Reseña del libro: ¿Por qué Fracasan los Países?

[Anselmo]

Sin parecerme que el libro en cuestión pueda situarse al mismo nivel que “la riqueza de las Naciones”, tal y como afirma determinado premio Nobel de Economía, sí lo considero uno de los libros más enriquecedores  que he leído hasta la fecha. Sus autores son de D.A. Acemoglu  y J.A. Robinson.

La idea en que se basa es que la riqueza de las naciones depende de que exista un grado de centralización que permita a sus habitantes disfrutar de seguridad y de infraestructuras y de instituciones económicas inclusivas, esto es instituciones que permitan a sus habitantes el participar en la economía en el grado que deseen y beneficiarse en consecuencia. El polo opuesto son las instituciones económicas excluyentes, que tan solo permiten el enriquecimiento de un grupo reducido de la población.
Un factor importante para el desarrollo económico es, según estos autores, la destrucción creativa- la facilidad existente en una sociedad para derribar instituciones económicas obsoletas y sustituirlas por otras nuevas - sólo factible en sociedades con sistemas económicos inclusivos.    
Las instituciones inclusivas  suelen ser comunes en lo que se entiende por democracias en su acepción más amplia. Pero hay múltiples excepciones como las que se dan en toda Iberoamérica, región donde proliferan las instituciones económicas excluyentes y que, en consecuencia, nunca podrán llegar a ser sociedades prosperas de una manera continuada. Siendo las únicas excepciones en este sentido Chile, Brasil y Méjico.
 
La principal causa  de que países con riquezas naturales población educada y sistemas políticos democráticos sufran de instituciones económicas excluyentes (los autores ponen como ejemplo a Argentina), reside en su pasado colonial.

Y es que el pasado colonial implica que las instituciones económicas extractivas que en su momento fueron implementadas para el beneficio de la metrópoli, y que por tanto son de carácter excluyente, han permanecido hasta el presente.

Respecto a las excepciones que suponen Estados Unidos  y Australia, se deben a que la población colonizadora tenía un papel preponderante en esos países despoblados y pobres en metales preciosos, preponderancia que les permitió escapar de las instituciones económicas excluyentes con las que se intentó someterlos.

Resulta curioso  que en Estados Unidos , por no mencionar a Sud África, los descendientes de estos colonos que lucharon contra las instituciones económicas excluyentes , y las instituciones politicas también excluyentes, no vacilasen en implementar nuevas instituciones de este tipo, una vez acabada la Guerra de Secesión,en el caso de los Estados Unidos  para sojuzgar y explotar a la población negra y que esas  instituciones hayan permanecido en plena vigencia hasta hace algunas décadas.  
 

Respecto a las revoluciones socialistas que han sacudido el mundo. La pobreza que ha sido su resultado económico final, es debida a que las instituciones políticas excluyentes que estos sistemas precisan para su existencia, requieren la  creación de instituciones económicas excluyentes, y tienen una fuerte aversión a la destrucción creativa.

La mayor parte de las revoluciones al aumentar el carácter excluyente de las instituciones económicas, terminan trayendo pobreza a largo plazo.
   
Con referencia a China, será imposible que su prosperidad de prolongue a largo plazo debido a que para ello se requiere destrucción creativa y  sistemas económicos incluyentes, cosa que no permitirá bajo ningún concepto el régimen comunista actual.    

Un ejemplo que me resultó chocante, acaeció en el siglo I ,en la Roma Imperial. Un inventor se presentó ante el Emperador Tiberio mostrándole un procedimiento revolucionario para la fabricación de vidrio irrompible. El Emperador le preguntó sobre cuantas personas conocían ese invento, y al responderle el inventor que nadie más aparte de él. Tiberio ordenó que se le diera muerte, para evitar la destrucción creativa que habría traído el progreso que para la industria del vidrio de aquel entonces habría supuesto la mencionada  invención.  

[Crosscountry]

pues si a tiberio le explico el timo del interés compuesto y quien lo invento...

uff..uff..uff..

[Fer]

Ola de huelgas en Alemania: la desintegración del modelo alemán

El país se enfrenta a una amplia erosión de las normas salariales formales e informales que durante décadas mantuvo la paz en el capitalismo alemán, dice el sociólogo Wolfgang Streeck, haciendo hincapié en que la ola de huelgas es más que un episodio cíclico: es otra faceta de la desintegración inexorable de lo que solía ser el ‘modelo alemán’.

“Este año, la mayor economía de Europa está a punto de superar un nuevo récord de huelgas, en todos los sectores- desde ingenieros a jardines de infancias y guarderías, maestros y trabajadores postales- que han promovido paros recientemente. Esta ola de luchas obreras es más que un episodio cíclico: es otra faceta de la desintegración inexorable de lo que solía ser el ‘modelo alemán’ “, dice Wolfgang Streeck en un artículo publicado en ‘The Guardian’.

“Los sindicatos de las prósperas industrias de exportación,  no son los únicos que están en huelga hoy”, dice el sociólogo económico, y ejemplificó con los conflictos laborales en los servicios, sobre todo en el sector público, que parece que “han llegado para quedarse.”

Tras señalar que “la competencia internacional ya no es sólo acerca de la cuota de mercado, sino también en el empleo”, que llegó, por ejemplo, a condicionar la acción de los sindicatos del metal. Señala  Wolfgang Streeck que el reto se ha desplazado a los servicios, ya que, en este caso, “la exportación de trabajo es más difícil.”

El sociólogo también establece que “los empleadores públicos en la búsqueda de la consolidación fiscal, rompieron el sistema de negociación colectiva peculiar en el sector público en Alemania”, que garantizaba esencialmente los mismos aumentos anuales de sueldos para todos los trabajadores.

Por otra parte, Wolfgang Streeck señala que varias ocupaciones – incluyendo la de los conductores de trenes, los maestros y los trabajadores de correos – ya no son regulados por la normativa específica de la Función Pública.

“Además, la progresiva privatización de los servicios públicos, combinada con el desempleo y la desindicalización que venía con ello, puso cada vez más los salarios del sector público en condiciones de competencia, lo que lleva a problemas hasta ahora desconocidos a los sindicatos, desencadenados por lo rápido en que se está convirtiendo el sistema de dos niveles de salario”, avanza.

Otro desarrollo que, según el sociólogo, contribuyó al conflicto laboral tiene que ver con la aparición de nuevas ocupaciones, especialmente las relacionadas con la educación de los niños y el cuidado de los ancianos. Estos trabajadores están mal pagados y son precarios, a pesar de “la retórica del Gobierno sobre la necesidad y la virtud moral de su trabajo”, cita Wolfgang Streeck.

La suma de estos factores surge de la misma manera que el clientelismo utiliza los avances tecnológicos para ejercer presión sobre las ocupaciones previamente privilegiadas, como los pilotos de aerolíneas, los controladores aéreos y conductores de trenes que socavan los derechos ya conquistados.

“Todo esto se traduce en una amplia erosión de las normas formales e informales de los salarios que durante décadas mantuvo la paz en el capitalismo alemán”, dice el sociólogo económico alemán.

Junto con el deterioro de las condiciones de trabajo, la pérdida de ingresos y recortes en los servicios públicos y las prestaciones sociales a las que está sujeta la mayoría de las familias, los sueldos de los altos directivos no paran de crecer “, especialmente, pero no exclusivamente, en el área financiera” refiere Streeck, que marca un aumento de la desigualdad salarial.

“El sistema de fijación de salarios alemán se acerca a una condición de ausencia de normas, similares a lo que Gran Bretaña experimentó en la década de 1970. En ese momento, el sociólogo, John Goldthorpe Oxford, diagnosticó un estado de anomia de trabajo: por la  falta fundamental de consenso sobre los principios legítimos de distribución entre capital y trabajo y entre grupos de trabajadores “, dice.

Según Wolfgang Streeck, “el gobierno alemán con su ministro de Trabajo socialdemócrata, está tratando de reprimir la ola de conflictos laborales, reduciendo el derecho de sindicación y huelga. Ilegalizando golpea a sindicatos sectoriales -como los maquinistas-“.

“Pero esto va a fallar, lo más probable es que el Tribunal Constitucional y, por supuesto, en la práctica, en un mundo donde la estructura de las empresas y sectores no es más favorable a los sindicatos y que se basa en la doctrina de ‘un lugar de trabajo, una unión, y donde los conductores, pilotos y otras personas sentirán el derecho a defenderse, si es necesario, ir a la huelga, la ley se confrontará a las luchas obreras”, concluye.

http://elcomunista.net/2015/05/30/ola-de-huelgas-en-alemania-la-desintegracion-del-modelo-aleman/

[Fer]

Según este autor USA colapsará totalmente entre 2015 y 2020, incluso se romperá en varios países. Se basa en observar el comportamiento de Estados Unidos estos últimos años.

Una guerra está a nuestra puerta. Como siempre, necesitamos un año más

http://www.elespiadigital.com/index.php/noticias/geoestrategia/9635-una-guerra-esta-a-nuestra-puerta-como-siempre-necesitamos-un-ano-mas

[Fleischman]

Mapunto el 1 de enero de 2021 en el calendario del outlook para ver cómo les va a los distintos países en los que se va a romper EE.UU. y echarnos unas risas...

[Fer]

El artículo no trata sobre el peak oil, sino de la sociedad americana en general.

[Fer]

"El mundo debe prepararse para el colapso de EE.UU. al estilo soviético"

La larga serie de reveses económicos, geopolíticos y sociales que enfrenta EE.UU. desde inicios de este siglo, ha llevado a la nación norteamericana a un punto crítico en el que es probable su desintegración al "estilo soviético", sostiene un influyente analista geopolítico brasileño.

En su artículo publicado en el portal 'Carta Maior', el profesor de la Fundación Getulio Vargas de Sao Paulo, Antonio Gelis-Filho, señala que, a pesar de que EE.UU. se enfrenta a una amenaza nuclear del Estado Islámico, su desintegración no será propiciada por el grupo islamista.

"El país parece haber llegado a un callejón sin salida en su declive", comenta Gelis-Filho, que cita como ejemplos los "fracasos geopolíticos" sufridos en Ucrania, donde Rusia ha sido capaz de hacer frente a Washington para defender sus intereses estratégicos, y en el sudeste asiático, donde China está construyendo islas artificiales en territorios que son objeto de disputa con varios aliados de EE.UU., que por su parte, "ha lanzado varias advertencias, pero que son ignorados por Pekín como si se tratara del zumbido de unmolesto mosquito".

Según el analista geopolítico, el panorama para Washington, a parte de los reveses internacionales, se agravó por los problemas sociales y económicos dentro del país. "La prometida recuperación económica nunca llegó y más bien se contrajo a una tasa anual de 0,7% en el primer trimestre del 2015", recuerda Gelis-Filho.

"Después de todos estos fracasos, además de la visible desintegración del tejido socialestadounidense con disturbios cada vez más frecuentes por la brutalidad policial y la creciente desigualdad", el profesor considera probable un colapso de EE.UU. al estilo soviético. El analista deja claro que tal desintegración no es inminente. Sin embargo, advierte que el mundo debería estar preparado para tal escenario porque tendría graves consecuencias.

http://www.laverdadoculta.com.ar/2015/06/el-mundo-debe-prepararse-para-el.html

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¿Washington permitirá un Kosovo en casa?: Texas allana el camino para su separación de EE.UU.

La semana pasada Texas anunció el establecimiento de su propia versión de Fort Knox, el repositorio impenetrable para los lingotes de oro, lo que podría ser una señal de la creación de su propia moneda y, finalmente, el avance hacia la separación de EE.UU.

Bajo el proyecto de ley 483, aprobado por unanimidad por el Senado estatal, Glenn Hegar, contralor de Cuentas Públicas de Texas, estaría autorizado a establecer y administrar los primeros lingotes que depositaría el estado en un lugar no determinado todavía. Cabe destacar que ningún otro estado de EE.UU. tiene aún su propio depósito de lingotes.

El senador republicano Lois Kolkhorst indicó que el estado y sus organismos tienen más de 1.000 millones de dólares en oro que ahora se conservan en instalaciones en otros estados.

Un análisis oficial del proyecto de ley explica: "El establecimiento de un almacén de lingotes de Texas permitiría al estado, agencias estatales e individuos almacenar metales preciosos utilizando un depositario seguro con sede en Texas para reducir la dependencia de las instalaciones fuera del estado y aislar sus activos de las fuerzas del mercado inestables".

"Nueva York aborrecerá esto", dijo Kolkhorst. "Para mí, eso y el hecho de que va a ahorrar dinero a Texas lo transforma en una idea de oro".

Estados ya no confían en EE.UU.

No es el primer intento de Texas de mostrar su independencia y distanciarse de EE.UU. Si otros esfuerzos no se transforman en resultados concretos, esto supondrá que el estado devolverá su oro y ya nadie será capaz de determinar su destino. Además, es un paso decisivo de Texas hacia la creación de su propia moneda y su independencia como una república autosuficiente.

Y el estado tiene todos los prerrequisitos para hacerlo una realidad: Texas es un enorme territorio, se puede hasta decir que es un país independiente con su singular cultura y forma de vida. Tiene una visión completamente diferente del mundo y puntos de vista sobre la política de EE.UU. Por ejemplo, está totalmente en desacuerdo con la política del Gobierno federal de Estados Unidos en materia fiscal, debido a una balanza claramente desfavorable.

La economía de Texas es una de las más grandes y de mayor crecimiento de los Estados Unidos. En Texas se encuentran 50 empresas de la lista Fortune 500 (tercer puesto después de Nueva York y California).

Texas es el mayor exportador de bienes a EE.UU., el volumen de negocios del comercio del estado con otros países supera los 100.000 millones de dólares anuales. Si Texas fuera un país soberano, tendría la 14ª economía más grande del mundo por PIB (por delante de Corea del Sur y los Países Bajos).

Así, muy pronto EE.UU. puede perder no solo a uno de sus estados más ricos, sino sus reservas de oro -un colchón de seguridad- que desaparecen a velocidades récord a la luz de los intentos de numerosos países de repatriar sus lingotes.

A medida que avance este proceso se verá si Washington muestra el mismo entusiasmo que ha manifestado referente a otros procesos secesionistas unilaterales: léase Kosovo (Serbia).

http://actualidad.rt.com/opinion/liliya_khusainova/177059-texas-repositario-oro-separacion-eeuu

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El Gobernador de Texas ordena a la Guardia Estatal monitorizar la operación especial del ejército yanki "Jade helm", en respuesta a la "preocupación generalizada del pueblo de Texas".

http://www.thenewamerican.com/usnews/constitution/item/20779-texas-guard-to-monitor-federal-jade-helm-military-exercise

[Anselmo]

Interesante entrevista a uno de los autores del libro que nos ocupa (Acemoglu), en la Vanguardia de hace pocos días, sobre la situación española.

[Fleischman]

Jared Diamond, sobre este libro:

What Makes Countries Rich or Poor ?

The fence that divides the city of Nogales is part of a natural experiment in organizing human societies. North of the fence lies the American city of Nogales, Arizona; south of it lies the Mexican city of Nogales, Sonora. On the American side, average income and life expectancy are higher, crime and corruption are lower, health and roads are better, and elections are more democratic. Yet the geographic environment is identical on both sides of the fence, and the ethnic makeup of the human population is similar. The reasons for those differences between the two Nogaleses are the differences between the current political and economic institutions of the US and Mexico.

This example, which introduces Why Nations Fail by Daron Acemoglu and James Robinson, illustrates on a small scale the book’s subject.* Power, prosperity, and poverty vary greatly around the world. Norway, the world’s richest country, is 496 times richer than Burundi, the world’s poorest country (average per capita incomes $84,290 and $170 respectively, according to the World Bank). Why? That’s a central question of economics.

Different economists have different views about the relative importance of the conditions and factors that make countries richer or poorer. The factors they most discuss are so-called “good institutions,” which may be defined as laws and practices that motivate people to work hard, become economically productive, and thereby enrich both themselves and their countries. They are the basis of the Nogales anecdote, and the focus of Why Nations Fail. In the authors’ words:

The reason that Nogales, Arizona, is much richer than Nogales, Sonora, is simple: it is because of the very different institutions on the two sides of the border, which create very different incentives for the inhabitants of Nogales, Arizona, versus Nogales, Sonora.

Among the good economic institutions that motivate people to become productive are the protection of their private property rights, predictable enforcement of their contracts, opportunities to invest and retain control of their money, control of inflation, and open exchange of currency. For instance, people are motivated to work hard if they have opportunities to invest their earnings profitably, but not if they have few such opportunities or if their earnings or profits are likely to be confiscated.

The strongest evidence supporting this view comes from natural experiments involving borders: i.e., division of a uniform environment and initially uniform human population by a political border that eventually comes to separate different economic and political institutions, which create differences in wealth. Besides Nogales, examples include the contrasts between North and South Korea and between the former East and West Germany. Many or most economists, including Acemoglu and Robinson, generalize from these examples of bordering countries and deduce that good institutions also explain the differences in wealth between nations that aren’t neighbors and that differ greatly in their geographic environments and human populations.

There is no doubt that good institutions are important in determining a country’s wealth. But why have some countries ended up with good institutions, while others haven’t? The most important factor behind their emergence is the historical duration of centralized government. Until the rise of the world’s first states, beginning around 3400 BC, all human societies were bands or tribes or chiefdoms, without any of the complex economic institutions of governments. A long history of government doesn’t guarantee good institutions but at least permits them; a short history makes them very unlikely. One can’t just suddenly introduce government institutions and expect people to adopt them and to unlearn their long history of tribal organization.

That cruel reality underlies the tragedy of modern nations, such as Papua New Guinea, whose societies were until recently tribal. Oil and mining companies there pay royalties intended for local landowners through village leaders, but the leaders often keep the royalties for themselves. That’s because they have internalized their society’s practice by which clan leaders pursue their personal interests and their own clan’s interests, rather than representing everyone’s interests.

The various durations of government around the world are linked to the various durations and productivities of farming that was the prerequisite for the rise of governments. For example, Europe began to acquire highly productive agriculture 9,000 years ago and state government by at least 4,000 years ago, but subequatorial Africa acquired less productive agriculture only between 2,000 and 1,800 years ago and state government even more recently. Those historical differences prove to have huge effects on the modern distribution of wealth. Ola Olsson and Douglas Hibbs showed that, on average, nations in which agriculture arose many millennia ago—e.g., European nations—tend to be richer today than nations with a shorter history of agriculture (e.g., subequatorial African nations), and that this factor explains about half of all the modern national variation in wealth. Valerie Bockstette, Areendam Chanda, and Louis Putterman showed further that, if one compares countries that were equally poor fifty years ago (e.g., South Korea and Ghana), the countries with a long history of state government (e.g., South Korea) have on the average been getting rich faster than those with a short history (e.g., Ghana).

An additional factor behind the origin of the good institutions that I discussed above is termed “the reversal of fortune,” and is the subject of Chapter 9 of Why Nations Fail. Among non-European countries colonized by Europeans during the last five hundred years, those that were initially richer and more advanced tend paradoxically to be poorer today. That’s because, in formerly rich countries with dense native populations, such as Peru, Indonesia, and India, Europeans introduced corrupt “extractive” economic institutions, such as forced labor and confiscation of produce, to drain wealth and labor from the natives. (By extractive economic institutions, Acemoglu and Robinson mean practices and policies “designed to extract incomes and wealth from one subset of society [the masses] to benefit a different subset [the governing elite].”)

But in formerly poor countries with sparse native populations, such as Costa Rica and Australia, European settlers had to work themselves and developed institutional incentives rewarding work. When the former colonies achieved independence, they variously inherited either the extractive institutions that coerced the masses to produce wealth for dictators and the elite, or else institutions by which the government shared power and gave people incentives to pursue. The extractive institutions retarded economic development, but incentivizing institutions promoted it.

The remaining factor contributing to good institutions, of which Acemoglu and Robinson mention some examples, involves another paradox, termed “the curse of natural resources.” One might naively expect countries generously endowed with natural resources (such as minerals, oil, and tropical hardwoods) to be richer than countries poorer in natural resources. In fact, the trend is opposite, the result of the many ways in which national dependence on certain types of natural resources (like diamonds and oil) tends to promote bad institutions, such as corruption, civil wars, inflation, and neglect of education.

An example, mentioned in Chapter 12, is the diamond boom in Sierra Leone, which contributed to that nation’s impoverishment. Other examples are Nigeria’s and the Congo’s poverty despite their wealth in oil and minerals respectively. In all three of those cases, selfish dictators or elites found that they themselves could become richer by taking the profits from natural resources for their personal gain, rather than investing the profits for the good of their nation. But some countries with prescient leaders or citizens avoided the curse of natural resources by investing the proceeds in economic development and education. As a result, oil-producing Norway is now the world’s richest country, and oil-producing Trinidad and Tobago now enjoys an income approaching that of Britain, its former colonial ruler.

Those are the main sets of institutional factors promoting power, prosperity, or poverty, and their roots. The other large set consists of geographic factors with direct economic consequences not mediated by institutions. One of those geographic factors leaps out of a map of the world in Why Nations Fail that depicts national incomes. On that map, both Africa and the Americas resemble peanut butter sandwiches, with thick cores of poor tropical countries squeezed between two thin slices of richer countries in the north and south temperate zones.

In the New World the two north temperate countries (the US and Canada, average incomes respectively $47,390 and $43,270) and the three south temperate countries (Uruguay, Chile, and Argentina, respectively $10,590, $10,120, and $8,620) are all richer—on the average five times richer—than almost all of the intervening seventeen tropical countries of mainland Central and South America (incomes mostly between $1,110 and $6,970). Similarly, mainland Africa is a sandwich of thirty-seven mostly desperately poor tropical countries, flanked by two thin slices each consisting of five modestly affluent or less desperately poor countries in Africa’s north and south temperate zones (see map).
 
Mike King

Mainland Africa’s ‘peanut butter sandwich’ of national wealth. Tropical African countries constitute a thick core between two thinner slices of countries in the north and south temperate zones. All temperate mainland African countries except landlocked Lesotho in the south have average annual incomes above $2,400 (gray), ranging up to over $12,000. All except three tropical mainland African countries—Equatorial Guinea, Gabon, and Angola— have average incomes below $2,200 (red), ranging down to as low as $170 (Burundi).

While institutions are undoubtedly part of the explanation, they leave much unexplained: some of those richer temperate countries are notorious for their histories of bad institutions (think of Algeria, Argentina, Egypt, and Libya), while some of the tropical countries (e.g., Costa Rica and Tanzania) have had relatively more honest governments. What are the economic disadvantages of a tropical location?

Two major factors contribute to the poverty of tropical countries compared to temperate countries: diseases and agricultural productivity. The tropics are notoriously unhealthy. Tropical diseases differ on average from temperate diseases, in several respects. First, there are far more parasitic diseases (such as elephantiasis and schistosomiasis) in tropical areas, because cold temperate winters kill parasite stages outside our bodies, but tropical parasites can thrive outside our bodies all year long. Second, disease vectors, such as mosquitoes and ticks, are far more diverse in tropical than in temperate areas.

Finally, biological characteristics of the responsible microbes have made it easier to develop vaccines against major infectious diseases of temperate areas than against tropical diseases; we still aren’t close to a vaccine against malaria, despite billions of dollars invested. Hence tropical diseases impose a huge burden on economies of tropical countries. At any given moment, much of the population is sick and unable to work efficiently. Many women in tropical areas can’t join the workforce because they are constantly nursing and caring for babies conceived as insurance against the expected deaths of some of their older children from malaria.

As for agricultural productivity, it averages lower in tropical than in temperate areas, again for several reasons. First, temperate plants store more energy in parts edible to us humans (such as seeds and tubers) than do tropical plants. Second, diseases borne by insects and other pests reduce crop yields more in the tropics than in the temperate zones, because the pests are more diverse and survive better year-round in tropical than in temperate areas. Third, glaciers repeatedly advanced and retreated over temperate areas, creating young nutrient-rich soils. Tropical lowland areas haven’t been glaciated and hence tend to have older soils, leached of their nutrients by rain for thousands of years. (Young fertile volcanic and alluvial soils are exceptions.) Fourth, the higher average rainfall of tropical than of temperate areas results in more nutrients being leached out of the soil by rain.

Finally, higher tropical temperatures cause dead leaves and other organic matter falling to the ground to be broken down quickly by microbes and other organisms, releasing their nutrients to be leached away. Hence in temperate areas soil fertility is on average higher, crop losses to pests lower, and agricultural productivity higher than in tropical areas. That’s why Argentina in South America’s south temperate zone, despite its conspicuous lack (for most of its history) of the good institutions praised by economists, is the leading food exporter in Latin America, and one of the leading ones in the world.

Thus, geographical latitude acting independently of institutions is an important geographic factor affecting power, prosperity, and poverty. The other important geographic factor is whether an area is accessible to ocean-going ships because it lies either on the sea coast or on a navigable river. It costs roughly seven times more to ship a ton of cargo by land than by sea. That puts landlocked countries at an economic disadvantage, and helps explain why landlocked Bolivia and semilandlocked Paraguay are the poorest countries of South America. It also helps explain why Africa, with no river navigable to the sea for hundreds of miles except the Nile, and with fifteen landlocked nations, is the poorest continent. Eleven of those fifteen landlocked African nations have average incomes of $600 or less; only two countries outside Africa (Afghanistan and Nepal, both also landlocked) are as poor.

The remaining major factor underlying wealth and poverty is the state of the natural environment. All human populations depend to varying degrees on renewable natural resources—especially on forests, water, soils, and seafood. It’s tricky to manage such resources sustainably. Countries that excessively deplete their resources—whether inadvertently or intentionally—tend to impoverish themselves, although the difficulty of estimating accurately the costs of resource destruction causes economists to ignore it. It helps explain why notoriously deforested countries—such as Haiti, Rwanda, Burundi, Madagascar, and Nepal—tend to be notoriously poor and politically unstable.

These, then, are the main factors invoked to understand why nations differ in wealth. The factors are multiple and diverse. We all know, from our personal experience, that there isn’t one simple answer to the question why each of us becomes richer or poorer: it depends on inheritance, education, ambition, talent, health, personal connections, opportunities, and luck, just to mention some factors. Hence we shouldn’t be surprised that the question of why whole societies become richer or poorer also cannot be given one simple answer.

Within this frame, Acemoglu and Robinson focus on institutional factors: initially on economic institutions, and then on the political institutions that create them. In their words, “while economic institutions are critical for determining whether a country is poor or prosperous, it is politics and political institutions that determine what economic institutions a country has.” In particular, they stress what they term inclusive economic and political institutions: “Inclusive economic institutions…are those that allow and encourage participation by the great mass of people in economic activities that make best use of their talents and skills and that enable individuals to make the choices they wish.” For example, in South Korea but not in North Korea people can get a good education, own property, start a business, sell products and services, accumulate and invest capital, spend money in open markets, take out a mortgage to buy a house, and thereby expect that by working harder they may enjoy a good life.

Such inclusive economic institutions in turn arise from “political institutions that distribute power broadly in society and subject it to constraints…. Instead of being vested in a single individual or a narrow group, [inclusive] political power rests with a broad coalition or a plurality of groups.” South Korea recently, and Britain and the US beginning much earlier, do have broad participation of citizens in political decisions; North Korea does not. Inclusive economic and political institutions provide individuals with incentives to increase their economic productivity as they think best. Such inclusive institutions are to be contrasted with absolutist political institutions that narrowly concentrate political power, and with extractive economic institutions that force people to work largely for the benefit of dictators. The ultimate development of inclusive political institutions to date is in modern Scandinavian democracies with universal suffrage and relatively egalitarian societies. However, compared to modern dictatorships (like North Korea) and the absolute monarchies widespread in the past, societies (such as eighteenth-century Britain) in which only a minority of citizens could vote or participate in political decisions still represented a big advance toward inclusiveness.

From this striking dichotomy, the authors draw thought-provoking conclusions. While absolutist regimes with extractive economic institutions can sometimes achieve economic growth, that growth is based on existing technology, and is nonsustainable and prone to collapse; whereas inclusive institutions are required for sustained growth based on technological change. One might naively expect dictators to promote long-term economic growth, because such growth would generate more wealth for them to extract. But their efforts are warped, because what’s economically good for individual citizens may be bad for the political elite, and because economic growth may be best promoted by political institutions that would shake the elite’s hegemony.

Why Nations Fail offers case studies to illustrate these points: the economic rises and subsequent declines of the Soviet Union and the Ottoman Empire; the resistance of tsarist Russia and the Habsburg Empire to building railroads, out of fear that they would undermine the landed aristocracy’s power and foster revolution; and, especially relevant today, the likely future trajectory of Communist China, whose growth prospects appear unlimited to many Western observers—but not to Acemoglu and Robinson, who write that China’s growth “is likely to run out of steam.”

In their narrow focus on inclusive institutions, however, the authors ignore or dismiss other factors. I mentioned earlier the effects of an area’s being landlocked or of environmental damage, factors that they don’t discuss. Even within the focus on institutions, the concentration specifically on inclusive institutions causes the authors to give inadequate accounts of the ways that natural resources can be a curse. True, the book provides anecdotes of the resource curse (Sierra Leone cursed by diamonds), and of how the curse was successfully avoided (in Botswana). But the book doesn’t explain which resources especially lend themselves to the curse (diamonds yes, iron no) and why. Nor does the book show how some big resource producers like the US and Australia avoid the curse (they are democracies whose economies depend on much else besides resource exports), nor which other resource-dependent countries besides Sierra Leone and Botswana respectively succumbed to or overcame the curse. The chapter on reversal of fortune surprisingly doesn’t mention the authors’ own interesting findings about how the degree of reversal depends on prior wealth and on health threats to Europeans.

Two major factors that Acemoglu and Robinson do mention, only to dismiss them in a few sentences, are tropical diseases and tropical agricultural productivity:

Tropical diseases obviously cause much suffering and high rates of infant mortality in Africa, but they are not the reason Africa is poor. Disease is largely a consequence of poverty and of governments being unable or unwilling to undertake the public health measures necessary to eradicate them…. The prime determinant of why agricultural productivity—agricultural output per acre—is so low in many poor countries, particularly in sub-Saharan Africa, has little to do with soil quality. Rather, it is a consequence of the ownership structure of the land and the incentives that are created for farmers by the governments and institutions under which they live.

These sweeping statements, which will astonish anyone knowledgeable about the subjects, brush off two entire fields of science, tropical medicine and agricultural science. As I summarized above, the well-known facts of tropical biology, geology, and climatology saddle tropical countries with much bigger problems than temperate countries.

A second weakness involves the historical origins of what Acemoglu and Robinson identify as inclusive economic and political institutions, with their consequences for wealth. Some countries, such as Britain and Japan, have such institutions, while other countries, such as Ethiopia and the Congo, don’t. To explain why, the authors give a just-so story of each country’s history, which ends by concluding that that story explains why that country either did or didn’t develop good institutions. For instance, Britain adopted inclusive institutions, we are told, as a result of the Glorious Revolution of 1688 and preceding events; and Japan reformed its institutions after 1868; but Ethiopia remained absolutist. Acemoglu and Robinson’s view of history is that small effects at critical junctures have long-lasting effects, so it’s hard to make predictions. While they don’t say so explicitly, this view suggests that good institutions should have cropped up randomly around the world, depending on who happened to decide what at some particular place and time.

But it’s obvious that good institutions, and the wealth and power that they spawned, did not crop up randomly. For instance, all Western European countries ended up richer and with better institutions than any tropical African country. Big underlying differences led to this divergence of outcomes. Europe has had a long history (of up to nine thousand years) of agriculture based on the world’s most productive crops and domestic animals, both of which were domesticated in and introduced to Europe from the Fertile Crescent, the crescent-shaped region running from the Persian Gulf through southeastern Turkey to Upper Egypt. Agriculture in tropical Africa is only between 1,800 and 5,000 years old and based on less productive domesticated crops and imported animals.

As a result, Europe has had up to four thousand years’ experience of government, complex institutions, and growing national identities, compared to a few centuries or less for all of sub-Saharan Africa. Europe has glaciated fertile soils, reliable summer rainfall, and few tropical diseases; tropical Africa has unglaciated and extensively infertile soils, less reliable rainfall, and many tropical diseases. Within Europe, Britain had the further advantages of being an island rarely at risk from foreign armies, and of fronting on the Atlantic Ocean, which became open after 1492 to overseas trade.

It should be no surprise that countries with those advantages ended up rich and with good institutions, while countries with those disadvantages didn’t. The chain of causation leading slowly from productive agriculture to government, state formation, complex institutions, and wealth involved agriculturally driven population explosions and accumulations of food surpluses, leading in turn to the need for centralized decision-making in societies much too populous for decision-making by face-to-face discussions involving all citizens, and the possibility of using the food surpluses to support kings and their bureaucrats. This process unfolded independently, beginning around 3400 BC, in many different parts of the ancient world with productive agriculture, including the Fertile Crescent, Egypt, China, the Indus Valley, Crete, the Valley of Mexico, the Andes, and Polynesian Hawaii.

The remaining weakness is the authors’ resort to assertion unsupported or contradicted by facts. An example is their attempt to expand their focus on institutions in order to explain the origins of agriculture. All humans were originally hunter/gatherers who independently became farmers in only about nine small areas scattered around the world. A century of research by botanists and archaeologists has shown that what made those areas exceptional was their wealth of wild plant and animal species suitable for domestication (such as wild wheats and corn).

While the usual pattern was for nomadic hunter/gatherers to become sedentary farmers, there were exceptions: some nomadic hunter/gatherers initially became nomadic farmers (Mexico and lowland New Guinea) while others never became farmers (Aboriginal Australia); some sedentary hunter/gatherers became sedentary farmers (the Fertile Crescent) while others never became farmers (Pacific Northwest Indians); and some sedentary farmers reverted to being nomadic hunter/gatherers (southern Sweden about four thousand years ago).

In their Chapter 5, Acemoglu and Robinson use one of those exceptional patterns (that for the Fertile Crescent) to assert, in the complete absence of evidence, that those particular hunter/gatherers had become sedentary because, for unknown reasons, they happened to develop innovative institutions through a hypothesized political revolution. They assert further that the origins of farming depended on their preferred explanation of institutional innovation, rather than on the local availability of domesticable wild species identified by botanists and archaeologists.

Among arguments to refute that widely shared interpretation, Acemoglu and Robinson redraw in their Map 5 on page 56 the maps on pages 56 and 66 of archaeobotanists Daniel Zohary and Maria Hopf’s book Domestication of Plants in the Old World, depicting the distributions of wild barley and of one of the two hybrid ancestors of one of the three wheats (which Acemoglu and Robinson misleadingly identify just as “wheat”). They take these maps to mean that “the ancestors of barley and wheat were distributed along a long arc” beyond the Fertile Crescent, hence that the Fertile Crescent’s unique role in agriculture’s origins “was not determined by the availability of plant and animal species.”

What Zohary and Hopf actually showed was that wild emmer wheat is confined to the Fertile Crescent, and that the areas of extensive spread of wild barley and wild einkorn wheat are also confined to the Fertile Crescent, and that the wild ancestors of all the other original Fertile Crescent crops are also confined to or centered on the Fertile Crescent, and hence that the Fertile Crescent was the only area in which local agriculture could have arisen. Acemoglu and Robinson do themselves a disservice by misstating these findings.

My overall assessment of the authors’ argument is that inclusive institutions, while not the overwhelming determinant of prosperity that they claim, are an important factor. Perhaps they provide 50 percent of the explanation for national differences in prosperity. That’s enough to establish such institutions as one of the major forces in the modern world. Why Nations Fail offers an excellent way for any interested reader to learn about them and their consequences. Whereas most writing by academic economists is incomprehensible to the lay public, Acemoglu and Robinson have written this book so that it can be understood and enjoyed by all of us who aren’t economists.

Why Nations Fail should be required reading for politicians and anyone concerned with economic development. The authors’ discussions of what can and can’t be done today to improve conditions in poor countries are thought-provoking and will stimulate debate. Donors and international agencies try to “engineer prosperity” either by foreign aid or by urging poor countries to adopt good economic policies. But there is widespread disappointment with the results of these well-intentioned efforts. Acemoglu and Robinson pithily diagnose the cause of these disappointing outcomes in their final chapter: “Attempting to engineer prosperity without confronting the root cause of the problems—extractive institutions and the politics that keeps them in place—is unlikely to bear fruit.”