My next favorite author, Daron Acemoglu, an economist, is a professor at MIT since 1993. He ranked third in the list of “Favorite Living Economists Under Age 60” in a 2011 survey among American economists, behind Paul Krugman and Greg Mankiw. And I don’t doubt this acclaim. He co-authored ‘Why Nations Fail’ with James A. Robinson, a political scientist.
Every reader has his/her own preference in appreciating certain books. Personally, most of the time, I tend to give higher marks to books that provide both depth and breadth – I value historical insights and extensive coverage. Hence this fascinating book! Also, the political and economic institutions we are in are on-going living issues that evolve over the life cycle of a nation, which motivate readers to contemplate deeply on their own and their nation’s destiny.
The clear frame used in their arguments enabled me to come up with a concise formula: A Nation’s Prosperity(Success) = [Political Institution(inclusive vs. extractive) + Economic Institution(inclusive vs. extractive)] x Critical Junctures(historical turning points, luck or peril).
Inclusive Political Institutions encourage individuals’ rights on personal property, freedom, education, and innovations, and therefore promote Inclusive Economic Institutions. This inclusive political system is a pre-requisite for an inclusive economic system. On the other hand, Extractive Political Institutions extract resources as well as rights from their incumbents and naturally discourage innovations since they can cause upheaval of their status-quo. Hence, extractive economic institutions to serve this purpose.
The best case is a combination of Inclusive Political and Economic Institutions evolved favorably over critical junctures throughout a nation’s history. They create an expansive virtuous cycle. Some Extractive Political Institutions, however, can make it through by adopting Inclusive Economic Systems, but the vulnerable political system in its nature always carries ‘uncertainty’ with it, potentially making it difficult to deal with upcoming critical junctures. You can guess which countries belong to this category.
Most dictatorship countries naturally belong to a combination of Extractive Political and Economic Institutions evolved over series of critical junctures. However, any favorable critical juncture can trigger a nation’s destiny to turn the corner for the better. It possibly enables to cut themselves from a vicious cycle and emerge from the past.
I am currently reading Acemoglu’s paper issued in January 2018 on NBER, under the title of Artificial Intelligence, Automation and Work. Will get back to you with a review!
Who is your favorite author? For what reasons? I would love to hear from you!