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Why Nations Fail (Read 9164 times)
freediver
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Why Nations Fail
Mar 15th, 2014 at 7:23am
 
Why Nations Fail (by Acemoglu and Robinson) is a book I am currently reading that attempts to explain the enormous variations in wealth seen in the world today. It attributes these differences to economic institutions, which are largely dictated by political institutions. Institutions is intended in the broad meaning - eg property rights, democracy etc. It highlights how both the patterns in wealth and the patterns in these institutions have been very (though not entirely) stable over the last 150 years, and argues an institutional inertia (my term) that goes beyond the influence of the powerful individuals involved. It suggests why it is so hard to break the mold, and how to break it (not up to that part yet).

It also rejects some of the conventional arguments - eg:

* Culture - that Protestant, Judea-Christian, European or Roman culture is what makes the west so rich, while attempting to disentangle the various meanings of culture. Culture is part of the economic and political institutions that make countries rich or poor. He even argues that the middle east is not poor because of Islam, though I suspect he has never met anyone like Abu.

* Geography - that people in hot countries are lazy, or the soil is less fertile, and various more complicated version of this theory. It addresses the "Guns, Germs and Steel" hypothesis of Jared Diamond and puts it in it's place as an explanation for why the west was able to dominate the world, while highlighting the inability of this theory to explain vast differences in wealth seen in those countries colonised or settled by Europeans.

* Ignorance - that leaders or people in poor countries do not understand how to get rich. This is the explanation favoured by many modern economists. It highlights that even when they do understand, the people in power usually don't want to. Even when they are forced to or try to make the change, it is fraught with danger, because the problems are institutionalised within the economy and the politics. The idiotic economic policies of various tinpot dictators are not determined out of ignorance of economics, but by the economic and political institutions that for the tinpot dictators are an unchangeable reality they must work within.

The causes of wealth and poverty are economic and political freedoms and rights that are closely linked or interact. For example - secure property rights, including patents, economic freedom, democracy and a broad distribution (separation) of political power.

In historical terms, it largely attributes these differences to "accidents of history".
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Taipan
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Re: Why Nations Fail
Reply #1 - Mar 15th, 2014 at 8:42am
 
The enormous variations in wealth is due to the creation of and destruction of nations by a power elite who have been on the go with their 'mystery religion' from time immemorial.

You have to go into the histories of the Canaanites who became the Phoenicians who then became the Venetians after they moved into Venice. After establishing their banking monopoly and infiltrating many of the royal and noble houses of Europe, becoming known as the Black Nobility, AND THEN taking power in England in 1717 you will find the real reason for the variations in wealth we see today but its an awful lot of history to read about. You also have to try and obtain the relevant books, especially those written before the second world war. Many books today are written for the express purpose of hiding the activities of the Elite.

I should also mention that a mystery religion is a "system of civilisation", the Babylonian system which wasn't actually exclusive to Babylon, but was the updated and improved version of the ones that came before, is in operation today but on a global scale, compliments of the descendants of the black nobility.
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Re: Why Nations Fail
Reply #2 - Mar 15th, 2014 at 11:25am
 
Niall Ferguson wrote some interesting points on the success of the West.

He outlines 6 points that made it succeed:

Competition, Science, Property, Modern Medicine, Consumerism, Work Ethic.

http://www.pbs.org/wnet/civilization-west-and-rest/killer-apps/#.UyOrp_mSySo
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Re: Why Nations Fail
Reply #3 - Mar 15th, 2014 at 11:36am
 
But I suppose it comes down to definitions of 'fail'. What is a failed society? One with pre-modern customs, or is it one that has wide gulfs in income (as the op seems to insinuate)? Or is it something else?
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Re: Why Nations Fail
Reply #4 - Mar 15th, 2014 at 11:48am
 
A big issue that causes countries to fail is when the elite see the population under them as a statistic . My workplace has just been purchased by Australia Post. First they sacked  the short term casuals, then the made the long term casuals part timers on $590 a week and slashed the wages for the rest. As a result morale is low, blokes chuck sickies and the place is failing. Who wants to work harder for less??? When the elite create such a gulf with the wider population problems occur. Understanding of needs and issues are always misjudged. Just like my Aus Post management and the poor workers. Ancient Rome all over again. Just over money. Money will damage our country.
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Re: Why Nations Fail
Reply #5 - Mar 15th, 2014 at 12:05pm
 
Sparky wrote on Mar 15th, 2014 at 11:48am:
A big issue that causes countries to fail is when the elite see the population under them as a statistic . My workplace has just been purchased by Australia Post. First they sacked  the short term casuals, then the made the long term casuals part timers on $590 a week and slashed the wages for the rest. As a result morale is low, blokes chuck sickies and the place is failing. Who wants to work harder for less??? When the elite create such a gulf with the wider population problems occur. Understanding of needs and issues are always misjudged. Just like my Aus Post management and the poor workers. Ancient Rome all over again. Just over money. Money will damage our country.


No the lack of understanding will...
The knowledge of a medium of exchange (money) and how to use and manipulate it has been known since ancient times. It is the most profitable of all business and yet one in a thousand understand this. Don't you find this strange?
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Re: Why Nations Fail
Reply #6 - Mar 15th, 2014 at 12:06pm
 
Culture Warrior wrote on Mar 15th, 2014 at 11:36am:
But I suppose it comes down to definitions of 'fail'. What is a failed society?


Here is a definition of a "failed State" by a US think tank which pretty much sums it up

Quote:
A failed state has several attributes. Common indicators include a state whose central government is so weak or ineffective that it has little practical control over much of its territory; non-provision of public services; widespread corruption and criminality; refugees and involuntary movement of populations; sharp economic decline.


Enormous variations in wealth is the process which causes a nation to fail rather than a symptom of it.
Once you have an enormous variation in wealth then corruption and criminality is going to increase and the economy is going to decline. The government will also start to have less control as the corporations and billionaires start to influence all decisions.
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Re: Why Nations Fail
Reply #7 - Mar 15th, 2014 at 12:17pm
 
Richdude wrote on Mar 15th, 2014 at 12:05pm:
Sparky wrote on Mar 15th, 2014 at 11:48am:
A big issue that causes countries to fail is when the elite see the population under them as a statistic . My workplace has just been purchased by Australia Post. First they sacked  the short term casuals, then the made the long term casuals part timers on $590 a week and slashed the wages for the rest. As a result morale is low, blokes chuck sickies and the place is failing. Who wants to work harder for less??? When the elite create such a gulf with the wider population problems occur. Understanding of needs and issues are always misjudged. Just like my Aus Post management and the poor workers. Ancient Rome all over again. Just over money. Money will damage our country.


No the lack of understanding will...
The knowledge of a medium of exchange (money) and how to use and manipulate it has been known since ancient times. It is the most profitable of all business and yet one in a thousand understand this. Don't you find this strange?


That is exactly what I'm talking about when I say Babylonian system, or mystery religion.

First they force their currency on the people. This is then followed by taxation and with taxation comes the Law. They also give the people their culture and their religion.
Its called 'civilisation' and that's what a mystery religion is all about.
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Lord Herbert
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Re: Why Nations Fail
Reply #8 - Mar 15th, 2014 at 12:19pm
 
freediver wrote on Mar 15th, 2014 at 7:23am:
In historical terms, it largely attributes these differences to "accidents of history".


Utter nonsense ~ as he would well know.

The author is obviously a disciple of PC politics and a moral coward who simply cannot bring himself to say that the West beat the Rest because it's institutions of governance, industry, and learning were far superior to that of the Third World.

While the Third World countries were turned inwards on surviving on cottage industries and centuries-old traditions that discouraged change and experimentation, the West meanwhile exploded with technical innovation, empire-building, inventions and discoveries, etc ... it had its Renaissance while the rest of the world slept.

But your author is too much of a leftwing arsehole to give credit to the West lest this 'offend' a few sensitivities amongst our immigrant Third Worlders.
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Re: Why Nations Fail
Reply #9 - Mar 15th, 2014 at 12:29pm
 
The_Barnacle wrote on Mar 15th, 2014 at 12:06pm:
Culture Warrior wrote on Mar 15th, 2014 at 11:36am:
But I suppose it comes down to definitions of 'fail'. What is a failed society?


Here is a definition of a "failed State" by a US think tank which pretty much sums it up

Quote:
A failed state has several attributes. Common indicators include a state whose central government is so weak or ineffective that it has little practical control over much of its territory; non-provision of public services; widespread corruption and criminality; refugees and involuntary movement of populations; sharp economic decline.


Enormous variations in wealth is the process which causes a nation to fail rather than a symptom of it.
Once you have an enormous variation in wealth then corruption and criminality is going to increase and the economy is going to decline. The government will also start to have less control as the corporations and billionaires start to influence all decisions.


Interesting view - but quite obviously one taken from a position of relative wealth and privilege.

I beleiee a firmer picture of 'failed' in this context could be gained from discussion with the Man Under The Bridge.

According to that definition, Australia is not a failed nation - yet it is near collapse in many ways, and so far the only thing the incumbent government has got right is that there is a need for hard decisions.

I have yet to see or hear of one valid 'hard decision' being offered other than the usual scare-mongering and inducement of heart troubles in the poorest in the land.
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Re: Why Nations Fail
Reply #10 - Mar 15th, 2014 at 12:30pm
 
Culture Warrior wrote on Mar 15th, 2014 at 11:36am:
But I suppose it comes down to definitions of 'fail'. What is a failed society?


These are societies from which large percentages have over the years chosen to abandon their ancestral homelands for the opportunities and the rich rewards that are found in countries whose success has been largely due to the broad and all-encompassing technical expertise and cultural excellence of the British and their cousins in the colonies.

...
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Re: Why Nations Fail
Reply #11 - Mar 15th, 2014 at 12:41pm
 
Richdude wrote on Mar 15th, 2014 at 12:05pm:
Sparky wrote on Mar 15th, 2014 at 11:48am:
A big issue that causes countries to fail is when the elite see the population under them as a statistic . My workplace has just been purchased by Australia Post. First they sacked  the short term casuals, then the made the long term casuals part timers on $590 a week and slashed the wages for the rest. As a result morale is low, blokes chuck sickies and the place is failing. Who wants to work harder for less??? When the elite create such a gulf with the wider population problems occur. Understanding of needs and issues are always misjudged. Just like my Aus Post management and the poor workers. Ancient Rome all over again. Just over money. Money will damage our country.


No the lack of understanding will...
The knowledge of a medium of exchange (money) and how to use and manipulate it has been known since ancient times. It is the most profitable of all business and yet one in a thousand understand this. Don't you find this strange?
No. I believe a lot of people at the top understand nothing but their own pockets and needs. Many inherit their positions. One day those poor  areas in your country like parts of Baltimore and parts of mine are going to grow and grow and the lawlessness might lick at the feet of the 'nice" suburbs. The poor live in   growing areas. It's happening all around the world. The rich should start to understand that maybe their safety is determined by how well they run their systems. They might end up walling off the poor like in John Carpenters Escape From  New York.
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Re: Why Nations Fail
Reply #12 - Mar 15th, 2014 at 1:41pm
 
The style of the book is similar to Jared Diamond - easy to read, using the best or most interesting examples to introduce concepts.

Some more interesting points:

* State centralisation is a prerequisite for wealth. Somalia for example has distributed political power, but this is because there is no central government. The result is chaos.

* Oppressive, or 'extractive' political and economic institutions tend to go hand in hand, and reinforce each other in a sort of positive feedback loop. If there is a mixture of the two, they will tend to sow the seeds of the other's destruction, and the society will eventually drift further in one direction. The extent of oppression is really only limited by the risk that if the entire economy is destroyed, there will be no wealth to extract from it.

* Economic and political inclusion (used to mean the opposite of oppression or extraction) always has losers as well as winners. But it is not just the wealthy elite who push a society down the path of oppression. The "creative destruction" of capitalism leads many to oppose it, for coherent reasons. The book gave the example of the British artisans who opposed the mechanisation of the industrial revolution because it undermined their profession. We see similar behaviour right here, with people complaining in a thread on the general board about the risk of check-out chicks losing their job because of automated or self service check-outs (drones thread). Sparky gave another good example.

Quote:
But I suppose it comes down to definitions of 'fail'. What is a failed society? One with pre-modern customs, or is it one that has wide gulfs in income (as the op seems to insinuate)? Or is it something else?


The book is really about wealth disparity. Failure is less wealth and a poorer standard of living, in relative terms. The poorer states are mostly 'functioning' in the normal sense of the word.

Quote:
Enormous variations in wealth is the process which causes a nation to fail rather than a symptom of it.


Not really. This is mostly a symptom, not a cause. There are successful states with huge wealth discrepancies. There are failures who share the wealth (most communist states). Of course, truly huge variations are unlikely to arise or be sustained in a "good" system, but they will arise where the contribution of a group of people is genuinely significant (eg the modern tech barons).

Quote:
The government will also start to have less control as the corporations and billionaires start to influence all decisions.


This is a genuine risk, though usually vastly overstated, IMO.

Lord Herbert wrote on Mar 15th, 2014 at 12:19pm:
freediver wrote on Mar 15th, 2014 at 7:23am:
In historical terms, it largely attributes these differences to "accidents of history".


Utter nonsense ~ as he would well know.

The author is obviously a disciple of PC politics and a moral coward who simply cannot bring himself to say that the West beat the Rest because it's institutions of governance, industry, and learning were far superior to that of the Third World.


No, he is pretty much saying just that. He is merely pointing out which institutions are actually responsible, and which are the useless cultural baggage. This is not actually a theme of the book, but my interpretation of the explanation for why the situation in the US and Canada differs to much from the rest of the Americas.

If you insist on going off on long rants about how they got it wrong, based on a one-line comment from someone else, you will merely look like you don't know what you are talking about. You would probably like the book, and agree with it.
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Ye Grappler
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Re: Why Nations Fail
Reply #13 - Mar 15th, 2014 at 2:17pm
 
Hmmm - does the author give any idea of a 'timeline' or event schedule that MAY lead to a 'failed nation' status?

Might be interesting... and interesting to look at where Australia stands now.

We need to be very careful - in discussing 'services' etc - many of those 'services simply do not and never did exist in some countries... therefore have no relevance other than a rich Western comparison in any statement of 'failed nation' status.

Ummm - got something somewhere from my Terrorism studies... might still have it...

Ah - here it is.....

http://ffp.statesindex.org/


Umm - Australia is stated as 'sustainable'.. hmmmmm.. higher than the US....

Jah, jah - Sveden und Vinland mit der schtrong Feminsme are zer only vones zat vill surfife der goming gatastrophe.. unlezz zomeone infades zem!

Here is the nub of the matter - for those who can't research a site:-

http://ffp.statesindex.org/methodology
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« Last Edit: Mar 15th, 2014 at 2:24pm by Ye Grappler »  

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Re: Why Nations Fail
Reply #14 - Mar 15th, 2014 at 2:27pm
 
Quote:
Hmmm - does the author give any idea of a 'timeline' or event schedule that MAY lead to a 'failed nation' status?


No. It's not really about the 'status' of failure, and they do not mean failure in the sense you describe. He points to 150 years of stability in relative global wealth distribution. The longest timeline give is 70 years - the time that Russia managed to defy the trend he suggests. Most of the timelines for "evidence" to emerge are much shorter, however it gets worse over the centuries, and there are many examples (eg most of the Americas) that are a hangover from the 1600s. 500 years ago, the global trend was pretty much the opposite of what it is now.

Quote:
Might be interesting... and interesting to look at where Australia stands now.


Close to the top.
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The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man - George Bernard Shaw
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