Wondering Why Nations Fail? Bring Your Questions for Daron Acemoglu and James Robinson

When it comes to economic ideas, Daron Acemoglu never thinks small. Widely acknowledged as one of the most insightful economists alive, Daron seems to have brilliant things to say about any and all things economic.

When you have that sort of gift, you might as well go after the biggest problems imaginable.  Thus his latest book, Why Nations Fail, written with Harvard political scientist James Robinson.

It is an awesome piece of work.  So full of ideas and wisdom, but still so easy to read.  I just love it.  Daron and Jim have agreed to take your questions about their new book, so please leave them in the comments section below.  To get you started, here’s the table of contents:

Preface: Why Egyptians filled Tahrir Square to bring down Hosni Mubarak and what it means for our understanding of the causes of prosperity and poverty

1. So Close and Yet So Different: Nogales, Arizona, and Nogales, Sonora, have the same people, culture, and geography. Why is one rich and one poor?

2. Theories That Don’t Work: Poor countries are poor not because of their geographies or cultures, or because their leaders do not know which policies will enrich their citizens

3. The Making of Prosperity and Poverty: How prosperity and poverty are determined by the incentives created by institutions, and how politics determines what institutions a nation has

4. Small Differences and Critical Junctures: The Weight of History: How institutions change through political conflict and how the past shapes the present

5. “I’ve Seen the Future, and It Works”: Growth Under Extractive Institutions: What Stalin, King Shyaam, the Neolithic Revolution, and the Maya city-states all had in common and how this explains why China’s current economic growth cannot last

6. Drifting Apart: How institutions evolve over time, often slowly drifting apart

7. The Turning Point: How a political revolution in 1688 changed institutions in England and led to the Industrial Revolution

8. Not on Our Turf: Barriers to Development: Why the politically powerful in many nations opposed the Industrial Revolution

9. Reversing Development: How European colonialism impoverished large parts of the world

10. The Diffusion of Prosperity: How some parts of the world took different paths to prosperity from that of Britain

11. The Virtuous Circle: How institutions that encourage prosperity create positive feedback loops that prevent the efforts by elites to undermine them

12. The Vicious Circle: How institutions that create poverty generate negative feedback loops and endure

13. Why Nations Fail Today: Institutions, institutions, institutions

14. Breaking the Mold: How a few countries changed their economic trajectory by changing their institutions

15. Understanding Prosperity and Poverty: How the world could have been different and how understanding this can explain why most attempts to combat poverty have failed 

Daron Acemoglu is the Killian Professor of Economics at MIT and a 2005 John Bates Clark medalist.  James A. Robinson is the David Florence Professor of Government at Harvard University.

This post is no longer accepting comments. The answers to the Q&A can be found here.

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  1. Benjamin says:

    This book looks very interesting, in particular chapters 3, 11, 12, 14, and 15.

    What are the thoughts on similarities between the politically powerful opposing the industrial revolution and technology revolutions today? People are always afraid to lose what they have. How can we create an environment without fear?

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  2. Colin says:

    In chapter 11 you cite government “trust busting” as an example of responsible behavior by government institutions meant to bring order to markets. However, while castigating the “robber barons” you never really explain what they did that was so bad. To the extent that any explanation is provided, it is that the robber barons established monopolies, which *implies* higher prices for consumers, but actual evidence of this occurring is presented. In contrast, in The Rational Optimist, author Matt Ridley notes the following:

    Rail freight charges fell by 90 percent between 1870 and 1900. There is little doubt that [Cornelius] Vanderbilt sometime bribed and bulled his way to success, and that he sometimes paid his workers lower than others — I am not trying to make him into a saint — but there is also no doubt that along the way he delivered to consumers an enormous benefit that would otherwise have eluded them — affordable transport. Likewise, Andrew Carnegie, while enormously enriching himself, cut the price of a steel rail by 75 percent in the same period; John D. Rockefeller cut the price of oil by 80 percent. During those thirty years, the per capita GDP of Americans rose by 66 percent. They were enricher barons too.

    So actually, the actions undertaken by Roosevelt to disrupt the robber barons seems to be best understood as needless government meddling rather than part of some virtuous cycle. What is your response?

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    • Colin says:

      *sigh* — should read “isn’t presented”

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    • kaltes says:

      To defend the authors: just because prices fell and wealth rose as a monopoly gained its stranglehold, does not mean monopolies are good. The argument would be that prices would have been even lower, had the monopoly not subverted the free market in order to charge above-market rates and enrich itself at the expense of the rest of the economy. Just because a monopoly is tolerated, does not mean it is better than competition.

      If you were infected with a parasite at the age of 12, and it drank your blood until age 18, would you credit the parasite with your adolescent growth, or would you feel that, in spite of the parasite, your body was resilient enough to thrive? It is well known that monopolies are bad, because they subvert free market competition. The extent of the damage a given monopoly can do varies greatly.

      US Steel peaked at 67% and typically, monopolies keep prices artificially LOW to strangle competition, only really harming the economy when they have sufficient dominance to safely raise prices well above market levels without having to worry about new market entry cutting their market share.

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  3. Colin says:

    Early in the book you dismiss culture as an explanation for economic success or failure, noting that while countries such as the US, Canada, Australia and New Zealand were all colonized by the British and are economically successful that Sierra Leone was similarly colonized and is a failure. But given that Sierra Leone was largely population by natives rather than British expats — in stark contrast to the other countries mentioned — can it really be presented as an example of British culture? If Sierra Leone were — like Canada, Australia and New Zealand — populated by British ex-pats rather than natives, does it not stand to reason that its economic history would be far different (and that its political institutions would have been far more successful)?

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    • Enter your name... says:

      Actually, I thought that difference was fundamentally the answer: British colonizers behaved differently in Sierra Leone because it was majority-African rather than majority-European. Consequently, they made different choices about (to name perhaps the most important example) property rights in Sierra Leone than they did in the US, AU, and NZ.

      What I’d like to know is why the authors do not consider the attitude towards property rights to be a part of culture.

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  4. MrAtoZ says:

    How crucial to success/failure is the fact that many “nations” in the developing world are actually artificial constructs, i.e. legacies of colonial-era maps that papered over tribal/ethnic boundaries .

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  5. JCB says:

    Daron, how do you pronounce your last name? Is it the Turkish way /ad?emo:’lu/ (ah-jem-OH-loo) or an Americanized way /æ’semo:glu/ (A-sem-oag-loo)? Or more importantly, when discussing your work in English, how would you prefer us to pronounce your name? When I first read your stuff, I had just moved to New York from Istanbul so I naturally pronounced it the Turkish way and no one had any idea who I was talking about.

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  6. JCB says:

    While it is easy to imagine policies that change or develop formal institutions, how does one go about changing informal institutions? Is it best to do indirectly? To what degree should states even involve themselves in trying to change informal institutions?

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  7. Caleb b says:

    If culture isn’t the reason for poverty on a national level, is it (can it be) at a local level? I look at Chinese and Vietnamese immigrants and I do not see multigenerational poverty, but I do in black communities. If not culture, then why?

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  8. Serge d'Agostino says:

    Short question but surely long answer but maybe can you summarize?
    what would be your institutionalist explanation of the current euro mess?

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