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Fixing Poverty

Daron Acemoglu describes what makes a nation rich in a new article for Esquire. According to Acemoglu, experts who believe geography or the weather or technology are to blame for persistent poverty are missing a much simpler economic explanation: people respond to incentives. “People need incentives to invest and prosper; they need to know that if they work hard, they can make money and actually keep that money,” he writes. “And the key to ensuring those incentives is sound institutions — the rule of law and security and a governing system that offers opportunities to achieve and innovate.” In other words, if you want to fix poverty, you’ll have to fix governments first. [%comments]