Article: Why nations fail


Nations thrive when they develop “inclusive” political and economic institutions, and they fail when those institutions become “extractive” and concentrate power and opportunity in the hands of only a few.  “Inclusive economic institutions that enforce property rights, create a level playing field, and encourage investments in new technologies and skills are more conducive to economic growth than extractive economic institutions that are structured to extract resources from the many by the few,” they write.
– from Why Nations Fail, a book review by Thomas Friedman

This reminds me of Johan Galtung who studied the fall of empires, predicted the timing of the fall of the Soviet empire 10-15 years before it happened, and is also predicting the fall of the US empire (it’s global power and reach) within perhaps 10-15 years.

The authors focus on China:

“Our analysis,” says Acemoglu, “is that China is experiencing growth under extractive institutions — under the authoritarian grip of the Communist Party, which has been able to monopolize power and mobilize resources at a scale that has allowed for a burst of economic growth starting from a very low base,” but it’s not sustainable because it doesn’t foster the degree of “creative destruction” that is so vital for innovation and higher incomes.

And also mention the US:

And America? Acemoglu worries that our huge growth in economic inequality is undermining the inclusiveness of America’s institutions, too. “The real problem is that economic inequality, when it becomes this large, translates into political inequality.” When one person can write a check to finance your whole campaign, how inclusive will you be as an elected official to listen to competing voices?

Empires fall, nations come and go, and the power and wealth of nations go in cycles. And it’s pretty clear that the US is (a) over reaching globally, especially in it’s military spending and (b) the increasing wealth gap within the US, and the concentration of economic, political and media power in the hands of a few individuals and corporations, creates an increasingly unstable situation. Internationally, the main problems may be (a) the largely unquestioned continuation of an economic system that does not take ecological realities into account, and is not framed within an ecological context, (b) international agreements and policies aimed at profits for multinational corporations at the expense of local economies and ecology, and (c) corporations set up with the sole purpose of maximizing profits.

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