Why Nations Fail: The Origins of Power, Prosperity, and Poverty by Daron Acemoğlu
My rating: 5 of 5 stars

Despite the hutzpah of a title like WHY NATIONS FAIL, there's nothing in the text itself that I found disagreeable, and I've read a lot of different economic and political theories of wealth over the years.

Of course, there have been a lot of armchair historians and armchair economists and armchair politicians, so who knows if 20/20 vision is really accurate? They could all be riffing on one fundamental theory or another and making a messy conclusion. Right?

The beauty of this one is pretty simple in effect if not in the supporting particulars. Tons of examples are given from all kinds of nations and economic policies and politics all throughout history and including a very refreshing survey of modern nations. They first break down the prevailing bad theories that revolve around geography, culture, bad luck, or even the big modern one we see all the time: Ignorance. *laugh* You know, the one that says, "If only you had our experts, you too can have all the wealth we have."

The fundamental difference in this book, fascinatingly so, can be summed up quite easily. And it's kinda obvious, too.

Extractor policies and inclusive policies.

You can translate that into government/economic policies that loot in order to grow or those that give a share of all the profits and incentives to all the people working in the system. Vicious cycles and Happy cycles.

Dictators that keep on taking can keep it up for a long time and even if there are revolutions, the revolutions keep putting the same damn policy in place. Any kind of authoritarian government can work to that same tune. Short term growth, sharp declines.

The politics and the economics of it are perfectly entwined. You can't have one without the other.

On the other hand, there's the other side. If everyone, not just the elite, has a stake in the game, then everyone works harder and with more intelligence to accomplish whatever they have to accomplish.

Use guns, coercion, theft. Or use honest cooperation.

It's pretty obvious that BOTH can be a basis for any nation. As can a wide, wide continuum mixing both elements in any. And that's also the point. Any nation can succeed or fail. No nation is exempt.

But it still requires a rather huge change of heart and it must be truly enacted in both the economics side and the political side. One without the other will perpetuate the same looting cycle.


For fans of other authors and big theories that nail this same idea, look to Ayn Rand's Atlas Shrugged. Or Game Theory.

You will have all types of individuals either working toward a collaborative whole or those who will short the whole damn thing down. The institutions with enough checks and balances DO seem to edge toward the more prosperous equations. Those who dismantle those checks and balances or work together to loot other subsets will take from the total potential benefits of wealth until it is all used up.

It's quite complicated in practice, of course, but for a cohesive underlying theory, it works a lot better than saying Communism! or Capitalism! or Socialism!

All those can be filled with thieves or genuinely cooperative individuals. The difference is in the institutions and economic models that might favor the thieves or the genuinely cooperative.


The real joy of reading this book is the myriads of examples. :)

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