State Failure is the Child of Oligarchy
An interesting piece in Democracy Journal by James Kwak:
….Countries differ in their economic success because of their different institutions, the rules influencing how the economy works, and the incentives that motivate people,” write Acemoglu and Robinson. Extractive institutions, whether feudalism in medieval Europe or the use of schoolchildren to harvest cotton in contemporary Uzbekistan, transfer wealth from the masses to elites. In contrast, inclusive institutions—based on property rights, the rule of law, equal provision of public services, and free economic choices—create incentives for citizens to gain skills, make capital investments, and pursue technological innovation, all of which increase productivity and generate wealth. Economic institutions are themselves the products of political processes, which depend on political institutions. These can also be extractive, if they enable an elite to maintain its dominance over society, or inclusive, if many groups have access to the political process. Poverty is not an accident: “[P]oor countries are poor because those who have power make choices that create poverty.” Therefore, Acemoglu and Robinson argue, it is ultimately politics that matters.
The logic of extractive and inclusive institutions explains why growth is not foreordained. Where a cohesive elite can use its political dominance to get rich at the expense of ordinary people, it has no need for markets and free enterprise, which can create political competitors. In addition, because control of the state can be highly lucrative, infighting among contenders for power produces instability and violence. This vicious circle keeps societies poor. In more fortunate countries, pluralistic political institutions prevent any one group from monopolizing resources for itself, while free markets empower a large class of people with an interest in defending the current system against absolutism. This virtuous circle, which first took form in seventeenth-century England, is the secret to economic growth….
Read the rest here.
January 14th, 2013 at 11:18 pm
The democratic facet of our republic is failing—as with most “democracies” around the world, and for the same reasons. Legislators no longer serve the people but themselves and special interests. The government “of The People, by The People and for The People” does not exist anymore. Special interests have hijacked the administration and Congress in the USA so that they are no longer responsive. Candidates promise change but will say (but not do) anything that major constituencies want to hear—in order to be elected—and then revert to “business as usual” once in office. Their acts are often opposite the will of the majority—and even contrary to national interests. Two examples: present election financing regulations are ineffective and campaigns last far too long.
We are governed by a moneyed elite that cares not what “The People” think or what they want. It may be unfair to the few, freshly elected idealists, who come to Washington to serve The People but they soon discover that millions in campaign funds are required to be reelected. They see the example of senators and congressmen who have been there for twenty or thirty years dispensing “pork” and socialist welfare benefits with our tax dollars and debt to keep the “poor folks” at home in a contented, brain-dead mood. The trouble is that this has just created more “poor folks” and the country can no longer afford the largesse—or zombie electors.
You can buy this book now on any of the following websites:
Strategic Book Publishing Rights Agency: http://sbpra.com/HenryMarkant/
Amazon Books: http://www.amazon.com/Coming-Crises-Their-Solutions-ebook/dp/B00A2WZ4CK/ref=sr_1_1?s=books&ie=UTF8&qid=1357573018&sr=1-1&keywords=coming+crisis+henry+markant
Barnes and Noble Books: http://www.barnesandnoble.com/w/coming-crises-and-their-solutions-henry-markant/1113749628?ean=2940015922875