cross-posted from: https://feddit.org/post/4157628
cross-posted from: https://feddit.org/post/4157529
James Robinson, along with Daron Acemoglu and Simon Johnson, has been awarded this year’s Nobel Prize in Economics for his research on the critical role institutions play in fostering national prosperity. In [this Q&A session]l with EL PAÍS, he explains that his work also seeks to highlight how the legacy of colonialism has impeded economic development in certain regions, particularly in Latin America and Africa.
James Robinson: […] we make a simple division, focusing on the presence of inclusive institutions or extractive institutions. Inclusive institutions create broad incentives and opportunities for all people equally, while extractive institutions concentrate benefits and incentives in the hands of a few. Many economists say that development comes from entrepreneurship and innovation, but in reality it comes from people’s dreams, creativity and aspirations. To be prosperous, you have to create a series of institutions that can cultivate this talent. However, if you look at countries like Colombia or Nigeria, talent is wasted because people do not have opportunities.
[…]
Institutions can be an obstacle to competitiveness. However, one should consider the impact that European integration had on countries such as Spain, Portugal or the former Soviet countries. These are remarkable success stories. There has been an almost unprecedented transition. It is true that there may be too much regulation or inefficient rules, but broadly speaking the effects of European institutions has been largely positive over the past 50 years.
[…]
[Immigration] is one of the big questions we have to solve. […] it can be difficult. It is not easy to quickly incorporate the millions of people who cross the Mediterranean [trying to reach Europe]. One of the possible ways is to help them develop in order to improve the terrible situation in their own countries. However, one of the biggest complications is that the policies recommended by Western institutions are not in tune with what is happening in these [developing] countries. At the World Bank, for example, you cannot talk about politics. How do we expect them to solve real problems when you cannot talk about them? Frankly, it doesn’t make sense. If we really want to change the world, we have to have honest conversations. I see that as a long way off.
[…]
The reality is that democratic countries have shown that they are better at managing public services and achieving rapid growth. You can find impressive examples like China among autocratic countries, but you cannot achieve an inclusive economy with an authoritarian regime and a model like the Chinese one.
[…]
I don’t think the Chinese model can continue. If you look at other authoritarian regimes, like Iran or Russia, they are incredibly weak economically and technologically. The economy cannot flourish in an authoritarian regime. Right now, technological dynamism is concentrated in one such country and in the Western world. However, one has to consider that, with Donald Trump, the institutions that have made the United States great are being seriously questioned. This could affect the context, and that is why the European Union and NATO are so important.
[…]
[Populism is linked to the growing disconnect between governments and citizens] and an example of this is Latin America. Democracy promised too much and did not always deliver. People’s lives did not change, and they sought new alternatives. There are various factors why democracy has not achieved transformations, such as clientelism and corruption. […] Venezuela was governed in a deeply corrupt manner, and Hugo Chávez was clever in taking advantage of it. You also see this with Donald Trump, who has gone far because he realized there was widespread dissatisfaction with traditional politics. The failures of democratic institutions are real, and that is why we have to think about how to make them more empathetic to what people need.
[…]
Artificial intelligence can be wonderful, but like all technologies, it depends on how it is used. If artificial intelligence is used to create replacements for humans, that could be devastating. […] It is all about how it is used, and that depends on our governments. I think that these decisions should not be left to the tech gurus. They only think about what makes them the most money, even if this is not related to the general well-being of society. In the case of artificial intelligence, it is very important, because it could have a tectonic impact on the world.
Who believes that authoritarian regimes care about inclusivity?
What democracy? Is he talking about the oligarchy that rules the US?
I would really love to have a conversation about how the Nazis had a great economy, capable of going from rebuilding from WWI to starting WWII in 20 years.
I feel like worshipping the economy, and having it be the sole measure of society, inevitably leads us to the far-right. China is not going to magically crumble, and economic prosperity is achievable without societal progress.
We need to have societal progress as the goal, not some magic by-product of line go up.
I would really love to have a conversation about how the Nazis had a great economy, capable of going from rebuilding from WWI to starting WWII in 20 years.
I mean more than two thirds of those 20 years were the Weimar republic, so if anything the credit goes to Weimar Germany here. The only contributions Nazis made to the economy were plundering Eastern European and Jewish wealth.
Germany didn’t build up middle class as much, more the lower class (that was saved from starvation), the added a lot to national wealth & common everyday lives via accessible public infrastructure (all of it basically, not just the roads & railroads).
And China is curbing it’s economical growth, and societal changes are happening, the first gens with mandatory education are now retired already.
I can’t really say how much and what directions it’s taking them, but no-one can prob - time will tell.
In a piece published in November 2022, Nobel Economist Daron Acemoglu argues that China’s economy is rotting from the head.
For a while, [China’s leader] Xi, his entourage, and even many outside experts believed that the economy could still flourish under conditions of tightening central control, censorship, indoctrination, and repression [after Xi secured an unprecedented third term (with no future term limits in sight), and stacked the all-powerful Politburo Standing Committee with loyal supporters]. Again, many looked to AI as an unprecedentedly powerful tool for monitoring and controlling society.
Yet there is mounting evidence to suggest that Xi and advisers misread the situation, and that China is poised to pay a hefty economic price for the regime’s intensifying control. Following sweeping regulatory crackdowns on Alibaba, Tencent, and others in 2021, Chinese companies are increasingly focused on remaining in the political authorities’ good graces, rather than on innovating.
The inefficiencies and other problems created by the politically motivated allocation of credit are also piling up, and state-led innovation is starting to reach its limits. Despite a large increase in government support since 2013, the quality of Chinese academic research is improving only slowly.
[…] The top-down control in Chinese academia is distorting the direction of research, too. Many faculty members are choosing their research areas to curry favor with heads of departments or deans, who have considerable power over their careers. As they shift their priorities, the evidence suggests that the overall quality of research is suffering.
Xi’s tightening grip over science and the economy means that these problems will intensify. And as is true in all autocracies, no independent experts or domestic media will speak up about the train wreck he has set in motion […]
But not too democratic because then the economy suffers amirite? Like, in the democracies, the poors must always be kept on a leash otherwise they might start getting ideas, right? RIGHT?
See Hong Kong circa 2019
☂️<-pretend it’s yellow
He’s right, but it can take a long time and people will suffer in the mean time. Would be nice to skip ahead.
that’s just rehashed fukuyama
Agreed. The economy and well-being of countries definitely suffer from authoritarian regimes in the long term, but…
What about their armies?
Libs: There is no way to avoid genocide. You must vote for genocide!
Also Libs (accepting “nobel prize in econ”): Enjoy your democracy!
Income equality is just one of many other factors to assess a just society as we know. But as many focus on China’s GDP growth in its recent history, here are just numbers:
Between 2014 and 2022, in China the share of the bottom-50% income group (pre-tax) in the national income fell from 14.4% to 13.7%. In the same period, the shares of the top-1% and top-10% income groups rose from 13.7% and 41.5% to 15.7% to 43.4%, respectively. In a nutshell: the Chinese rich got richer, the poor got poorer.
For Western-style democracies countries, the numbers are diverse:
In European democracies like Germany and especially Norway, top income groups lost while the bottom-50% gained, while in countries like Finland all three mentioned groups gained, suggesting that the ‘middle class’ paid the bill. In other countries like Sweden, Denmark, and the U.S., the numbers show gains for the top at the cost of the bottom half.
And in Australia, top income groups lost significantly more than the bottom-50% gained, suggesting the middle class benefited, while in countries like Canada and Japan there appear to be only slight or even no significant changes in the period between 2014-2022.
But as I said, we must also focus on other factors that makes a good society (the four freedoms come to my mind: freedom of speech and expression, freedom of worship, freedom from want, freedom from fear). Given the numbers and the fact that some in this thread cite China’s GDP and national wealth as a factor of societal success, it is clear that this argument does not hold, though.
A lot of people who have never actually been to China don’t understand just how poor the rural areas actually are. Chins has invested a ton in major urban infrastructure but has largely let the countryside languish. The worst part is that you are born with something called hukou which makes it very difficult to establish permanent residence in these new cities, reinforcing what is effectively a regional caste system.
They also haven’t seen the shantytowns on the outskirts of the cities.
I absolutely agree with that.
Alfred Nobel never created a Nobel Prize for Economics.
Instead what there is is the Swedish Central Bank Prize For Economics In Honor Of Alfred Nobel, which is not a Nobel Prize but they convinced the Nobel Committee (using a lot of $$$) to treat it as one.
Now, I don’t know if this guy is right or if he is wrong, but trying the whole Appeal To Authority thing using a “Nobel Prize” which is no such thing to throw some generic criticism on other Political models has a strong whiff of Propaganda.
PS: Also his arguments are very much cherry picking. For example I’m Portuguese and calling European Integration a “remarkable success story” for Portugal is hilarious - the actual reality was that Portugal grew massively when it kicked out Fascism (and the country was very Leftwing back then, so for example invested massively in Education and created a National Healthcare System) accelerated a bit when it joined the EU (because the money the EU sent to help with integration of what was then one of the poorest countries in the EU added up to a significant fraction of the GDP), then braked hard when the EURO came to be, culminating in the aftermath of the 2008 Crash with the country’s Economy significantly shrinking and the Troika coming over and forcing Austerity (which later even Cristine Lagarde admited was “the wrong thing to do”) and forced Privatization of actual profit-making state companies creating veritable anchors around the neck of the Economy in the country (for example, Telecoms are compared to average incomes very expensive in Portugal, a “rent” borne by the rest of the Economy which pulls down for example small businesses and kills business opportunities that rely on widespread digital access). Looking back all the best things that were done for Portugal were very much Leftwing such as investment in quality Public Education, a National Health Service and large programs of public housing (which were stopped decades ago, so now we have a giant house price bubble).
It wasn’t Capitalism that pulled Portugal out of the shitter, it was kicking out the Fascists and basically Social Democracy (and I don’t mean in the Portuguese Social Democrat Party, who are hard right with have nothing at all to do with the actual ideology in the name of the party), topped up with charity from the EU (in a way good while it lasted but then again went into all the wrong things, so the country has disgracefully bad rail-service everywhere but the North-South between the two main cities but lots and lots of underused highways built with that money).
Now, I get the appeal to authority, and the arguments against it. Obviously they wanted the cachet of the Nobel name for their economics prize, but economists often worry about the wrong thing. Yes, stagnant capital is bad for the economy, and a stagnant economy is bad for society, but having a vibrant economy doesn’t necessarily mean society is benefiting. Most economists don’t worry too much about that, and many businesses don’t, either. And that’s where the problems come in.
While companies are going about making profits, they rarely worry about the world or society they operate in. This is why they will happily pollute the planet, underpay their employees, or produce goods and services that maximize profits rather than better suit their customers’, and society’s, needs. Hence, fossil fuel companies desperately hanging onto their current profit model while storms rage and cities flood, or light bulbs being made to burn out (or, in the case of LEDs, just a certain component so they can be easily ‘recycled’). And this is where society needs to have strong government to step in and curb the ravenous hunger of capitalism and direct that energy in ways that help society.
So, for good or ill, more housing needs to be built, even if that means housing prices are stagnant or even drop. Food has to be affordable, or people with less income need to be supported so they aren’t starving. People need to be educated well, so they don’t make imprudent choices and have better opportunities in life. Healthcare needs to be accessible, so society is happier, healthier, and can also further drive that economy.
Keep capitalism for what it is good for (or find a way to replace it with something better, preferably without burning civilization down), which is finding innovative ways to get things done, and looking for new and interesting things to make society better. And use government to set limits and direction, such as incentivizing needed housing that isn’t profitable.
There’s a lot in there I agree with and a lot I find unconvincing, but the thing that really jumped out to me was this line:
Elites seek to concentrate profits. In our book Why Nations Fail, we compare Bill Gates and Carlos Slim. In the book, we point out that while Gates made his fortune through innovation, Slim did so by forming a telecommunications monopoly thanks to his close relationship with the government. It is an example of the link between monopolies and clientelism that has been seen throughout history in Latin America since colonial times.
I’m sorry, what? Does he not remember Microsoft losing perhaps the most famous successful American antitrust case of the last fifty years?
I don’t think this guy is dumb, but I don’t know how to fully take him seriously when he says something like this in passing.
I think perhaps you are misunderstanding what is being stated here. Billionaires everywhere are the same—they will maximum their wealth whether it helps or hurts others. The difference is that the US, with its stronger democratic elements, is much more likely to reign that power in than Mexico is. And that’s exactly what happened. In Mexico there never would have been an anti-trust case against Microsoft, or it would have been killed in the early stages.
That doesn’t sound at all like the point he was making, but I haven’t read the book so I’ll withhold further opinions.
Yes, I too find that irritating. Maybe what he means is that Microsoft was innovative in the very beginning of the company’s history, before PCs were part of everyone’s household. But Gates’ Microsoft soon started to pursue a very monopolistic policy. And it has been doing so to this day. (I can’t compare that to Carlos Slim’s conglomerate, though, due to a lack of knowledge about that.)
what‘s this inclusive economy he‘s talking about?
Oh boy, ml is going to be real mad about this one. 🫳🍿
Why would anyone be mad at an unsourced opinion piece from a person that got a feels prize in a non scientific category?
Yes, the person that dedicated their life to simping for capitalism to massively enrich themselves is going to say anything but their ideal version of capitalism will fail.
