Sunday, March 25, 2012

why nations fail: book review in wsj. reason: 'extractive' institutions prevail over 'inclusive' ones. [therefore india is doomed]

http://online.wsj.com/article/SB10001424052702304724404577293714016708378.html

Far too much intellectual firepower regarding the global poor these days focuses on the (small) things Westerners can do to help—obsessing about, say, how much money to spend on mosquito-blocking bed nets to fight malaria. The bigger questions—about why some societies prosper and others don't, about how to improve the lot of an entire impoverished class—are left by default largely to uncritical admirers of China's growth. The arrival of "Why Nations Fail" is thus a hugely welcome event, since economists Daron Acemoglu and James A. Robinson take on the big questions and in doing so present a substantial alternative to the dominant thinking about global poverty.

For Messrs. Acemoglu and Robinson, it is institutions that determine the fate of nations. Success comes, the authors say, when political and economic institutions are "inclusive" and pluralistic, creating incentives for everyone to invest in the future. Nations fail when institutions are "extractive," protecting the political and economic power of only a small elite that takes income from everyone else.

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sound familiar?

pick an institution in india. pick any. they are *all* extractive.

the most extractive is a certain family's business. it is probably better to not explicitly name it, but we all know what it is (and no, i am not talking about reliance).

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also relevant in this context is jared diamond's book 'collapse'. here's something from wikipedia. once again india fits the bill for a collapsing, failing nation.

Diamond identifies five factors that contribute to collapse: climate change, hostile neighbors, collapse of essential trading partners, environmental problems, and failure to adapt to environmental issues.

He also lists 12 environmental problems facing mankind today. The first eight have historically contributed to the collapse of past societies:

  1. Deforestation and habitat destruction
  2. Soil problems (erosion, salinization, and soil fertility losses)
  3. Water management problems
  4. Overhunting
  5. Overfishing
  6. Effects of introduced species on native species
  7. Overpopulation
  8. Increased per-capita impact of people

Further, he says four new factors may contribute to the weakening and collapse of present and future societies:

  1. Anthropogenic climate change
  2. Buildup of toxins in the environment
  3. Energy shortages
  4. Full human utilization of the Earth’s photosynthetic capacity

Diamond also writes about cultural factors, such as the apparent reluctance of the Greenland Norse to eat fish.

Diamond says Easter Island provides the best historical example of a societal collapse in isolation

The root problem in all but one of Diamond's factors leading to collapse is overpopulation relative to the practicable (as opposed to the ideal theoretical) carrying capacity of the environment. The one factor not related to overpopulation is the harmful effect of accidentally or intentionally introducing nonnative species to a region.

Diamond also states that "it would be absurd to claim that environmental damage must be a major factor in all collapses: the collapse of the Soviet Union is a modern counter-example, and the destruction of Carthage by Rome in 146 BC is an ancient one. It's obviously true that military or economic factors alone may suffice" (p. 15).

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