Friday, April 20, 2012

Do we want to succeed as a nation?

Some time ago, I read the very interesting book by Harvard professor Niall Ferguson about "The West and the Rest". In it, Ferguson identifies 6 so-called killer-apps which accounted for Europe's supremacy over the last 4 centuries. Greek politicians might want to check how many of those 6 killer-apps are in place in Greece.

I am now reading an equally interesting book by Harvard political scientist James A. Robinson and M.I.T. economist Daron Acemoglu titled "Why Nations Fail". Particularly this book would make good reading for Greek politicians as they explain to their compatriots during the election campaign what kind of a society they think Greece should become.

Particulary the latter book could be very useful. The authors argue (paraphrasing the NYT reviewer) that the key differentiator between countries is “institutions.” 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. 

“Inclusive economic institutions, are in turn supported by, and support, inclusive political institutions,” which “distribute political power widely in a pluralistic manner and are able to achieve some amount of political centralization so as to establish law and order, the foundations of secure property rights, and an inclusive market economy.” Conversely, extractive political institutions that concentrate power in the hands of a few reinforce extractive economic institutions to hold power. 

The authors argue that once an extractive political and economic system has been firmly established by the society's elite, it is extremely difficult to change that. The explanation is simple: elites generally don't deprive themselves voluntarily of benefits which they have.

I guess the challenge for Greek voters is how to change an extractive political and economic system into an inclusive one.

No comments:

Post a Comment