Why Nations Fail: Purposeful Inequality

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Once again, let's give huge hosannas to Up with Chris Hayes for having a conversation you won't see on the corporate media (suck it, David Gregory) and for having enough respect for both the subject and the audience to not try to give it a cursory "both sides" treatment for six minutes before moving onto another topic.

Daron Acemoglu and James Robinson set out to document the commonalities of struggling nations and hit on a single point with encompasses much of what we see as unrest in the rest of the world and the origins of the uprisings of the labor unions and Occupy protests here: the willful promotion of economic inequality by a small number of economic elites.

Acemoglu and Robinson’s answer is straightforward – it all depends on institutions. Successful nations have good institutions that are “inclusive” and “pluralistic” and create incentives for people to work hard and invest in the future. Unsuccessful states, on the other hand, are characterized by “extractive” or “absolutist” institutions that economically and politically benefit a small group of elites at the expense of everyone else.

I think this quote that Chris Hayes cites from the book is the money quote:

Poor countries are poor because those who have power make choices that create poverty. They get it wrong not by mistake or ignorance but on purpose.

While Acemoglu and Robinson focused on the developing world, there are clear parallels to the United States. While simultaneously being the wealthiest nation in the world, the US also bears ownership to the fact that one in three Americans lives at or near the poverty level, one in four children suffer from food insecurity and homelessness rates rising in major population centers. Clearly, that wealth is not trickling down, no matter what Milton Friedman theorized.

We see it in the nations trying "austerity" measures, which by and large burden the lower economic ranks significantly by cutting services to them with little to no sacrifice from those at the top of the economic ladder. Like the mitas in Peru, these are systems set up by elites to benefit them and with no protections to the workers. And they become institutionalized, used by whichever party is in power.

And that is once again (my pet meme) where our media fails us (Chris Hayes excepted, naturally). Because this growing inequality is NEVER discussed. These systems that hurt the economically impoverished are still discussed as potential solutions, even though we have historical evidence that they don't work. And never, ever are historical parellels, precedents or successes brought up. Bob Schieffer isn't going to bring up the New Deal works that got Americans working again, instead of tax cuts for the robber barons. David Gregory won't ask Republican strategists about how the Glass Steagall Act protected Americans' savings accounts for decades. There's no way Chris Wallace would point out that lowering the Medicare age eligibility could actually be a way to increase employment and dramatically stimulate the economy.

Happily for us, Acemoglu feels more optimistic about our outlook. We've pulled ourselves out of one great depression, and we can do it again. But it's going to take an uprising within the system to do so.


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