Adventures in Economics: Why Nations Fail by Daron Acemoglu and James Robinson

One of the many giveaways I received at this year’s BEA was a complimentary copy of the New York Review of Books which featured a review by Jared Diamond of Daron Acemoglu and James Robinson’s Why Nations Fail: The Origins of Power, Prosperity, and Poverty. Published in 2012, it’s the latest in a line of what I call “big picture” kind of books: attempts by historians, economists, scientists and the like to explain why the world is the way it is. More specifically, by interpreting history and/or taking a particular scientific approach the authors of such books as Guns, Germs and Steel, Carnage and Culture and God and Gold have tried to answer the often-asked question:why are some nations rich while some are poor? Therefore, taking all of that into account, I found it very hard to resist grabbing a copy of Why Nations Fail when I stumbled upon it during one of my weekend library visits.

By examining thousands of years of human history, Acemoglu and Robinson have concluded the that most prosperous nations are those able to produce institutions  leading to societies that allow and promote widespread economic participation, rewards for innovation and government accountability. To be successful, it’s vital that nations possess the right degree and quality of governance. Too much (North Korea) or too little (Somalia) or too corrupt (any number of developing nations)  and conditions will not be conducive for widespread and enduring economic success. If such a happy medium isn’t found then what success is achieved is usually just temporary (at one time Argentina was one of the wealthiest countries on earth, alas more) or wealth is concentrated in the coffers of a small group of elites, most frequently in cahoots with the state. The result is not just poverty and severe wealth inequity but also political instability and even civil war.

This is an impressive book both in depth and scope. While anyone attempting to explain why some nations are rich while some are poor will have his or her critics, I thought the book’s two authors did a fine job explaining their positions and supporting their arguments. Plus, I found it readable and engaging. This is arguably one of the best books I’ve read this year. Therefore, I highly recommend it.