A must holiday reading for leaders and candidates
“Why Nations Fail” is a hefty book of more than 500 pages and is heavy to carry around. But what it says is simple enough to be summarized in a few sentences.
Countries that prosper, generally, have “inclusive” economic institutions, meaning, they “enforce property rights, create a level playing field, and encourage investments in new technologies and skills.” These go in tandem with “inclusive” political institutions—those that “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 opposite of these institutions are of the “extractive” type, those that “extract resources from the many by the few,” where power is concentrated in the hands of a few “who will then have incentives to maintain and develop extractive economic institutions for their benefit and use the resources they obtain to cement their hold on political power.” Countries which host these types of institutions are the kind that slide into poverty and remain there.
Even if two countries have similar colonial backgrounds, geography, or culture—even if they happen to be neighbors—one can end up rich and the other poor because of the nature of the institutions they nurture. The book gives various colorful and detailed examples, from history to contemporary times, to make its case.
For a book by two academics, it’s surprisingly written in popular prose. I understand that the authors—Daron Acemoglu, an economics professor at the Massachusetts Institute of Technology, and James Robinson, a political scientist and economist at Harvard University—worked with editors who thought of the general public in mind and kept jargon and complicated, dense charts out of the book. Thank God!
PH case: the hard part
The easy part is reading the book. The hard part is kick-starting “inclusive” development in our country.
“Why Nations Fail,” unfortunately, doesn’t include the Philippines. It covers Latin America, Africa, and South Asia which are eons apart—in terms of incomes and standards of living—from Britain, Germany and the United States. This book doesn’t give customized solutions that apply to us alone.
What our leaders, policy-makers, and political party heads can do is pick up lessons from other countries. There is no single recipe for success.
But Brazil, in my mind, stands out as an example close to our experiences. How someone from the labor movement, Lula da Silva, ended up as president is a stunning story in itself but even more stunning is the political transformation of Brazil and its impact on the country’s economic growth. Brazil has risen to be one of the BRIC nations (Brazil, Russia, India and China), “the first Latin American country actually to have weight in international diplomatic circles.”
The key here is a broad-based coalition—“diverse groups of people courageously building inclusive institutions”—that “fused with local social movements all over the country, as the Workers’ Party took over local governments.” This caused a revolution in local governance throughout Brazil.
Can we imagine this happening in our country? Can someone from the workers’ ranks (Lula), or from one of the legitimate and authentic party-list groups become president of the Philippines? Can a non-elite, someone not belonging to an entrenched political family, ever lead us? Can a grassroots organizer (like Barack Obama) make it in our political system?
The book points out that not all reform movements succeed. A number were co-opted by the oligarchy or simply donned the oligarchy’s habits and “replaced one set of extractive institutions with even more pernicious ones.” New vested interests replaced old ones.
Looking at our own past, we felt the stirrings of a level playing field during the time of President Fidel Ramos. It was his mantra then and we saw it play out as the telecoms monopoly was dismantled. This remains an unfinished task.
The telecoms business has practically morphed into a duopoly. Big businesses like ports, inter-island shipping have yet to be taken away from the grip of a few. In Congress, an anti-trust bill languishes.
The book also mentions the importance of independent media and the “transformative role” it can play in empowering society. There is a need for “widespread information about whether there are economic and political abuses by those in power.”
I asked the book’s co-author, Robinson, who was in town recently, courtesy of the World Bank, about how media can become independent in a country such as ours when members of the oligarchy own big TV and radio networks as well as newspapers.
He quickly answered: use the Internet. “Nobody owns the Internet,” he said, pointing to the potential of the social media.
That’s one part of the solution. In the Philippine context, the other part is to make the public understand the importance of independent media, that that’s the way to serve the larger good.
Happy reading! - Rappler.com