Book: 20230401 to 20230709, "Why Nations Fail" by Robinson, James A.,Acemoglu, Daron

20230401 -Preface

Why Egyptians filled Tahrir Square to bring down Hosni Mubarak and what it means for our understanding of the causes of prosperity and poverty

Maybe "game theory" is the key. If value is distributed fairly, everyone want to work hard to get more value. If value is captured by a small percentage of people, everyone choose to sacrifice other people t obtain more for themselves, which leads to zero total value growth.

20230403 -So close and yet so different

Nogales, Arizona, and Nogales, Sonora, have the same people, culture, and geography. Why is one rich and one poor?

Why diversity is so important to natural evolution? It makes game theory millions of times more complicated, then be much more stable.

How to make a country prosperous? At the moment, I believe there are three steps.

1. Express freedom;

2. Checks and balances of power;

3. Voting rights;

The step three is the foundation of the first two steps, but it only has indirect effects on the society.

Step one turns ignorant masses into citizens.

Step two is mainly designed for elites. It forces elites to work for people, instead of grabbing benefit for themselves.

In totalitarian society, people are against the dictator.

In fascist society, people support the dictator.

20230421 -Theories that don't work

poor countries are poor not because of their geographies or cultures, or because their leaders do not know which policies will enrich their citizens

Geographic, culture or ignorance hypothesis?

Earlier than 1500, I believe it's mainly about geographic factors. Nowadays, MEME.

There are always many important factors, but MEME leads to different culture and economical policies, which leads to different result.

What caused the difference in MEME? That's what I am going to learn in the rest of this book.

20230424 -The making of prosperity and poverty

how prosperity and poverty are determined by the incentives created by institutions, and how politics determines what institutions a nation has

Political institution vs economic institution. Inclusive vs extractive.

Political institution decides economic institution.

Extractive political institution can create and maintain inclusive economic institutions, for short period period of time (less than 50 years).

There are four stages of civilization: a scattered plate, a cake grab, theft of knowledge, and creation of knowledge.

1. the widespread belief that wealth is in someone else's pocket, waiting to be taken. (A scattered plate. For example, the Somali Congo)

2. the widespread belief that wealth is a "cake" from God (e.g. oil) and the more you share, the better your life will be. (Believe in the law of the jungle, zero-sum game)

3. the widespread belief that wealth comes from study and labour. (The book itself is a golden house. The book itself is a gift from God, stealing books is not stealing)

4. the general belief that wealth comes from innovation and institutions. (Respect for intellectual property and the supremacy of law)

20230504 -Small differences and critical junctures: the weight of history

how institutions change through political conflict and how the past shapes the present

I believe, 700 years ago, it's decided by geography. Geography decides culture, such as whether rely on farm land or trading.

800 years ago, which countries were the poorest and richest in the world?

The poorest were Australia and Iceland. The inhabitants lived primitive tribal lives, relying on hunting and gathering.

Next were Africa, New Zealand, North America, and others. They had agriculture but lacked efficient political organizations.

Third were Northern Europe, Western Europe, Central Europe, Eastern Europe, South America, Southeast Asia, India, and others. They had agriculture and efficient political organizations, but each country (empire) had limited scale and population.

The richest were China and the Middle East.

In the past 500 years, economy is decided by political institution, which is decided by geography and contingency.

20230507 -"I've seen the future, and it works"

growth under extractive institutions: what Stalin, King Shyaam, the Neolithic Revolution, and the Maya city-states all had in common and how this explains why China's current economic growth cannot last

Extractive institution are motivated to push other people to work more productively, and they can reallocate resource from one sector to another. That help a bit with improving the living standard of people.

However, normal people don't have incentives to work hard, as the extra profit are taken away by elite group.

Elite group always face conflicts as everyone want to replace them or the elites want to get more.

In general, no one care much about long term benefit, which paused the innovation progress.

20230518 -Drifting apart

how institutions evolve over time, often slowly drifting apart

There was no democracy in ancient Rome. It's Republic country, but normal people don't share political rights.

Ancient Rome heavily relied on Mediterranean for communication and transportation. That's the reason that the same situation cannot be reproduced anywhere else.

Is it possible for modern western countries to get the same fate? As long as free expression is still available, I don't think we need to worry about that.

How about AI then? Is it possible for AI to control public opinion? Why does AI want to do that? I guess we don't need to worry about AI either.

20230520 -The turning point

how a political revolution in 1688 changed institutions in England and led to the Industrial Revolution

There is only one core factor in politics: vested interest group.

All political behavior can be explained from the viewpoint of vested interest group.

Human is lucky. Glorious Revolution is not something destined.

Changes are good to people in suffer. To create a stable society, we need to make sure that most of people have decent lives.

20230602 -Not on our turf

barriers to development: why the politically powerful in many nations opposed the Industrial Revolution

The lack of centralized government, or extractive institutions, blocked the spread of industralization. The reasons are same: ruled people (if no centralized government) and rulers (if with extractive institutions) want to avoid loss caused by destructive innovations.

Is there a way to overcome these barriers? What's the best way to help North Korea, Ethiopia and Somalie?

20230604 -Reversing development

how European colonialism impoverished large parts of the world

To some extent, people always pursue their own benefit. Under different institutions, this pursueness leads to prosperity or impoverishment.

Yes, institutions decides everything. The problem is, how to create inclusive institutions? Is it possible for the institutions in modern developed countries to get reversed? What may cause that?

20230614 -The diffusion of prosperity

how some parts of the world took different paths to prosperity from that of Britain

French Revolution is critical! Without it, there would be no rise of Napolean , then all other Europe countries would stay in poor for much longer time!

Why China and Japan respond to Industrial Revolution so differently? It's because of the geographical environment. Shogunate could not control Japan tightly, as there were so many islands. But Chinese central government could.

Similar factors affected all other countries. The countries with rich natural resources were controled by 

strong absolutism, which made it unlikely to transform to inclusive political and economical institutions.

20230618 -The virtuous circle

how institutions that encourage prosperity create positive feedback loops that prevent the efforts by elites to undermine them

Inclusive institutions are, hopefully, as stable as extractive institutions.

But the outcome is contigent when extractive political institutions are transforming into inclusive ones. Japan, Korea, Taiwan, etc. succeeded, but Russia and China failed. What happened?

Independent Justice system, Parliament and Media are critical. When the country is huge, there are, maybe, too many people facing prisoner's dilemma.

So, whenever government want to restrict the power of Justice system, Parliament and Media, it's time to replace it with a new government.

20230626 -The vicious circle

how institutions that create poverty generate negative feedback loops and endure

How can China become democracy and wealthy?

Social Improvement doesn't work. Those with vested interests will never cede their interests bit by bit. Reform is a dead end.

Revolution doesn't work too. Based on Iron law of oligarchy, the new government will be worse.

I think the only solution is to let Taiwan unite the mainland, peacefully.

China mainland will go through Civil War, then Taiwan get chance to unite it. Hopefully.

20230628 -Why nations fail today

institutions, institutions, institutions

1991, Argentina changed the exchange rate of currency PESO:USD to 1:1

2001, Argentian PESO crashed.

10 years?! How could it last for so long time? And Partido Justicialista is still the head of Argentina after this disaster, how could that be possible?

If China changes its currency to the new digital RMB, will it also last for 10 years?

All poor nations share the same core feature: extractive institutions. A small group of people control government (including army), parliament, legal system and media.

20230707 -Breaking the mold

how a few countries changed their economic trajectory by changing their institutions

Countries only change when there are serious stress.

Botswana's situation was quite similar to Israel in 1960s, but unemployment rate is quite high: 20+%. It still has long way to go, even with relatively inclusive institutions. Their success more came from luck.

Is China doomed? I think so. CCP won't give up the privileges voluntarily, and there is no powerful external force to threat it.

20230709 -Understanding prosperity and poverty

how the world could have been different and how understanding this can explain why most attempts to combat poverty have failed

I don't think that the development of democracy is so random. To some extent, natural resources (including geographical location and weather) is curse, which build very strong elite group that almost no way to break it.

So, if a small country is facing serious external enemy, which make it hard to survive, the local elites are more likely to set up inclusive institutions, such as Finland, Sweden, Germany and Japan(after WW2), Israel, Korea, Taiwan, Botswana, etc.

Foreign aid from developed countries to developing countries is most likely useless. In the end, I believe only -10% to 20% of the aid are distributed to the poor. Why negative percentage? Because a large part of the aid went to dictators' pockets, which help them to put tighter control on people, for example, buy more weapons.

Free expression is the first step to set up inclusive institutions. But that's almost impossible in any developing countries.

It's exception that some creature like human can cooperate to beat lion and tiger, and it's exception that the public can cooperate to beat elites. The one who throw out the current government, must NOT be the one who govern the state. Or else, they will become the elite group following Iron law of oligarchy.