It's fitting that in the year after the Arab Spring and the European debt crisis dethroned one head of state after another, MIT economist Daron Acemoglu and Harvard University political scientist James Robinson put out an authoritative tome arguing, based on a sweeping historical survey stretching back to the Neolithic age, that state failure stems not from culture, geography, or insufficient technocratic expertise, but rather from what they call "extractive institutions" -- those that concentrate power and wealth in the hands of a few elites. "Poor countries are poor because those who have power make choices that create poverty," the two write in Why Nations Fail. "They get it wrong not by mistake or ignorance but on purpose."
In tackling one of history's most vexing questions -- why some countries flourish while others flounder -- Acemoglu and Robinson argue that Mexico is poorer than the United States because of the institutions established by Spanish versus British colonialists, and that authoritarian China's current economic growth is simply not sustainable. The duo has also launched a blog to apply their thesis to everything from the eurozone crisis to sexual repression in North Korea.
Along the way, Acemoglu and Robinson are making people think again (and again) about geopolitics. "The more you read [Why Nations Fail], the more you appreciate what a fool's errand we're on in Afghanistan and how much we need to totally revamp our whole foreign aid strategy," New York Times columnist Thomas Friedman marveled. "But most intriguing are the warning flares the authors put up" about America's growing inequality and China's unsustainable growth. They're danger signs world leaders would do well to heed.
ACEMOGLU Reading list: Haiti: The Aftershocks of History, by Laurent Dubois; Dancing in the Glory of Monsters: The Collapse of the Congo and the Great War of Africa, by Jason Stearns; The Evolution of God, by Robert Wright. Best idea: A growth pact for Europe. Worst idea: A growth pact for Europe based on just carrying on with business as usual. American decline or American renewal? American renewal. More Europe or less? More. To tweet or not to tweet? Why not?
ROBINSON Reading list: Oblivion: A Memoir, by Héctor Abad Faciolince; Country of Bullets: Chronicles of War, by Juanita León; Antecedents to Modern Rwanda: The Nyiginya Kingdom, by Jan Vansina. Best idea: To have the World Bank led by someone who actually has a track record in solving the problems of poor people in developing countries. Worst idea: CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa) as favored emerging markets. American decline or American renewal? Renewal. More Europe or less? More. To tweet or not to tweet? Not.
Back in 2009, Paul Romer began talking about "charter cities" -- his novel idea for persuading a developing country to sign away a parcel of land to be governed by a foreign power as a model for economic growth, essentially creating mini-Hong Kongs throughout the Third World. The concept was generally received as intriguing but infeasible. Free trade zones and low-cost maquiladora factories are one thing, but what government would ever voluntarily let another country enforce laws on its territory? It seemed like a mix of wild-eyed futurism and old-school colonialism, and the one government that seriously considered adopting it -- Madagascar's -- was overthrown in a coup shortly afterward.
Then came Honduras. President Porfirio Lobo, who came to power following his own country's coup in 2009, was intrigued by Romer's proposal, and over the past two years, Honduras moved substantially toward enacting his dream, even passing legislation establishing a Región Especial de Desarrollo -- or RED -- that would have special, market-friendly laws to attract international investors. In a geographically bizarre arrangement, the court system of Mauritius, a tiny island country in the Indian Ocean, was enlisted to serve as the RED's appeals court. Still, big dreams don't come easily. In September, Romer resigned from the project's advisory board after the Honduran government signed an investment deal without the board's input. In October, the Honduran Supreme Court ruled "private cities" unconstitutional. "I don't know what people mean when they refer to private cities," Romer told the Guardian before the decision. "But if it suggests that there will be no institutions or government, then I fear that misses the essential requirement for successful urbanization."
Whether or not the Honduran Hong Kong ever materializes, Romer deserves credit for showing the power of even an outlandish idea to make us reimagine the world's poorest places.