DUE TUE, 4-28-15 4PM

“Institutions” Please respond to the following in 2 to2 ½ paragraphs 2 if possible

Based on 2 articles below,

, address the following: Every country in the world is constructed around the same set of institution that differs only in how governments manage them.

1. Identify the specific components of an institution

2. Explain why the institutions in failed states are in such disarray.

Article1

Elections Don’t Matter, Institutions Do

June 2014

Many years ago, I visited Four Corners in the American Southwest. This is a small stone monument on a polished metal platform where four states meet. You can walk around the monument in the space of a few seconds and stand in four states: Arizona, New Mexico, Colorado and Utah, so people lined up to do this and have their pictures taken by excited relatives. To walk around the monument is indeed a thrill, because each of these four states has a richly developed tradition and identity that gives these borders real meaning, and yet no passports or customs police are required to go from one state to the other. Well, of course that’s true, they’re only states, not countries, you might say. But the fact that my observation is a dull commonplace doesn’t make it any less amazing. To be sure, it makes it more amazing. For as the late Harvard Professor Samuel P. Huntington once remarked, the genius of the American system lies less in its democracy per se than in its institutions. The federal and state system featuring 50 separate identities and bureaucracies, each with definitive land borders — that nevertheless does not conflict with each other — is unique in political history. And this is not to mention the thousands of counties and municipalities in America with their own sovereign jurisdictions. Many of the countries I have covered as a reporter in the troubled and war-torn developing world would be envious of such an original institutional arrangement for governing an entire continent. In fact, Huntington’s observation can be expanded further: the genius of Western civilization in general is that of institutions. Sure, democracy is a basis for this; but democracy is, nevertheless, a separate factor. For enlightened dictatorships in Asia have built robust, meritocratic institutions whereas weak democracies in Africa have not.

Institutions are such a mundane element of Western civilization that we tend to take them for granted. But as I’ve indicated, in many places I have worked and lived, that is not the case. Getting a permit or a simple document is not a matter of waiting in line for a few minutes, but of paying bribes and employing fixers. We take our running water and dependable electric current for granted, but those are amenities missing from many countries and regions because of the lack of competent institutions to manage such infrastructure. Having a friend or a relative working in the IRS is not going to save you from paying taxes, but such a situation is a rarity elsewhere. Successful institutions treat everyone equally and impersonally. This is not the case in Russia or Pakistan or Nigeria. Of course, Americans may complain about poor rail service and deteriorating infrastructure and bureaucracies, especially in inner cities, but it is important to realize that we are, nevertheless, complaining on the basis of a very high standard relative to much of the developing world. Institutions, or the lack of them, explain much that has happened in the world in recent decades. Following the collapse of the Berlin Wall in 1989, Central Europe went on to build functioning democracies and economies. With all of their problems and challenges, the Baltic states, Poland, the Czech Republic, Slovakia and Hungary have not fared badly and in some cases have been rousing success stories. This is because these societies boast high literacy rates among both men and women and have a tradition of modern bourgeois culture prior to World War II and communism. And it is literacy and middle class culture that are the building blocks of successful institutions. Institutions after all require bureaucrats, who must, in turn, be literate and familiar with the impersonal workings of modern organizations.

The Balkans have been less fortunate, with bad government and unimpressive growth the fare in Romania since 1989, semi-chaos rearing its head in Albania and Bulgaria, and inter-ethnic war destroying the Yugoslav federation in the 1990s. Here, too, a history of lower literacy rates, weak or in some cases non-existent middle classes, and an Eastern Orthodox faith that, because it is more contemplative it does not encourage impersonal standards, at least to the degree of Protestantism or even Catholicism, have all been factors in a weaker institutional basis for economic growth and political stability. Russia, too, fits into this category. Its system of oligarchs is a telltale sign of weak institutions, since corruption merely indicates an alternative pathway to getting things done when laws and the state bureaucracies are inadequately developed. Then there is the greater Middle East. The Arab Spring failed because the Arab world was not like Central and Eastern Europe. It had low literacy, especially among women. It had little or no tradition of a modern bourgeois, despite commercial classes in some cities, and so no usable institutions to fall back upon once dictatorships crumbled. Thus, what was left in North Africa and the Levant after authoritarianism was tribes and sects; unlike the post-communist civil society that encouraged stability in Central Europe. Turkey and Iran, as real states with more successful urbanization and higher literacy rates, are in an intermediate category between southern Europe and the Arab world. Obviously, even within the Arab world there are distinctions. Egyptian state institutions are a reality to a degree that those in Syria and Iraq are not. Egypt is governable, therefore, if momentarily by autocratic means, whereas Syria and Iraq seem not to be. Finally, there is Africa. In many African countries, when taking a road out of the capital, very soon the state itself vanishes. The road becomes a vague dirt track, and the domains of tribes and warlords take over. This is a world where, because literacy and middle classes are minimal (albeit growing), institutions still barely exist. The way to gauge development in Africa is not to interview civil society types in the capitals, but to go to the ministries and other bureaucracies and wait in line and see how things work — and if they do.

Indeed, people lie to themselves and then lie to journalists and ambassadors. So don’t listen to what people (especially elites) say; watch how they behave. Do they pay taxes? Where do they stash their money? Do they wait in line to get drivers’ permits, and so forth? It is behavior, not rhetoric, which indicates the presence or absence of institutions. Elections are easy to hold and indicate less than journalists and political scientists think. An election is a 24- or 48-hour affair, organized often with the help of foreign observers. But a well- oiled ministry must function 365 days a year. Lee Kuan Yew is one of the great men of the 20th century because he built institutions and, therefore, a state in Singapore. For without basic order there can be no meaningful freedom. And institutions are the foremost tools of order. Because institutions develop slowly and organically, even under the best of circumstances, their growth eludes journalists who are interested in dramatic events. Thus, media stories often provide a poor indication of the prospects of a particular country. The lesson for businesspeople and intelligence forecasters is: track institutions, not personalities.

Article 2

 Review of Why Nations Fail

By Daron Acemoglu and James A. Robinson

By Warren Bass, Published: April 20, 2012

Why Nations Fail” is a sweeping attempt to explain the gut-wrenching poverty that leaves 1.29 billion people in the developing world struggling to live on less than $1.25 a day. You might expect it to be a bleak, numbing read. It’s not. It’s bracing, garrulous, wildly ambitious and ultimately hopeful. It may, in fact, be a bit of a masterpiece. Daron Acemoglu and James A. Robinson, two energetic, widely respected development scholars, start with a bit of perspective: Even in today’s glum economic climate, the average American is seven times as prosperous as the average Mexican, 10 times as prosperous as the average Peruvian, about 20 times as prosperous as the average inhabitant of sub-Saharan Africa and about 40 times as prosperous as the average citizen of such particularly desperate African countries as Mali, Ethiopia and Sierra Leone. What explains such stupefying disparities? The authors’ answer is simple: “institutions, institutions, institutions.” They are impatient with traditional social-science arguments for the persistence of poverty, which variously chalk it up to bad geographic luck, hobbling cultural patterns, or ignorant leaders and technocrats. Instead, “Why Nations Fail” focuses on the historical currents and critical junctures that mold modern polities: the processes of institutional drift that produce political and economic institutions that can be either inclusive — focused on power- sharing, productivity, education, technological advances and the well-being of the nation as a whole; or extractive — bent on grabbing wealth and resources away from one part of society to benefit another. To understand what extractive institutions look like, consider les Grosses Legumes (the Big Vegetables), the sardonic Congolese nickname for the obscenely pampered clique around Mobutu Sese Seko, the strongman who ruled what is now the Democratic Republic of the Congo from 1965 to 1997. When Mobutu decreed that he wanted a palace built for himself at his birthplace, the authors note, he made sure that the airport had a landing strip big enough to accommodate the Concordes he liked to rent from Air France. Mobutu and the Big Vegetables weren’t interested in developing Congo. They were interested in strip-mining it, sucking out its vast mineral wealth for themselves. They were, at best, vampire capitalists. But the roots of Congo’s nightmarish poverty and strife go back centuries. Before the arrival of European imperialists, what was then known as the Kingdom of Kongo was ruled by the oligarchic forerunners of the Big Vegetables, who drew their staggering wealth from arbitrary taxation and a busy slave trade. And when the European colonists showed up, they made a dreadful situation even worse — especially under the rapacious rule of King Leopold II of Belgium. When Congo finally won its independence in 1960, it was a feeble, decentralized state burdened with a predatory political class and exploitative economic institutions — too weak to deliver basic services but just strong enough to keep Mobutu and his cronies on top; too poor to provide for its citizenry but just wealthy enough to give elites something to fight over. Acemoglu and Robinson argue that when you combine rotten regimes, exploitative elites and self- serving institutions with frail, decentralized states, you have something close to a prescription for poverty, conflict and even outright failure. “Nations fail,” the authors write, “when they have extractive economic institutions, supported by extractive political institutions that impede and even block economic growth.” But even as vicious cycles such as Congo’s can churn out poverty, virtuous cycles can help bend the long arc of history toward growth and prosperity. Contrast the conflict and misery in Congo with Botswana — which, when it won its independence in 1966, had just 22 university graduates, seven miles of paved roads and glowering white-supremacist regimes on most of its borders. But Botswana today has “the highest per capita income in sub-Saharan Africa” — around the level of such success stories as Hungary and Costa Rica.

How did Botswana pull it off? “By quickly developing inclusive economic and political institutions after independence,” the authors write. Botswana holds regular elections, has never had a civil war and enforces property rights. It benefited, the authors argue, from modest centralization of the state and a tradition of limiting the power of tribal chiefs that had survived colonial rule. When diamonds were discovered, a far-sighted law ensured that the newfound riches were shared for the national good, not elite gain. At the critical juncture of independence, wise Botswanan leaders such as its first president, Seretse Khama, and his Botswana Democratic Party chose democracy over dictatorship and the public interest over private greed. In other words: It’s the politics, stupid. Khama’s Botswana succeeded at building institutions that could produce prosperity. Mobutu’s Congo and Robert Mugabe’s Zimbabwe didn’t even try. Acemoglu and Robinson argue that the protesters in Egypt’s Tahrir Square had it right: They were being held back by a feckless, corrupt state and a society that wouldn’t let them fully use their talents. Egypt was poor “precisely because it has been ruled by a narrow elite that has organized society for their own benefit at the expense of the vast mass of people. “Such unhappy nations as North Korea, Sierra Leone, Haiti and Somalia have all left authority concentrated in a few grasping hands, which use whatever resources they can grab to tighten their hold on power. The formula is stark: Inclusive governments and institutions mean prosperity, growth and sustained development; extractive governments and institutions mean poverty, privation and stagnation— even over the centuries. The depressing cycle in which one oligarchy often replaces another has meant that “the lands where the Industrial Revolution originally did not spread remain relatively poor.” Nothing succeeds like success, Acemoglu and Robinson argue, and nothing fails like failure. So what about China, which is increasingly cited as a new model of “authoritarian growth”? The authors are respectful but ultimately unimpressed. They readily admit that extractive regimes can produce temporary economic growth so long as they’re politically centralized — just consider the pre-Brezhnev Soviet Union, whose economic system once had its own Western admirers. But while “Chinese economic institutions are incomparably more inclusive today than three decades ago,” China is still fundamentally saddled with an extractive regime.

In fairly short order, such authoritarian economies start to wheeze: By throttling the incentives for technological progress, creativity and innovation, they choke off sustained, long-term growth and prosperity. (“You cannot force people to think and have good ideas by threatening to shoot them,” the authors note dryly.) Chinese growth, they argue, “is based on the adoption of existing technologies and rapid investment,” not the anxiety-inducing process of creative destruction that produces lasting innovation and growth. By importing foreign technologies and exporting low-end products, China is playing a spirited game of catch-up — but that’s not how races are won. So how can the United States help the developing world? Certainly not by cutting foreign aid or conditioning it; as the authors note, you’d hardly expect someone like Mobutu to suddenly chuck out the exploitative institutions that underpin his power “just for a little more foreign aid,” and even a bit of relief for the truly desperate, even if inefficiently administered, is a lot better than nothing. But ultimately, instead of trying to cajole leaders opposed to their people’s interests, the authors suggest we’d be better off structuring foreign aid so that it seeks to bring in marginalized and excluded groups and leaders, and empowers broader sections of the population. For Acemoglu and Robinson, it is not enough to simply swap one set of oligarchs for another.

“Why Nations Fail” isn’t perfect. The basic taxonomy of inclusive vs. extractive starts to get repetitive. After chapters of brio, the authors seem almost sheepish about the vagueness of their concluding policy advice. And their scope and enthusiasm engender both chuckles of admiration — one fairly representative chapter whizzes from Soviet five-year plans to the Neolithic Revolution and the ancient Mayan city states — and the occasional cluck of caution. It would take several battalions of regional specialists to double-check their history and analysis, and while the overall picture is detailed and convincing, the authors would have to have a truly superhuman batting average to get every nuance right. Their treatment of the Middle East, for instance, is largely persuasive, but they are a little harsh on the Ottoman Empire, which they basically write off as “highly absolutist” without noting its striking diversity and relatively inclusive sociopolitical arrangements, which often gave minority communities considerably more running room (and space for entrepreneurship) than their European co-religionists. Acemoglu and Robinson have run the risks of ambition, and cheerfully so. For a book about the dismal science and some dismal plights, “Why Nations Fail” is a surprisingly captivating read. This is, in every sense, a big book. Readers will hope that it makes a big difference. Warren Bass is a senior political scientist at the RAND Corporation and a former adviser to U.S. Ambassador to the United Nations Susan Rice.

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