In Focus: Let’s consider, ‘Why Nations Fail’

In his article (In Focus, Nov. 9), Mark Mansperger jousts with a straw boogeyman. Somehow, controlling spending and limiting government programs that increasingly invade our private lives will lead to cultural disintegration that fragments us into warring clans that abuse women. He invokes the founders and the Constitution to justify his claim that freedom is derived from “a strong state.” Memo from James Madison: “Huh?”

For his reading pleasure, I commend to Professor Mansperger Why Nations Fail, by Daron Acemoglu of MIT and James A. Robinson of Harvard University. In this book, the authors address a question that troubled me after living for a few days with an immigrant family in a Texas border town. You would not call this family wealthy, but they had a home with bedrooms, hot water, and electricity. When we drove a few miles across the border, I saw other families living in cardboard boxes. My question was, why do people who are in many ways so similar achieve such dramatically different standards of living and abilities to enjoy their lives?

The answer that Acemoglu and Robinson provide is the profoundly different cultural and political institutions under which different people live. They contrast what they call “extractive” and “inclusive” institutions which produce dramatically different results for people living under them. An extreme example of an extractive institution is slavery, and the authors spend time examining the American experience with slavery and its consequences. Inclusive institutions limit government power, promoting freedom for people to develop their potential.

The authors contrast two of the wealthiest men in the world, Bill Gates and Carlos Slim (the Mexican wireless magnate). Bill Gates, operating under relatively inclusive institutions, pursued and developed an idea that not only made him wealthy, but also revolutionized the lives and living conditions of people all over the world. The well-connected Carlos Slim, however, exploited a corrupt, extractive government authority to establish a monopoly that made him very wealthy. But the benefit to others was, well, limited.

The authors go on to connect the Meiji Restoration in Japan, the Glorious Revolution in England, the French Revolution, and other events that replaced extractive institutions with relatively inclusive ones. In each case, limiting the extractive power of the state unleashed the creative power of the people and introduced new eras of prosperity.

For the United States, the authors place much importance on the Congress stopping Franklin Roosevelt from packing the Supreme Court. The court had found Roosevelt was exceeding his constitutional authority with his more ambitious New Deal initiatives, so he wanted judges who would rubber-stamp whatever he decided was best for the American people. Both Democrats and Republicans recognized this as a move to concentrate power in the Executive Branch in a way that would have transformed American institutions from relatively inclusive to simply extractive. Recall that, during most of the 20th Century, extractive government was the rule throughout Latin America, Asia, Africa, Eastern Europe, and much of Western Europe. In Greece, Spain, Germany, Argentina, Chile, Cuba (both before and after 1959), China, both Koreas, and most of the rest of the world, people lived in fear of their own public servants. (This did not begin to abate until the 1980s.) In the estimation of the authors, we would have ended up just like everyone else but for those who were willing to stand up to Roosevelt and just say “No.”

Government does many necessary things. I’m happy to pay taxes to provide protection from foreign enemies and criminals, for the enforcement of contracts, and for the proper exercise of other constitutionally permitted government activities. But we must remember that whenever we endow government with additional strength for the purpose of helping us manage our lives, there’s a cost. And as the Congress understood in 1937, there is also a tipping point into a place where we absolutely do not want to go.