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The reasons for mass wealth differences across nation states

Heard on Talk of the Nation In his Pulitzer Prize-winning book Guns, Germs and Steel, Jared Diamond looked back over thousands of years of human history to examine fundamental questions behind why some societies built empires while others withered. Diamond now has some new ideas for why vast economic inequalities persist.

I'm Neal Conan in Washington. What makes some nations succeed while others fail? In his Pulitzer Prize-winner, "Guns, Germs and Steel," Jared Diamond looked back over thousands of years of human history and concluded that geography allowed Eurasia to get a big head start and develop agriculture, writing, bureaucracy and the military technologies that led to dominance over much of the globe.

His next book, "Collapse," investigated the historical and cultural factors. Now he's reviewed a new book called "Why Nations Fail: The Origins of Power, Prosperity and Poverty," which proposes some new ideas. Author Daron Acemoglu and James A. Robinson argue that inclusive economic and political institutions can be critical to success, and they describe an abundance of natural resources like diamonds or oil as a curse.

If you have a question for Jared Diamond on why nations fail, give us a call. Email us, talk npr. You can also join the conversation on our website. Later in the program, a peek inside the CIA's analysis process 10 years after they called it wrong on Iraq.

  1. These figures are far lower than those found in other nations; the average benefit for all countries is 53 percent for a single person and 59 percent for couples. Download your free copy here.
  2. For example, some goals related to education and child mortality have seen real — if uneven — progress, while rates of hunger and malnutrition have actually worsened in some cases.
  3. I'm not familiar with that book, but I can certainly comment on the subject of the relation between developed, wealthy countries and developing countries. States are also bound by other rules, such as customary international law.
  4. Simply put, it was not just getting easier to do business across national borders, but highly desirable to the growing numbers of potential beneficiaries of this commerce.

Nice to have you with us again. It's good to be with you from beautiful Los Angeles. Well, it's humid Washington, D. In the meantime, the book begins with an example many Americans will recognize: Yes, this is about the beginning, the first section of Jim Robinson and Daron Acemoglu's new book "Why Nations Fail," and it's a dramatic example. So here is Nogales, Arizona, and Nogales across the border in Mexico. You go five yards, and there's no change in atmosphere or in the environment, but you go from a Nogales in which elections work, and you're safe, and there's prosperity and reliable health care, and you cross the border, and you're in another Nogales, where people are much poorer, and elections are often rigged, and there's not reliable health care.

So that's a dramatic example that not just geography but also institutions, those differing between the U. And they conclude that it is economic institutions and indeed the political institutions that create those economic institutions, that's the difference.

They argue, and they're certainly right in this case of Nogales, that political institutions in particular, whether political institutions mean that the whole mass of the population is included and feels that it has a say and is motivated, those political institutions create economic institutions that motivate people to work hard.

For example, if you can count on keeping what you earn rather than having it expropriated by a corrupt government, or if there is support for education. And so where you get good political institutions and the reasons for mass wealth differences across nation states economic institutions, then you're likely to have a richer country.

And a prime example is Norway, with great institutions, richest country in the world, about 500 times richer per person than the world's poorest country. Well, you can see other examples like that right across borders - North and South Korea, of course, the old East Germany and West Germany. Can that be extrapolated to places that aren't so similar?

Explaining Economic Inequality Between Nations

There are enthusiasts who would extrapolate the examples that you mention, North versus South Korea; Nogales, Arizona, versus Nogales, Mexico; cases where there's no doubt that institutions produce the different results across the border. And some enthusiasts would extrapolate that and say that institutions account for differences in national wealth around the world.

But there are other things. There's geography, of which a prime example is whether a country is in the tropics, which makes for poverty, or whether a country is in the temperate zone, like the United States, which is conducive to wealth. Why does the tropics, a location in the tropics seem to indicate poverty? It's not that it dictates poverty, but it's a strike against you, and there are two reasons.

  • In doing so, our goals are to review the relevant literature and to identify valuable new directions for research into the economic status of the aged in the United States;
  • He joined us from his home in Los Angeles, which he describes as beautiful;
  • In a relative sense, it can result in certain elements of a population lacking the tools and resources needed to counter the challenges they face;
  • Internationally comparable data offer researchers an important window for comparisons;
  • Yet whenever a state exercises its sovereign right to sign a treaty, it is also wilfully limiting that right by the very act of undertaking an international legal obligation;
  • A meaningful alternative to deficit accounting.

One might naively think that the tropics are a great place to grow food - you lie under a tree and wait for the bananas to fall off - but in fact tropical soils are relatively infertile compared to temperate-zone soils. And the tropics have all of these diseases, chronic diseases like malaria and yellow fever and sleeping sickness that make people die young and make them sick and unable to work all the time.

So those are the two major reasons why all other things being equal, tropical countries are only about half as rich as temperate countries. There are also the factors, some of which you pointed out in "Guns, Germs and Steel," is a lot of these places in the tropics were colonized by those Eurasian powers that benefitted from their early development of agriculture, writing, bureaucracy and those other things.

Given the the reasons for mass wealth differences across nation states that temperate zones have an advantage, and so Europe starts off richer than tropical countries, that advantage is then multiplied when European countries colonized African countries and South American countries and then set up basically corrupt, exploitative institutions to make the local people work for the good of the colonial masters. And those then corrupt institutions have persisted until this day and left a bad legacy of colonialism, making it a double-whammy in the tropics.

And then you have other kinds of colonies, though, where there were not extractive policies. There wasn't much to extract, at least not initially. Sure, the United States is a prime example. The Native American population in the United States, particularly after European diseases swept across, was lower in population density than, say, in Mexico or Peru so that Europeans who came to the United States had to work for themselves, and they set up institutions that rewarded them for working for themselves.

  • Many have pointed out that we "patch together" the safety net for the aged in the United States;
  • But Jim and Daron's take is more measured;
  • Even the lowest among these, the United Kingdom, has a floor 11 to 12 percentage points above the U.

Whereas in densely populated tropical countries, such as Mexico and Peru and Bolivia, Europeans set up institutions to extract work and money out of the local population, and those institutions have persisted and continue to impoverish the countries until this day.

So we see different kinds of institutions and different kinds of political structure and economic opportunity as being hugely important. But do they dictate a country's future? You could see places that have, for example, vast mineral wealth being able to overcome these sorts of things. When one points out a disadvantage for a country, it's like pointing out a disadvantage for a person.

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And that's exactly what some tropical countries in Southeast Asia did, notably Malaysia and Singapore and Taiwan.

They - and now Thailand. They recognized that they're in the tropics, and so to get rich, they had to solve their problems of diseases. So they invested heavily in public health in stamping out malaria, and they also realized that they were not going to get rich by growing wheat.

Leave that to the United States and Argentina. They've turned to other things, with the result that Taiwan and Singapore are first-world countries today, and Malaysia is well on its way. So that's an example of how knowing what penalizes you can help you fix it. But getting back to the argument about institutions, those are places that are blessed, relatively, with well-functioning institutions, political and economic.

They do have well-functioning institutions, and their institutions are getting better. Singapore's democracy is not the same as American democracy, but nevertheless it's a democracy that rewards people for hard work.

Introduction

And what can you do to inculcate those positive infrastructure organizations? This seems to be, you know, a process of - that humans can do this, it's not geography. We can actually change that. Yeah, it's interesting to think of can we inculcate.

Distribution of wealth and income

Well, the United States can't inculcate something into another country any more than I, as a father, can inculcate something into my children: My children what do what I please.

Similarly, countries will do what they please. What is the case for countries is if they see examples of other countries near them that are getting rich through good institutions, they may prefer to learn from those other countries than from the United States.

And a nice example is that in Africa, the country of Botswana, which used to be desperately poor 50 years ago, has gotten good institutions, has handled its diamond wealth well, is now one of the sixth-richest countries in Africa, and it's to Botswana more than to the United States that other African countries are coming to learn good governmental practices.

  • Indeed, many of the legal and political principles of exclusivity commonly associated with the nation state are enshrined in the great treaty linking all countries, the Charter of the United Nations;
  • Recalling Quinn 1987 , we are highly uncomfortable about saying much of anything specific about "the aged" of tomorrow;
  • As already mentioned, such aid requires the receiving nation to restructure its economy in ways that may not benefit the most vulnerable people;
  • Because it ignores a large fraction of intergenerational transfers college expenditures and bequests , they argue that this estimate constitutes a lower bound for the contribution of operative intergenerational linkages to aggregate capital accumulation;
  • This is the solemn task of environmental NGOs in the future, the task of mobilizing a stubborn defence of our common global heritage;
  • For instance, comparing data from two Census Bureau surveys, the first taken in 1979 and the second in 1984, the average income and net worth of those families with heads aged 65-69 increased by 47.

The Fates of Human Societies" and "Collapse: How Societies Choose to Fail or Succeed. Bob's ph on the line with us from Reno. Hi, I really - it's an honor to be speaking with you. I've devoured your books. And I had a question, too, about the - you know, if you could just take a look at our 50 states here in this country.

Some are doing well; others are, like our state, Nevada, not doing so well. And can you - and just as geography, abundance of natural resources, things that determine these stronger, healthier nation-states, you know, can you extrapolate those down? Do they also indicate the health of constitute states in this country?

That's a really nice example, and I'm glad that you brought this up. So you are in Nevada, and I am in California. California is, or was, one of the richest states in the United States.

And Nevada was not so rich. And there are obvious reasons for that. California is blessed with fertile soils and reasonable amounts of rainfall, and as Nevada, mineral wealth, and California has got a coastline, so it's got I think the biggest port in the United States in the Long Beach area, whereas Nevada is landlocked.

Nevada does not have any ports to the ocean.

  1. Originally intended in reference to the establishment of order within a state, sovereignty has since been interpreted by some as a legal quality that places the state above the authority of all external laws. Yet whenever a state exercises its sovereign right to sign a treaty, it is also wilfully limiting that right by the very act of undertaking an international legal obligation.
  2. We're going to talk more with Jared Diamond after we come back from a short break about why some societies thrive and others wither, a topic he covers in his books, "Guns, Germs and Steel" and "Collapse" and he revisited in a recent piece in the New York Review of Books.
  3. In his Pulitzer Prize-winner, "Guns, Germs and Steel," Jared Diamond looked back over thousands of years of human history and concluded that geography allowed Eurasia to get a big head start and develop agriculture, writing, bureaucracy and the military technologies that led to dominance over much of the globe. We know very little about several key issues e.
  4. He spent much of his career studying what makes some countries prosper while others go poor. Modigliani 1988 , however, reached the symmetric, but opposite, conclusion that the life-cycle model accounts for as much as 80 percent of accumulation.

Nevada has low rainfall. So it's no surprise that California is richer than Nevada, although California and Nevada are both part of the United States and have similar institutions. Bob, thanks very much, and keep working on that tunnel to the Pacific. All right, thanks very much. We're going to talk more with Jared Diamond after we come back from a short break about why some societies thrive and others wither, a topic he covers in his books, "Guns, Germs and Steel" and "Collapse" and he revisited in a recent piece in the New York Review of Books.

If you'd like to join us about this conversation, 800-989-8255. You can also go to our website, npr. He spent much of his career studying what makes some countries prosper while others go poor. The answers, as we've heard, are as varied as they are complex. If you'd like to join the conversation, 800-989-8255.

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Let's go next to Cathy phand Cathy's with us from Denver. Hi, I just had a question about how he defines success and failure, if it's purely in economic terms, or if he took into consideration things like distribution of wealth, gender equality, access to democratic institutions, because it seems like a lot of that might be subjective measurements, but might also give a more complete story of whether a nation was successful or not.