WHY NATIONS FAIL.

WHY NATIONS FAIL. The Economist (March 10) reviewed the new book by Daron Acemoglu and James Robinson, WHY NATIONS FAIL. The book takes on the explanation for why some countries have prospered in the last 300 years and others have not. The review says that their approach is “rooted solely in institutional economics, which studies the impact of political environments on economic outcomes.” Their answer is that in countries that fail a parasitic elite discourages rival sources of power—and also investment and innovation. In this interview Acemoglu says: “when considering some reform, what most politicians and powerful elites in society really care about is not whether this reform will make the population at large better off, but whether it will make it easier or harder for them to cling to power.” The Economist review says that England broke these constraints because: “Small medieval differences in the absolutism of English and Spanish monarchs were amplified by historical chance”. In England it was privateers and not the state that conducted trade when European exploration began. The merchant elite that was created helped secure pluralism in the period after the Glorious Revolution of 1688.