Why Nations Fail

The big revelation of this book is that nations with absolutist governments that are ruled by greed and exploit their populations won't prosper. Who would have thought? That's not necessarily how the authors phrase it, but that's my takeaway. They would phrase it as: Nations with inclusive economic and political institutions fare better than nations with extractive economic and political institutions.

They are very dismissive of the claim that geography, biogeography and climate are fundamental reasons for why some societies fare better than other. Yet they don't really explain what causes inclusive healthy societies to originate in the first place. The bottom line could be, that economic and political systems are complex, and once they are established, they are hard to course-correct.

Nevertheless this is an interesting read. I don't have an issue with the content, rather with how they frame it as a novel take. It has some structural issues, as the second half with the case studies feels way too long.

Once extractive exploitative power structures are in place, it's hard to escape them. In a vicious cycle, tyrants are expelled only for a new power elite to emerge. That's why so many ex-colonial nations are failing. The colonial powers left behind a system built on the exploitation of nature and people, that simply falls into the hands of the next power-hungry rulers.

Despite exploitation enabling some growth, extractive institutions ultimately will stagnate, as they are blocking any attempts at bottom-up innovations. Innovations are drivers of creative destruction. Old industries must fall for new to emerge, and the current elite and their friends have all their money invested in the old industries. Similarly innovation won't happen, if no one is given the incentive to invent.