Why Nations Fail Best Quotes

1. Bangladesh.... In 1971 ... Kissinger overrode all advice in order to support the Pakistani generals in both their civilian massacre policy in East Bengal and their armed attack on India from West Pakistan.... This led to a moral and political catastrophe the effects of which are still sorely felt. Kissinger’s undisclosed reason for the ‘tilt’ was the supposed but never materialised ‘brokerage’ offered by the dictator Yahya Khan in the course of secret diplomacy between Nixon and China.... Of the new state of Bangladesh, Kissinger remarked coldly that it was ‘a basket case’ before turning his unsolicited expertise elsewhere. 2. Chile.... Kissinger had direct personal knowledge of the CIA’s plan to kidnap and murder General René Schneider, the head of the Chilean Armed Forces ... who refused to countenance military intervention in politics. In his hatred for the Allende Government, Kissinger even outdid Richard Helms ... who warned him that a coup in such a stable democracy would be hard to procure. The murder of Schneider nonetheless went ahead, at Kissinger’s urging and with American financing, just between Allende’s election and his confirmation.... This was one of the relatively few times that Mr Kissinger (his success in getting people to call him ‘Doctor’ is greater than that of most PhDs) involved himself in the assassination of a single named individual rather than the slaughter of anonymous thousands. His jocular remark on this occasion—‘I don’t see why we have to let a country go Marxist just because its people are irresponsible’—suggests he may have been having the best of times.... 3. Cyprus.... Kissinger approved of the preparations by Greek Cypriot fascists for the murder of President Makarios, and sanctioned the coup which tried to extend the rule of the Athens junta (a favoured client of his) to the island. When despite great waste of life this coup failed in its objective, which was also Kissinger’s, of enforced partition, Kissinger promiscuously switched sides to support an even bloodier intervention by Turkey. Thomas Boyatt ... went to Kissinger in advance of the anti-Makarios putsch and warned him that it could lead to a civil war. ‘Spare me the civics lecture,’ replied Kissinger, who as you can readily see had an aphorism for all occasions. 4. Kurdistan. Having endorsed the covert policy of supporting a Kurdish revolt in northern Iraq between 1974 and 1975, with ‘deniable’ assistance also provided by Israel and the Shah of Iran, Kissinger made it plain to his subordinates that the Kurds were not to be allowed to win, but were to be employed for their nuisance value alone. They were not to be told that this was the case, but soon found out when the Shah and Saddam Hussein composed their differences, and American aid to Kurdistan was cut off. Hardened CIA hands went to Kissinger ... for an aid programme for the many thousands of Kurdish refugees who were thus abruptly created.... The apercu of the day was: ‘foreign policy should not he confused with missionary work.’ Saddam Hussein heartily concurred. 5. East Timor. The day after Kissinger left Djakarta in 1975, the Armed Forces of Indonesia employed American weapons to invade and subjugate the independent former Portuguese colony of East Timor. Isaacson gives a figure of 100,000 deaths resulting from the occupation, or one-seventh of the population, and there are good judges who put this estimate on the low side. Kissinger was furious when news of his own collusion was leaked, because as well as breaking international law the Indonesians were also violating an agreement with the United States.... Monroe Leigh ... pointed out this awkward latter fact. Kissinger snapped: ‘The Israelis when they go into Lebanon—when was the last time we protested that?’ A good question, even if it did not and does not lie especially well in his mouth. It goes on and on and on until one cannot eat enough to vomit enough.

No one could discuss racial justice with President Eisenhower without coming away with mixed emotions. His personal sincerity on the issue was pronounced, and he had a magnificent capacity to communicate it to individuals. However, he had no ability to translate it to the public, or to define the problem as a supreme domestic issue. I have always felt that he failed because he knew that his colleagues and advisers did not share his views, and he had no disposition to fight even for cherished beliefs. Moreover, President Eisenhower could not be committed to anything which involved a structural change in the architecture of American society. His conservatism was fixed and rigid, and any evil defacing the nation had to be extracted bit by bit with a tweezer because the surgeon's knife was an instrument too radical to touch this best of all possible societies.

WE WILL ARGUE that to understand world inequality we have to understand why some societies are organized in very inefficient and socially undesirable ways. Nations sometimes do manage to adopt efficient institutions and achieve prosperity, but alas, these are the rare cases. Most economists and policymakers have focused on “getting it right,” while what is really needed is an explanation for why poor nations “get it wrong.” Getting it wrong is mostly not about ignorance or culture. As we will show, poor countries are poor because those who have power make choices that create poverty. They get it wrong not by mistake or ignorance but on purpose. To understand this, you have to go beyond economics and expert advice on the best thing to do and, instead, study how decisions actually get made, who gets to make them, and why those people decide to do what they do. This is the study of politics and political processes.

An economically weakened and isolationist America will call into question the Pax Americana, whereby the United States oversees international peace and security, and thus expose the world to the unpredictable whims and values of nondemocratic powers. These are not the solutions the world needs. Creating sustainable economic growth in the twenty-first century requires no less than aggressively retooling history’s greatest engine of growth, democratic capitalism itself. This requires a clear-eyed assessment of how ineffective the system is in its current state, politically as well as economically—and then implementing the repairs that will yield better outcomes. Too much is at stake for us to remain wedded to the status quo. The ominous rise of protectionism and nationalism throughout the world portend that the global economy and community are eroding already. The only way forward is to preserve the best of liberal democratic capitalism and to repair the worst. We cannot cling to past practices and old ideologies simply for their own sake. Doing nothing is no choice at all.

Inclusive economic institutions, such as those in South Korea or in the United States, are those that allow and encourage participation by the great mass of people in economic activities that make best use of their talents and skills and that enable individuals to make the choices they wish. To be inclusive, economic institutions must feature secure private property, an unbiased system of law, and a provision of public services that provides a level playing field in which people can exchange and contract; it also must permit the entry of new businesses and allow people to choose their careers.

Having a TV—which gives you the ability to receive information—fails to establish any capacity for sending information in the opposite direction. And the odd one-way nature of the primary connection Americans now have to our national conversation has a profound impact on their basic attitude toward democracy itself. If you can receive but not send, what does that do to your basic feelings about the nature of your connection to American self-government? “Attachment theory” is an interesting new branch of developmental psychology that sheds light on the importance of consistent, appropriate, and responsive two-way communication—and why it is essential for an individual’s feeling empowered. First developed by John Bowlby, a British psychiatrist, in 1958, attachment theory was further developed by his protégée Mary Ainsworth and other experts studying the psychological development of infants. Although it applies to individuals, attachment theory is, in my view, a metaphor that illuminates the significance of authentic free-flowing communication in any relationship that requires trust. By using this new approach, psychologists were able to discover that every infant learns a crucial and existential lesson during the first year of life about his or her fundamental relationship to the rest of the world. An infant develops an attachment pathway based on different patterns of care and, according to this theory, learns to adopt one of three basic postures toward the universe: In the best case, the infant learns that he or she has the inherent ability to exert a powerful influence on the world and evoke consistent, appropriate responses by communicating signals of hunger or discomfort, happiness or distress. If the caregiver—more often than not the mother—responds to most signals from the infant consistently and appropriately, the infant begins to assume that he or she has inherent power to affect the world. If the primary caregiver responds inappropriately and/or inconsistently, the infant learns to assume that he or she is powerless to affect the larger world and that his or her signals have no intrinsic significance where the universe is concerned. A child who receives really erratic and inconsistent responses from a primary caregiver, even if those responses are occasionally warm and sensitive, develops “anxious resistant attachment.” This pathway creates children who feature anxiety, dependence, and easy victimization. They are easily manipulated and exploited later in life. In the worst case, infants who receive no emotional response from the person or persons responsible for them are at high risk of learning a deep existential rage that makes them prone to violence and antisocial behavior as they grow up. Chronic unresponsiveness leads to what is called “anxious avoidance attachment,” a life pattern that features unquenchable anger, frustration, and aggressive, violent behavior.

The good performed by some of United Nations institutions, such as the World Health Organization and UNICEF, has been outweighed by the amount of bad the UN has either abetted or allowed. It has enabled genocide in Rwanda, done little or nothing to stop genocide in the Congo and Sudan, given a respectable forum to tyrannies, convened conferences (the Durban Conferences on racism) that simply became forums for anti-Semitism, and been preoccupied with vilifying one of its relatively few humane states, Israel. Its moral failings were further exemplified by its placing Qaddafi’s Libya on its Human Rights Commission, Iran on its Commission on the Status of Women, and North Korea on the Nuclear Disarmament Commission. It is not that the people who run the United Nations are bad people; it is that the United Nations is run by a majority of the world’s governments, and they are run by bad people. Without America in the Security Council, the bad would nearly always prevail.

MH: In an early letter to William Kennedy you spoke of the "dry rot" of American journalism. Tell me what you think. What's the state of the American press currently? HST: The press today is like the rest of the country. Maybe you need a war. Wars tend to bring out out the best in them. War was everywhere you looked in the sixties, extending into the seventies. Now there are no wars to fight. You know, it's the old argument about why doesn't the press report the good news? Well, now the press is reporting the good news, and it's not as much fun. The press has been taken in by Clinton. And by the amalgamation of politics. Nobody denies that the parties are more alike than they are different. No, the press has failed, failed utterly -- they've turned into slovenly rotters. Particularly The New York Times, which has come to be a bastion of political correctness. I think my place in history as defined by the PC people would be pretty radically wrong. Maybe I could be set up as a target at the other end of the spectrum. I feel more out of place now than I did under Nixon. Yeah, that's weird. There's something going on here, Mr. Jones, and you don't know what it is, do you? Yeah, Clinton has been a much more successfully deviant president than Nixon was. You can bet if the stock market fell to 4,000 and if four million people lost their jobs there'd be a lot of hell to pay, but so what? He's already re-elected. Democracy as a system has evolved into something that Thomas Jefferson didn't anticipate. Or maybe he did, at the end of his life. He got very bitter about the press. And what is it he said? "I tremble for my nation when I reflect that God is just"? That's a guy who's seen the darker side. Yeah, we've become a nation of swine. - HST - The Atlantic , August 26, 1997

gave up on the idea of creating “socialist men and women” who would work without monetary incentives. In a famous speech he criticized “equality mongering,” and thereafter not only did different jobs get paid different wages but also a bonus system was introduced. It is instructive to understand how this worked. Typically a firm under central planning had to meet an output target set under the plan, though such plans were often renegotiated and changed. From the 1930s, workers were paid bonuses if the output levels were attained. These could be quite high—for instance, as much as 37 percent of the wage for management or senior engineers. But paying such bonuses created all sorts of disincentives to technological change. For one thing, innovation, which took resources away from current production, risked the output targets not being met and the bonuses not being paid. For another, output targets were usually based on previous production levels. This created a huge incentive never to expand output, since this only meant having to produce more in the future, since future targets would be “ratcheted up.” Underachievement was always the best way to meet targets and get the bonus. The fact that bonuses were paid monthly also kept everyone focused on the present, while innovation is about making sacrifices today in order to have more tomorrow. Even when bonuses and incentives were effective in changing behavior, they often created other problems. Central planning was just not good at replacing what the great eighteenth-century economist Adam Smith called the “invisible hand” of the market. When the plan was formulated in tons of steel sheet, the sheet was made too heavy. When it was formulated in terms of area of steel sheet, the sheet was made too thin. When the plan for chandeliers was made in tons, they were so heavy, they could hardly hang from ceilings. By the 1940s, the leaders of the Soviet Union, even if not their admirers in the West, were well aware of these perverse incentives. The Soviet leaders acted as if they were due to technical problems, which could be fixed. For example, they moved away from paying bonuses based on output targets to allowing firms to set aside portions of profits to pay bonuses. But a “profit motive” was no more encouraging to innovation than one based on output targets. The system of prices used to calculate profits was almost completely unconnected to the value of new innovations or technology. Unlike in a market economy, prices in the Soviet Union were set by the government, and thus bore little relation to value. To more specifically create incentives for innovation, the Soviet Union introduced explicit innovation bonuses in 1946. As early as 1918, the principle had been recognized that an innovator should receive monetary rewards for his innovation, but the rewards set were small and unrelated to the value of the new technology. This changed only in 1956, when it was stipulated that the bonus should be proportional to the productivity of the innovation. However, since productivity was calculated in terms of economic benefits measured using the existing system of prices, this was again not much of an incentive to innovate. One could fill many pages with examples of the perverse incentives these schemes generated. For example, because the size of the innovation bonus fund was limited by the wage bill of a firm, this immediately reduced the incentive to produce or adopt any innovation that might have economized on labor.

First, national standards and national curriculum, enforced by high-stakes testing, can at best teach students what is prescribed by the curriculum and expected by the standards. This system fails to expose students to content and skills in other areas. As a result, students talented in other areas never have the opportunity to discover those talents. Students with broader interests are discouraged, not rewarded. The system results in a population with similar skills in a narrow spectrum of talents. But especially in today's society, innovation and creativity are needed in many areas, some as yet undiscovered. Innovation and creativity come from cross-fertilization across different disciplines. A narrow educational experience hardly provides children opportunities to examine an issue from multiple disciplines.

Economic growth Stalin style was simple: develop industry by government command and obtain the necessary resources for this by taxing agriculture at very high rates. The communist state did not have an effective tax system, so instead Stalin “collectivized” agriculture. This process entailed the abolition of private property rights to land and the herding of all people in the countryside into giant collective farms run by the Communist Party. This made it much easier for Stalin to grab agricultural output and use it to feed all the people who were building and manning the new factories. The consequences of this for the rural folk were calamitous. The collective farms completely lacked incentives for people to work hard, so production fell sharply. So much of what was produced was extracted that there was not enough to eat. People began to starve to death. In the end, probably six million people died of famine, while hundreds of thousands of others were murdered or banished to Siberia during the forcible collectivization. Neither the newly created industry nor the collectivized farms were economically efficient in the sense that they made the best use of what resources the Soviet Union possessed. It sounds like a recipe for economic disaster and stagnation, if not outright collapse. But the Soviet Union grew rapidly. The reason for this is not difficult to understand. Allowing people to make their own decisions via markets is the best way for a society to efficiently use its resources. When the state or a narrow elite controls all these resources instead, neither the right incentives will be created nor will there be an efficient allocation of the skills and talents of people. But in some instances the productivity of labor and capital may be so much higher in one sector or activity, such as heavy industry in the Soviet Union, that even a top-down process under extractive institutions that allocates resources toward that sector can generate growth. As we saw in chapter 3, extractive institutions in Caribbean islands such as Barbados, Cuba, Haiti, and Jamaica could generate relatively high levels of incomes because they allocated resources to the production of sugar, a commodity coveted worldwide. The production of sugar based on gangs of slaves was certainly not “efficient,” and there was no technological change or creative destruction in these societies, but this did not prevent them from achieving some amount of growth under extractive institutions.

The second audience consists of those—Americans and all others—who either do not believe that the American value system is as described, or that it is the best ever devised, or that there is even such a thing as a specifically American value system. I welcome these readers. I have in many ways designed this book for them. The third audience is non-Americans. As this book goes to press, it is finally becoming obvious that the European attempt to create a welfare state alternative to the American model has failed. Begun after World War II, the secular welfare state offered Europeans and sympathetic non-Europeans an alternative to American religiosity and to what the welfare state’s supporters depict as cutthroat, heartless American free market capitalism. But some fifty to sixty years later, it is clear that this state is economically—and, as I show in the book, morally—unsustainable. Of the two democratic models—the European and the American—only the American one works and can endure. And the beauty of it as far as non-Americans are concerned is that it does not demand that any group give up its national or religious culture (except insofar as the culture holds values in conflict with the American value system). On the contrary, Americanism, as this value system is called, wants all peoples to retain their national culture and allegiances.

As a result of personal losses and the losses of clients, I had to let everyone in my fledgling company Bridgewater Associates go, and was so broke, I had to borrow $4000 from my dad to help pay my family’s bills. At the same time, this was one of the best things that ever happened to me, because it changed my whole approach to decision-making.

In a famous speech he criticized “equality mongering,” and thereafter not only did different jobs get paid different wages but also a bonus system was introduced. It is instructive to understand how this worked. Typically a firm under central planning had to meet an output target set under the plan, though such plans were often renegotiated and changed. From the 1930s, workers were paid bonuses if the output levels were attained. These could be quite high—for instance, as much as 37 percent of the wage for management or senior engineers. But paying such bonuses created all sorts of disincentives to technological change. For one thing, innovation, which took resources away from current production, risked the output targets not being met and the bonuses not being paid. For another, output targets were usually based on previous production levels. This created a huge incentive never to expand output, since this only meant having to produce more in the future, since future targets would be “ratcheted up.” Underachievement was always the best way to meet targets and get the bonus. The fact that bonuses were paid monthly also kept everyone focused on the present, while innovation is about making sacrifices today in order to have more tomorrow.

Poor countries are poor because those who have power make choices that create poverty. They get it wrong not by mistake or ignorance but on purpose. To understand this, you have to go beyond economics and expert advice on the best thing to do and, instead, study how decisions actually get made, who gets to make them, and why those people decide to do what they do. This is the study of politics and political processes.

History has shown that we shouldn’t rely on governments to protect us financially. On the contrary, we should expect most governments to abuse their privileged positions as the creators and users of money and credit for the same reasons that you might commit those abuses if you were in their shoes. That is because no one policy maker owns the whole cycle. Each comes in at one or another part of it and does what is in their interest to do given their circumstances at the time and what they believe is best (including breaking promises, even though the way they collectively handle the whole cycle is bad).

To have peaceful coexistence Americans must understand that the Chinese believe that their values and their approaches to living out these values are best, as much as Americans believe their American values and their ways of living them out are best.

Finally, it’s not clear that government and the tech industry are competing for exactly the same people. The biggest bidding wars among the tech giants and startups is for technologists who work with advanced technologies like AI and machine learning. Outside of national security and defense (where such skills are very much in demand), government is rarely competing for this talent pool. The skills most needed in government are good product management and service design. The work is hard not because the tech is complicated but because the environment is. Arrogance can be an asset in startups; in government, humility is not only necessary but soon acquired if one doesn’t start out with it. While emotional intelligence matters in all jobs more than the Silicon Valley caricature allows for, it is critical in public-sector work, which is more about change and human responses to change than about technology. The same goes for ethics: a sense of responsibility to the common good and a willingness to think deeply about what harm might come from your actions are assets in any field, but if you’re not already considering these factors, working in government will bring them front and center. When entrepreneurs say that government will never do tech well because lower pay means it won’t get the best people, it’s worth asking what they mean by “best.

Ignorance can explain at best a small part of world inequality.

Consider the divergent paths of the United States and Mexico. Blaming this disparity on the ignorance of the leaders of the two nations is, at best, highly implausible. It wasn’t differences in knowledge or intentions between John Smith and Cortés that laid the seeds of divergence during the colonial period, and it wasn’t differences in knowledge between later U.S. presidents, such as Teddy Roosevelt or Woodrow Wilson, and Porfirio Díaz that made Mexico choose economic institutions that enriched elites at the expense of the rest of society at the end of the nineteenth and beginning of the twentieth centuries while Roosevelt and Wilson did the opposite. Rather, it was the differences in the institutional constraints the countries’ presidents and elites were facing. Similarly, leaders of African nations that have languished over the last half century under insecure property rights and economic institutions, impoverishing much of their populations, did not allow this to happen because they thought it was good economics; they did so because they could get away with it and enrich themselves at the expense of the rest, or because they thought it was good politics, a way of keeping themselves in power by buying the support of crucial groups or elites. The

WE WILL ARGUE that to understand world inequality we have to understand why some societies are organized in very inefficient and socially undesirable ways. Nations sometimes do manage to adopt efficient institutions and achieve prosperity, but alas, these are the rare cases. Most economists and policymakers have focused on “getting it right,” while what is really needed is an explanation for why poor nations “get it wrong.” Getting it wrong is mostly not about ignorance or culture. As we will show, poor countries are poor because those who have power make choices that create poverty. They get it wrong not by mistake or ignorance but on purpose. To understand this, you have to go beyond economics and expert advice on the best thing to do and, instead, study how decisions actually get made, who gets to make them, and why those people decide to do what they do. This is the study of politics and political processes. Traditionally economics has ignored politics, but understanding politics is crucial for explaining world inequality. As the economist Abba Lerner noted in the 1970s, “Economics has gained the title Queen of the Social Sciences by choosing solved political problems as its domain.” We

This was a media beat-up at its very worst. All those officials reacting to what the media labeled “The Baby Bob Incident” failed to understand the Irwin family. This is what we did--teach our children about wildlife, from a very early age. It wasn’t unnatural and it wasn’t a stunt. It was, on the contrary, an old and valued family tradition, and one that I embraced wholeheartedly. It was who we were. To have the press fasten on the practice as irresponsible made us feel that our very ability as parents was being attacked. It didn’t make any sense. This is why Steve never publicly apologized. For him to say “I’m sorry” would mean that he was sorry that Bob and Lyn raised him the way they did, and that was simply impossible. The best he could do was to sincerely apologize if he had worried anyone. The reality was that he would have been remiss as a parent if he didn’t teach his kids how to coexist with wildlife. After all, his kids didn’t just have busy roads and hot stoves to contend with. They literally had to learn how to live with crocodiles and venomous snakes in their backyard. Through it all, the plight of the Tibetan nuns was completely and totally ignored. The world media had not a word to spare about a dry well that hundreds of people depended on. For months, any time Steve encountered the press, Tibetan nuns were about the furthest thing from the reporter’s mind. The questions would always be the same: “Hey, Stevo, what about the Baby Bob Incident?” “If I could relive Friday, mate, I’d go surfing,” Steve said on a hugely publicized national television appearance in the United States. “I can’t go back to Friday, but you know what, mate? Don’t think for one second I would ever endanger my children, mate, because they’re the most important thing in my life, just like I was with my mum and dad.” Steve and I struggled to get back to a point where we felt normal again. Sponsors spoke about terminating contracts. Members of our own documentary crew sought to distance themselves from us, and our relationship with Discovery was on shaky ground. But gradually we were able to tune out the static and hear what people were saying. Not the press, but the people. We read the e-mails that had been pouring in, as well as faxes, letters, and phone messages. Real people helped to get us back on track. Their kids were growing up with them on cattle ranches and could already drive tractors, or lived on horse farms and helped handle skittish stallions. Other children were learning to be gymnasts, a sport which was physically rigorous and held out the chance of injury. The parents had sent us messages of support. “Don’t feel bad, Steve,” wrote one eleven-year-old from Sydney. “It’s not the wildlife that’s dangerous.” A mother wrote us, “I have a new little baby, and if you want to take him in on the croc show it is okay with me.” So many parents employed the same phrase: “I’d trust my kids with Steve any day.

poor countries are poor because those who have power make choices that create poverty. They get it wrong not by mistake or ignorance but on purpose. To understand this, you have to go beyond economics and expert advice on the best thing to do and, instead, study how decisions actually get made, who gets to make them, and why those people decide to do what they do.

poor countries are poor because those who have power make choices that create poverty. They get it wrong not by mistake or ignorance but on purpose. To understand this, you have to go beyond economics and expert advice on the best thing to do and, instead, study how decisions actually get made, who gets to make them, and why those people decide to do what they do. This is the study of politics and political processes. Traditionally economics has ignored politics, but understanding politics is crucial for explaining world inequality.

Underachievement was always the best way to meet targets and get the bonus. The fact that bonuses were paid monthly also kept everyone focused on the present, while innovation is about making sacrifices today in order to have more tomorrow. Even

18. The Political Left/Right Cycle. Capitalists (i.e., those of the right) and socialists (i.e., those of the left) don’t just have different self-interests—they have different deep-seated ideological beliefs that they are willing to fight for. The typical perspective of the rightist/capitalist is that self-sufficiency, hard work, productivity, limited government interference, allowing people to keep what they make, and individual choice are morally good and good for society. They also believe that the private sector works better than the public sector, that capitalism works best for most people, and that self-made billionaires are the biggest contributors to society. Capitalists are typically driven crazy by financial supports for people who lack productivity and profitability. To them, making money = being productive = getting what one deserves. They don’t pay much attention to whether the economic machine is producing opportunity and prosperity for most people. They can also overlook the fact that their form of profit making is suboptimal when it comes to achieving the goals of most people. For example, in a purely capitalist system, the provision of excellent public education—which is clearly a leading cause of higher productivity and greater wealth across a society—is not a high priority. The typical perspective of the leftist/socialist is that helping each other, having the government support people, and sharing wealth and opportunity are morally good and good for society. They believe that the private sector is by and large run by capitalists who are greedy, while common workers, such as teachers, firefighters, and laborers, contribute more to society. Socialists and communists tend to focus on dividing the pie well and typically aren’t very good at increasing its size. They favor more government intervention, believing those in government will be fairer than capitalists, who are simply trying to exploit people to make more money. I’ve had exposure to all kinds of economic systems all over the world and have seen why the ability to make money, save it, and put it into capital (i.e., capitalism) is an effective motivator of people and allocator of resources that raises people’s living standards. But capitalism is also a source of wealth and opportunity gaps that are unfair, can be counterproductive, are highly cyclical, and can be destabilizing. In my opinion, the greatest challenge for policy makers is to engineer a capitalist economic system that raises productivity and living standards without worsening inequities and instabilities. 21.

In 1931, Japan went broke—i.e., it was forced to draw down its gold reserves, abandon the gold standard, and float its currency, which depreciated it so greatly that Japan ran out of buying power. These terrible conditions and large wealth gaps led to fighting between the left and the right. By 1932, there was a massive upsurge in right-wing nationalism and militarism, in the hope that order and economic stability could be forcibly restored. Japan set out to get the natural resources (e.g., oil, iron, coal, and rubber) and human resources (i.e., slave labor) it needed by seizing them from other countries, invading Manchuria in 1931 and spreading out through China and Asia. As with Germany, it could be argued that Japan’s path of military aggression to get needed resources was more cost-effective than relying on classic trading and economic practices. In 1934, there was severe famine in parts of Japan, causing even more political turbulence and reinforcing the right-wing, militaristic, nationalistic, and expansionistic movement. In the years that followed, Japan’s top-down fascist command economy grew stronger, building a military-industrial complex to protect its existing bases in East Asia and northern China and support its excursions into other countries. As was also the case in Germany, while most Japanese companies remained privately held, their production was controlled by the government. What is fascism? Consider the following three big choices that a country has to make when selecting its approach to governance: 1) bottom-up (democratic) or top-down (autocratic) decision making, 2) capitalist or communist (with socialist in the middle) ownership of production, and 3) individualistic (which treats the well-being of the individual with paramount importance) or collectivist (which treats the well-being of the whole with paramount importance). Pick the one from each category that you believe is optimal for your nation’s values and ambitions and you have your preferred approach. Fascism is autocratic, capitalist, and collectivist. Fascists believe that top-down autocratic leadership, in which the government directs the production of privately held companies such that individual gratification is subordinated to national success, is the best way to make the country and its people wealthier and more powerful.

science of economics should focus on the best use of scarce means to satisfy social ends.

Inclusive economic institutions, such as those in South Korea or in the United States, are those that allow and encourage participation by the great mass of people in economic activities that make best use of their talents and skills and that enable individuals to make the choices they wish.

First perfected by Cortés in Mexico, it was based on the observation that the best way for the Spanish to subdue opposition was to capture the indigenous leader. This strategy enabled the Spanish to claim the accumulated wealth of the leader and coerce the indigenous peoples to give tribute and food. The next step was setting themselves up as the new elite of the indigenous society and taking control of the existing methods of taxation, tribute, and, particularly, forced labor. When

I want to start everything in New, what's the bad point?? I don't want to have problems with people which we can be friends or nothing, but not argue as before. What's the purpose what did you gain??? Points?? Money?? PS3??? Xbox??? Nothing just useless and making troubles with people, if we must discuss something let's to be about the fucking Bulgarian Schools, talk about them, I hate them as much as you hate them, I hate the Bulgarian as much as you hate them, I hate the fucking teachers in the fucking schools with which just have fucking problems. How can somebody joke with your spelling or with your mistakes for months???? ... What more to tell you??? That I'm sorry that I'm a Bulgarian guy, because I'm sorry, I can't live with this fucking people, what do they created??? Nothing just staying home and jerkoff non-stop, very creative! And guest what happened??? Here come the "?" people which are terrorists in france and have killed a lot of people and here will be planed the same....,what more only the thought that somebody has graduated from the best school existed in Bulgaria and to have fails with the writing like making so easy mistakes that nobody will make ever, to make mess on the sheets and many other things and this on very important day. A day in which you choose the president or the pre-minister or some kind like this, which is important. I'm very sorry that I'm Bulgarian guy, I don't want to be the cases are this, I want to be an American or a guy from Great Britain, but whatever to be, but to know this language. All people use it, and we are the only people which or some others as one User said that France and Germany are also with the worst English in case that Germany words are like English, but little fucked like spelled and written different like Sänger - singer songster schreiben WOw, this is really fucked just look how arae spelled how are written little like joking with English, aren't they??? If they aren't okay, that's your opinion _ I don't have something against it! If there was chance to be other race no matter what American guy or whatever ot to change my country ot my native language I will do it. If there is chance to and learn English, I go and learnt it without giving and shit about the fucking Bulgarian, I won't call my parents, friends and everything, just everything will be mainly for learning English the best way as possible. I fill fucked there are people which can't read, english, to don't talk about bulgarian, all day I'm seeing how mass media brain washes. I don't see how can be improved Bulgaria it's a fail I know why Adolf Hitler wanted to destroyed it and why Churchill Wanted also, I'm not sure about Churchill, but for HItler I'm sure that he wanted to kill us because of that, whatever you understand me what level we are as nation. I hate the fucking Bulgarian people what to learn from them to joke with people badly??? Very Creative??? To jerkoff all time and to don't give a damn shit about the things around the world?? Or to be with friends which can't think or people which are so much stupid that I'm sorry about them... Whatever, read it if you want if you don't want don't read it, but first check it before you block me. Thank you I appreciate your reading!

The Spanish strategy of colonization was highly effective. First perfected by Cortés in Mexico, it was based on the observation that the best way for the Spanish to subdue opposition was to capture the indigenous leader. This strategy enabled the Spanish to claim the accumulated wealth of the leader and coerce the indigenous peoples to give tribute and food. The next step was setting themselves up as the new elite of the indigenous society and taking control of the existing methods of taxation, tribute, and, particularly, forced labor. When

Just as African societies took aggressive advantage of the economic opportunities presented by the slave trade, they did the same with legitimate commerce. But they did so in a peculiar context, one in which slavery was a way of life but the external demand for slaves had suddenly dried up. What were all these slaves to do now that they could not be sold to Europeans? The answer was simple: they could be profitably put to work, under coercion, in Africa, producing the new items of legitimate commerce. One of the best documented examples was in Asante, in modern Ghana. Prior to 1807, the Asante Empire had been heavily involved in the capturing and export of slaves, bringing them down to the coast to be sold at the great slaving castles of Cape Coast and Elmina. After 1807, with this option closed off, the Asante political elite reorganized their economy. However, slaving and slavery did not end. Rather, slaves were settled on large plantations, initially around the capital city of Kumase, but later spread throughout the empire

The growth generated by extractive institutions is very different in nature from growth created under inclusive institutions, however. Most important, it is not sustainable. By their very nature, extractive institutions do not foster creative destruction and generate at best only a limited amount of technological progress. The growth they engender thus lasts for only so long. The Soviet experience gives a vivid illustration of this limit.

Allowing people to make their own decisions via markets is the best way for a society to efficiently use its resources. When the state or a narrow elite controls all these resources instead, neither the right incentives will be created nor will there be an efficient allocation of the skills and talents of people.