Why Nations Fail Quotes

As we will show, poor countries are poor because those who have power make choices that create poverty.

Economic institutions shape economic incentives: the incentives to become educated, to save and invest, to innovate and adopt new technologies, and so on. It is the political process that determines what economic institutions people live under, and it is the political institutions that determine how this process works.

The most common reason why nations fail today is because they have extractive institutions.

Politics is the process by which a society chooses the rules that will govern it.

Inclusive economic and political institutions do not emerge by themselves. They are often the outcome of significant conflict between elites resisting economic growth and political change and those wishing to limit the economic and political power of existing elites.

A businessman who expects his output to be stolen, expropriated, or entirely taxed away will have little incentive to work, let alone any incentive to undertake investments and innovations.

Traditionally economics has ignored politics, but understanding politics is crucial for explaining world inequality.

NATIONS FAIL TODAY because their extractive economic institutions do not create the incentives needed for people to save, invest, and innovate. Extractive political institutions support these economic institutions by cementing the power of those who benefit from the extraction.

This book will show that while economic institutions are critical for determining whether a country is poor or prosperous, it is politics and political institutions that determine what economic institutions a country has.

They tell us we must learn to live with less, and teach our children that their lives will be less full and prosperous than ours have been; that the America of the coming years will be a place where — because of our past excesses — it will be impossible to dream and make those dreams come true. I don't believe that. And, I don't believe you do either. That is why I am seeking the presidency. I cannot and will not stand by and see this great country destroy itself. Our leaders attempt to blame their failures on circumstances beyond their control, on false estimates by unknown, unidentifiable experts who rewrite modern history in an attempt to convince us our high standard of living, the result of thrift and hard work, is somehow selfish extravagance which we must renounce as we join in sharing scarcity. I don't agree that our nation must resign itself to inevitable decline, yielding its proud position to other hands. I am totally unwilling to see this country fail in its obligation to itself and to the other free peoples of the world.

Economic growth and technological change are accompanied by what the great economist Joseph Schumpeter called creative destruction. They replace the old with the new. New sectors attract resources away from old ones. New firms take business away from established ones. New technologies make existing skills and machines obsolete.

no system of government, no economic system, no currency, and no empire lasts forever, yet almost everyone is surprised and ruined when they fail.

Father! My father knows the proper way The nation should be run; He tells us children every day Just what should now be done. He knows the way to fix the trusts, He has a simple plan; But if the furnace needs repairs, We have to hire a man. My father, in a day or two Could land big thieves in jail; There's nothing that he cannot do, He knows no word like "fail." "Our confidence" he would restore, Of that there is no doubt; But if there is a chair to mend, We have to send it out. All public questions that arise, He settles on the spot; He waits not till the tumult dies, But grabs it while it's hot. In matters of finance he can Tell Congress what to do; But, O, he finds it hard to meet His bills as they fall due. It almost makes him sick to read The things law-makers say; Why, father's just the man they need, He never goes astray. All wars he'd very quickly end, As fast as I can write it; But when a neighbor starts a fuss, 'Tis mother has to fight it. In conversation father can Do many wondrous things; He's built upon a wiser plan Than presidents or kings. He knows the ins and outs of each And every deep transaction; We look to him for theories, But look to ma for action

Those controlling political power will eventually find it more beneficial to use their power to limit competition, to increase their share of the pie, or even to steal and loot from others rather than support economic progress.

Inclusive economic institutions require secure property rights and economic opportunities not just for the elite but for a broad cross-section of society.

For economists, Argentina is a perplexing country. To illustrate how difficult it was to understand Argentina, the Nobel Prize–winning economist Simon Kuznets once famously remarked that there were four sorts of countries: developed, underdeveloped, Japan, and Argentina.

The fear of creative destruction is the main reason why there was no sustained increase in living standards between the Neolithic and Industrial revolutions.

History has shown that we shouldn’t rely on governments to protect us financially.

A remarkable thing about new technologies in the Roman period is that their creation and spread seem to have been driven by the state. This is good news, until the government decides that it is not interested in technological development—and all-too-common occurrence due to the fear of creative destruction.

We call such institutions, which have opposite properties to those we call inclusive, extractive economic institutions—extractive because such institutions are designed to extract incomes and wealth from one subset of society to benefit a different subset.

The past is many nations' present.

The essence of the iron law of oligarchy, this particular facet of the vicious circle, is that new leaders overthrowing old ones with promises of radical change bring nothing but more of the same.

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.

Economic growth and technological change are accompanied by what the great economist Joseph Schumpeter called creative destruction.

Economics has gained the title Queen of the Social Sciences by choosing solved political problems as its domain.

There could be some economic growth without innovation, relying on existing technology, but it was growth without creative destruction. And it did not last.

Whether it is North Korea, Sierra Leone, or Zimbabwe, well show that poor countries are poor for the same reason that Egypt is poor. Countries such as Great Britain and the United States became rich because their citizens overthrew the elites who controlled power and created a society where political rights were much more broadly distributed, where the government was accountable and responsive to citizens, and where the great mass of people could take advantage of economic opportunities.

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.

Technological innovation makes human societies prosperous, but also involves the replacement of the old with the new, and the destruction of the economic privileges and political power of certain people.

Women are an eternal subject, which is a lot like being subjected, or subjugated, or a subject nation, even. There are comparatively few articles about whether men are happy or why their marriages also fail or how nice or not their bodies are, even the movie-star bodies. They are the gender that commits the great majority of crime, particularly violent crime, and they are the majority of suicides as well. American men are falling behind women in attending college, and have fallen farther in the current economic depression than women, which you'd think would make them interesting subjects of inquiry.

As I studied history, I saw that it typically transpires via relatively well-defined life cycles, like those of organisms, that evolve as each generation transitions to the next.

debt eats equity but central banks can feed debt by printing money instead.

After an initial phase of looting, and gold and silver lust, the Spanish created a web of institutions designed to exploit the indigenous peoples. The full gamut of encomienda, mita, repartimiento, and trajin was designed to force indigenous people’s living standards down to a subsistence level and thus extract all income in excess of this for Spaniards. This was achieved by expropriating their land, forcing them to work, offering low wages for labor services, imposing high taxes, and charging high prices for goods that were not even voluntarily bought.

when people are willing to die for their country, their country will be more likely to be protected than if the individual self is more important, in which case individuals will run from deadly combat.

Where was innovation to come from? We have argued that innovation comes from new people with new ideas, developing new solutions to old problems. In Rome the people doing the producing were slaves and, later, semi-servile coloni with few incentives to innovate, since it was their masters, not they, who stood to benefit from any innovation. As we will see many times in this book, economies based on the repression of labor and systems such as slavery and serfdom are notoriously noninnovative. This is true from the ancient world to the modern era. In the United States, for example, the northern states took part in the Industrial Revolution, not the South. Of course slavery and serfdom created huge wealth for those who owned the slaves and controlled the serfs, but it did not create technological innovation or prosperity for society. N

To begin with, we have to be more clear about what we mean by patriotic feelings. For a time when I was in high school, I cheered for the school athletic teams. That's a form of patriotism — group loyalty. It can take pernicious forms, but in itself it can be quite harmless, maybe even positive. At the national level, what "patriotism" means depends on how we view the society. Those with deep totalitarian commitments identify the state with the society, its people, and its culture. Therefore those who criticized the policies of the Kremlin under Stalin were condemned as "anti-Soviet" or "hating Russia". For their counterparts in the West, those who criticize the policies of the US government are "anti-American" and "hate America"; those are the standard terms used by intellectual opinion, including left-liberal segments, so deeply committed to their totalitarian instincts that they cannot even recognize them, let alone understand their disgraceful history, tracing to the origins of recorded history in interesting ways. For the totalitarian, "patriotism" means support for the state and its policies, perhaps with twitters of protest on grounds that they might fail or cost us too much. For those whose instincts are democratic rather than totalitarian, "patriotism" means commitment to the welfare and improvement of the society, its people, its culture. That's a natural sentiment and one that can be quite positive. It's one all serious activists share, I presume; otherwise why take the trouble to do what we do? But the kind of "patriotism" fostered by totalitarian societies and military dictatorships, and internalized as second nature by much of intellectual opinion in more free societies, is one of the worst maladies of human history, and will probably do us all in before too long. With regard to the US, I think we find a mix. Every effort is made by power and doctrinal systems to stir up the more dangerous and destructive forms of "patriotism"; every effort is made by people committed to peace and justice to organize and encourage the beneficial kinds. It's a constant struggle. When people are frightened, the more dangerous kinds tend to emerge, and people huddle under the wings of power. Whatever the reasons may be, by comparative standards the US has been a very frightened country for a long time, on many dimensions. Quite commonly in history, such fears have been fanned by unscrupulous leaders, seeking to implement their own agendas. These are commonly harmful to the general population, which has to be disciplined in some manner: the classic device is to stimulate fear of awesome enemies concocted for the purpose, usually with some shreds of realism, required even for the most vulgar forms of propaganda. Germany was the pride of Western civilization 70 years ago, but most Germans were whipped to presumably genuine fear of the Czech dagger pointed at the heart of Germany (is that crazier than the Nicaraguan or Grenadan dagger pointed at the heart of the US, conjured up by the people now playing the same game today?), the Jewish-Bolshevik conspiracy aimed at destroying the Aryan race and the civilization that Germany had inherited from Greece, etc. That's only the beginning. A lot is at stake.

Was it the wicked leaders who led innocent populations to slaughter, or was it wicked populations who chose leaders after their own hears? On the face of it, it seemed unlikely that one Leader could force a million Englishmen against their will. If, for instance, Mordred had been anxious to make the English wear petticoats, or stand on their heads, they would surely not have joined his party -- however clever or persuasive or deceitful or even terrible his inducements? A leader was surely forced to offer something which appealed to those he led? He might give the impetus to the falling building, but surely it had to be toppling on its own account before it fell? If this were true, then wars were not calamities into which amiable innocents were led by evil men.They were national movements, deeper, more subtle in origin. And, indeed, it did not feel to him as if he or Mordred had led their country to its misery. If it was so easy to lead one's country in various directions, as if she was a pig on a string, why had he failed to lead her into chivalry, into justice, and into peace? He had been trying. Then again -- this was the second circle -- it was like the Inferno -- if neither he nor Mordred had really set the misery in motion, who had been the cause? How did the fact of war begin in general? For any one war seemed so rooted in its antecedents. Mordred went back to Morgause, Morgause to Uther Pendragon, Uther to his ancestors. It seemed as if Cain had slain Abel, seizing his country, after which the men of Abel had sought to win their patrimony again for ever. Man had gone on, through age after age, avenging wrong with wrong, slaughter with slaughter. Nobody was the better for it, since both sides always suffered, yet everybody was inextricable. The present war might be attributed to Mordred or to himself. But also it was due to a million Thrashers, to Lancelot, Guenever, Gawaine, everybody. Those who lived by the sword were forced to die by it. It was as if everything would lead to sorrow, so long as man refused to forget the past. The wrongs of Uther and of Cain were wrongs which could have been righted only by the blessing of forgetting them.

But stimulating sustained economic growth required that individuals use their talent and ideas, and this could never be done with a Soviet-style economic system. The rulers of the Soviet Union would have had to abandon extractive economic institutions, but such a move would have jeopardized their political power. Indeed, when Mikhail Gorbachev started to move away from extractive economic institutions after 1987, the power of the Communist Party crumbled, and with it, the Soviet Union.

The Maya’s economy was based on extensive occupational specialization, with skilled potters, weavers, woodworkers, and tool and ornament makers. They also traded obsidian, jaguar pelts, marine shells, cacao, salt, and feathers among themselves and other polities over long distances in Mexico. They probably had money, too, and like the Aztecs, used cacao beans for currency. The

Secular conservatism is like trying to use your pocket handkerchief to slow you down after the main chute has failed. This is why individual heart transformation, not legislation, is fundamental to national reformation. The person and work of Jesus is not optional.

Rich nations are rich largely because they managed to develop inclusive institutions at some point during the past three hundred years. These institutions have persisted through a process of virtuous circles. Even if inclusive only in a limited sense to begin with, and sometimes fragile, they generated dynamics that would create a process of positive feedback, gradually increasing their inclusiveness.

The political institutions of a society are a key determinant of the outcome of this game. They are the rules that govern incentives in politics. They determine how the government is chosen and which part of the government has the right to do what. Political institutions determine who has power in society and to what ends that power can be used. If the distribution of power is narrow and unconstrained, then the political institutions are absolutist, as exemplified by the absolutist monarchies reigning throughout the world during much of history.

The thing that drew me to Lafayette as a subject - that he was that rare object of agreement in the ironically named United States - kept me coming back to why that made him unique. Namely, that we the people never agreed on much of anything. Other than a bipartisan consensus on barbecue and Meryl Streep, plus that time in 1942 when everyone from Bing Crosby to Oregonian school children heeded FDR's call to scrounge up rubber for the war effort, disunity is the through line in the national plot - not necessarily as a failing, but as a free people's privilege. And thanks to Lafayette and his cohorts in Washington's army, plus the king of France and his navy, not to mention the founding dreamers who clearly did not think through what happens every time one citizen's pursuit of happiness infuriates his neighbor, getting on each other's nerves is our right.

Argentina was also one of the richest countries in the world in the nineteenth century, as rich as or even richer than Britain, because it was the beneficiary of the worldwide resource boom; it also had the most educated population in Latin America. But democracy and pluralism were no more successful, and were arguably less successful, in Argentina than in much of the rest of Latin America. One coup followed another, and as we saw in chapter 11, even democratically elected leaders acted as rapacious dictators. Even more recently there has been little progress toward inclusive economic institutions, and as we saw in chapter 13, twenty-first-century Argentinian governments can still expropriate their citizens’ wealth with impunity. All

I believe that the reason people typically miss the big moments of evolution coming at them in life is because they experience only tiny pieces of what’s happening. We are like ants preoccupied with our jobs of carrying crumbs in our very brief lifetimes instead of having a broader perspective of the big-picture patterns and cycles, the important interrelated things driving them, where we are within the cycles, and what’s likely to transpire.

Our theory has attempted to achieve this by operating on two levels. The first is the distinction between extractive and inclusive economic and political institutions. The second is our explanation for why inclusive institutions emerged in some parts of the world and not in others. While the first level of our theory is about an institutional interpretation of history, the second level is about how history has shaped institutional trajectories of nations. Central

We need a powerful sense of determination to banish the ugly blemish of racism scarring the image of America. We can, of course, try to temporize, negotiate small, inadequate changes and prolong the timetable of freedom in the hope that the narcotics of delay will dull the pain of progress. We can try, but we shall certainly fail. The shape of the world will not permit us the luxury of gradualism and procrastination. Not only is it immoral, it will not work It will not work because Negroes know they have the right to be free. It will not work because Negroes have discovered, in nonviolent direct action, an irresistible force to propel what has been for so long an immovable object. It will not work because it retards the progress not only of the Negro, but of the nation as a whole.

Having a reserve currency is great while it lasts because it gives a country exceptional borrowing and spending power and significant power over who else in the world gets the money and credit needed to buy and sell internationally. However, having a reserve currency typically sows the seeds of a country ceasing to be a reserve currency country. That is because it allows the country to borrow more than it could otherwise afford to borrow, and the creation of lots of money and credit to service the debt debases the value of the currency and causes the loss of its status as a reserve currency. The loss of its reserve currency status is a terrible thing because having a reserve currency is one of the greatest powers a country can have because it gives the country enormous buying power and geopolitical power.

Decades of countercultural rebellion have failed to change anything because the theory of society on which the countercultural idea rests is false. We do not live in the Matrix, nor do we live in the spectacle. The world we live in is in fact much more prosaic. It consists of billions of human beings, each pursuing more or less plausible conceptions of the good, trying to cooperate with one another, and doing so with varying degrees of success. There is no single, overarching system that integrates it all. The culture cannot be jammed because there is no such thing as "the culture" or "the system". There is only a hodge-podge of social institutions, most tentatively thrown together, which distribute the benefits and burdens of social cooperation in ways that sometimes we recognize to be just, but that are usually manifestly inequitable. In a world of this type, countercultural rebellion is not just unhelpful, it is positively counterproductive. Not only does it distract energy and effort away from the sort of initiatives that lead to concrete improvements in people's lives, but it encourages wholesale contempt for such incremental changes.

All of this highlights several important ideas. First, growth under authoritarian, extractive political institutions in China, though likely to continue for a while yet, will not translate into sustained growth, supported by truly inclusive economic institutions and creative destruction. Second, contrary to the claims of modernization theory, we should not count on authoritarian growth leading to democracy or inclusive political institutions. China, Russia, and several other authoritarian regimes currently experiencing some growth are likely to reach the limits of extractive growth before they transform their political institutions in a more inclusive direction—and in fact, probably before there is any desire among the elite for such changes or any strong opposition forcing them to do so. Third, authoritarian growth is neither desirable nor viable in the long run, and thus should not receive the endorsement of the international community as a template for nations in Latin America, Asia, and sub-Saharan Africa, even if it is a path that many nations will choose precisely because it is sometimes consistent with the interests of the economic and political elites dominating them. Y

Without an integrated formal property system, a modern market economy is inconceivable. Had the advanced nations of the West not integrated all representations into one standardized property system and made it accessible to all, they could not have specialized and divided labor to create the expanded market network and capital that have produced their present wealth. The inefficiencies of non-Western markets have a lot to do with the fragmentation of their property arrangements and the unavailability of standard representations.

Lack of entitlement drives small nation’s success: they expect to adapt to outside forces, so they do.

A society where everybody is paddling the same boat at a decent pace will move quicker and more effortlessly than one with a few speedsters and many laggards.

The cost of conflict almost always outweigh the benefit of what is being fought over.

Though the policies of Stalin and subsequent Soviet leaders could produce rapid economic growth, they could not do so in a sustained way. By the 1970s, economic growth had all but stopped. The most important lesson is that extractive institutions cannot generate sustained technological change for two reasons: the lack of economic incentives and resistance by the elites.

When two people produce entirely different memories of the same event, observers usually assume that one of them is lying. […] But most of us, most of the time, are neither telling the whole truth nor intentionally deceiving. We aren’t lying; we are self-justifying. All of us, as we tell our stories, add details and omit inconvenient facts; we give the tale a small, self-enhancing spin; that spin goes over so well that the next time we add a slightly more dramatic embellishment; we justify that little white lie as making the story better and clearer – until what we remember may not have happened that way, or even may not have happened at all. […] History is written by the victors, and when we write our own histories, we do so just as the conquerors of nations do: to justify our actions and make us look and feel good about ourselves and what we did or what we failed to do. If mistakes were made, memory helps us remember that they were made by someone else.

The en­emy doesn't want us to plan, to organize, to nationalize our economy; the enemy fights with all its might against it. Why? Be­cause it is precisely through the capitalist anarchy of production that they exploit working people. That is how they make everyone develop a dog-eat-dog mentality, where each one struggles on his own, elbowing each other, kicking each other, knocking heads; each person trying to get ahead of everyone else, failing to realize that if we got organized and united we would be a tremendous force and could go much further, to the benefit of everyone.

Meanwhile, exposure to so many new ideas was producing mass confusion. The amount of information was increasing much more rapidly than our understanding of what to do with it, or our ability to differentiate the useful information from the mistruths. Paradoxically, the result of having so much more shared knowledge was increasing isolation along national and religious lines. The instinctual shortcut that we take when we have “too much information” is to engage with it selectively, picking out the parts we like and ignoring the remainder, making allies with those who have made the same choices and enemies of the rest.

The Industrial Revolution started and made its biggest strides in England because of her uniquely inclusive economic institutions. These in turn were built on foundations laid by the inclusive political institutions brought about by the Glorious Revolution. It was the Glorious Revolution that strengthened and rationalized property rights, improved financial markets, undermined state-sanctioned monopolies in foreign trade, and removed the barriers to the expansion of industry. It was the Glorious Revolution that made the political system open and responsive to the economic needs and aspirations of society. These inclusive economic institutions gave men of talent and vision such as James Watt the opportunity and incentive to develop their skills and ideas and influence the system in ways that benefited them and the nation. Naturally these men, once they had become successful, had the same urges as any other person. They wanted to block others from entering their businesses and competing against them and feared the process of creative destruction that might put them out of business, as they had previously bankrupted others.

Dropping cluster bombs from the air is not only less repugnant: it is somehow deemed, by Western people at least, to be morally superior,’ says British psychologist Jacqueline Rose. 'Why dying with your victim should be seen as a greater sin than saving yourself is unclear.'The colonial West had created a two-tier hierarchy that privileged itself at the expense of 'The Rest’. The Enlightenment had preached the equality of all human beings, yet Western policy in the developing world often adopted a double standard so that we failed to treat others as we would wish to be treated. Our focus on the nation seems to have made it hard for us to cultivate the global outlook that we need in our increasingly interrelated world. We must deplore any action that spills innocent blood or sows terror for its own sake. But we must also acknowledge and sincerely mourn the blood that we have shed in pursuit of national interests. Otherwise we can hardly defend ourselves against accusations of maintaining an 'arrogant silence’ in the face of others’ pain and of creating a world order in which some people’s lives are deemed more valuable than others

Ugh. Would that Christmas could just be, without presents. It is just so stupid, everyone exhausting themselves, miserably haemorrhaging money on pointless items nobody wants: no longer tokens of love but angst-ridden solutions to problems. [...] What is the point of entire nation rushing round for six weeks in a bad mood preparing for utterly pointless Taste-of-Others exam which entire nation then fails and gets stuck with hideous unwanted merchandise as fallout? If gifts and cards were completely eradicated, then Christmas as pagan-style twinkly festival to distract from lengthy winter gloom would be lovely. But if government, religious bodies, parents, tradition, etc. insist on Christmas Gift Tax to ruin everything why not make it that everyone must go out and spend £500 on themselves then distribute the items among their relatives and friends to wrap up and give to them instead of this psychic-failure torment?

Still, at its heart the Rwandan story is the story of the failure of humanity to heed a call for help from an endangered people. The international community, of which the UN is only a symbol, failed to move beyond self-interest for the sake of Rwanda. While most nations agreed that something should be done they all had an excuses why they should not be the ones to do it. As a result, the UN was denied the political will and material mean to prevent the tragedy.

Our minds are vulnerable to myths, falsehoods and fictions not merely because we are dumb or stupid, but because we are frail, flawed and easily afraid. Advocating fearless rationality—an end to myth-making and myth-believing—is not just about being smart. It is a matter of privilege. If you don’t lack for food and water, for physical security or a police department that comes when you call, you might not feel the need to turn to myths, rationalizations and rituals. You may have no need for fellow members of your tribe to come to your assistance when you are sick, because there are doctors and hospitals who will do a better job. If you think of yourself as a citizen of the world because borders are illusions and people everywhere are the same, you probably haven’t lived through the kind of persecution that makes you desperate for the protection of your fellow tribesmen. It’s fine to hold secular, cosmopolitan views. But when rationalists look down on people who crave the hollow panaceas of tribe and nation, it’s like Marie Antoinette asking why peasants who lack bread don’t satisfy themselves with cake. They fail to grasp what life is like for most people on the planet.

This process of innovation is made possible by economic institutions that encourage private property, uphold contracts, create a level playing field, and encourage and allow the entry of new businesses that can bring new technologies to life. It should therefore be no surprise that it was U.S. society, not Mexico or Peru, that produced Thomas Edison, and that it was South Korea, not North Korea, that today produces technologically innovative companies such as Samsung and Hyundai.

stronger education leads to stronger technological innovation, which leads to increased productivity and increased shares of trade, greater wealth, more military power, and eventually the establishment of a reserve currency. Further, having strong leaders, a population that is well-educated and civil with each other, a system that efficiently allocates capital and other resources, access to natural resources, and favorable geography all help a lot, and when they decline, they tend to decline together.

THERE ARE HUGE DIFFERENCES in living standards around the world. Even the poorest citizens of the United States have incomes and access to health care, education, public services, and economic and social opportunities that are far superior to those available to the vast mass of people living in sub-Saharan Africa, South Asia, and Central America. The contrast of South and North Korea, the two Nogaleses, and the United States and Mexico reminds us that these are relatively recent phenomena. Five hundred years ago, Mexico, home to the Aztec state, was certainly richer than the polities to the north, and the United States did not pull ahead of Mexico until the nineteenth century. The gap between the two Nogaleses is even more recent. South and North Korea were economically, as well as socially and culturally, indistinguishable before the country was divided at the 38th parallel after the Second World War. Similarly, most of the huge economic differences we observe around us today emerged over the last two hundred years. Did

Why did her family think pachinko was so terrible? Her father, a traveling salesman, had sold expensive life insurance policies to isolated housewives who couldn’t afford them, and Mozasu created spaces where grown men and women could play pinball for money. Both men had made money from chance and fear and loneliness. Every morning, Mozasu and his men tinkered with the machines to fix the outcomes—there could only be a few winners and a lot of losers. And yet we played on, because we had hope that we might be the lucky ones. How could you get angry at the ones who wanted to be in the game? Etsuko had failed in this important way—she had not taught her children to hope, to believe in the perhaps-absurd possibility that they might win. Pachinko was a foolish game, but life was not.

Tocqueville concluded that “the strength of free peoples resides in the local community. Local institutions are to liberty what primary schools are to science: they put it within the people’s reach; they teach people to appreciate its peaceful enjoyment and accustom them to make use of it.”26 He stressed that it was the nearness and immediacy of the township that made its citizens more likely to care and take an active interest not only in their own fates but in the shared fates of their fellow citizens. By contrast, he noted a striking lack of attentiveness to more distant political centers of power, including both state and an even more distant federal government, where only a few ambitious men might govern but which otherwise was of little concern to the active citizens within the township. Tocqueville would have regarded a citizenry that was oblivious to local self-governance, but which instead directed all its attention and energy to the machinations of a distant national power, not as the culmination of democracy but as its betrayal.

Most decisions are wrong. Most experiments fail. It is tempting to believe that if we entrusted the future of our companies, our industries, our countries, to the right people, they would lead us unerringly to the promised land. Such hopes are always disappointed. Most of Thomas Edison’s inventions did not work, Ford, Morris and Mao ended their careers as sad, even risible figures. Bill Gates missed the significance of the Internet, Mrs Thatcher introduced the poll tax, and Napoleon died in exile on St Helena. Even extraordinarily talented people make big mistakes.

Republican President Dwight D. Eisenhower created the Arctic National Wildlife Refuge, an achievement that much of the Republican Party has been trying to undo over the past several decades. Richard Nixon signed into law four landmark federal bills: the Clean Air Act, the National Environmental Policy Act, the Environmental Pesticide Control Act, and the Endangered Species Act. He established the Environmental Protection Agency, and made many strong environmental appointments in his administration. As we saw in Section 2.2, it was when the Reagan administration came to power in 1980 that environmental concern began to become a partisan issue.

In North Korea, the state built an education system to inculcate propaganda, but was unable to prevent famine. In colonial Latin America, the state focused on coercing indigenous peoples. In neither type of society was there a level playing field or an unbiased legal system. In North Korea, the legal system is an arm of the ruling Communist Party, and in Latin America it was a tool of discrimination against the mass of people. We call such institutions, which have opposite properties to those we call inclusive, extractive economic institutions—extractive because such institutions are designed to extract incomes and wealth from one subset of society to benefit a different subset.

About 15,000 BC, the Ice Age came to an end as the Earth’s climate warmed up. Evidence from the Greenland ice cores suggests that average temperatures rose by as much as fifteen degrees Celsius in a short span of time. This warming seems to have coincided with rapid increases in human populations as the global warming led to expanding animal populations and much greater availability of wild plants and foods. This process was put into rapid reverse at about 14,000 BC, by a period of cooling known as the Younger Dryas, but after 9600 BC, global temperatures rose again, by seven degrees Celsius in less than a decade, and have since stayed high. Archaeologist Brian Fagan calls it the Long Summer.

Given the highly absolutist and extractive Ottoman institutions, the sultan’s hostility to the printing press is easy to understand. Books spread ideas and make the population much harder to control. Some of these ideas may be valuable new ways to increase economic growth, but others may be subversive and challenge the existing political and social status quo. Books also undermine the power of those who control oral knowledge, since they make that knowledge readily available to anyone who can master literacy. This threatened to undermine the existing status quo, where knowledge was controlled by elites. The Ottoman sultans and religious establishment feared the creative destruction that would result.

The rule of law is a very strange concept when you think about it in historical perspective. Why should laws be applied equally to all? If the king and the aristocracy have political power and the rest don’t, it’s only natural that whatever is fair game for the king and the aristocracy should be banned and punishable for the rest. Indeed, the rule of law is not imaginable under absolutist political institutions. It is a creation of pluralist political institutions and of the broad coalitions that support such pluralism. It’s only when many individuals and groups have a say in decisions, and the political power to have a seat at the table, that the idea that they should all be treated fairly starts making sense.

Those who choose to live criminal lives are not the brightest among us. This truth inspires a question: If evil geniuses are so rare, why do so many bad people get away with so many crimes against their fellow citizens and, when they become leaders of nations, against humanity? Edmund Burke provided the answer in 1795: The only thing necessary for the triumph of evil is for good men to do nothing. I would only add this: It is also essential that good men and women not be educated and propagandized into believing that real evil is a myth and that all malevolent behavior is merely the result of a broken family’s or a failed society’s shortcomings, amenable to cure by counseling and by the application of new economic theory.

The witch mania is shameful. How could we do it? How could we be so ignorant about ourselves and our weaknesses? How could it have happened in the most “advanced,” the most “civilized” nations then on Earth? Why was it resolutely supported by conservatives, monarchists, and religious fundamentalists? Why opposed by liberals, Quakers and followers of the Enlightenment? If we’re absolutely sure that our beliefs are right, and those of others wrong; that we are motivated by good, and others by evil; that the King of the Universe speaks to us, and not to adherents of very different faiths; that it is wicked to challenge conventional doctrines or to ask searching questions; that our main job is to believe and obey - then the witch mania will recur in its infinite variations down to the time of the last man. Note Friedrich von Spee’s very first point, and the implication that improved public understanding of superstition and skepticism might have helped to short-circuit the whole train of causality. If we fail to understand how it worked in the last round, we will not recognize it as it emerges in the next.

Dropping cluster bombs from the air is not only less repugnant: it is somehow deemed, by Western people at least, to be morally superior,’ says British psychologist Jacqueline Rose. 'Why dying with your victim* should be seen as a greater sin than saving yourself is unclear.'The colonial West had created a two-tier hierarchy that privileged itself at the expense of 'The Rest’. The Enlightenment had preached the equality of all human beings, yet Western policy in the developing world often adopted a double standard so that we failed to treat others as we would wish to be treated. Our focus on the nation seems to have made it hard for us to cultivate the global outlook that we need in our increasingly interrelated world. We must deplore any action that spills innocent blood or sows terror for its own sake. But we must also acknowledge and sincerely mourn the blood that we have shed in pursuit of national interests. Otherwise we can hardly defend ourselves against accusations of maintaining an 'arrogant silence’ in the face of others’ pain and of creating a world order in which some people’s lives are deemed more valuable than others

The reasons why institutions fail and societies change are complex, and simplistic explanations should evoke automatic suspicion. Sometimes external causes - droughts, plagues or foreign invasions - can unsettle a nation, or its leadership may prove inadequate because of personal factors. In every case, a society faces problems, and is solutions or lack of response set a course for the future.

Why can’t a musician try to make a cinematic “state of the nation” poem told through dream imagery and pop music? They may fail miserably or they may fluke a masterpiece, but at least they tried to push their creativity. As Howard Devoto, of the bands Buzzcocks and Magazine, put it: “Pretentiousness is interesting. At least you’re making an effort. Your ambition has to outstrip your ability at some point.

Nationalism and socialism as actually lived and applied in the 20th century are the same thing (and in the 18th and 19th century, nationalism was often a force for classical liberalism!). It’s all a kind of reactionary tribalism (another “ism” which becomes poisonous quickly as you up the dosage). When you nationalize an industry, you socialize it. When you socialize an industry you nationalize it. Yes, international socialism rejected this formulation. And that’s why international socialism failed! People wanted to be Germans or Russians or Italians and they wanted to be socialists. Even the Soviet Union embraced national-socialism (socialism in one country) because that 'workers of the world unite' crap wouldn't fly. After Stalin, no Communist or socialist regime failed to exploit nationalism to one extent or another.

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.

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.

What remains of the labours of the ‘new philosophers’ who have been enlightening us – or, in other words, deadening our minds – for 30 years now? What really remains of the great ideological machinery of freedom, human rights, the West and its values? It all comes down to a simple negative statement that is as bald as it is flat and as naked as the day it was born: socialisms, which were the communist Idea’s only concrete forms, failed completely in the twentieth century. Even they have had to revert to capitalism and non-egalitarian dogma. That failure of the Idea leaves us with no choice, given the complex of the capitalist organization of production and the state parliamentary system. Like it or not, we have to consent to it for lack of choice. And that is why we now have to save the banks rather than confiscate them, hand out billions to the rich and give nothing to the poor, set nationals against workers of foreign origin whenever possible, and, in a word, keep tight controls on all forms of poverty in order to ensure the survival of the powerful. No choice, I tell you! As our ideologues admit, it is not as though relying on the greed of a few crooks and unbridled private property to run the state and the economy was the absolute Good. But it is the only possible way forward. In his anarchist vision, Stirner described man, or the personal agent of History, as ‘the Ego and his own’. Nowadays, it is ‘Property as ego’. Which

First, I must confess that over the past few years I have been gravely disappointed with the white moderate. I have almost reached the regrettable conclusion that the Negro's great stumbling block in his stride toward freedom is not the White Citizens' Councilor or the Ku Klux Klanner, but the white moderate, who is more devoted to "order" than to justice; who prefers a negative peace which is the absence of tension to a positive peace which is the presence of justice; who constantly says: "I agree with you in the goal you seek, but I cannot agree with your methods of direct action"; who paternalistically believes he can set the timetable for another man's freedom; who lives by a mythical concept of time and who constantly advises the Negro to wait for a "more convenient season." Shallow understanding from people of good will is more frustrating than absolute misunderstanding from people of ill will. Lukewarm acceptance is much more bewildering than outright rejection. I had hoped that the white moderate would understand that law and order exist for the purpose of establishing justice and that when they fail in this purpose they become the dangerously structured dams that block the flow of social progress. I had hoped that the white moderate would understand that the present tension in the South is a necessary phase of the transition from an obnoxious negative peace, in which the Negro passively accepted his unjust plight, to a substantive and positive peace, in which all men will respect the dignity and worth of human personality. Actually, we who engage in nonviolent direct action are not the creators of tension. We merely bring to the surface the hidden tension that is already alive. We bring it out in the open, where it can be seen and dealt with. Like a boil that can never be cured so long as it is covered up but must be opened with all its ugliness to the natural medicines of air and light, injustice must be exposed, with all the tension its exposure creates, to the light of human conscience and the air of national opinion before it can be cured.

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.

The world has enjoyed a notably long period marked by relative peace and security. Nevertheless, the forecasts of increasing fragile states, mounting conflicts born of natural resource scarcity, and the rising risk in the incidence of terrorism around the world all point to an increasingly politically volatile world, one that is worsened by economic uncertainty. The Horizon 2025: Creative Destruction in the Aid Industry report cautions that within the next decade more than 80 percent of the world’s population will live in fragile states, susceptible to civil wars that could spill into cross-border conflicts.4 The US National Intelligence Council has published a similarly dire forecast of more clashes in decades to come. While this study focuses largely on the prospect of natural resource conflicts, water especially, it underscores the political vulnerability of many economies. A 2016 report by the Institute for Economics and Peace concludes 2014 was the worst year for terrorism in a decade and a half, with attacks in ninety-three countries resulting in 32,765 people killed; 29,376 people died the year before, making 2013 the second worst year.5

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.

The federal government could make a Rolls Royce affordable for every American, but we would not be a richer country as a result. We would in fact be a much poorer country, because of all the vast resources transferred from other economic activities to subsidize an extravagant luxury. [...] To have politicians arbitrarily change the price tags, so that prices no longer represent the real costs, is to defeat the whole purpose [of an economy: to make trade-offs, with the prices of a market economy representing the costs of producing things]. Reality doesn't change when the government changes price tags. Talk about "bringing down health care costs" is not aimed at the costly legal environment in which medical science operates, or other sources of needless medical costs. It is aimed at price control, which hides costs rather than reducing them. [...] Whether in France during the 1790s, the Soviet Union after the Bolshevik revolution, or in newly independent African nations during the past generation, governments have imposed artificially low prices on food. In each case, this led to artificially low supplies of food and artificially high levels of hunger. People who complain about the "prohibitive" cost of housing, or of going to college, for example, fail to understand that the whole point of costs is to be prohibitive. [...] The idea [that "basic necessities" should be a "right"] certainly sounds nice. But the very fact that we can seriously entertain such a notion, as if we were God on the first day of creation, instead of mortals constrained by the universe we find in place, shows the utter unreality of failing to understand that we can only make choices among alternatives actually available. [...] Trade-offs [as opposed to solutions] remain inescapable, whether they are made through a market or through politics. The difference is that price tags present all the trade-offs simultaneously, while political 'affordability' policies arbitrarily fix on whatever is hot at the moment. That is why cities have been financing all kinds of boondoggles for years, while their bridges rusted and the roadways crumbled.

Start releasing the American dream. In The Progress Paradox, Gregg Easterbrook uses parameters like healthcare, options, living space per person and mobility to conclude that we who live middle-class lives in North America or Europe are living a lifestyle that is, materially speaking, "better than 99 percent of all the people who have ever lived in human history." 2 He goes on to show the great paradox of our material wealth. As our lives have grown more comfortable, more affluent and filled with more possessions, "depression in the Western nations has increased ten times."3 Why? Easterbook cites Martin Seligman, past president of the American Psychological Association, who identifies rampant individualism (viewing everything through the "I," which inevitably leads to loneliness) and runaway consumerism (thinking that owning more will make us happy and then being disappointed when it fails to deliver) .4 Like the rich farmer in Luke's parable, excessive individualism and rampant consumerism distracts us from the care of our souls. We enlarge on the outside and shrivel on the inside, and we find ourselves spiritually bankrupt. If any characteristic of North American society might disqualify us from effective involvement in mission in our globalized world, it is the relentless pursuit of the so-called American dream. (I think it affects Canadians too.) The belief that each successive generation will do better economically than the preceding one leads to exaggerated expectations of life and feelings of entitlement. If my worldview dictates that a happy and successful life is my right, I will run away from the sacrifices needed to be a genuine participant in the global mission of God.

In Broadway, I suddenly found myself face to face with William de la Touche Clancey. "Well!" A long drawn-out syllable, in which fear and condescension were unpleasantly mingled. "What is the young Old Patroon about to turn his hand to next?" "The Vauxhall Gardens, I should think." My dislike of Clancey is almost physical. Yet I stare at him with fascination; note that his protuberant eyes are yellowish; that he scratches himself compulsively; that his tongue darts in and out of his mouth like a lizard's catching flies. "Of the delicious nymphs you sport with there?" "Of the delicious fauns, too — and their goatish friends." "Uh-huh..." A long, drawn-out attempt at sounding amused failed of its object. "I hope you realize that your editor's unholy passion for the Negro grows more embarrassing each day. If I were he I should beware. He might simply vanish one dark night." "Murdered? Or sold into slavery?" Clancey recently delighted his admirers by proposing that since the institution of slavery has been an integral part of every high civilization (and peculiarly well-adapted to those nations that follow the word as well as the spirit of Old and New Testaments), poor whites should be bought and sold as well as blacks. "I don't believe that poor sick Mr. Leggett would command a high price in the bazaar. Only his diseased mind would have a certain morbid interest to the special collector. You, on the other hand, ought to fetch a pretty price." "More than the usual two dollars you pay?" Two dollars is the current rate for a male prostitute. "Much more! Why, just for those pink Dutch cheeks alone!" It would be nice to record that I thought to something terminal to say but in my rage I could think of absolutely nothing and so left him with the last word.

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.

We are here this afternoon to mourn the passing of two good friends, Terrence Dace and Felix Beider. They were homeless. Their ways were not those we most desire for ourselves, but that didn’t make them wrong. We seem determined to save the homeless, to fix them, to change them into something other than what they are. We want them to be like us, but they are not. The homeless do not want our pity, nor do they deserve our scorn. Our judgments about them, for good or for ill, negate their right to live as they please. Both the urge to rescue and the need to condemn fail to take into account the concept of their personal liberty, which they may exercise as they see fit as long as their actions fall within the law. The homeless are not lesser mortals. For Terrence and Felix, their battles were within and their victories hard-won. I think of these two men as soldiers of the poor, part of an army of the disaffiliated. The homeless have established a nation within a nation, but we are not at war. Why should we not coexist in peace when we may be in greater need of salvation than they? This is what the homeless long for: respect, freedom from hunger, shelter from the elements, safety, the companionship of the like-minded. They want to live without fear. They want to enjoy the probity of the open air without the risk of bodily harm. They want to be warm. They want the comfort of a clean bed when they are ill, relief from pain, a hand offered in friendship. Ordinary conversation. Simple needs. Why are their choices so hard for us to accept? What you see before you is their home. This is their dwelling place. This grass, this sunlight, these palms, this mighty ocean, the moon, the stars, the clouds overhead though they sometimes harbor rain. Under this canopy they have staked out a life for themselves. For Terrence and for Felix, this is also the wide bridge over which they passed from life into death. Their graves will be unmarked but that does not mean they are forgotten. The Earth remembers them, even as it gathers them tenderly into its

Racism was a constant presence and absence in the Obama White House. We didn’t talk about it much. We didn’t need to—it was always there, everywhere, like white noise. It was there when Obama said that it was stupid for a black professor to be arrested in his own home and got criticized for days while the white police officer was turned into a victim. It was there when a white Southern member of Congress yelled “You lie!” at Obama while he addressed a joint session of Congress. It was there when a New York reality show star built an entire political brand on the idea that Obama wasn’t born in the United States, an idea that was covered as national news for months and is still believed by a majority of Republicans. It was there in the way Obama was talked about in the right-wing media, which spent eight years insisting that he hated America, disparaging his every move, inventing scandals where there were none, attacking him for any time that he took off from work. It was there in the social media messages I got that called him a Kenyan monkey, a boy, a Muslim. And it was there in the refusal of Republicans in Congress to work with him for eight full years, something that Obama was also blamed for no matter what he did. One time, Obama invited congressional Republicans to attend a screening of Lincoln in the White House movie theater—a Steven Spielberg film about how Abraham Lincoln worked with Congress to pass the Thirteenth Amendment abolishing slavery. Not one of them came. Obama didn’t talk about it much. Every now and then, he’d show flashes of dark humor in practicing the answer he could give on a particular topic. What do you think it will take for these protests to stop? “Cops need to stop shooting unarmed black folks.” Why do you think you have failed to bring the country together? “Because my being president appears to have literally driven some white people insane.” Do you think some of the opposition you face is about race? “Yes! Of course! Next question.” But he was guarded in public. When he was asked if racism informed the strident opposition to his presidency, he’d carefully ascribe it to other factors.

Rejecting failure and avoiding mistakes seem like high-minded goals, but they are fundamentally misguided. Take something like the Golden Fleece Awards, which were established in 1975 to call attention to government-funded projects that were particularly egregious wastes of money. (Among the winners were things like an $84,000 study on love commissioned by the National Science Foundation, and a $3,000 Department of Defense study that examined whether people in the military should carry umbrellas.) While such scrutiny may have seemed like a good idea at the time, it had a chilling effect on research. No one wanted to “win” a Golden Fleece Award because, under the guise of avoiding waste, its organizers had inadvertently made it dangerous and embarrassing for everyone to make mistakes. The truth is, if you fund thousands of research projects every year, some will have obvious, measurable, positive impacts, and others will go nowhere. We aren’t very good at predicting the future—that’s a given—and yet the Golden Fleece Awards tacitly implied that researchers should know before they do their research whether or not the results of that research would have value. Failure was being used as a weapon, rather than as an agent of learning. And that had fallout: The fact that failing could earn you a very public flogging distorted the way researchers chose projects. The politics of failure, then, impeded our progress. There’s a quick way to determine if your company has embraced the negative definition of failure. Ask yourself what happens when an error is discovered. Do people shut down and turn inward, instead of coming together to untangle the causes of problems that might be avoided going forward? Is the question being asked: Whose fault was this? If so, your culture is one that vilifies failure. Failure is difficult enough without it being compounded by the search for a scapegoat. In a fear-based, failure-averse culture, people will consciously or unconsciously avoid risk. They will seek instead to repeat something safe that’s been good enough in the past. Their work will be derivative, not innovative. But if you can foster a positive understanding of failure, the opposite will happen. How, then, do you make failure into something people can face without fear? Part of the answer is simple: If we as leaders can talk about our mistakes and our part in them, then we make it safe for others. You don’t run from it or pretend it doesn’t exist. That is why I make a point of being open about our meltdowns inside Pixar, because I believe they teach us something important: Being open about problems is the first step toward learning from them. My goal is not to drive fear out completely, because fear is inevitable in high-stakes situations. What I want to do is loosen its grip on us. While we don’t want too many failures, we must think of the cost of failure as an investment in the future.

Westerners, not just Lincoln Steffens. It took in the Central Intelligence Agency of the United States. It even took in the Soviet Union’s own leaders, such as Nikita Khrushchev, who famously boasted in a speech to Western diplomats in 1956 that “we will bury you [the West].” As late as 1977, a leading academic textbook by an English economist argued that Soviet-style economies were superior to capitalist ones in terms of economic growth, providing full employment and price stability and even in producing people with altruistic motivation. Poor old Western capitalism did better only at providing political freedom. Indeed, the most widely used university textbook in economics, written by Nobel Prize–winner Paul Samuelson, repeatedly predicted the coming economic dominance of the Soviet Union. In the 1961 edition, Samuelson predicted that Soviet national income would overtake that of the United States possibly by 1984, but probably by 1997. In the 1980 edition there was little change in the analysis, though the two dates were delayed to 2002 and 2012. Though the policies of Stalin and subsequent Soviet leaders could produce rapid economic growth, they could not do so in a sustained way. By the 1970s, economic growth had all but stopped. The most important lesson is that extractive institutions cannot generate sustained technological change for two reasons: the lack of economic incentives and resistance by the elites. In addition, once all the very inefficiently used resources had been reallocated to industry, there were few economic gains to be had by fiat. Then the Soviet system hit a roadblock, with lack of innovation and poor economic incentives preventing any further progress. The only area in which the Soviets did manage to sustain some innovation was through enormous efforts in military and aerospace technology. As a result they managed to put the first dog, Leika, and the first man, Yuri Gagarin, in space. They also left the world the AK-47 as one of their legacies. Gosplan was the supposedly all-powerful planning agency in charge of the central planning of the Soviet economy. One of the benefits of the sequence of five-year plans written and administered by Gosplan was supposed to have been the long time horizon necessary for rational investment and innovation. In reality, what got implemented in Soviet industry had little to do with the five-year plans, which were frequently revised and rewritten or simply ignored. The development of industry took place on the basis of commands by Stalin and the Politburo, who changed their minds frequently and often completely revised their previous decisions. All plans were labeled “draft” or “preliminary.” Only one copy of a plan labeled “final”—that for light industry in 1939—has ever come to light. Stalin himself said in 1937 that “only bureaucrats can think that planning work ends with the creation of the plan. The creation of the plan is just the beginning. The real direction of the plan develops only after the putting together of the plan.” Stalin wanted to maximize his discretion to reward people or groups who were politically loyal, and punish those who were not. As for Gosplan, its main role was to provide Stalin with information so he could better monitor his friends and enemies. It actually tried to avoid making decisions. If you made a decision that turned

There would seem to be only one question for philosophy to resolve: what must I do? Despite being combined with an enormous amount of unnecessary confusion, answers to the question have at any rate been given within the philosophical tradition of the Christian nations. For example, in Kant's Critique of Practical Reason, or in Spinoza, Schopenhauer and especially Rousseau. But in more recent times, since Hegel's assertion that all that exists is reasonable, the question of what one must do has been pushed to the background and philosophy has directed its whole attention to the investigation of things as they are, and to fitting them into a prearranged theory. This was the first step backwards. The second step, degrading human thought yet further, was the acceptance of the struggle for existence as a basic law, simply because that struggle can be observed among animals and plants. According to this theory the destruction of the weakest is a law which should not be opposed. And finally, the third step was taken when the childish originality of Nietzche's half-crazed thought, presenting nothing complete or coherent, but only various drafts of immoral and completely unsubstantiated ideas, was accepted by the leading figures as the final word in philosophical science. In reply to the question: what must we do? the answer is now put straightforwardly as: live as you like, without paying attention to the lives of others. Turgenev made the witty remark that there are inverse platitudes, which are frequently employed by people lacking in talent who wish to attract attention to themselves. Everyone knows, for instance, that water is wet, and someone suddenly says, very seriously, that water is dry, not that ice is, but that water is dry, and the conviction with which this is stated attracts attention. Similarly, the whole world knows that virtue consists in the subjugation of one's passions, or in self-renunciation. It is not just the Christian world, against whom Nietzsche howls, that knows this, but it is an eternal supreme law towards which all humanity has developed, including Brahmanism, Buddhism, Confucianism and the ancient Persian religion. And suddenly a man appears who declares that he is convinced that self-renunciation, meekness, submissiveness and love are all vices that destroy humanity (he has in mind Christianity, ignoring all the other religions). One can understand why such a declaration baffled people at first. But after giving it a little thought and failing to find any proof of the strange propositions, any rational person ought to throw the books aside and wonder if there is any kind of rubbish that would not find a publisher today. But this has not happened with Nietzsche's books. The majority of pseudo-enlightened people seriously look into the theory of the superman, and acknowledge its author to be a great philosopher, a descendant of Descartes, Leibniz and Kant. And all this has come about because the majority of the pseudo-enlightened men of today object to any reminder of virtue, or to its chief premise: self-renunciation and love - virtues that restrain and condemn the animal side of their life. They gladly welcome a doctrine, however incoherently and disjointedly expressed, of egotism and cruelty, sanctioning the ideas of personal happiness and superiority over the lives of others, by which they live.

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

a young Goldman Sachs banker named Joseph Park was sitting in his apartment, frustrated at the effort required to get access to entertainment. Why should he trek all the way to Blockbuster to rent a movie? He should just be able to open a website, pick out a movie, and have it delivered to his door. Despite raising around $250 million, Kozmo, the company Park founded, went bankrupt in 2001. His biggest mistake was making a brash promise for one-hour delivery of virtually anything, and investing in building national operations to support growth that never happened. One study of over three thousand startups indicates that roughly three out of every four fail because of premature scaling—making investments that the market isn’t yet ready to support. Had Park proceeded more slowly, he might have noticed that with the current technology available, one-hour delivery was an impractical and low-margin business. There was, however, a tremendous demand for online movie rentals. Netflix was just then getting off the ground, and Kozmo might have been able to compete in the area of mail-order rentals and then online movie streaming. Later, he might have been able to capitalize on technological changes that made it possible for Instacart to build a logistics operation that made one-hour grocery delivery scalable and profitable. Since the market is more defined when settlers enter, they can focus on providing superior quality instead of deliberating about what to offer in the first place. “Wouldn’t you rather be second or third and see how the guy in first did, and then . . . improve it?” Malcolm Gladwell asked in an interview. “When ideas get really complicated, and when the world gets complicated, it’s foolish to think the person who’s first can work it all out,” Gladwell remarked. “Most good things, it takes a long time to figure them out.”* Second, there’s reason to believe that the kinds of people who choose to be late movers may be better suited to succeed. Risk seekers are drawn to being first, and they’re prone to making impulsive decisions. Meanwhile, more risk-averse entrepreneurs watch from the sidelines, waiting for the right opportunity and balancing their risk portfolios before entering. In a study of software startups, strategy researchers Elizabeth Pontikes and William Barnett find that when entrepreneurs rush to follow the crowd into hyped markets, their startups are less likely to survive and grow. When entrepreneurs wait for the market to cool down, they have higher odds of success: “Nonconformists . . . that buck the trend are most likely to stay in the market, receive funding, and ultimately go public.” Third, along with being less recklessly ambitious, settlers can improve upon competitors’ technology to make products better. When you’re the first to market, you have to make all the mistakes yourself. Meanwhile, settlers can watch and learn from your errors. “Moving first is a tactic, not a goal,” Peter Thiel writes in Zero to One; “being the first mover doesn’t do you any good if someone else comes along and unseats you.” Fourth, whereas pioneers tend to get stuck in their early offerings, settlers can observe market changes and shifting consumer tastes and adjust accordingly. In a study of the U.S. automobile industry over nearly a century, pioneers had lower survival rates because they struggled to establish legitimacy, developed routines that didn’t fit the market, and became obsolete as consumer needs clarified. Settlers also have the luxury of waiting for the market to be ready. When Warby Parker launched, e-commerce companies had been thriving for more than a decade, though other companies had tried selling glasses online with little success. “There’s no way it would have worked before,” Neil Blumenthal tells me. “We had to wait for Amazon, Zappos, and Blue Nile to get people comfortable buying products they typically wouldn’t order online.