‘Why Nations Fail’ Author: The World Is Rebalancing | Endgame #137 (Luminaries)

‘Why Nations Fail’ Author: The World Is Rebalancing | Endgame #137 (Luminaries)

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You can have great leadership but unless that leads to institution building, the great leadership won't last, you can't rely on good leaders, you need to build institutions, that's the key. I think artificial intelligence is a misnomer because it's not intelligence, actually. So it's artificial something, but it's not intelligence; it's a mischaracterization to call it artificial intelligence as a mischaracterization of what intelligence is. We need a fundamental change in the mindset or in our values about what is it makes a good life for? What is it makes for happiness? Hi friends and fellows. Welcome to this special series of conversations involving personalities coming from a number of campuses, including Stanford University.

The purpose of the series is really to unleash thought-provoking ideas that I think would be of tremendous value to you. I wanna thank you of your support so far, and welcome to this special series. GITA WIRJAWAN: Hi, today we're honored to have Professor James Robinson, who's a professor at the Harris School of Public Policy at the University of Chicago. James, thank you so much for your time. JAMES ROBINSON: My pleasure. You were born in the UK.

You spent a lot of time in the Caribbean and West Africa, and then you found your way here in Chicago. How and why? - But that's a long story. My father was an itinerant engineer who started life working in the British Colonial Service in the 1930s, so he basically worked overseas most of his life, and then when I was a kid, we spent a lot of time overseas, in Barbados and Trinidad, and then we moved back to Britain in the 1970s.

He stayed overseas, and we moved around in Britain. I went to the London School of Economics. I studied economics, and I tried to study political science; it's a long story. And then I ended up in the United States. It's a long story. I ended up going to the United States doing a PhD in economics at Yale. I got very excited about learning economics and trying to master economics.

And then I realized that economics didn't actually explain most of what I was interested in. And then it's been a long story of trying to find a way to do research that I feel kind of serious about on the topics I'm passionate about, and that's taken me to lots of places: Australia, Harvard, and I came here in 2015, I moved to the University of Chicago, and it's been fantastic; actually, I love it. Yeah. You've written so many books, and the best one to which for many people, is "Why Nations Fail." And do you think and feel that the success of that is because of your experience in the developing economies, having lived in those areas to the extent that your personal experience relates to the developing countries' citizens around the world? I think that's right.

I mean, on the one hand, the book is trying to summarize in an accessible way a lot of the scientific research that Daron Acemoglu and I had done in the previous sort of 20 years, but many of the examples in the book actually come from my direct experience of kind of field work. Also, the first place I started working in sub-Saharan Africa was Botswana. We talk about Botswana in the book. I've worked for many years in Sierra Leone; we talk about Sierra Leone. I've worked in Zimbabwe; we talk about Zimbabwe. I've taught for the last 30 years every summer in Colombia.

So I've done a lot of research in Colombia; Colombia is in the book. So of course I'm English. I grew up in the 1970s in England, studying English history and society. And so I came to the U.S. So I think you're right that a lot of the focus comes from my childhood.

Professor Acemoglu, of course, grew up in Istanbul. He grew up in Turkey; he grew up in the developing world, straddling Asia and Europe. One of the things that I've learned, one of the things that I found myself kind of most out of sync with, for example, as an economist, was it's just obvious to me that you have to do field work. So many things I just don't understand, and you need to get out there; you need to talk to people; you need to understand other people's perspectives; you need to understand other people's cultures and institutions; the way they think about them. There's only so much you can learn sitting behind your desk. Yes, there's a library full of books, but many things you want to know are not in any book that's in the library.

And so I kind of threw myself into that, starting in the 1990s, mostly because I felt so ignorant, because I enjoy it terrifically also, but just as a way of just generating ideas. And far too much of economic development is also about people sitting in their offices in the United States and imagining what might be true in developing countries, and the voices and the ideas of the people in the developing countries themselves are not on the table, and that's sort of outrageous; it has to change; it will change, and I guess that's something I've always tried to kind of embrace these other perspectives. You kind of dispelled the theory that geography would determine the fate of a country, and you talked in depth about how inclusive institutional building would be far more important and culture would be far more important than stuff like geography. Explain that. Well, one of the sort of proximate motivations for some of the academic papers that Professor Acemoglu and I wrote was...

We were at a conference at Boston University, and Jeffrey Sachs, Professor Jeffrey Sachs, remember him? He was talking about how geography is destiny and how poor countries in Africa and the Tropics were intrinsically poor because of tropical latitude, and I sort of thought I knew something about... Having lived in places of tropical latitude, I just thought this was complete nonsense. And so, Professor Acemoglu and I went afterwards to some bar or something, and we started discussing it, and we agreed immediately that this was complete nonsense, but like, why was there a correlation between latitude and...

It's true that there's a sort of correlation between latitude and prosperity, but that has nothing to do with the effect of latitude in any kind of causality. There was no causality. It's just a correlation. It doesn't mean anything. So what could have created that correlation? That's when we came up with this hypothesis that this is actually related to the nature of European colonialism. In some sense, European colonialism created very different types of institutions in tropical latitudes than it did in temperate latitudes, where Europeans were much more happy living, etc. So that was the start of a whole sort of scientific research agenda that we had trying to look at the effect of colonialism on the kind of modern world income distribution.

And then it turns out that once you think about this properly, geography has no effect on anything. So I think this idea, kind of more conceptually, this idea that somehow human society is kind of limited by geography or ecology, I find that completely wrong. There are 9,000 species of ants. When ants moved to Canada, they speciated because Canada was cold and sort of marginal.

They speciated to kind of be better adapted to the climate. When Homo sapiens got to Canada, what did they do? They didn't speciate; they invented igloos, they developed a taste for sealed blubber, and they developed ice fishing. I think humans are just incredibly creative in terms of technology, institutions, and the way they organize their society. So they don't succumb to geography and ecology. I think we overcome it; humans. I think that's the big story. So I think a lot of our early scientific work was sort of showing that some of these associations that Professor Sachs and other people had kind of tried to convince people were true; just actually were not right once you did the analysis properly.

What do you think is the fundamental cause for the difference between the same people culturally evolving in different manners? You're interested in what outcome? Just like, why is it that human society starts first? - I mean, you could have the same group of people, and they happen to be living in, let's say, two different geographic zip codes. But for some reason the two of them culturally evolved in different ways. One would be of superiority over the other. I don't know. Human society is very complex.

I think humans come up with ideas; they come up with ways of thinking about the world with culture and institutions, and that can lead societies to diverge. Think about New Guinea. In New Guinea, there are hundreds of languages. You go from one valley to the next valley and they speak a different language and they're organized in different ways. So societies can kind of innovate and create, and there are evolutionary processes at work there, I suppose. But I think there's a lot of freedom.

I don't think human society is like this sort of Darwinian. I don't like this evolutionary idea of Darwin's finches, the famous finches of the Galapagos Islands; they had different beaks because the food was different on different islands, and so the finches evolved beaks that were well adapted to eating the food. But I think humans create all sorts of institutions and cultures that are not necessarily very adaptive at all. They can be. They can be brilliantly productive;

they can lead people to cooperate and invent; but they can also be very different. My experience working in developing countries, I think, is that you see lots of things that can't be thought of in a very useful way as being adapted to particular circumstances. So I think that's part of humanity's kind of uniqueness.

The emergence of Homo sapiens with language, culture, and symbolic culture and we're just very creative. I want to take you to Southeast Asia, and I want to bring up the topic of Foreign Direct Investment (FDI). If you take a look at the different Southeast Asian countries, Singapore stands out and being able to attract a massively higher amount of FDI vis-à-vis the others. If you take a look at the FDI on a per capita per year basis for the big guns of Southeast Asia such as Thailand, the Philippines, Malaysia, Vietnam, and Indonesia, they range between a hundred dollars to four hundred dollars per capita. Singapore does it at about nineteen thousand dollars.

Then comes the small country argument. But that gets displaced also because Singapore was able to get in 2021, about 105 billion dollars’ worth of FDI compared to the next biggest recipient at about 30 billion. This kind of confirms your theory, geography doesn't determine the fate of a country, right? It goes back to the institutional building. How would you describe this phenomenon? - Of why Singapore is so successful? - Yeah.

And I want you to peel the onion a little bit, so that at least Singapore can be some sort of an inspiration in some context to others. Yeah, it's an inspiration, but it's also a difficult case. It's interesting, the Singapore's experience. I mean, the big story we try to tell in "Why Nations Fail" is this idea that if you want to have prosperity, if you want to have economic success, then you need to have inclusive economic institutions, by which we mean economic institutions that create broad-based patterns of incentives and opportunities. The way I think about this is very simple. We know what drives economic development is entrepreneurship, innovation, and creativity, and that talent is sort of spread out everywhere in society.

I think all the evidence suggests that in the history of innovation. So how do you find that talent? You don't know where it is. The government doesn't know where it is. You need to create a kind of set of institutions that allow those people to get to the top, that allow them to get credit, to get an education, to have access to markets, and to kind of take patents out to build businesses without somebody crushing them. So that's what inclusive economic institutions are about.

But how do you create such an economy? That's about politics. That's the story here. So we say, "Yeah, that's the economics of it, but lying behind that is the politics." And if you want to have an inclusive economy, you have to have an inclusive political system, and there are two dimensions to that. One is this state capacity, like having a state which can really enforce the law, raise taxes, and provide key public goods, that's the key.

But you also need political power to be broadly based in the sense that I don't think you can rely on some autocrat to use state capacity in the interests of the collectivity, the vast mass of people. It can happen in some circumstances, but not in an enduring way. And the reason why Singapore is kind of a complicated example is that yes, there is state capacity; there's an ability to provide order, provide public goods, invest in education, and enforce the law, but the political system has been pretty autocratic.

It's not like China or whatever it is. But Lee Kuan Yew didn't like opposition too much. You've had the same kind of family dynasty running the place; the same party. So that's a difficult thing, and how would I think about that? I think in society, there are lots of sources of variation.

Human motivation is very complicated. Did Deng Xiaoping do what he did because he wanted to get rich? No, he didn't. Nor about Lee Kuan Yew. Lee Kuan Yew wanted to develop his country.

The guy was charismatic, he was driven, and he didn't like criticism, but he actually acted in what you could say was the collective interest. But my observations as a social scientist are two. One, that's a very unlikely type of autocrat to have. You can have people like that; it's unusual. Two, it's more usual in East Asia for a reason that social scientists don't understand, right? So, you've got Lee Kuan Yew, you've got Park Chung-hee, even like Soeharto maybe for a bit. There are examples of this.

There are no examples in Africa. Maybe you could say President (Paul) Kagame today. Latin America; name one such person in Latin America. So there are interesting regional differences in the presence of these kinds of enlightened autocrats or whatever. But even so, that's an interesting fact. But even there, how do you find these people? And I think what we know in social science is that the best way of actually finding these people is to have a relatively democratic process.

How can you guarantee that you're going to get somebody at the top who really wants to act in the interests of society? When I look at China, I see what's going to stop the presidency whoever comes after him behaving like Chairman Mao and destroying society on some personal whim or some kind of idiosyncratic ideological project. I don't see anything that will stop him. So that's the kind of basis of our prediction. So you can see that Singapore is a difficult case.

It's a small country where one person can have a lot of impact; one personality. But you can't really understand big patterns in world economic history by focusing on individuals like that. The other thing which is very interesting is that whenever you meet a dictator, they always say their model is Lee Kuan Yew. The former president of Kazakhstan, for example, President Nazarbayev, announced that his model was Lee Kuan Yew.

So I was in Kazakhstan talking about my book, and I met the Prime Minister, and I explained to the Prime Minister, "You don't understand the Lee Kuan Yew model. Go to the National Museum of Singapore." If you go to the National Museum of Singapore, it's about Singapore; it's about the history of Singapore, Singapore identity, institution. He appears; Lee Kuan Yew appears in the 1950s at his appropriate place in history, and then he disappears.

You go to the National Museum of Astana; President Nazarbayev, President Nazarbayev, President Nazarbayev did this, totally personalized; that's not the Lee Kuan Yew model at all. He built institutions interestingly enough. Okay, you mentioned democracy. It's probably fair to say that democracy is in some sort of recession, and we're seeing an increasing number of democracies around the world where talent has been selected less on meritocracy, more on loyalty and/or patronage.

Is this you think episodic, or is this something that's going to last for quite a while? I think there are different things going on. If I talked about the United States, I'd say, for example, that there have been lots of terrible leaders in the United States, honestly. People who did far worse things than President Trump.

Roosevelt tried to pack the Supreme Court in the 1930s; he egregiously violated this norm of term limits in a very sneaky way. Also, lots of people tried to do that. Ulysses S. Grant tried to do it in the 19th century. People have just forgotten these names, they've forgotten. So, the U.S. people have forgotten that people did much sneakier things

than President Trump did, honestly. I mean, I'm not defending what President Trump did, but there's a long history of that in the United States, actually in fact. And one of the things we point out in "Why Nations Fail" is that there are these feedback loops.

And the institutional design stopped President Trump. Federalism stopped President Trump. He couldn't interfere with the vote counting because it's controlled by the states, and that's why the constitution was designed.

If you read The Federalist Papers, which was James Madison's sort of justification for why you have the constitution, he makes it very clear that you write constitutions exactly because you expect that people like President Trump are going to come to power. He says, "If men were angels, he wouldn't need a constitution." All right? So he understood that. So I think the constitution did its job. I think it's actually a big triumph for the institutions, actually.

Now, I understand it's still kind of running and whatever. But my sense is that when President Trump drops out, everything is going to revert back. Now, people are scared of him and they're worried about his kind of base, but that's very tied to him personally, and I don't think anyone is going to be able to leverage that movement in the future. But as I said, I think that you said, you use the word "episodic," so, I would say if you look at it historically, this is actually not so uncommon in the United States. This kind of polarization, this attempts to undermine institutions. One of the points about "Why Nations Fail" is that, of course, if you're in an inclusive society or a relatively inclusive society, there are always incentives to make it extractive.

We give the example of Venice, probably the world's most successful society in the late Middle Ages basically just went completely into reverse and destroyed all the institutions that had made it so prosperous to kind of cement this oligarchy. So I think elsewhere in the world, what I see in Latin America, I can't talk about everything, but what I see in Latin America is there was this so-called third wave of democratization in the 1980s and like the 1990s, you see all of these new democracies kind of created. And what you see is that this creates all of these expectations that can't be met in some sense. This has something to do with the weak state capacity or the limited ability of governments to actually change society and kind of deliver things for people. I think there's an enormous disillusionment with democratic practices. I think you see that in Eastern Europe also like the 1990s kind of European integration, which was a benefit that Latin America didn't have but that brought a lot of benefits to Eastern Europe.

But there are also a lot of problems in Eastern Europe, and people have the same sort of disillusionment that I think sets in, so that creates instability amongst the party system. People look for radical alternatives, and quite how that will play out, I don't know. I think my view of democracy is similar to Winston Churchill's, which is that it's the worst possible political system except for the alternatives. And I've done a lot of empirical work, like scientific research, on this. What I can say is that the average effect is that democracies are associated with better public goods provision, better education, and substantial increases in prosperity, but of course, there's a lot of heterogeneity in the sense that there are the Lee Kuan Yews of the world and there are other Paul Kagames of the world.

And that can bring a lot of benefits, but how do you institutionalize it? How do you sustain that? Maybe they can do that in Singapore. I think it seems likely they'll do it in Singapore, but that's not the general pattern at all. I want to ask you about social media. It seems to have distorted the way people look at things, the way people look at people, and it seems to have basically cost discount in the ability to find a proper intersection between power and talent. What we're seeing in many places around the world is for anybody to attain a position of leadership in anything, it's got to do with how much mud you put on your picture on your face when you're on TikTok as opposed to how well you intellectualize. That kind of inevitably will undermine the ability to intellectualize generally and the ability to choose leadership that's going to be able to intellectualize and that's going to be able to build inclusive institutions.

Is that the right way of looking at this as a systemic risk for a long time? I don't know, it's such a fast-moving thing, all of this social media, and it's such a recent thing. The academics are scrambling to catch up with it in terms of trying to understand the research consequences. And the first impulse of academics was to sort of think of this as a positive thing, like Tahrir Square, people coordinating protests against dictators using Twitter, and things like this. Even Facebook, there's research on the spread of Facebook to different languages and how that's associated with protests, democratization, and things like that.

But I think the current view would be much more like what you're articulating, which is having some very corrosive effect on people. Somehow humans, for some reason, are very susceptible to information which they can't document, and I find it very isolating. I think it's very isolating. One of the hypotheses about why on earth Putin launched this invasion of Ukraine when he did and not years before, whatever is that he got so isolated in COVID. He got isolated, and social media isolates you, so people are not giving you feedback (because) you're not talking. And that's what humans do.

It's not a coincidence that the most famous works of philosophy are dialogues, right? What did Plato write? Dialogues. What does Cicero have? Dialogues. Because we need to talk to each other, we need to communicate. And sitting on your phone... I agree, it's sort of... I'm not sure I have a very intelligent view of this, I think it's sort of frightening what you're describing.

I'm not sure I know what the good... As I said, academics are scrambling to get on top of this. But I think the unintended consequences of it just seem to be huge; it's frightening, but I'm not sure I have anything good to say.

I'm equally basic about this. But just within intuition, at the rate that for anybody who wants to attain a position of leadership, it matters more if he or she can dance on TikTok by way of popularizing herself or himself as opposed to intellectualizing. And to me, that is a discount to anybody's ability to build institutions, especially in an inclusive manner, right? And if this thing were to carry on for a long time, then I think there's less hope for institutional building in an inclusive manner. I think that's a challenge.

I mean, I think if you went back in the history of political thought and thought about some of the great scholars like John Locke in the 17th century, look, what was Locke doing? He starts his famous secondary system of government by sort of characterizing, "What are the problems in society?" "What are the main problems?" Well, we have this natural law that God gave. But that doesn't work so well in all contexts. And then he sort of says, "Here's the problem, and here's a solution. We have to design these institutions, etc."

But perhaps what you're saying is that social media creates the world so different. It creates such a different world that we have to characterize in a different way, the types of problems we're facing in society, and we have to come up with different sorts of institutional solutions. I mean, it'd be sort of ludicrous to say that the world never changed. And so if the world changes, the problems are going to change, and the institutional solutions to the problems are going to change. I don't know if there are too many people thinking like that, but it makes sense.

I'm just concerned because, going back to Southeast Asia, it's a region of around 700 million people, it's about a 3.5 trillion-dollar economy. I think what's at stake for these 700 million people is not small potatoes, right? The more we need institutions that are inclusive, the more we need to make sure that we can sustain whatever episodic stresses that could happen politically, geopolitically, economically, socially, and culturally. I'm just not sure, but I can say this though, social media, I think, has changed culture in a big way at the rate that people look at their handphones nine to ten hours a day, and most of what they're looking at is TikTok and Instagram reels and what have you.

And whatever they're looking at, for the most part, are not exactly economics from the University of Chicago; they're just stupid stuff. I hate to say that. And that, I think, is a discount to anybody's ability to build institutions going forward.

But I want to take you to the topic of climate change now. I want to try to bring up what I think is a bit paradoxical. I mean, if you talk to the people within the sustainability space, they're all focused on achieving carbon neutrality by 2050, which is only about 27 years away. But if you take a look at most people on the planet who are living in developing economies, they're more worried about putting food on the table, and for them to understand sustainability, they've got to be modern. And if you try to figure out what it takes for a nation to be modern, there are so many metrics, but one metric is electrification, right? And for them to be adequately electrified, to be modern thinking, it takes countries like India and Indonesia between 90 to 130 years. There seems to be this awkward, irreconcilable nature between the narrative of sustainability and the narrative of modernization.

How do we fix this? I don't know. I mean, I think it's the rich countries that are the big guilty parties here in terms of... I mean, I guess it seems to me that it's not the people in developing countries that created this problem; it's the people in rich countries that created this global problem, and they're mostly responsible for dealing with it, it seems to me. I would say I think it's completely unreasonable to expect people, poor people in developing countries, who didn't create this problem to have to pay for it. So I think whether or not we can actually organize such a global social contract, I don't know. I think it's a sort of indictment in some sense of this period of economic history that humanity, for whatever reason, Western humanity became so focused on this sort of economic materialistic objectives.

Even the terminology of "natural resources," like the world and nature is a resource which we can exploit for our benefit. Whose idea was that? We're all on the same planet, we're living together, and we're living with these natural ecosystems. I feel like that has to change in some fundamental way. I think the very economistic way of thinking about it is the carbon taxes, and that doesn't resonate. We need to find a way of resonating, getting this to resonate with people, and seeing ourselves as kind of part of nature in a much more fundamental way rather than just natural resources.

It seems like the whole terminology has to change. But just in terms of what you're talking about, yes, I think you can't expect people in poor countries to... it's not ... they didn't create the problem.

And they're not responsible now for climate change and global warming; it's the U.S., China, Western Europe, and India, and of course there are a lot of poor people in India too, but... So, that's one question. But it seems to me that to solve that question, we need a fundamental change in the mindset or in our values about what is it makes a good life for? What is it makes for happiness and kind of… I don't know, it's just like… I work a lot in sub-Saharan Africa and you see different ideas in Africa about what a good society looks like, much more embedded in the community, much more respect for the kind of nature and natural resources than you have in this Western Society with this very kind of materialistic. I find myself personally out of sync with that.

How do we play catch up then? I mean, at the end of the day, if we want to be modern or more modern, we gotta catch up; it's a question of scale or scalability. How do we scale in an environmentally friendly manner when the alternatives are not sufficient? I mean, if you want to go with solar, not adequately cheap. Well, I mean the long view is that there's a technological solution, they said the economist view is; well, prices will change, and there'll be a technology will solve this problem. And I always like the joke, Jared Diamond has this great joke, - that in Jared Diamond's book ... - I don't want to mention his name

when I was talking about geography. No, but that's fine, he's a very good friend of mine. We edited a book together; we organized many conferences together. We disagree about many things but that's perfectly normal. But he has this great joke which is in Easter Island completely deforested, like, what did the person think who chopped down the last tree, did they say, "Hey this is my tree, we have private property here. I can cut it down if I like, and you can't do anything about it."

This sort of characterizing a sort of modern Western attitude towards natural resources that's kind of put us in this mess. So, I think this idea that somehow technology can save this; we can have electric cars or we can have electric airplanes or whatever it is, that seems unlikely to be true to me. And so we need some more fundamental rethink of what modernity is about, I would say. I want to ask you about leadership.

What would it take for a country or a nation to have the right kind of leadership? Oh gosh! That's a very hard topic in social science. There's no good social scientific research on leadership to my knowledge, like there's no good ... I mean, I think it's just undeniable in reality the importance of leadership; getting people to work together to identify collective projects turning a country around and a society or whatever it is, or a city, or a university, even, so an institution, an organization. But it's very difficult to understand where that comes from and how do I find good leadership if I don't have it, and why do I have bad leadership. And most social science is all about kind of structures, and it's very hard to take into account what you could call 'agency'; the ability of individuals to impact society or decisions. And it's funny because you spend so much time worrying about that; trying to get the right person and trying to find the right person.

But there's not a good social science theory about that, unfortunately. It's frustrating especially, because in my research, looking at comparative economic development, we were talking about Singapore or talking about General Park Chung-hee; why did he do, what he did, and why did he come to the top when the military took over in Korea, why did he come to the top, and not somebody else. And then look at Ferdinand Marcos, for example. Many military governments that I could name when you get some completely kleptocratic villain, person comes to the top.

Why is it that in one context, you get someone like Park Chung-hee who wanted to really develop his country or you get Ferdinand Marcos who was just much more interested in accumulating wealth for himself and his family, that's a huge consequence for those societies, but we just don't understand why that happens in social science. I mean, in history, you've seen cases where you could have the most fantastic set of institutions, relatively speaking, and you could have the most awkward leadership whereas on the other hand, you could have a set of the most horrible institutions, but awkwardly you end up with a fantastic leadership who could put all the pieces of the puzzle together and fix them. Is it some sort of an act of serendipity? Yeah, I think it has elements like that. I mean, I guess my emphasis would be; you can have great leadership but unless that leads to institution building, the great leadership won't last, you can't rely on good leaders, you need to build institutions, that's the key. So that’s sort of Why Nations Fail's perspective.

I think it does have that element of serendipity. I mean, sometimes leaders emerge to solve a particular problem and they're good for one problem, but they're not good for other problems also, I see that a lot. Like in Colombia, for example, there was this long-running insurgency with these Marxist guerrilla groups, and the government spent 20 years trying to negotiate with them, and it never worked. And then, people just decided; this isn't going to work, we need to fight. And then, there was someone there, President Álvaro Uribe who became president, and that's what he wanted, that's what he always wanted. But, "Okay, we don't want that, we're trying to negotiate."

"Okay fine, now we have to fight, let's get this guy." And they put the guy in power, and he did, that's what he did, and it was fantastic. But he was also a disaster in every other dimension he tried to undermine all the institutions, the Supreme Court, whatever.

And then they got rid of that. So, good for Colombia, but I think sometimes people are good for one thing, one task, and they're not necessarily good for everything also, that's something about leadership. I would say, like Elon Musk, he seems like he's very good at some things, but he's not good at everything.

Like Michael Jordan was very good at basketball, but he wasn't good at baseball. So, I think that's also very difficult, not everybody's good at everything. So, that's another problem with leadership.

Maybe some people, I think like Lee Kuan Yew, he was very intolerant in lots of dimensions and he was autocratic or whatever, but he was also very serious about building the state and building institutions. And he got that. This was not about him, this was about Singapore, and it was not about his personal aggrandizement.

And that was just him, that's just what he cared about and what he valued. And again, so, that's great. But how do we know he will have come to power in the circumstances he did? And I don't think it's necessary either. That's what's interesting. If you look at, say, Mauritius or Barbados, or other places that have been terrifically successful under democracy, then could you name one prime minister of Mauritius? One prime minister of independent Barbados? No. But those in Mauritius have been incredibly successful industrialized, finance, it's peaceful, it's multicultural in the sort of… you have people of Indian descent, Chinese descent, African descent, English, French people.

I mean, it's just an incredible melting pot, Mauritius. It's been extremely dynamic under democracy. And Barbados too. So I always find it curious whenever people tell me the example of Lee Kuan Yew. I'd say, "Well, why don't we talk about Botswana, or why don’t we talk about Barbados, or why don't we talk about all these places that have been successful under democracy?" Also, it's kind of odd this… Well, I think the reason why people talk more often about Singapore is that Singapore has been very good and conscious at projecting ideas and soft power to the rest of the world. And they've always consciously made an effort to be at the intersection of ideas coming from one direction and another, whereas the Mauritius of the world probably chose not to do that, not because they couldn't, right? And one would argue that as much as many think that Singapore is not a thriving liberal democracy, but you got to give it to them for having been able to not just distribute power to the hands of many to some extent, but they've been very good at distributing other essential public goods: health care, welfare, education, intellect, integrity, and social value.

Things that I think matter in the context of a liberal democracy. So I would consider Singapore as I think a very good example for many countries around the world, not just many of us in Southeast Asia, because they've been able to prove themselves to be trustworthy to the rest of the world when it comes to monetary capital allocation. I agree with all of that. But as a social scientist my question is, how do you replicate that somewhere else? What is it that allowed Singapore, Singaporeans to do that? You just just pass laws? Like Saint-Just, one of the leaders of the French Revolution said, “There have been a lot more good laws than good examples.” But they have good laws and good examples in Singapore.

But where does that come from exactly? Is that to do with Lee Kuan Yew? Is it something deeper in the society and the culture? I don't think we'd understand that in social science. So that's my problem. I think I completely agree with all of what you said. My question is, how do I take that and reproduce it in Kazakhstan, or in the Philippines, or in Guinea-Bissau? That's the challenge. How do you see inequality? I mean, one would have thought that in developed economies, inequality would be less, but it's pretty stark, right? If you take a look at the Gini coefficient ratios for some of the most developed economies, they're not small potatoes.

And from a social scientist's standpoint, how is that happening? Is it just because money has gotten a little too elitized? I would say if I just looked at the Americas, the big picture in the Americas is that North America has been much more equal than Latin America for hundreds of years. So it's true that in the last 30 or 40 years, inequality levels in the U.S. have kind of started moving towards Latin American-type levels. But that still masks enormous differences in terms of social mobility, and I think that's really a lot to do with globalization. Why is it that Zuckerberg and these people are so rich? Because the world is his market, it's not just America with a few exports. Facebook is everywhere.

Why are all these people so rich? It's because of this enormous globalization. So I look at that and I think, "Okay, I don't think that can have all sorts of negative consequences for societies." But fundamentally, those people made that money through innovation. In the start of "Why Nations Fail," we say, "If you want to understand the difference between North America and Latin America, look at the difference between Bill Gates and Carlos Slim." Bill Gates made his money innovating; Carlos Slim made his money by getting his friends in the Mexican government to privatize the unregulated telecom monopoly to him, okay? That's the story of Latin America, and end of the story. And I still see that.

I still see in the U.S. the way to get rich and be successful, and have high status is through innovation, it's through entrepreneurship. I don't think that's… It's just that the world has changed in a way that makes that enormously more profitable. I don't think that's the whole story, of course. There's also a domestic story about the crumbling kind of unionization and the kind of accumulation of monopoly power within the society to keep wages down. So this is being combined with other more cultural things, almost within the U.S., kind of attitudes towards work

and the sort of dispensability of workers. I think that's a lot to do with (Ronald) Reagan, the sort of fallout of Reagan, this kind of embracing of the free market, this kind of free market view of the world. So I think that's also going on at the same time.

So it's a combination of different things, which is creating this upsurge in inequality. But as I said, I think it's also very different from Latin America. I mean, in the sense that if you look at social mobility, there's still far more social mobility here. There was a recent calculation by the OECD looking at how many generations it takes to go from being in the poorest 10 percent of the population to being middle class. And in Colombia, it takes 12 generations, and it was like 200 years or something, or 200 and whatever, to get (there). So the U.S. is not the best.

I think it's like Finland and Denmark are the best, but the U.S. is still up there, better than any Latin American country. And I think there's... Think about China, again, because China has had an enormous increase in inequality. Well, inequality is enormously compressed under socialism, so you just take the lid off this thing; all this entrepreneurship is about inequalities bound to increase. So, I think it's complicated—inequality.

And I see kind of good reasons why it's happening and maybe bad reasons why it's happening, but for me, it doesn't really change my view of relative degrees of inclusive or extractive institutions. I still see the economic institutions here as being fundamentally inclusive. - By way of social mobility? - Yeah. And I think people can, you can get to the top. There's enormous openness still for talent and ability. I want to go back to Africa.

I've got a couple of questions on Africa. I know you spent a lot of time there. Where do you see the future of Africa economically in the next, I don't know, a few decades? Because it is the region or a region that I think is large and that continues to be underrated conversationally, right? And where do you see the role of Africa in the context of climate change? So I've written a little bit about this recently, about trying to sort of look at positive aspects from my perspective, positive aspects of Africa, and potential positive aspects for economic development in Africa. And one of the things I sort of point out is that, talking about social mobility, there's actually immense social mobility in Africa.

If you look at the data, it's probably the most socially mobile place in the world. Nobody talks about that, but it's true. And my personal experience in Africa also is just there's enormous… Anyone can get ahead in Africa; there's no kind of the caste system you have in India or all this kind of inequality in Latin America, like very rigid.

You don't have that in Africa. Anyone can get to the top in Africa. So that's an enormous kind of asset, it seems to me. And I think the places I've worked a lot in the last few years, particularly in Congo and Nigeria, was just enormous amounts of talent, energy, and entrepreneurship everywhere.

It's just that the institutional quality is so low that it's just focused on rent seeking or kind of trying to... I mean, Congo is just so... I would say I could imagine Nigeria; there's 200 million people. If you ask me, is there one country in the world that you could see making a transition to growing at 10% a year for the next 50 years like China? I say Nigeria for sure. And you say, "Okay, there are all sorts of institutional problems in Nigeria."

Sure, but did Deng Xiaoping solve every institutional problem in 1978? No. In fact, when people talk about Deng Xiaoping, they talk about policy reform. But what about trying to introduce a market economy into a society where capitalists were evil? "To get rich is glorious," as he put it. So he had to change people's cultures as well. So I look at Nigeria and I say, "How much do you have to really change things to sort of push all of this talent and energy towards productive things? Towards producing instead of trying to get oil wealth?" And so I think Congo is more difficult.

There's all this talent and energy, but Congo is not really a country. Maybe it's like Indonesia; it's an archipelago. There are no roads in Congo, so it's just a hundred different societies and different people hardly linked together.

So if you could link that together, maybe things could happen, but at the moment... Nigeria is not like that; Nigeria is linked together. People mingle; you can get from A to B.

So I think this energy, this social mobility, that's an enormous potential asset. And I also think that culturally, Africa is so powerful. I always think that when we talk about South Korea, South Korea isn't just an economic phenomenon; it's a cultural phenomenon. Just think of K-pop and Netflix. It's just like South Korea is just taking over the world; it's just amazing, kind of in the same way Japan did. And I think in Africa, just all of that: the style and the culture.

Africa will take over the world culturally, I think. And so, I think there's so much... I always find it frustrating when people talk about industry or whatever.

No, that's not what's going to happen in Africa. It's not what's going to happen in Africa. So I think Africans… I talk about many things in this work that I've been doing.

And I also find Africa is very globalized. So every African I know speaks five or six languages. Maybe in Indonesia people speak many languages and things like that, but actually, if you look at the data, Africa is the most multilingual part of the world. What do English people speak? English. What do Americans speak? English. But the world is rebalancing, it seems to me.

And I think if anyone is equipped to take advantage of that, it's Africans. They're so used to… Africa's so diverse, with so many cultures and histories, and everyone is so used to kind of dealing with all these differences. Who's best? The English? No, we had Brexit. We couldn't even stand the French, so insular. It's just that mentality is just so outdated in the modern world.

That English mentality is pathetic. Africans are not like that at all. So I think, as I said, I don't know when these institutional problems will get sorted out. They're getting sorted out.

Kenya is doing very well; Ghana is not so well. There are bits and pieces where there's success and there's economic dynamism, and you see things moving in Rwanda, but I don't think that's very sustainable in Rwanda. But there are parts where things are moving, and I think there are many places where it wouldn't take very much to get things moving because underneath it there's huge potential in society.

But there's still… Nigeria just needs some basics. I mean, it's going to be very interesting to see what President (Bola) Tinubu does because he was formerly Governor of Lagos State, and he actually did fantastic things in Lagos State. So Lagos State has sort of dramatically transformed in the last 20–25 years in terms of security, public goods, the kind of the capacity of the government to kind of do things like raise taxes. And so he's got a heck of a job doing that in the national state.

But if he could do half of what he did in Lagos State in the national state, then Nigeria could take off big time, it seems to me. Wow. I want to push on social science a little bit here. How do you see the role of artificial intelligence in the future of social science for the better of humanity? I don't know. I'm not such a… - Me neither. It just popped out of my head. - Yeah, everybody's talking about ChatGPT or whatever it is. And playing with ChatGPT and… - But young boys and girls, they can't live a day without using AI, right? And if we think positively about this for purposes of better humanity going forward from a social science standpoint, I'd like to think that it's got to be value-additive, right? I think so. I mean, what I see so far in terms of social science research

is kind of very boring derivative things like just kind of doing something you're already doing but in a more sophisticated way or just kind of very... I don't see it leading to conceptually different things yet, but I agree you could say... But I'm not such a… I like technology, but I always think the consequence of technology depends on the kind of institutional context, like this example of the radio. When the radio spread in the United States in the 1930s, what you see is that in counties where they got more radio sets, people were better informed about politics, and then they got more services because the politicians had to pay attention to them. But at the same time that was happening, Hitler bought every German a radio so they could listen to his speeches.

So the technology is the same, the radio set is the same, but the context is completely different, and the consequences are very different. So I think all of this stuff that they're doing in China with artificial intelligence; they're using that to kind of try to monitor people. "Big Brother is watching you," George Orwell said in "1984". Well, it wasn't technologically feasible for Big Brother to watch you when Orwell wrote that book, but maybe it is now. So that's sort of frightening; it may allow a kind of totalitarianism that hadn't previously existed.

How do I see it in kind of scientific research? I don't know. I think the human mind is not like a computer. Creativity is a sort of emergent; what a physicist would call an emergent property; it's not just a matter of crunching numbers; it's a matter of putting things together in some kind of network way. And I don't see AI as substituting for human creativity. And so without that creative input, social science, it doesn't matter how much capacity you have in terms of computing or whatever it is; social science doesn't go anywhere. So maybe I'm just a dinosaur, but it's kind of... - Me too. - I mean, the idea that AI will revolutionize,

I think it's great for some things. It's great for, like, computers can figure out if you come into the hospital with chest pains, what's the probability you're going to die of a heart attack in the next three days? Well, it turns out that the computer is better at figuring that out than the doctor because the computer can just look at much more information than it can understand, and so that's a great application of these very sophisticated techniques. But social science is a very different thing than figuring out if you're going to have a heart attack. Well, radio was net good for the most part because it brought about the democratization of information, which actually led to democratization of ideas. But what we have seen recently with respect to technological innovation is that it brought about the democratization of information but it led to the polarization of ideas as opposed to the democratization of ideas.

That's, I think, what's paradoxical and also problematic. So I'm okay with any new innovation if it leads to the democratization of ideas to the extent it doesn't... I don't think it's going to help with respect to institutional building in a more inclusive manner. Are you suggesting that this could be potentially dystopian? I don't know.

I mean, I guess you could summarize my first point by saying I think artificial intelligence is a misnomer because it's not intelligence, actually. So it's artificial something, but it's not intelligence; it's a mischaracterization to call it artificial intelligence as a mischaracterization of what intelligence is. It's as if intelligence was like being able to do your numbers, doing long division better, or something like that. That's not intelligence. Intelligence is creativity; it's lateral thinking; it's about how you put things together; it's about seeing connections.

So I don't see... Computers could do that, but they wouldn't know what was significant and what wasn't. So there's the left brain, right brain, like the left hemisphere and the right hemisphere thing. So I guess that was my first point; it's not really intelligence. So I don't feel threatened by computers. None of us should feel threatened by computers.

But it's good for some things. Could it be dystopian? Yes. I think our view about China, as articulated in "Why Nations Fail," is actually China doesn't have a model of sustainable economic development, it's all going to end horribly, and it's going to end far more horribly than it did in the past because China is so much more connected to the rest of the world than it was at the time of the cultural revolution, the Great Leap Forward, or whatever it was. And I don't know what's going to happen. But I think if you look at human history, you see this accumulation of this personality cult around President Xi getting rid of these term limits and all of this stuff. That can only lead in one direction: power corrupts.

All power corrupts, absolutely. That's my sort of simplistic view of the world, but I think there's a lot of evidence to suggest that. Everyone says, "Oh, this time it's different." or "The Chinese are different." It could be. We kind of had a discussion about how Singapore was different.

So it could be. It could be. But I don't see that honestly yet. And going back to Lee Kuan Yew, what I find striking is that this wasn't a personalized project; it was not a...

Lee Kuan Yew did not have Singaporean children learning the great thoughts. He didn't have his little green book or his little red book; that was not his project. - It’s all about institutions. - Yeah, but that is President Xi’s project; it's all about him, you see. And that's a big, big difference. So could it be dystopian? I don't know. It's possible.

More possible than in the past. I mean, the interesting thing is, if you look at the Nazi state or going back to Hitler and his radio, even without this kind of incredible technology, Hitler managed to basically maybe get two-thirds or three-quarters of Germans to buy into this project. He didn't need to brainwash them; they bought into it. They bought into this cultural project of racial superiority, and so that can happen without AI, it turns out. We've got to end in Southeast Asia. Tell us a little bit about your personal experience traveling in Southeast Asia.

You've been to Yogyakarta and other parts of Southeast Asia. How was it? Yeah, it's absolutely fascinating. I mean, it's a place with such a deep history and such a kind of innovator historically in terms of culture, it seems to me, like politically. I mean, it's just they're sort of dramatic.

The gap between, like, Java with this kind of Islamic culture, and then you go to Bali and then you have this Hindu culture, and then you go across to the next island, and it's something completely different. It's just that for a social scientist, that amount of variation within such a small space is just sort of absolutely astonishing. So I found that incredibly interesting. And I think, as we were saying earlier, just in terms of the economic potential of Southeast Asia, there's something about... We don't really know how to conceptualize it, but there's something about East Asia that leads to a particular Southeast Asia, to a type of dynamics that you don't see elsewhere in the world in terms of sub-Saharan Africa, in terms of Latin America, where I've done...

I think a lot of our research, as we were discussing earlier, comes from you make generalizations based on sort of statistical analysis or whatever, but also from the places that you know well and you think you kind of understand. But the world is very diverse culturally. I mean, I think one of the things that Professor Acemoglu and I have been working on a lot recently is trying to think through the different intellectual systems of different parts of the world. Confucianism is something very different from the Western tradition. You look at Islam; Islamic political thought, for example, or Confucian political thought, is very different from Western political thought, with this tradition going back to Aristotle and Plato or whatever.

They've had this very different idea of the state, a very different idea of the relationship between the citizen and the state, very different idea of what the state was supposed to be doing. So I think we've been trying to understand, but that means that your experiences are limited because they've involved a particular type of cultural context in Africa or Latin America. So I always feel a little inhibited talking about a place like Southeast Asia where I haven't done research, and I feel I can read books and I can kind of experience the depth of the history and the richness. But I don't feel I have much of a handle on how my concepts travel to Java, how do I think about this, and how do I map that into. I think one of the strengths of "Why Nations Fail" is we came up with this language which is very flexible which you can apply anywhere in the world, and you could sort of say… We have this one chapter, "W

2023-05-09 03:13

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