Friday, May 29, 2015

More From Acemoglu

Daron Acemoglu, Why Nations Fail

Yes, countries such as Syria and Egypt are poor, and their populations are primarily Muslim. But these countries also systemically differ in other ways that are far more important for prosperity. For one, they were all provinces of the Ottoman Empire, which heavily, and adversely, shaped the way they developed. After Ottoman rule collapsed, the Middle East was absorbed into the English and French colonial empires, which, again, stunted their possibilities. After independence, they followed much of the former colonial world by developing hierarchical, authoritarian political regimes with few of the political and economic institutions that, we will argue, are crucial for generating economic success. This development path was forged largely by the history of Ottoman and European rule. The relationship between the Islamic religion and poverty in the Middle East is largely spurious. [..]

Geography is also unlikely to explain the poverty of the Middle East for similar reasons. After all, the Middle East led the world in the Neolithic Revolution, and the first towns developed in modern Iraq. Iron was first smelted in Turkey, and as late as the Middle Ages the Middle East was technologically dynamic. [.. The reason for the backwardness] was the expansion and consolidation of the Ottoman Empire, and it is the institutional legacy of this empire that keeps the Middle East poor today [..].

The Ottoman state was absolutist, with the sultan accountable to few and sharing power with none. The economic institutions the Ottomans imposed were highly extractive. There was no private property in land, which all formally belonged to the state. Taxation of land and agricultural output, together with loot from war, was the main source of government revenues.

[Plus] the Ottoman state did not dominate the Middle East in the same way that it could dominate its heartland in Anatolia or even to the extent that the Spanish state dominated Latin American society [..] It lacked not only the ability to impose a stable order in much of the Middle East but also the administrative capacity to collect taxes [this is the worst mixture of governance and non-governance]. So it “farmed” them out to individuals, selling off the right to others to collect taxes in whatever way they could. These tax farmers became autonomous and powerful. Rates of taxation in the Middle Eastern territories were very high, varying between one-half or two-thirds of what farmers produced. Much of this revenue was kept by the tax farmers [..] In Palestine, for example, the situation was so dire that starting in the late sixteenth century, peasants left the most fertile land and moved up to mountainous areas [..].

Extractive economic institutions in the urban areas of the Ottoman Empire were no less stifling. Commerce was under state control, and occupations were strictly regulated by guilds and monopolies. The consequence was that at the time of the Industrial Revolution the economic institutions of the Middle East were extractive. The region stagnated economically.


I call on anyone who can think to not to refrain from commentary such as this just because it doesn't fit some sort of "cultural acceptance" that is mostly the product of a feel-good globalization mantra during the 90s. In this era, which was extremely bereft of original thinking outside of tech, national / cultural differences, of any kind, became a sort of "cool thing to talk about"; "I... AM... KLINGOOOOON!" used to scream the man every other episode in the most famous scifi show of the day which personified everything that was wrong with the cultural interaction at this time. "Ohh part X of your history / culture is different -barbaric- weird... how cool!". It was the lowest hanging fruit, perhaps, for all races, ethnicities, religions in US and the world could protect itself under a charade of funkiness. A certain [visible] part of your culture is different, be loud and proud about it (and tell something cool about it to us so we pass the word to our friends and also be cool in the process). "Oleg means donkey fart after a meal had with wine".. Wow! Dude! Tell me more! "My name Barack means _the one_ in Swahili (actually it doesn't, it just means "aplenty". Of what, who knows). Bunch of weird shit like this.

But most of history and culture for most of the world, sucked, as described above. Nothing in the past is better than today. Europe, US, Middle East all had ups and downs (mostly downs for ME recently). People should come to terms with this.

Guns and Butter

Peter Schiff "We had a lot of problems that happened in 70s, under Nixon and Ford. But those problems started in the 60s, the great ...