Popular Economics Weekly
The Nobel memorial prize in economics was awarded Monday to Daron Acemoglu, Simon Johnson and James A. Robinson for research that explains why societies with poor rule of law and exploitative institutions do not generate sustainable growth, as with some U.S. states as well.
Whereas the peoples of more democratic countries with institutions answerable to their citizens are more prosperous than those with weak democratic institutions, such as North Korea, Mexico, Russia, and even China, say the authors of Why Nations Fail, Daron Acemoglu and James Robinson, two of the new Suth Nobel Laureates.
“Reducing the vast differences in income between countries is one of our time’s greatest challenges. The laureates have demonstrated the importance of societal institutions for achieving this,” said Jakob Svensson, chair of the Committee for the Prize in Economic Sciences.
The authors use the example of the twin cities of Nogales, Texas and Nogales, Sonora, Mexico. Anyone driving across the border can see the difference. Nogales, Texas has three times the income level, better roads, schools, and better law enforcement to protect its citizens than Nogales, Sonora that has been ruled by drug cartels.
The contrast between North and South Korea is even greater—a prosperous South Korean government elected by its citizens vs. a North Korean dictatorship that has literally starved its people to keep one family in power.
It’s also a devastating analysis of why we have a partisan divide between red vs. blue states that Republican Parties have been able to capitalize on by falsely rationalizing the reason for their differences; especially economic rationalizations.
It is a case of the exploiters—wealthy individuals who don’t like to share their wealth—blaming a Washington elite that has dominated most government institutions since World War Two.
The truth is Republican Party economic programs have performed badly; causing massive deficits from tax cuts without concomitant growth that would pay for the tax cuts that have made the red states they govern poorer; because Republicans have adopted policies designed to weaken governmental institutions that are protected by the rule of law.
Republicans began to actually break laws with President Nixon’s Watergate break-in, President Reagan’s secret Iran-contra weapon shipment to Khomeini’s Iran, and GW Bush’s fabrications about Sadam Hussein’s weapons of mass destruction that justified the invasion of Iraq.
It has culminated with Donald Trump and the Republican Party’s outright contempt of laws and even the constitution in not accepting its loss to Democrats and Joe Biden in 2020.
This is born out in the major thesis of this year’s Nobel Prize-winners: that so-called illiberal democracies with central governments only answerable to a powerful minority rather than a majority of its citizens have performed poorly.
A Georgetown Public Review measured the different median household incomes of red and blue states in the U.S.--$74,000 in blue states vs. $60,000 in red states. It’s in part because most red states have lower minimum wages, and fewer social services such as healthcare for their citizens. And even those social services are mostly subsidized by the federal government.
It is why democracies work best when they follow economic rules that serve the majority, and most in danger when attempts are made to weaken or discredit their institutions. The choice for Americans in the upcoming Presidential election should be clear—belong to a party and vote for a country that works for all of its citizens.
Harlan Green © 2024
Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen
No comments:
Post a Comment