A Book on Why Nations Fail

Let me warn my readers in the most friendly manner that if you think you can rely on Wikipedia to tell you what this book is truly about, please think again. Wikipedia throws everything into the mix just to play safe. But, in so doing, it misses the big picture while giving us the impression that it is a comprehensive book review.


Here is the big picture that Wikipedia has missed: China between 2008 and 2012.


Thanks to the meltdown of the property market in 2007, the United States found itself in the depths of the so-called Great Recession which had a "tsunami effect" on the whole world. Export economies, led by China, bore the brunt first and foremost because import economies, led by the U.S., did not have much appetite for consumer goods. Under-reported and thus under media's radar screen, China's economy was on the verge of collapse. The U.S. could afford to print U.S. dollars to quench its thirst for Quantitative Easing (QE). China, not so much. But Beijing went ahead with record-breaking QE, anyway. To do less was to invite more mortal danger to the Beijing government, no matter who's in charge. Failing to prop up the job market was not an option. If it would worsen China's over-reliance on debt and export, so be it. Well, it worked even though it was no more than a band-aid solution. The Titanic didn't sink immediately, did it?


Beijing's spin doctors would later try to have the world believe that China had saved America because the former kept the latter's consumer economy above water. At the same time, given Beijing's magic wand, China's financial and property markets were recovering if not booming --- according to China's overseas propagandists who spread the "gospel" around. Caveat emptor ( buyers beware).


In their book Why Nations Fail (2012), Daron Acemoglu and James A. Robinson were among the very few published economists who gave the world the earliest possible warning that China was just rearranging the deck chairs on the Titanic. What debt-ridden Japan has gone through was painful enough. Japan is still floating, after all. China? Only the tip of the iceberg is allowed to be seen these days.


As stressed by Acemoglu and Robinson, people do NOT fail their nations. Their nations' power elites fail them by sticking to a politically and economically EXTRACTIVE SYSTEM. To extract is to take something away. To justify extraction is to justify expropriation, all in the name of a grand design for a victorious future however defined. 


Criticize these two economists all you want, but it remains true that the less extractive a nation is, the more attractive it becomes. 


“Bad citrus trees may grow from good citrus seeds if planted on the wrong side of the Huai River, and vice versa (橘越淮而枳, 反之亦然).”

I have put Why Nations Fail on top of Wong Huning (王沪宁)'s books.


by 水儿