Power, Prosperity and Poverty

This one is was long overdue. I have been meaning to put down my thoughts about this much-recommended book for a few weeks now. "Why Nations Fail - The Origins of Power, Prosperity and Poverty", was first published more than eight years ago but I managed to finish it only during this ongoing Covid-19 lockdown.

The book covers a broad sweep of history and geography to make its central point -  the importance of institutions. Starting with Nogales a city that sits astride on the border between USA and Mexico the authors point out to the stark difference in levels of development (the average US citizen is 7x more prosperous) The Mexican side apparently is stuck with the extractive, authoritarian institutions inherited from the Spanish while the North American side developed inclusive, democratic institutions , which, in the long run, have clearly made up for the lack of gold and silver mines.

We are shown similar patterns in the rest of South America, Europe (England vs. France), Russia, Africa (Congo, Ghana and Ethiopia), Turkey, the Koreas and China. The amazing extent to Spanish exploitation ("Economienda") in South America came as a revelation. I never knew, for instance, about the extent to which the indigenous people were forced out of their towns and villages into "Reducciones" to serve Spain's greed for silver and gold.

It seems an Inca labour institution called "Mit'a" ('a turn' in Quechua) was revived to cover about 200,000 miles wherein 1/7th of male populations from the Reductions were required to work in the mines at Potosi. On top of the "Repartimiento" system for distribution of goods involved forced sale of goods to locals at prices determined by the Spaniards, and under "Trajin" (the burden), indigenous people were forced to substitute for pack animals, for carrying goods within the country.

While stressing on the importance of inclusive institutions, the authors admit that "No two societies create the same institutions; they will have distinct custom, different systems of property rights and different ways of sharing wealth."

You also realise that much has changed since the time this book was conceived. Under Donald Trump USA is no longer the inclusive, equitable country it used to be. And then we have a completely new set of unknown thrown up by the Covid-19 pandemic and mass surveillance programs. Perhaps it is time to revisit the arguments presented in "Why Nations Fail".