ESOC book club: Why nations fail

[Goodspeed]

You should probably read the book if you want to talk about it and not sound like an idiot to people who have

[Dolan]

Who says I'm talking about the book

[fightinfrenchman]

Context clues, I suppose

[Dolan]

No, I reacted to 2 main ideas that were brought up in this thread: the importance of institutions and the extractive/inclusive dichotomy.
I once read a summary of this book, because I remember some points they made about the importance of patents.
It was such a rose-tinted way of looking at the current situation in the IP field, I didn't even bother to react to that. If they really believe the little inventor is protected by patents then they had no brush with real life yet.

[Dolan]

Has anyone here tried to register a patent? You need 1 year for the national phase, it can cost several thousand bucks, then you have to elevate the issue to the WIPO where you pay an extra $1300 and wait for another year just for them to examine your dossier. It's possible you could spend the money and they won't recognise any of the innovations you submitted or maybe recognise some small one among several you proposed.
So, at best, after 2 years and several thousand bucks spent, you might have an internationally recognised patent. But that won't stop any megacorp from just copying it and then good luck fighting them in courts, they know you won't last beyond a million or two in lawyer costs, so all they have to do is outlast you and they win by default. That's your magnific IP protection that enables the great inclusive society to thrive.
That's what happens when you're an academic who thinks abstractions are real.

[Dolan]

Now imagine someone who is dirt-poor but has come up with a brilliant idea and develops it. He won't even have the money to register the patent, let alone find a lawyer to represent him in a court of law if a corporation simply uses his invention.
The current system of patent registering exists mainly so that big corporations can have a legal record that they can use in court if one of their main competitors wants to use a similar feature in their products. It's about blocking the competition.
And if you go to the patent databases and read through them, most of them were submitted by corporations... because that's the purpose of this system. Occasionally you might find one of those crazy individuals who braved the whole procedural bullshit to get their invention recorded.
Also, there's a cooldown on your patent (I think it's 7 years) and you have to pay every year for maintaining the record, otherwise they will consider it vacant and you lose it.

[gibson]

Funny, this exact thing was discussed in the book. You have (unsurprisingly for someone who hasn’t read it) completely missed the point it’s trying to make.

[Dolan]

So what was their point about patents, that they hold back society because only the patent holder gains wealth from it, so there needs to be a pluralistic system of institutions to counter that? That's what the wiki on this book says.
If so, that's not the case, society gains from the implementation of that patent, since the holder normally will not use the patent to block its implementation.

[Goodspeed]

There are 29 instances of the string "patent" in the book. If you download it (link in the OP) you can ctrl-F them yourself and see about the context. Iirc patents are brought up as an example of an inclusive economic institution. The possibility to patent ideas gives people more incentive to innovate. They're also mentioned as a way for absolutist leaders to stop creative destruction (which they are incentivized to do), in that they can deny patents for ideas that threaten to upend the status quo. I think there was an example of some guy who had an important idea and went to a few kings and asked for a patent for his idea, but the kings were too scared of the idea and denied it, which slowed economic progress or something.

[Dolan]

I see, so they have a more nuanced view of how patents could be used in different contexts.
Anyway, the state of IP protection is a lot more terrible than people imagine it is. Better than none at all but heavily skewed in favour of megacorporations.
At this point, I gave up on registering a patent, since I could end up spending thousands of bucks and still have no real legal cover against corporations stealing it. At best, I could use the public record to create a PR problem for them, exposing what they did, which is not guaranteed to resolve anything. So my best bet is to make implementation so complicated and time-consuming, it wouldn't be worth replicating.

[Dolan]

I'm looking at the chapter in which they dismiss the cultural argument and I have to say this was written in a very superficial journalistic popsci way. Probably because it wouldn't sell or create much of a stir, unless they turn it into the textual version of a National Geographic documentary. It needs suspense, arguments everyone can understand, 'interesting' leaps of logic.

Here they fail to recognise how communism has changed people's mentalities in North Korea. It hasn't been the same culture for half a century. Most of those people were born in an environment of collective ideological brainwashing. I know because that's what my country went through and you cannot fathom how much a closed system like communism, information deprivation and censorship deform people's mentalities, how they reason about things.

What they should have explained here is not why South Korea jumped ahead, that's due to the postwar circumstances in which the USA was heavily ideologically and strategically invested in making that country succeed, to build a ring around both China and the USSR. They should have realised that it was the North that got off the train of history and went on a path of collective utopian cultism, psy-op-ing themselves into poverty. Then once they got stuck in a non-functional system, they compensated through collective coping sessions of dreaming about the future bluesky communist society that never came.

The way they dismiss here the cultural argument is just very very superficial. And this book is recommended by some Noblel prize weiner.
Glad I didn't waste time reading the whole book.

[Dolan]

Imagine thinking that institutions are something apart from culture. That is the level of popsci today

[Cometk]

image and rest of post

I'm looking at the chapter in which they dismiss the cultural argument and I have to say this was written in a very superficial journalistic popsci way. Probably because it wouldn't sell or create much of a stir, unless they turn it into the textual version of a National Geographic documentary. It needs suspense, arguments everyone can understand, 'interesting' leaps of logic.

Here they fail to recognise how communism has changed people's mentalities in North Korea. It hasn't been the same culture for half a century. Most of those people were born in an environment of collective ideological brainwashing. I know because that's what my country went through and you cannot fathom how much a closed system like communism, information deprivation and censorship deform people's mentalities, how they reason about things.

What they should have explained here is not why South Korea jumped ahead, that's due to the postwar circumstances in which the USA was heavily ideologically and strategically invested in making that country succeed, to build a ring around both China and the USSR.

pretty much this yeah, south korea's present economic success was presupposed during its three decades as a military dictatorship, during which time it received direct aid from the U.S. and west along with financial integration. are the authors really calling the Park junta an example of successful "inclusive institutions"? did south korea's history only begin in the 90s?

They should have realised that it was the North that got off the train of history and went on a path of collective utopian cultism, psy-op-ing themselves into poverty. Then once they got stuck in a non-functional system, they compensated through collective coping sessions of dreaming about the future bluesky communist society that never came.

The way they dismiss here the cultural argument is just very very superficial. And this book is recommended by some Noblel prize weiner.
Glad I didn't waste time reading the whole book.

even if it led to an unbalanced economy, aggressively pursuing nuclear capability after experiencing a genocide at the hands of the unscathed-by-ww2 global hegemon at the time seems totally reasonable to me. you would need to end the West's comprehensive sanctions on the DPRK and give it two decades of development before you could pass this type of judgment on its success by its "inclusive" or "extractive institutions"

haven't read the book yet, don't really have time, but i do want to, probably will need to resort to audiobook to get it done...

[Cometk]

it's funny they characterize the Park regime and subsequent juntas as "authoritarian, but basically inclusive" because they were reliant on US aid and tech transfers, but don't say the same of China under late Mao/Deng/Jiang after its Kissingerian market liberalization & integration with western finance capital

[Goodspeed]

[image]

I'm looking at the chapter in which they dismiss the cultural argument and I have to say this was written in a very superficial journalistic popsci way. Probably because it wouldn't sell or create much of a stir, unless they turn it into the textual version of a National Geographic documentary. It needs suspense, arguments everyone can understand, 'interesting' leaps of logic.

Here they fail to recognise how communism has changed people's mentalities in North Korea. It hasn't been the same culture for half a century. Most of those people were born in an environment of collective ideological brainwashing. I know because that's what my country went through and you cannot fathom how much a closed system like communism, information deprivation and censorship deform people's mentalities, how they reason about things.

What they should have explained here is not why South Korea jumped ahead, that's due to the postwar circumstances in which the USA was heavily ideologically and strategically invested in making that country succeed, to build a ring around both China and the USSR. They should have realised that it was the North that got off the train of history and went on a path of collective utopian cultism, psy-op-ing themselves into poverty. Then once they got stuck in a non-functional system, they compensated through collective coping sessions of dreaming about the future bluesky communist society that never came.

The way they dismiss here the cultural argument is just very very superficial. And this book is recommended by some Noblel prize weiner.
Glad I didn't waste time reading the whole book.

Two things I'll agree with you about. One is that it's written in a journalistic popsci way. I think they intended the book to be accessible, and succeeded. The second is that their claim that any difference in culture is the consequence of differences in prosperity does not follow from what they said previously, and I don't think it's true either. Actually I don't even think that's what they meant to say, I think it's a mistake. What they probably meant to say is that prosperity and culture changed for the same underlying reason: A sudden and strong institutional divergence.

They don't fail to recognize how communism changed the North, that's actually the point they're making here. Their point is that, despite Korea's cultural homogeniety, the North and South suddenly strongly diverged in their levels of prosperity. If culture was a reliable predictor of prosperity, that couldn't have happened. Simple as that. The reason is, as you said, that the North went under communist rule and the South was put on a path to prosperity by the US. They go into the Korean case in more detail from page 70.

You seem very eager to dismiss the book, and are making some big leaps (on what basis did you think they fail to recognize that communism changed the North?) to confirm your existing belief that it's popsci trash. If you're not going to give it a real chance, why even read it?

[Goodspeed]

image and rest of post

I'm looking at the chapter in which they dismiss the cultural argument and I have to say this was written in a very superficial journalistic popsci way. Probably because it wouldn't sell or create much of a stir, unless they turn it into the textual version of a National Geographic documentary. It needs suspense, arguments everyone can understand, 'interesting' leaps of logic.

Here they fail to recognise how communism has changed people's mentalities in North Korea. It hasn't been the same culture for half a century. Most of those people were born in an environment of collective ideological brainwashing. I know because that's what my country went through and you cannot fathom how much a closed system like communism, information deprivation and censorship deform people's mentalities, how they reason about things.

What they should have explained here is not why South Korea jumped ahead, that's due to the postwar circumstances in which the USA was heavily ideologically and strategically invested in making that country succeed, to build a ring around both China and the USSR.

pretty much this yeah, south korea's present economic success was presupposed during its three decades as a military dictatorship, during which time it received direct aid from the U.S. and west along with financial integration. are the authors really calling the Park junta an example of successful "inclusive institutions"? did south korea's history only begin in the 90s?

They make a distinction between economic institutions and political institutions. A country can have extractive political institutions (authoritarian leadership) while having (at least relatively) inclusive economic institutions, though it's rare for reasons they explain elsewhere. They characterize the Park regime as extractive politically, but somewhat inclusive economically (due to US influence) which allowed the SK economy to grow much more quickly than it would under extractive economic institutions. If you only read snippets and are unable to place them into context, you're not going to understand these nuances.

it's funny they characterize the Park regime and subsequent juntas as "authoritarian, but basically inclusive" because they were reliant on US aid and tech transfers, but don't say the same of China under late Mao/Deng/Jiang after its Kissingerian market liberalization & integration with western finance capital

They actually do. They go into China in more detail much later in the book, and they characterize the market liberalization as a move towards more inclusive economic institutions. Modern China is economically relatively inclusive while its political institutions are still extractive. They argue that this can be a solid recipe for growth, but that growth is unlikely to be sustained. They are not the first or the last to make the prediction that China's growth, as long as it doesn't move towards inclusive political institutions, will be limited. I happen to agree with them (and already did, before reading this book).

[Goodspeed]

Getting pretty tired of explaining the book to people who haven't read it tbh. That's not how I envisioned this book club thing.

The arrogance of sitting here reading snippets and thinking you have it all figured out, then going on ESOC to triumphantly type up your complaints about these stupid nobel-prize-winning economists and their dumb theory. Lol. Where's your humility guys?

[Cometk]

Show hidden quotes

image and rest of post

I'm looking at the chapter in which they dismiss the cultural argument and I have to say this was written in a very superficial journalistic popsci way. Probably because it wouldn't sell or create much of a stir, unless they turn it into the textual version of a National Geographic documentary. It needs suspense, arguments everyone can understand, 'interesting' leaps of logic.

Here they fail to recognise how communism has changed people's mentalities in North Korea. It hasn't been the same culture for half a century. Most of those people were born in an environment of collective ideological brainwashing. I know because that's what my country went through and you cannot fathom how much a closed system like communism, information deprivation and censorship deform people's mentalities, how they reason about things.

What they should have explained here is not why South Korea jumped ahead, that's due to the postwar circumstances in which the USA was heavily ideologically and strategically invested in making that country succeed, to build a ring around both China and the USSR.

pretty much this yeah, south korea's present economic success was presupposed during its three decades as a military dictatorship, during which time it received direct aid from the U.S. and west along with financial integration. are the authors really calling the Park junta an example of successful "inclusive institutions"? did south korea's history only begin in the 90s?

They make a distinction between economic institutions and political institutions. A country can have extractive political institutions (authoritarian leadership) while having (at least relatively) inclusive economic institutions, though it's rare for reasons they explain elsewhere. They characterize the Park regime as extractive politically, but somewhat inclusive economically (due to US influence) which allowed the SK economy to grow much more quickly than it would under extractive economic institutions. If you only read snippets and are unable to place them into context, you're not going to understand these nuances.

i'm aware of this, as i went on further in my subsequent post, though i did make a critical reading error on page 93. nonetheless it's funny how their prediction on china's economic outlook under its so-called "extractive political institutions" has fared, almost 15 years from publication. to be fair the xi era changed a lot.

[Cometk]

always wait for the goodspeed post edit. anyway, i disagree with you about china's prospective growth, and am more bearish on the american economy, not a novel take for the next five years, but even beyond that. the problems are too deep. i'll read more when i can.

[Goodspeed]

To the extent that I'm bearish on the US economy, it's due to the flaws in their political system. In line with the book's theory, we can say American political institutions have been getting more extractive recently, likely to get even more so in the future. This is mostly due to corruption enabled by SCOTUS rulings and widespread disenfranchisement enabled by its electoral system. There is little hope of reform there. And when political institutions get extractive, economic institutions are likely to follow. We will probably see examples of this happening this term, with the Trump administration openly supporting Musk's monopolies (SpaceX and Starlink). No doubt these companies will get some public policy windfalls in the next 4 years, one of which will probably be lax enforcement of anti-trust laws.

[Dolan]

Their point is that, despite Korea's cultural homogeniety, the North and South suddenly strongly diverged in their levels of prosperity. If culture was a reliable predictor of prosperity, that couldn't have happened. Simple as that. The reason is, as you said, that the North went under communist rule and the South was put on a path to prosperity by the US. They go into the Korean case in more detail from page 70.

Divergence didn't happen right away, it took time for SK to jump ahead with the help of US capital. Meanwhile Norks were left behind, captive in their new-found ideological cult. Culture diverged and institutions followed, then this became visible in differing levels of wealth creation.

I could talk about this, knowing how my country changed its culture when it transitioned from communism to a free-market economy with a democratic system. A lot of the laws we adopted to reform our system were cultural transplants, they didn't come organically from our local culture. Even our constitution is some frankensteined version of Belgian and French constitutions, that created a hybrid semi-presidential system that was meant to give the universally elected president enough power to match the level of political legitimacy but not as much power that he could turn into a new Ceausescu. So we struggled with these new cultural transplants in terms of legal and constitutional norms, they didn't work perfectly and definitely not how they worked in the culture from which they were imported (France, Belgium).

The outcome of this political-institutional hybridisation was sui generis, something that doesn't resemble the models but neither does it look like anything we had before. And there are pull factors from our older culture that still try to drag us back to our previous history, both boomers and zoomers who are nostalgic for the good old sturdy times when the country was led by a providential leader, boosting feelings of national pride and really showing our enemies (the West, globohomo, international bankers etc) the middle finger. While on the other hand, there's a middle class of younger corporatists, urban entrepreneurs who like the Western models, for whom transition to a market system was a success story. They made money, they feel great about their new-found wealth and social mobility, they go on expensive vacations, the last thing they want is to go back. And they are very much acculturated to the West. You can find this pattern all across Eastern Europe.

I imagine something similar happened in Korea, where the family split and went in two separate directions, one learning new ways of building an economy aided by Western capital and cultural imports, the other also working on building a new society based on some utopian ideas imported from Europe. It's interesting how the push to modernise societies, all around the world, came through the vector of European modernistic ideologies seeping through local cultures. Results have been variable, it mostly failed in the Middle East due to religion being a much stronger factor, while it more or less succeeded in SE Asia, to the extent it eventually hybridised with local previously existing cultures and institutions. For example, Marxism with its Lutheran equalitarian spirit of building the future society as a workers' paradise (reminding the times of Germanic guilds and the role they played in late-medieval Protestant kingdoms) was grafted onto the local Confucian tradition of emphasising solutions that work collectively rather than individually.

[Goodspeed]

Their point is that, despite Korea's cultural homogeniety, the North and South suddenly strongly diverged in their levels of prosperity. If culture was a reliable predictor of prosperity, that couldn't have happened. Simple as that. The reason is, as you said, that the North went under communist rule and the South was put on a path to prosperity by the US. They go into the Korean case in more detail from page 70.

Divergence didn't happen right away, it took time for SK to jump ahead with the help of US capital. Meanwhile Norks were left behind, captive in their new-found ideological cult. Culture diverged and institutions followed, then this became visible in differing levels of wealth creation.

And the cult was communism, right? So it seems to me that came first (the institutional change) and cultural change followed. The soviets established communist institutions pretty much immediately after the division, and certainly before the cultures would've had a chance to meaningfully diverge.

It turns out that the reasons why countries end up with different institutions are so varied and contingent that there is no one cause we can point to as a reliable predictor. This becomes obvious throughout the book, from the many examples they bring up. Perhaps you should *gasp* read it.

[Dolan]

So it seems to me that came first (the institutional change) and cultural change followed. The soviets established communist institutions pretty much immediately after the division, and certainly before the cultures would've had a chance to meaningfully diverge.

Events disrupted the area, during the Japanese occupation that reached within China too. Soviet and Chinese troops fought alongside Korean ones in China to push the Japanese out. Meanwhile the Americans decided this was an opportunity to establish a Korea under US influence. So the people in the area were caught in between the big powers playing their own games. And as it often happens, some sided with one power, some with the other. Events forced a new realignment of political and cultural attitudes, until Korea was successfully partitioned. And those who stayed in the North had more reasons to see the USSR and China more favourably, considering them saviours for helping them drive out the Japanese. Then started the whole mental programming process, through communist indoctrination. It was a mixed situation of events forcing new political affiliations among Koreans then institutions being established along ideological lines, once those who sympathised with the Soviets accepted their system too. In the south, the Americans struggled to extinguish several thousand communist uprisings, it wasn't all smooth sailing for them. Took a while to turn the ROK into the docile US ally they wanted.

It turns out that the reasons why countries end up with different institutions are so varied and contingent that there is no one cause we can point to as a reliable predictor.

I can agree with that. What made Poland thrive was completely unrelated to what made Saudi Arabia richer than other countries.

[gibson]

About half way through the book and probably not going farther. I feel like it’s made its point and is just pulling in more and more historic example to prove it, which at first I found interesting but has gotten old. My iPad kid brain has gotten bored with it.