Why Nations Fail: The Origins of Power, Prosperity, and Poverty (70 page)

One other actor, or set of actors, can play a transformative role in the process of empowerment: the media. Empowerment of society at large is difficult to coordinate and maintain without widespread information about whether there are economic and political abuses by those in power. We saw in
chapter 11
the role of the media in informing the public and coordinating their demands against forces undermining inclusive institutions in the United States. The media can also play a key role in channeling the empowerment of a broad segment of society into more durable political reforms, again as illustrated in our discussion in
chapter 11
, particularly in the context of British democratization.

Pamphlets and books informing and galvanizing people played an important role during the Glorious Revolution in England, the French Revolution, and the march toward democracy in nineteenth-century Britain. Similarly, media, particularly new forms based on advances in information and communication technology, such as Web blogs, anonymous chats, Facebook, and Twitter, played a central role in Iranian opposition against Ahmadinejad’s fraudulent election in 2009 and subsequent repression, and they seem to be playing a similarly central role in the Arab Spring protests that are ongoing as this manuscript is being completed.

Authoritarian regimes are often aware of the importance of a free media, and do their best to fight it. An extreme illustration of this comes from Alberto Fujimori’s rule in Peru. Though originally democratically elected, Fujimori soon set up a dictatorial regime in Peru, mounting a coup while still in office in 1992. Thereafter, though elections continued, Fujimori built a corrupt regime and ruled through repression and bribery. In this he relied heavily on his right-hand man, Valdimiro Montesinos, who headed the powerful national intelligence service of Peru. Montesinos was an organized man, so he kept good records of how much the administration paid different individuals to buy their loyalty, even videotaping many actual acts of bribery. There was a logic to this. Beyond just recordkeeping, this evidence
made sure that the accomplices were now on record and would be considered as guilty as Fujimori and Montesinos. After the fall of the regime, these records fell into the hands of journalists and authorities. The amounts are revealing about the value of the media to a dictatorship. A Supreme Court judge was worth between $5,000 and $10,000 a month, and politicians in the same or different parties were paid similar amounts. But when it came to newspapers and TV stations, the sums were in the millions. Fujimori and Montesinos paid $9 million on one occasion and more than $10 million on another to control TV stations. They paid more than $1 million to a mainstream newspaper, and to other newspapers they paid any amount between $3,000 and $8,000 per headline. Fujimori and Montesinos thought that controlling the media was much more important than controlling politicians and judges. One of Montesinos’s henchmen, General Bello, summed this up in one of the videos by stating, “If we do not control the television we do not do anything.”

The current extractive institutions in China are also crucially dependent on Chinese authorities’ control of the media, which, as we have seen, has become frighteningly sophisticated. As a Chinese commentator summarized, “To uphold the leadership of the Party in political reform, three principles must be followed: that the Party controls the armed forces; the Party controls cadres; and the Party controls the news.”

But of course a free media and new communication technologies can help only at the margins, by providing information and coordinating the demands and actions of those vying for more inclusive institutions. Their help will translate into meaningful change only when a broad segment of society mobilizes and organizes in order to effect political change, and does so not for sectarian reasons or to take control of extractive institutions, but to transform extractive institutions into more inclusive ones. Whether such a process will get under way and open the door to further empowerment, and ultimately to durable political reform, will depend, as we have seen in many different instances, on the history of economic and political institutions, on many small differences that matter and on the very contingent path of history.

T
HIS BOOK IS
the culmination of fifteen years of collaborative research, and along the way we have accumulated a great deal of practical and intellectual debts. Our greatest debt is to our long-term collaborator Simon Johnson, who coauthored many of the key scientific papers that shaped our understanding of comparative economic development.

Our other coauthors, with whom we have worked on related research projects, played a significant role in the development of our views, and we would like to particularly thank in this capacity Philippe Aghion, Jean-Marie Baland, María Angélica Bautista, Davide Cantoni, Isaías Chaves, Jonathan Conning, Melissa Dell, Georgy Egorov, Leopoldo Fergusson, Camilo García-Jimeno, Tarek Hassan, Sebastián Mazzuca, Jeffrey Nugent, Neil Parsons, Steve Pincus, Pablo Querubín, Rafael Santos, Konstantin Sonin, Davide Ticchi, Ragnar Torvik, Juan Fernando Vargas, Thierry Verdier, Andrea Vindigni, Alex Wolitzky, Pierre Yared, and Fabrizio Zilibotti.

Many other people played very important roles in encouraging, challenging, and critiquing us over the years. We would particularly like to thank Lee Alston, Abhijit Banerjee, Robert Bates, Timothy Besley, John Coatsworth, Jared Diamond, Richard Easterlin, Stanley Engerman, Peter Evans, Jeff Frieden, Peter Gourevitch, Stephen Haber, Mark Harrison, Elhanan Helpman, Peter Lindert, Karl Ove Moene, Dani Rodrik, and Barry Weingast.

Two people played a particularly significant role in shaping our views and encouraging our research, and we would like to take this
opportunity to express our intellectual debt and our sincere gratitude to them: Joel Mokyr, and Ken Sokoloff, who unfortunately passed away before this book was written. Ken is sorely missed by us both.

We are also very grateful to the scholars who attended a conference we organized in February 2010 on an early version of our book manuscript at the Institute for Quantitative Social Science at Harvard. We would particularly like to thank the co-organizers, Jim Alt and Ken Shepsle, and our discussants at the conference: Robert Allen, Abhijit Banerjee, Robert Bates, Stanley Engerman, Claudia Goldin, Elhanan Helpman, Joel Mokyr, Ian Morris, Şevket Pamuk, Steve Pincus, and Peter Temin. We are also grateful to Melissa Dell, Jesús Fernández-Villaverde, Sándor László, Suresh Naidu, Roger Owen, Dan Trefler, Michael Walton, and Noam Yuchtman, who gave us extensive comments at the conference and at many other times.

We are also grateful to Charles Mann, Leandro Prados de la Escosura, and David Webster for their expert advice.

During much of the process of researching and writing this book we were both members of the Canadian Institute for Advanced Research’s (CIFAR) program on Institutions, Organizations, and Growth. We presented research related to this book many times at CIFAR meetings and have benefited hugely from the support of this wonderful organization and the scholars that it brings together.

We also received comments from literally hundreds of people in various seminars and conferences on the material developed in this book, and we apologize for failing to attribute properly any suggestion, idea, or insight that we got from those presentations and discussions.

We are also very grateful to María Angélica Bautista, Melissa Dell, and Leander Heldring for their superb research assistance on this project.

Last, but certainly not least, we have been very fortunate to have a wonderful, insightful, and extremely supportive editor, John Mahaney. John’s comments and suggestions have greatly improved our book, and his support and enthusiasm for the project made the last year and a half much more pleasant and less taxing than it might have been.

Mohamed ElBaradei’s views can be found at
twitter.com/#!/ElBaradei
.

Mosaab El Shami and Noha Hamed quotes are from Yahoo! news 2/6/2011, at
news.yahoo.com/s/
yblog_exclusive/20110206/ts_yblog_exclusive/
egyptian-voices-from-tahrir-square
.

On the twelve immediate demands posted on Wael Khalil’s blog, see
alethonews.wordpress.com/2011/02/27/egypt-reviewing-the-demands/
.

Reda Metwaly is quoted on Al Jazeera, 2/1/2011, at
english.aljazeera.net/news/
middleeast/2011/02/2011212597913527.html
.

A good discussion of the Spanish exploration of the Rio de La Plata is Rock (1992), chap. 1. On the discovery and colonization of the Guaraní, see Ganson (2003). The quotations from de Sahagún are from de Sahagún (1975), pp. 47–49. Gibson (1963) is fundamental on the Spanish conquest of Mexico and the institutions they structured. The quotations from de las Casas come from de las Casas (1992), pp. 39, 117–18, and 107, respectively.

On Pizarro in Peru, see Hemming (1983). Chaps. 1–6 cover the meeting at Cajamarca and the march south and the capture of the Inca capital, Cuzco. See Hemming (1983), chap. 20, on de Toledo. Bakewell (1984) gives an overview of the functioning of the Potosí
mita
, and Dell (2010) provides statistical evidence that shows how it has had persistent effects over time.

The quote from Arthur Young is reproduced from Sheridan (1973), p. 8. There are many good books that describe the early history of Jamestown: for
example, Price (2003), and Kupperman (2007). Our treatment is heavily influenced by Morgan (1975) and Galenson (1996). The quote from Anas Todkill comes from p. 38 of Todkill (1885). The quotes from John Smith are from Price (2003), p. 77 (“Victuals …”), p. 93 (“If your king …”), and p. 96 (“When you send …”). The Charter of Maryland, the Fundamental Constitutions of Carolina, and other colonial constitutions have been put on the Internet by Yale University’s Avalon Project, at
avalon.law.yale.edu/17th_century
.

Bakewell (2009), chap. 14, discusses the independence of Mexico and the constitution. See Stevens (1991) and Knight (2011) on postindependence political instability and presidents. Coatsworth (1978) is the seminal paper on the evidence on economic decline in Mexico after independence. Haber (2010) presents the comparison of the development of banking in Mexico and the United States. Sokoloff (1988) and Sokoloff and Khan (1990) provide evidence on the social background of innovators in the United States who filed patents. See Israel (2000) for a biography of Thomas Edison. Haber, Maurer, and Razo (2003) proposes an interpretation of the political economy of the regime of Porfirio Díaz very much in the spirit of our discussion. Haber, Klein, Maurer, and Middlebrook (2008) extend this treatment of Mexico’s political economy into the twentieth century. On the differential allocation of frontier lands in North and Latin America, see Nugent and Robinson (2010) and García-Jimeno and Robinson (2011). Hu-DeHart (1984) discusses the deportation of the Yaqui people in chap. 6. On the fortune of Carlos Slim and how it was made, see Relea (2007) and Martinez (2002).

Our interpretation of comparative economic development of the Americas builds on our own previous research with Simon Johnson, particularly Acemoglu, Johnson, and Robinson (2001, 2002), and has also been heavily influenced by Coatsworth (1978, 2008) and Engerman and Sokoloff (1997).

Jared Diamond’s views on world inequality are laid out in his book
Guns, Germs and Steel
(1997). Sachs (2006) sets out his own version of geographical determinism. Views about culture are widely spread throughout the academic literature but have never been brought together in one work. Weber (2002) argued that it was the Protestant Reformation that explained why it was Europe that had the Industrial Revolution. Landes (1999) proposed that
Northern Europeans developed a unique set of cultural attitudes that led them to work hard, save, and be innovative. Harrison and Huntington, eds. (2000), is a forceful statement of the importance of culture for comparative economic development. The notion that there is some sort of superior British culture or superior set of British institutions is widespread and used to explain U.S. exceptionalism (Fisher, 1989) and also patterns of comparative development more generally (La Porta, Lopez-de-Silanes, and Shleifer, 2008). The works of Banfield (1958) and Putnam, Leonardi, and Nanetti (1994) are very influential cultural interpretations of how one aspect of culture, or “social capital,” as they call it, makes the south of Italy poor. For a survey of how economists use notions of culture, see Guiso, Sapienza, and Zingales (2006). Tabellini (2010) examines the correlation between the extent to which people trust each other in Western Europe and levels of annual income per capita. Nunn and Wantchekon (2010) show how the lack of trust and social capital in Africa is correlated with the historical intensity of the slave trade.

The relevant history of the Kongo is presented in Hilton (1985) and Thornton (1983). On the historical backwardness of African technology, see the works of Goody (1971), Law (1980), and Austen and Headrick (1983).

The definition of economics proposed by Robbins is from Robbins (1935), p. 16.

The quote from Abba Lerner is in Lerner (1972), p. 259. The idea that ignorance explains comparative development is implicit in most economic analyses of economic development and policy reform: for example, Williamson (1990); Perkins, Radelet, and Lindauer (2006); and Aghion and Howitt (2009). A recent, forceful version of this view is developed in Banerjee and Duflo (2011).

Acemoglu, Johnson, and Robinson (2001, 2002) provide a statistical analysis of the relative role of institutions, geography, and culture, showing that institutions dominate the other two types of explanations in accounting for differences in per capita income today.