Arnold Kling  

Acemoglu, Clark Medal winner

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Why Most Economists Are Hawks ... Immigrant Progress...

Daron Acemoglu, the latest winner of the Clark Medal, is one more data point in the trend line away from mathematical viruosity and toward the The New Economic Paradigm. Consider, for example, his Lionel Robbins lectures on Understanding Institutions.


Institutions, the formal and informal rules governing economic and political interactions, are the major determinant of the cross-country differences in economic performance. Understanding the effect of institutions on economic outcomes and why institutions vary across countries must be a first step in any attempt to improve the long-run performance of less-developed nations in the world. These lectures will show that institutions are not purely determined by historical accidents or ideological differences, but are chosen by social groups with political power as a way of affecting current and future allocation of resources.

Thanks to "new economist" for the pointer.

For Discussion. Acemoglu's primary institutional driver of prosperity is "freedom from expropriation." What institutions are conducive to this?


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COMMENTS (4 to date)
Lawrance George Lux writes:

The worst bane of underdeveloped economies is the 'Padrone' system. Establishment of Workers' Right is elemental to breaking this system. Here is where modern Business and Economics diverge. They wish suppression of Trade Unionism because of ill effects generated by Trade Unions in developed economies, but Workers need an institutional framework to contend with the 'Padrone' system. lgl

Bill writes:

Title companies and independent courts, two name just two.

Carodozo Bozo writes:

ditto Bill.

There's a problem w/ independent Courts however: corruption.

Yes, many developing nation government Courts are subject to this too, but private Courts are almost always worse. The economic incentives are such that the parties before the Court always have more riding on the issue than the Court does, so they'll always have more money to try to bribe the Court with. It doesn't even take that much, either, unfortunately.

Government 'Courts of last resort' are necessary because they respond not to money, but politics. In a country where the rights to vote and speak are secure, Courts will be policed by the political sphere to remain free of economic corruption.

In short, Title and Judicial enforcement are neccessary to support property rights, but the 1st and 14th Amendments are necessary to keep Courts from succumbing to the economic pressures of enforcing Title.

(And not that it's really germaine, but the 2nd Amendment (1) enforces the 1st and 14th, and (2) prevents a lot of expropriation 'in the first instance.')

Bill writes:

CB,

I guess I should have stipulated that the courts must be part of constitutional checks and balances.

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