ECO 5600 Final
Future of China?
1. become more democratic and continue to grow 2. democratic and weak growth, possible revolution or anarchy 3. authoritarian (nightmare senario for US) 4. authoritarian and weak growth (frail giant)
Reversal of Fortune
A and R mean the transitioning from an undeveloped society to a developed one and visa versa. In this example, it disproves the geography hypothesis.
What is a critical juncture?
A critical juncture is a major event or confluence of factors disrupting the existing economic or political balance in society
The big picture about how economic incumbents used Parliament to 'lock in' economic advantages.
A sufficiently inclusive political process will prevent economic actors from creating economically extraction rules. For example, infrastructure development, routinely stifled by Stuart Kings, was improved to help the economy, enduring the transportation of ideas and technologies cheaper. The expansion of voting rights and the rights of the people to petitions also ensured that laws to block creative destruction could be stopped, for example, the breakdown of the monopoly that the East India Company enjoyed through petitions of traders.
Sub. Says that under ARs theory politically inclusive institutions drive growth. Do AR agree?
AR do not agree, they say that the political institutions do not directly determine economic prosperity rather economic institutions determine prosperity and then there is a link between inclusive and sustained growth. Different, they made the point that one does not work without the other. Helps them explain Chinas short term growth.
What predictions do AR make about Chinese growth
AR maintain that china;'s growth is similar tothe USSR in the 50s so they therefore predict that Chinas economy will turn
Sachs charges that AR wrongly assert that inclusive political institutions must precede economic growth, and that this is refuted by East Asia state capitalism. How would AR reply
AR would say that Chinas growth is not sustainable and that it will soon take the path of the USSR in the future
Utility and telecom markets
Access to pipes and wires
Why do so many African nations have extractive institutions.
According to A and R many countries have extractive institutions as a result fo white colonial power which turned the land to reservoirs of cheap labor for white miners and an inability after independence was declared to instate inclusive instead of extractive institutions.
Why is China different than Russia in growth? A and R and critics
According to A and R they would stipulate that Chinas growth is not sustainable and it will go down the path of the USSR in the future. Critics say that China differs from Russia in that its investment and economic policy mirrors W countries and that it invests in the same thing that the W does (tech, etc) and is therefore different. China has also opened itself up to trade wheras the USSR closed itself off completely
Edmond Burke's comment on the difference between England and France's institutional changes
According to Burke, Englands was much more durable because they had a plan,while France violently tore their system down with no plan. According to A and R Englands also set them up better which made it more durable.
What, According to sachs, is the real story of development
According to Sachs, geography disease and ease of travel as well as many other factors have a larger effect on what institutions grow and which do not
How do these explanatory concepts (institutions) interact?
All economic institutions are created by society A and R say that pluralism lends itself to inclusive economic institutions. Inclusive economic institutions create inclusive markets which give people the freedom to pursue the vocations that best suit their talents and provides a level playing field that gives people the opportunity to do so. Inclusive economic institutions also pave way for tech and education and education supports an inclusive political institution. Ex pol systems create extractive econ institutions that benefit themselves
After the plague, England Spain and France developed different political and economic institutions. What factors led to these differences?
Although in the West each country had the circumstances above, their constitutional monarchies resulted in very different institutions. In England, the monarchy did not control trade and the parliament had the power to tax and control trade (more inclusive), In spain, the monarchy controlled trade but the parliament taxed. In France, the monarchy had the tax and trade power. These differences created different levels of extraction and pluralism.
Know what is meant by an efficient tax. Know what is meant by 'excess burden.' and how to excess burden is a measure of efficiency. Know what is meant by the Ramsey rule. ALSO STUDY CONSUMER SURPLUS GRAPH NOTES
An efficient tax is that which minimizes tax induced inefficiencies consistent with other goals of tax policy. Excess burdens are large efficiency losses that contribute little or nothing to policy goals or loss in total welfare. The Ramsey rule is that efficient taxing on goods with high
Why was botswana wealthy at the end of colonialism. How successful is it today and why? What role was played by the discovery of diamonds? Why do A and R believe it had fared better?
As a result of its cattle economy, Botswana was able to rely on its meat exports and then expand when diamonds were discovered. The tribe who found the first diamonds changed the law so that the rights to the diamonds were given to the nation not to the tribe which ensured that diamond wealth would not create great inequalities as in other nations. also achieved remarkable growth rates after independence because it set up inclusive institutions after independence.
What is the Ignorance explanation and why do A and R reject it
Asserts that people dont know how to make poor countries rich and that is why nations are poor. Ghana example, if poor policies are the reason, leaders would just learn and modify their policies, mexican v. us
Critics charge that China is perhaps the most convincing counter-example to ARs central thesis. What do critics say? How do AR respond? How has their response changed over time?
BL say that there is no way of telling that China will stop growing because we cannot say how they will evolve. Fukuyama says that it is a flaw that they do not explain Chinese growth. Sachs says that China is successful because they import tech from abroad- not due to their institutions. Subramanian say that their prediction for China is unrealistic for them either to slide into chaos or become a democracy. In the response to Fukuyama, AR say how wealthy China would have to grow to invalidate their theory, In their response to Subramanian, they say that China would have to have years of sustained growth. Answer 2 is higher than 1.
Fuayama and Boldrin, a and R apply these concepts after they know they are successful. Why bad?
Boldrin says that it is hard to know whether the US will continue to grow and Chine will decline, we are in a state of crisis and china isnot. N and S Italy also does not explain this discrepancy.
Capital Markets and Corp Governance
Buying and selling stock--related problem, why buy a share without gov involvement
Main components in the financial system in developed countries
Central bank, commercial and depository banks, stock market (and other capital markets), insurance companies, pension funds, hedge funds, venture capital, etc.
What is the geographic explanation for the patterns of development?
Claims that the great divide between rich and poor countries is created by geographical differences. Sachs said that the propensity for diseases have adverse consequences on health and therefore labor productivity and that tropical soils do not allow for productive atmosphere so temperate climates have an advantage
Developed countries v. developing tax revenue.
Compared to developed, developing get more of their tax revenue from goods and transaction taxes, and taxes on foreign trade and tariffs, and less revenue from income taxes.
Foundation actors without which 21st century could not function
Corporation, Banks, Capital markets and corp. governance, antitrust (Sector specific: utility markets, telecom, Internet, Transport Sector), Intellectual property
What is Ars story about FDRs court packing plan?
Court packing occurred as a result of the courts marketing as unconstitutional many of FDRs reforms so he was going to institute a mandatory retirement age and that he should be allowed to appoint up to six new justices. It was refused by the house and the senate and his legislation was allowed to go through regardless.
Banks
Crucial to get money back from people with excess to the people with ideas for growth.
Dutch East India Company
DEIC used its army to engage in spanish style conquest of spice growing regions, squashing a commercial class that in england helped lead the way to inclusive institutions. Countries destroyed their own natural resources in the hope that making themselves less attractive to colonizing invades. The DEIC set up extractive, forced labor institutions that short circuited the change these regions had to develop inclusive institutions
ARs story about columbia and Argentina
Democracies without inclusive institutions. Extractive economic and extractive political in the part of rural militias
What is ARs story about Egypt
Democracy, markets opened up, but extractive political institutions remained, Crony capitalism when those who own business control regulations in gov
Know that developing nations are prone to bouts of severe inflation. Explain how developing countries enter periods of extreme inflation.
Developing countries may enter periods of extreme inflation as a result of war or broad mismanagement, printing too much currency, or large budget deficits (USSR new republics or Congo)
Does diamond disagree with ARs that inclusive institutions facilitate growth? How is his thesis different than AR
Diamond disagrees with their thesis because they do not explain how some have good institutions and some do not and one cant just introduce institutions and expect everyone to adopt them. According to Diamond, governments are linked to the durations and productivities of farming that is a prerequisite for the rise of govs
What does Diamond say about reversal of fortune
Diamond says that their argument does not bring up the authors findings that the reversal depends on prior wealth and on health threats to Europeans
Diamond and Sachs views on A&R's geographic explanation
Diamond: Believes that they cherry picked examples such as E and W Germany and that you cannot say that only institutions will transform a country and assume that people will adopt them wholeheartedly w Geographic thesis Sachs: Believes that the authors are too simplistic in their characterization and naive in assuming that it is only institutions that define success. Sach explains how africa institutions were a product of its poor rivers for navigation disease and poor soil
Diamond Geography v. Sachs Geography
Diamond: Different historical endowments of plant and animal species relate to inequality today (that which one can easily domesticate and settle) Sachs: Attributes a geographical difference to the presence of disease (bad for labor productivity) and poor tropical soil for agriculture
What is Diamond's central thesis for the pattern of successful nations we see in the world today?Why did agriculture begin where it did? How does agriculture lead to more complex forms of social organization and civilization?
Diamonds central thesis is that certain parts of the world had different historical endowments of plant and animal species that were available for domestication and that those who were able to develop agricultural settled societies developed faster. (when you have more people in one place you need institutions)
What do AR say about India?
Electoral democracy is not the same as inclusive political institutions. Must explain too much is too broad.
What is the washington consensus
Emphasizes free trade and institutional reform. If under extractive, cannot be exchanged
Transport sector
Externalizes like safety
Understand the two major components of foreign investment- FDI and portfolio investment. Be able to give examples of them. Be able to state some advantages and disadvantages of each sort of investment. Know whether FDI leads to economic growth (when it does and does not). and how countries encourage FDI, and how countries try to maximize benefits from it.
FDI- foreign direct investment is long term investment in which a non resident entity exerts significant management control (usually 10 percent of voting stock) over an enterprise in the host country. A and D, FDI is a source of capital that adds to total investment, it is also more volatile than domestic capital but more stable than other forms of foreign capital. It can also help increase specialization and bring access to world markets and new tech skills and ideas. It is varied so it depends on specific activities. When the workforce has a minimum level of education, it can cause growth not with out education and without subsidies. Countries who want to attract it try to improve the investment environment (improve roads and infrastructure), introduce policies aimed at attracting it (provide information, create export processing zones) and to maximize benefit they impose requirements and restrictions (sell a specialized share of equity to local partners). Portfolio equity is when an investor takes a smaller take in an enterprise either through direct purchase or through stock exchange.
Fiscal v. Monetary policy
Fiscal policy involved government taxing and spending decisions and can be used as a tool to control inflation and to lift nations out of recession.
Understand how the costing principles set forth above differ for public vs. private investments. What sorts of benefits do public investors consider that private investors do not? What are shadow costs, how are they different from market costs and why might a public investor use opportunity costs and not market costs in calculating the costs/benefits of an investment?
For a private firm, the opportunity cost is the market value that it pays for wages, goods, and services. For public, the cost is the value of the resources in terms of their next best use. Must consider different wage rate, foreign exchange, etc. Shadow prices are opportunity costs for the goods and services of the market as a whole. They are different in that they calculate how an action impacts the whole economy rather than just a market. A public investor uses opportunity costs because market prices do not reflect true scarcity values.
What is the story of the French Revolution as A and R tell it? Did it lead directly to inclusive institutions?
France was divided into three estates, subject to different laws. Life was harsh and unhealthy. Feudal dues, etc. Upset by extractive institutions, the French revolution was radical in proposing a new constitution and abolishing the feudal system and establishing equality before the law. Did not happen right away bc it created violence suffering instability and war . Only truly inclusive after Napoleon was defeated
What is Fukuyamas complaint about ARs distinction between inclusive and extractive institutions.
Fukuyama complains that their definitions are much too broad and that they never provide a clear definition of what they encompass and that some governments may fall it claims that it generalized in that government may seem inclusive but may have limited voting access and therefore is not. It is difficult to pick out factors that specifically contribute to growth
What does diamond mean by geographical
Geographical endowments of favorable and easily domesticated plant and animal species is most important to his account
What limits to Chinese growth do AR foresee
Gov overspending, inefficiencies from government planning vs open price system, fear of entrepreneurs, restrictive labor markets, insecure property rights
Sachs says that AR model does not support good predictions of future growth. What examples does he give?
HE gives economists in the 80s betting on columbia, equador, or suriname rather than the East asian countries or china
What is Fukuyamas complaint about ARs use of historical evidence
His complaint is that they use problematic facts and interpretations (rome, or the glorious revolution) ignores historical reasons for institutions and generalizes
What is an extractive v. inclusive economic system? Political system?
Inclusive institutions are those that allow and encourage participation from many people in economic activities that make the best use of their talents and skills and enable people to make the choices they wish. Extractive institutions are those that have institutions that are designed to extract incomes and wealth from one subset of society to benefit a different subset.
What is institutional drift? How is it like genetic drift?
Institutional drift is when 2 otherwise similar societies drift apart institutionally as a result of critical junctures, history and changes in balances of power and culture differences. Has no premeditated path and does not need to be cumulative. Similar to genetic drift bc 2 populations drift apart slowly as a result of random changes and mutations.
Why do A & R think is wrong with the geographical explanation? Consider the nations/regions that A&R believe are anomalies for the explanation, and why there are anomalies?
It cannot account for intercontinental differences such as in N and S Korea and E or W Germany. It is also untrue that tropical climates have always been poorer than temperate climates, such as in Latin America with the Aztec society flourished and tribes in N. America did not
Do A& R think it was inevitable that the Industrial Revolution would happen in England? Could a careful observer say that they could see it coming
It was a result of critical junctures that the industrial revolution happened i England.None of them made it inevitable and you could not say, but it was accumulation of small factors that caused it to happen
Corporation
Law and Gov. Can buy sell sue and be sued as an entity apart from the individuals who work manage and own shares of it. No one would work if personally liable for debts. Shareholders liable only up to the value of their shares
How does a central bank maintain a fixed exchange rate. Know how it responds when its own currency flows out and its currency becomes weaker
Local currency pegs itself to the dollar done through intervention by the country's monetary authority in the market for foreign exchange and requires the maintenance of substantial international reserves usually equivalent to the value of 4 or more months of substantial international reserves usually equivalent to the value of 4 or more months of imports. Must have sufficient reserves to buy more on the market and if not, must stop. When comes in, must sell.
What is modernization theory
Maintains that all societies are headed towards a more modern, developed and civilized existence as well as towards Democracy. It predicts that it will become more democratic. Growth and increase in education is convincing support. They believe that economies come after institutions not before
Know what is meant by money. Know M1...
Money supply is the sum of all liquid assets in the financial system. M1: currency in circulation outside banks, demand deposits M2: M1 and savings deposits M3: M2 and total liabilities
How can a natural resource be a curse
Natural resources can be a curse when selfish elites find that they can become richer by taking profits from the natural resources for their personal gain rather than investing profits that are good for the nation
Be able to explain why three common goals of a tax scheme (neutrality, efficiency, and progressiveness) tend to conflict with one another
Neutral tax (uniform rates), efficient tax (minimizes excess burden), progressiveness (increases up income scale), most effective for Ramsey rule-not neutral.
Why has China grown so fast
Openness to western markets, adoption of western technology, liberalization of agricultural policy to increase output, education, and cheap labor
Regulatory reform in US
Period coincided with Washington Consensus, US going through a deregulation phase so it seemed natural that this is how 3rd world countries would too
Be able to state major barriers to investment- macro instability and ineffective government and be able to five examples of them. Know that there are widely used indices of effective government, and that wealthy industrialized nations typically appear in the top 30 of those rankings, and that the poorest countries (sub Saharan Africa) are clustered near the bottom.
Political instability can lower the rate of return and increase the risk (rent seeking, taking value without increasing compensation), macroeconomic instability can distort investment decisions away from investments that promote long term growth and towards hose that protect the investor from inflation.
Know what is meant by financial inter-mediation
Pricing investments at different risk levels differently and steering investments of the appropriate type to appropriate investors (households are the main net savers)
What is a public good
Public goods are non rival (consumed by an indefinitely large amount of people) and non excludeable ( once produced, non feasible to deny). Poor governments spend less. and govs must spend on public goods to achieve an efficient level of these goods.
What is the anecdote about Queen Elizabeth and the knitting machine? Why do extractive political elites fear tech change? Was the Queen concerned about the well being of her citizens or something else?
QE refused the patent of the knitting machine displaying the fear of creative destruction was the main reason why there was no sustained increase in living standards between the neolithic and industrial revolutions. Ex. institutions fear tech change bc they threaten to change the power in the way that those displaced by the invention would disrupt political order and therefore their own power.
What is the difference between Rule by law and rule of law in ENgland
Rule by law is that the commoners had to abide by the rules that were passed by parliament. The rule of law meant that those same rules applied to lawmakers. After the glorious revolution, England lawmakers had to reckon with the fact that rule of law applied to themselves. They could not be extractive in their policies
How does Sachs analyze the interplay between tech and geography? Is this a better explanation than AR
Sachs believes that geography is more important because the main drivers of the industrial revolution depended on geography (steam engine) and then on natural resource deposits.
Consider ARs explanation for why extractive institutions wont lead to sustained growth. Does Sachs agree, can we characterize sachs as a proponent of fierce development.
Sachs does not agree and cites instances where authoritarian rulers have had positive impacts. Napoleon, etc.
AR say that inclusive institutions are necessary for sustained growth. Does Sachs agree? What factors can prevent growth?
Sachs does not agree and presents china as an example. According to Sachs, geography geopolitical threats, debt crisis and cultural barriers also make an impact.
What are the three major areas of dispute with Sachs and AR
Sachs identifies that the areas of dispute are they assume that authoritarian elites are hostile to economic progress (Napoleon, etc), that they conflate incentives for technological innovation and diffusion, and that they identify political centralization as the precursor to economic development and forget they need a base to finance that capacity.
Does the discovery of Diamonds show that Botswana is just an example of favorable geography? Who has the better argument here- Sachs or AR?
Sachs says that the difference between Botswana and other countries (he mentions Sierra Leone) is just that Botswana had more diamond wealth. WNF explains in some detail that diamonds wealth in Botswana has been used more inclusively because of institutions that were allowed to flourish there.
Internet
Service providers vs content producers
Washington Consensus
Since western countries are getting government out others should too (but deregulation is really deregulation, tweaking and staving off potential problems)
How do nations control inflation with X rate
Some try to control by creating a fixed exchange with another currency, others by allowing their currency to float freely in world markets, and others by policies that are in between.
What does the story of Sierra Leone tell us about the persistence of extractive institutions ?
Stevens' violent dictatorship killing and harassing opponents and only having one political party. The SL produce marketing board in an extractive economic institution exploiting cocoa and coffee farmers. The tribal authority where only members of a certain tribe could rule, was an extractive tool. When diamonds were found the british set up the SL selection trust, a monopoly on the diamond trade and granted it to DeBeers, who then set up an army to defend the diamond trade and making it a monopoly. After SL became independent, the monopoly was nationalized and made even worse.
What does Subramanian say about China and India? What do AR say
Sub says that China and India are outliers in opposite ways. India is too economically underdeveloped given the quality of its political institutions and China is too rich given its lack of democratic institutions. The rest of the line is upward sloping and represents strong relationships between political institutions and economic development.
Trucking, Airlines, Utilities, Telecom Regulation
T and A: obvious issues, if too much competition margins narrow and players might cut corners on safety so must set minimum fares that allow everyone to make a profit. But also increase safety regulation. Airlines: prices fell, number of competitors increase but then only 1 existed in 2005. Relentless focus on price drives players out and then they raised prices. Net neutrality: regulation cables, no non gov solution
What is the story of the black plague? How did it change political and economic institutions in Eastern Europe and Western Europe?
The black plague is an example of two different places, with similar institutions at one time, can diverse so greatly with a cumulation of random historical circumstances (institutional drift). At the turn of the 14th century, Europe had a feudal order that was based on hierarchical leadership. In w. Europe, the scarcity of labor that occurred because of the plague led serfs to demand more freedoms and decreased the power of the nobility. In E, Europe, the higher wages and scarcity of labor incentivized the lords to make their systems even more extractive. The results were different because workers had more power in W Europe and were able to demand more freedoms.
What is ARs theory of court packing in Argentina
The courts were created, but the rest of Argentinas political system was very extractive. The presidents coalition proposed impeachment of 4 of the 5 members of the court. It happened and after the president was given unchecked political power. He then packed the court and continued the extractive system.
What is the cultural explanation for the big facts? Why do A and R reject?
The cultural explanation, propagated by Max Weber, said that certain cultures were predisposed to success and hard work "protestant hard work" Cannot explain intercontinental differences is rejected by countries that do well
What are the main factors that lend to the reduction of the crown's power compared to other elites? Who controlled taxing power and the power over monopolies and trade
The main factors began with the magna carta and the creation of a council of 25 barrons to the king and while the magna carta was annulled, the barrons remained. The power of the monarchy was further constrained with the enacting of the 1st parliament in 1265. Represented by elites,but in a broader range of society such as minor aristocrats and gentry. The centralization of power by the Tudors and the strong opposition to this centralization meant greater efforts to have parliament have a larger effect on the crown. These political changes took place with other changes such as the widening of political conflict with different groups who wanted a say in their gov. At first, the crown controlled all, but in 1623 parliament granted the power to prevent the king from creating monopolies. Let to civil war After the glorious revolution, parliament took control.
Intellectual property
The product itself is just a bundle of gov created rights
Why did the ruling elites in England allow the broadening of rights
The ruling elites allowed enroachment on their power because it was the only way to stave off revolt and revolution and ensure the continuation of their rule.
Big facts that the authors think require explanation. How much change in the past 50 years. Last 150 years? 500 years ago?
The same countries that were poor years ago are still poor today. Western growth blossomed, starting in England after the Industrial Revolution. If you went back 50 it would not be different (save for Asian Tiger countries), go back 100 years and 150, would be the same. The divide between the W. World and sub Saharan Africa and great divides within Latin America itself.
What extractive institutions did the Spanish establish in Guatamala? How did these institutions carry into the modern era?
The spanish packed descendants of Conquistadors in the government of guatamala. Those who had economic and political power structured their institutions to ensure the continuity of their power. Much of the land was in the hand of indigenous people with large commercial landholdings called ejidos but the remainder was unoccupied and controlled by the gov. which meant that there was more money in controlling and taxing trade than in controlling land. They resisted infrastructure so trade could be almost completely controlled by gov. The encomienda was a system if forced labor that set up the extractive repartimiento and the mandamiento.
What is the story of the Natufians. What lesson do they draw and what does diamond say about it
The story of the Natufians is that in the fertile crescent they were able to develop innovative institutions that allowed them to settle and therefore farm. AR draw that it is not the endowment of resources but the institutions and innovations that allow this. Diamond says that this is founded and widely refuted.
What story does AR tell about Chinas growth.
The story that AR tell about China is that Mao set up extractive institutions and an extractive economy. In his death, certain potential (Deng) successors knew they needed to spur economic growth and were willing to make certain concessions (international trade, etc). Deng began changing the economic institutions-- provided economic incentives to farmers and changed grain purchase to voluntary, 14 open cities to spur foreign investment. Not politically but economically follows western models.
Why do critics say that the qualifications of extractive and inclusive institutions are too broad. Glorious revolution, etc. (Fukuyama, Subramanian, and replies)
The terms of inclusive (pluralistic) and exclusive (absolutist) umbrellas are too broad. The glorious revolution was also not important in establishing property rights and afterwards, the public debt exploded in the century following that event. Subramanian said that China and India, if they followed on a path like A and R predicted, still would defy the explanation based on their current growth paths.
Who were the Whigs and what role did they play in the glorious revolution?
The whigs were a political party founded in the 1670s to represent new mercantile and economic interests and was the main organization behind the glorious revolution. Once in power, they tended to prey on the rights of others although their power was not absolute. IT was constrained by the Tories in parliament. The blacks were a response by the common people to the perception that the whigs were exploiting their position (ravaged the countryside and hunted on royal grounds) The black act was passed to outlaw 50 new offenses punishable by hanging such as carrying weapons and having a blackened face. Was not successful (not enforced well) but did strengthen the rule of law even towards elected officials
Vogel's Marketcraft Thesis
There is no state of nature where markets exist without governments. Governments create the markets.
How do institutional drift and critical junctures help explain how nations or regions that seem institutionally similar at one time can become so different over time
These concepts help explain diverging nations and institutions by highlighting how small differences in history, culture, and other random factors that can form their institutions and change them in different ways, big and small
What are some of the tools that a monetary authority can use to increase and decrease the money supply? What is an open market operation and how does it affect the money supply? What is a reserve requirement and how does raising it affect the money supply?
They can use central bank loans to exert control over interest rates and therefore the money people take to invest. Central bank loans to lower banks and set reserve requirements as well as open market operations in which gov directly contacts bank reserves by sales on government securities.
How did economic institutions and political institutions in England during this period each support the increasing inclusiveness of the other
They supported one another by ensuring a dynamic positive feedback in that inclusive economic institutions led to the development of inclusive markets including a more efficient allocation of resources, greater encouragement to acquire education and skills and further innovations in technology and clamping down and refusing to make the political institutions more inclusive would erase these gains and the elites may have lost their fortunes because of it
How does diamond use climate, soil quality, disease and parasites to explain why Sub Saharan Africa is under developed.
They were not easily able to settle due to non nutrient rich soils and landlocked areas which are hard to trade to.
Trust busting. Who consolidated wealth and power? How did inclusive institutions prevent being extractive? Media?
Those who consolidated wealth included businessmen from the north who were involved in railways industry and commerce. The robber barrons, the pluralistic system enabled people hurt by these monopolies to organize against them (the populist and progressive movements). Inspired congress to put out anti trust laws. Mudrucking in the news also influenced and empowered a segment of society to mobilize against monopolies such as ida tarbell
Purpose of Marketcraft
To dispel that free markets exist spontaneously like a state of nature and where free markets work well without government involvement
BLM, like Fukuyama think that the vagueness of AR explanatory concepts leave too much wiggle room? What is the argument
Too broad by dividing them based on ex post evaluations on the outcomes and subject to selection bias. When trying to classify, is too hard to determine small v many, etc. Data problem in that the only ones to exhibit sustained growth are ones still growing today- a limited selection of historical time. Could pluralism be a consequence rather than success?
Western Europe in Africa
Turned it into slave factories to provide labor for US and Caribbean plantations. The Extractive institutions created by the slave trade persisted long after European demand was gone and created a cycle of conquests that exemplified the iron law of oligarchy
How did the USSR grow after the 1920s.
USSR use the power of a totalitarian state to force people from low productivity farm work into higher productivity manufacturing. USSR paid for all of this by extracting wealth from the agricultural sector-- collectivized farms. The gov stole excess output and use the threat of imprisonment to reach output targets. But the manufactuing tech was not improving to match more highly developed countries It stopped due to a lack of incentives, inefficiency, and lack of creative destruction.
How do we know that the Natufians developed permanent settlements before they became farmers? How does the story of the Natufians support ARs claim that good institutions not geography is the real explanatory variable for growth?
We know that they became sedentary because archeological evidence found in Natufian graves and memorabilia in them--suggesting a social hierarchy. The size of the villages (agricultural bigger) suggests that with innovation and honing of technique, people were able to specialize and that the transition was not because of the availability of species but of going through political and cultural transition to hone better techniques.
antitrust
We need large companies to do big things and manufacture on a large scale. But can use their market power to quash the next generation of innovation or to fix prices so that the firm gets the benefit of the lower prices. Vertical restraint, horizontal restraint, illegal tying, exclusionary practices.
Europeans in South Africa
Were developing a broad middle class of artisans to support Dutch and English farmers and miners who flocked to the region beginning in the 1860s. But the Europeans used their political and economic power to pass laws severely limiting what occupations the native SAs could take, and where they could live, thus creating by law the apartheid regime that persisted into the 1990s
When the three chiefs made their voyage to england, what sorts of economic and political institutions prevailed in Botswana. How did they outsmart Cecil Rhodes
When the three chiefs made their voyage, a pluralistic society prevailed which encouraged political participation and constrained chiefs and the chiefdom was not hereditary but open to those with talent and ability. The three chiefs outsmarted him by making a deal with Chamberlain to have a protective railroad and have their country be protected by the British crown in a speaking campaign all over England
Sachs discusses the story of the two Nogaleses. Sachs geographical explanation? Has sachs, moved the goalposts of what a geographic explanation is
Yes, sachs means the geography of borders and railways that make trade accessible and easy. Yes it is not the widely accepted definition, but sachs is right that these factors can change over time