00:00Why do some nations succeed and some fail?
00:09Economics Nobel Prize winner James A. Robinson has spent his career trying to answer that
00:13question.
00:14I spoke to him at his home in Chicago to find out more.
00:18Congratulations on having won the Nobel Prize for Economics.
00:21At the risk of being, I don't know, the one billionth person to have asked you, how do
00:25you feel?
00:26I was a little shell-shocked for the first few days, actually, I have to say.
00:31It was a sort of out-of-body experience.
00:33I wasn't really thinking about it.
00:37But obviously it's kind of marvelous.
00:41What's been so nice is just talking to so many students and colleagues and like so many
00:46other people, kind of happy, seeing other people happy about, not about me, but about
00:52the ideas and about the research.
00:55So that's been very rewarding, I have to say.
00:59Now to someone who might not be familiar with your work, how would you explain what you've
01:04been doing and what got you the prize, sort of this relationship between colonial strategies
01:09and how institutions developed and economic prosperity?
01:13We were fundamentally, you know, 30 years ago, we were fundamentally interested in understanding
01:17these massive differences in prosperity around the world.
01:21And we thought that economists were just not thinking about this in the right way and
01:26they weren't kind of using the right concepts to think about this.
01:30So the main idea that we developed is that this is really related to the institutions
01:36of different societies and how people themselves kind of organize their societies.
01:41And by institutions, I just mean the rules that create incentives and opportunities for
01:45people.
01:47And if you look around the world, you see these huge differences in these institutions.
01:51But where did those differences come from?
01:53And then to us, just talking about it, this wasn't anything that economists talked about
01:5830 years ago.
02:00Colonialism obviously had to have a big, had to be a big part of that story.
02:04You know, many of these societies were shaped profoundly by colonialism.
02:08So then we started investigating the role of colonialism in creating institutional variation
02:14in the world historically and the extent to which that really accounted for these differences
02:19in prosperity today.
02:21You talk about the difference between inclusive and extractive institutions.
02:26Inclusive institutions having set up nations more for success than extractive ones have.
02:31What is the difference?
02:32Yeah, so that's a dichotomy.
02:35It's sort of simplistic.
02:36Obviously, the world is full of shades of gray, but it's very useful for sort of understanding
02:40the kind of approach that we say inclusive institutions are institutions that create
02:45broad-based incentives and opportunities for people.
02:49And extractive institutions concentrate incentives and opportunities in the hands of a few people.
02:56And so that's crucial for prosperity because what drives economic growth and economic development
03:02is innovation.
03:04It's people's creativity and talents and, you know, you don't know where that is.
03:09You don't know where those people are in society.
03:11You don't know where the innovators are, where the entrepreneurs are.
03:14And so you need to create a set of institutions that allows all that talent to come to the top.
03:21But we also currently have this ongoing competition in Latin America, in Asia, in Africa.
03:28You have countries like the U.S., Russia, and China sort of jockeying for influence
03:33in these places.
03:34How do you apply your theory to that phenomenon?
03:38You know, the way our theory works is there are moments in world history where, you know,
03:43whole continents get reshaped by colonialism or these sort of global forces.
03:48And then we put a lot of emphasis on the kind of internal dynamics, internal political dynamics
03:54of societies.
03:55You know, we're often accused of not having a really good, well-articulated theory of
03:59international relations.
04:01You know, the way I look at it, you know, which comes a lot from my experience of working
04:06in the global south, is that, you know, many people still see, you know, the United States
04:12or the Western powers as colonizers.
04:14You know, like, Western powers come, they tell you what to do, you know, they kind of,
04:19you know, they boss you about.
04:20They say, if you do this and that, we'll give you money.
04:23You know, what you should really do is, like, be more like us, you know.
04:27And that's very annoying for people in the global south, I would say, you know.
04:33And I'm not sure it's such a bad thing if there was a rebalancing of that, you know.
04:38So I think the rise of China, of course, has created a sort of idea that, you know,
04:43there's going to be a different world system.
04:44I'm not quite sure that's actually going to happen, because, you know, my own view about
04:49Chinese economic growth is, you can't actually have a modern, innovative economy under a
04:53totalitarian dictatorship.
04:55There's no precedent for that in world history.
04:57And I think you see lots of mechanisms for why that's not going to happen.
05:00Look at Jack Ma.
05:01You know, Jack Ma, you know, one of the symbols of Chinese economic success.
05:05What happened to him?
05:06He was cancelled.
05:08He disappeared because he criticized the government.
05:09You can't have a society like that.
05:11You can't have a modern, innovative society like that.
05:14So I don't think the Chinese really have the political foundations to be economically successful.
05:19So of course, the scale of China is so impressive that, you know, it's difficult not to be carried
05:24away by it.
05:26But I'm old enough to remember when the Soviet Union was an economic success story.
05:30You know, we learned when we were at school, high school, university, Russia was going
05:36to be the future.
05:37You know, now you tell young people that they don't know what you're talking about.
05:40You know, there's nothing left in Russia except natural resources.
05:44But I think, you know, we point out in the book there's many experiences in world history
05:48like China where you have, you know, periods of very rapid economic growth in particular
05:53circumstances, you know, but you can't extrapolate that into the future.
05:58You know, we call it extractive growth.
06:00So that means, you know, I think it would probably be a good thing to rebalance the
06:04world system, you know, to stop this hegemony of Western powers in international institutions
06:10and everywhere.
06:12But I'm not sure it's going to happen, actually.
06:15Taking your definition of institutions being a set of rules and incentives, how would you
06:20rate the institutions of the United States today?
06:24Well, you know, I still see, you know, there's huge elements of inclusion, you know, in the
06:29sense that United States, you know, for me the biggest edge in, you know, economic edge
06:34the United States has had for the last 200 years is this ability to suck talent out of
06:40the rest of the world.
06:41You know, think about Elon Musk, where did Elon Musk, where was Elon Musk born?
06:45South Africa.
06:46You know, Steve Jobs.
06:47Where did Steve Jobs' father's family come from?
06:49Syria.
06:50You know, Sergey Bin.
06:51Where's he from?
06:52Russia.
06:53You know, like, so that's still going on, you know.
06:55So that's still going on.
06:56Obviously, look at all this innovation in AI and, you know, digital, you know, so that
07:02kind of machine is still going there.
07:04But I think what you've seen in the United States, and of course, you know, much of the
07:08other stuff is there too, the long shadow of slavery, you know, and discrimination and
07:13racism in this country, the marginalization of indigenous people, that's all there too,
07:19you know.
07:20So, but I think what you've seen in the last 50 years is this is all coming off the rails
07:24in many ways.
07:25You know, that most Americans are not better off now than they were 50 years ago.
07:30That's a fact.
07:31You know, social mobility has slowed down dramatically.
07:35There's been a massive increase in inequality, you know.
07:39So that's challenging all the institutions today.
07:41Look, you know, probably next week we're going to elect a president who doesn't respect institutions,
07:47who basically tried to fix the last election in his own favor.
07:51So that's a massive challenge to inclusive institutions in this country.
07:56But you know, the way I think about that is that's because of the failures of the system,
08:01you know, that the system, the democratic system has failed to adapt to globalization,
08:07to technical change.
08:08It's failed to kind of listen to people's problems, you know.
08:12I do think in Why Nations Fail, what we show is that, you know, the U.S. institutions have
08:16been challenged many times.
08:17You know, if you look historically, you see in the 19th century, these robber barons,
08:22Vanderbilt, Rockefeller, you know, they definitely challenged institutions.
08:27They tried to undermine the political system, you know.
08:30But the system managed to fight back.
08:32People managed to fight back.
08:34And I think at the moment, we don't know if that's going to happen.
08:38You know, we're in the middle of a kind of very historic moment.
08:41I think in the past, you know, we show there are many moments like this.
08:45But somehow the system has come back on the rails.
08:49Will it come back on the rails now?
08:50I don't know.
08:51You know, we also talk about many examples where inclusive institutions and inclusive
08:55societies became more extractive.
08:57You know, Venice is our sort of leading example.
09:00Venice was probably the richest part of the world in the late Middle Ages.
09:04And then everything went into reverse.
09:06You know, all the inclusion in the economic sphere and the political sphere.
09:09So could that happen here?
09:10Yes, of course it could happen here.
09:12When you see Donald Trump, and he could very well be the next president of the United States,
09:18you talk a lot about the importance of institutions.
09:20And this is someone whose supposed agenda is to remake government, is to overhaul institutions.
09:27What do you think will happen if all this comes to pass?
09:30Like, what does that say about the fortunes of this country?
09:34Well, I don't think President Trump is in favor of changing institutions.
09:38I think he's in favor of destroying and personalizing institutions, actually.
09:42I think it's an impulse you see all over Latin America.
09:44It's been going on in Mexico for the last few years.
09:47You know, it's a very common sort of scenario.
09:50So I think, you know, he'd like to undermine institutions.
09:54And he doesn't like institutions.
09:55He wants to personalize everything.
09:57He wants to make everything discretionary.
09:59And so I think that's going to be a disaster for this country, honestly.
10:03It's going to be a calamity.
10:05You know, can we survive that for four years?
10:08I don't know.
10:09Federalism, you know, helped us last time.
10:10It saved us last time.
10:12He tried to interfere with the counting of votes.
10:14But he couldn't really do that because the federal government can't really do that, you
10:18know.
10:19So the federalism is very important, you know.
10:22And you know, if you go back to the founding of the United States and the writing of the
10:26Constitution, James Madison, these people understood this.
10:29You know, the Constitution wasn't designed for, like, Barack Obama, you know, like some
10:33really nice person.
10:35Well, the Constitution was designed for somebody who wanted to destroy it, you know.
10:39That's why there are these checks and balances.
10:41That's why there are these separations of powers.
10:43That's why there's federalism, you know, because of people like this.
10:48And that's happened before, as I said.
10:49And we survived.
10:50Are we going to survive it now?
10:51You know, I was impressed when President Trump was sort of removed from power by people's
10:57willingness to kind of act in favor of the country's welfare, even when their own jobs
11:04and livelihoods were on the line.
11:05You know, people were willing to kind of work with the institutions and to support
11:11them and believe in them.
11:12And I think that's what we're relying on now.
11:14You know, already they're burning ballot boxes, you know.
11:16So people are—whatever happens, you know, if President Trump loses, he's never going
11:20to accept the result.
11:21And then I think, you know, many people are concerned about violence and sort of political
11:25instability.
11:26And, you know, we also—what we don't know, I think, is what's really happened to the
11:32Republican Party.
11:33You know, like, I'm emphasizing we're talking about President Trump.
11:36But I first of all started talking about the social problems in this country.
11:39You know, let's not forget the social problems.
11:42That's why President Trump is so powerful, that he understood that these people felt
11:47that they were not being listened to and not represented in the political system.
11:52And you know, he was clever enough to understand that.
11:54The Democratic Party didn't understand it.
11:56So those problems, you know, if those problems don't go away, this type of politics may not
12:02go away.
12:03So you need to step up to the plate, you know.
12:06And you're not going to step up to the plate if you're complacent and don't recognize the
12:09challenges.
12:10Thank you very much, Professor James Robinson.
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