Monday, November 14, 2016

Policy vs. Politics

Why Nations Succeed or Fail.  It has been on our minds lately as economic and political turmoil have stirred America and the world.  While today might be making us nervous, the debate over national viability spans the years.

There are a lot of half-answers -- they've been offered and discarded.  Things like:
  • It's the geography! - some places are good and others not so good.  True, but nations rise and fall in every region.  Did you know that North America was the 'leftovers' for colonization; all the wealth was farther south and had been claimed.
  • It's the demographics! - indigenous, immigrant, race, origin ... countries with virtually identical demographics vary widely in degrees of success.
  • It's the culture! - it makes a difference but not definitively.  South and North Korea are perhaps the most successful and most disastrous expressions of a single culture, geography, and demographic.
Extractive vs. inclusive -- when people are the 
resource, using them up and leaving them behind 
while the wealthy continue to benefit, that's 
extractive rather than inclusive.  The result 
is destructive to most for the
benefit of the few.
  • It's politics! - maybe, but it's more the specific leadership and the policies chosen to maintain power, to benefit the influential, to please the power players that make a difference.
  • Economics? - well, the math part is easy, but it's the policies that make the difference.  Extractive versus inclusive policies and institutions are the difference between Nogales, Mexico and Nogales, Arizona.

  • So, governance (policies & players) makes the difference.  
  • A benevolent dictator can govern a healthy economy and culture; bizarre but true.  And, a democracy might produce a disaster of polarization and inequality; Hitler's Germany began as a democracy that was bent that way.

    The common factors contributing to a nation's success or failure are perhaps most visible at the individual level.
    I have opportunity, the community makes a place for me and my family, and there's help for those who need it.  Everyone needs a hand along the way, of course, and I'll be glad to help, too.  There's a fair return for my labor, for my contribution.    
    << Equality vs. Inequality >>    
    At the opposite end of that spectrum, such quality of life concerns are addressed at a minimum level, perhaps just short of deadly.  In the western world, it's depersonalized as 'those welfare leeches', 'that 47% who never contribute', 'those government-dependents'.
    Governance and policy determine the well-being of regular folks.

    Government policies that attempt to address the needs of millions are rarely successful for all, and they often do harm to some.  If they're not reviewed and refined, they'll continue to be problematic. That part is understood and worth our aggressive effort to improve, but those are not the highest risk.

    Government decisions that favor wealth and power are deadly. They commonly lead to the nation's decline and eventual failure. That's the history.  Increasing inequality such as we see today is just an indicator.

    It's only among humans that we see the quest for 'more than I need or could ever use'.  Greed, avarice, gluttony, selfishness, pride, excess, all at the expense of others ... the subject matter is ancient, well understood, and ignored in extractive economics, today's common baseline for policy.

    If serfdom were a gallon bucket, we'd be below the rim and sinking as economic inequality accelerates and the GAP widens.

    There are easy solutions of course.  It's the players that make it hard.

    (Ref: Why Nations Fail: The Origins of Power, Prosperity, and Poverty -- Daron Acemoğlu and James A. Robinson)