Democracy, Inc

Should it be called Columbus Day or Indigenous People’s Day? Today’s winners of the Nobel Prize in Economics decided to ask a different question. “Rather than asking whether colonialism is good or bad, we note that different colonial strategies have led to different institutional patterns that have persisted over time.” What did they find? “Colonies where a large share of settlers survived tended to establish inclusive, democratic institutions and subsequently prospered, the prize-winning researchers found. Those where relatively few settlers survived often formed more autocratic, extractive institutions and ended up languishing.” Nobel Prize goes to 3 economists who study the wealth and poverty of nations. Unfortunately, since three people won the prize, each will only get a third of the associated prize money, proving that sometimes you can be an economic genius but fail Econ 101.

+ NYT (Gift Article): Three Receive Nobel in Economics for Research on Global Inequality. “Countries that developed institutions that protected personal property rights and allowed for widespread economic participation tended to end up on a pathway to longer-term prosperity. Those that had extractive institutions — ones that helped elites to maintain control, but which gave workers little hope of sharing in the wealth — merely provided short-term gains for the people in power.” (In lay terms, ranting that “They’re eating the dogs, they’re eating the cats!” is not particularly productive.)