Sudanese Riots Caused by Lack of Inclusive Institutions

    
      A lack of inclusive political and economic institutions has led to riots in Sudan; the government is trying to impose unpopular (and therefore ineffective) policies.
    
     In an attempt to improve its economy, the Sudanese government lifted their subsidies on gasoline, and massively increased transportation and manufacturing prices, which increased the cost of many commodities.

     Responding to this new policy, the CNN report claims, large numbers of primarily working class citizens flooded the streets in the capital city of Khartoum, as well as various other cities across the country. Government forces scrambled to control the riots, which emerged without any form of organized leadership, implying a general public outcry.

 

     Bloomberg News describes a petition drafted and signed by members and supporters of Bashir's National Congress Party, in protest of the removal of the subsidies. It specifically cites a lack of peaceful consitutional expression. Bashir, who came to power in a coup in 1989, has been struggling to improve Sudan's economy; the average income for a Sudanese citizen in 2012 was $1,450.

Creative Destruction in the Music Industry

In the year, 2000, 943 music albums were sold on CDs, and profits of music sales were reaching an all time high. With the release of iTunes in 2003, however, people were able to buy single songs or entire albums, and easily download them directly onto their computers. Soon iTunes came to dominate the music industry and CD sales declined.

This is a textbook example of the way innovation invites creative destruction. When people found out about Apple's new music model, where customers buy music online and listen to it on an iPod, many chose it over buying CDs. When iPods and iTunes grew more popular, the music CD industry declined. A physical product takes more energy and money to create than a digital one, and thus also sells for more, so when
the iTunes model made buying music simple and easy, the music business as a whole shrunk.

http://money.cnn.com/2013/04/25/technology/itunes-music-decline/index.html

State of Russian Economy Today

Five Important Facts about the Russian Economy

    
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     After reading Acemoglu and Robinson's take on the development of the Soviet Union economy during the 20th century, I became curious about the state of the Russian economy today. Their of the persistence of political and economic decisions of the past influencing modern-day institutions seems to hold some water in this case study. The former Soviet Union has yet to successfully and fairly implement strategies that would lead to the development of a market economy, failures that the article above attributes to a lack of judicial independence from corrupt political structures. I think that there are many factors that can influence economic growth in a nation, and it's hard to point to the political decisions of the past as the primal cause for the perpetuation of social, economic and political stability with 100% certainty.
    Nonetheless, Alexeev seems to agree with Acemoglu and Robinson in that there is still a prevalent cultural mindset that causes Russians to discourage themselves from taking initiative, problem solving, or taking creative risks.

The Looming Shadow of Persistence

Though present extractive institutions are the main focus of this article, what is more troubling is the mindset of persistence that is foreshadowed.

With this past election, “Few people believe that they (would) be free and fair” (Coltart), and they were of course correct. The corrupt and tyrannical political party, the African Nation Union-Patriotic Front, led by Robert Mugabe, once again was ‘elected’ into office.

As stated, this was no surprise, so even though it’s not the best thing ever, it’s not the worst. Its legacy is what will leave the country and people scarred. The author of the article is hopeful that change will come, and when it does, “the nation will have to rediscover the rule of law and the sanctity of persons and property” (Coltart); but people have come to expect that things can’t change, so there is not initiative to try, especially if the reigning political party will murder you for it. Even when/if a better institution rises up, it “will have to find a way for the people of Zimbabwe to heal the wounds caused by decades of political violence” (Coltart). Because there is currently no room for hope, the citizens will tumble into a persistent cycle of fear and oppression for the foreseeable future, possibly undermining any reconstructive efforts. 

Treating acne is all about the money

We have travelled to the moon, developed the field of quantum mechanics, and created glow-in-the-dark animals, yet we are incapable of curing acne. The question arises if this really is the case, and the answer is no. George McCumiskey points out the all too obvious - that acne is a multibillion dollar business. There is an uncountable number of acne companies and products - all fairly ineffective at treating acne - that all thrive on the same old recipe in this huge consumer market. McCumiskey states, that "from this point, there is no need to put more money into improving product effectiveness."  And the reason for this is that it would decrease the total revenue of the companies.

The acne industry touches upon the concept of "creative destruction" from Acemoglu and Robinson's book Why Nations Fail. The acne industry continues to be highly profitable through corruption and by avoiding creative destruction. It spends tons of money bribing the FDA, putting "millions of dollars into lobbying the government for ‘ease of passage," so that its new drugs that aren't very effective are approved and quickly put on the shelves for consumers. It puts barely any money into research as developing a cure, which McCumiskey says is possible, would remove the demand for all its acne products. No demand for acne products would remove any profit in the industry. There is no proof, but I would not doubt that the acne companies are even pumping money into the prevention of such a cure.

A Critical Juncture That Changed China

December 1978, along with the opening of the Third Plenary Session of the 11th CPC Central Committee in China, the clique of Xiaoping Deng gradually took control of the Chinese government. This was a critical juncture in modern Chinese history, because Deng, unlike his predecessor, was a supporter for economic liberty. Believing that a market economy could help to improve the living standards in China, Deng carried out a series of new policies including reforms in the countryside (let the peasants participate in market economy) and reforms in the costal areas like Shenzhen and Zhuhai (encourage international trades and investments).

Deng's policy helped to create an inclusive economic structure in China, which, although still maintained an exclusive political institution, is able to achieve economic growths thanks to that. In fact, it has the fastest growing economy in the world and is able to double its GDP every ten years.

Democracy in Senegal

The abuse of power in an impoverished Sub-saharan nation should come as no surprise, however the election of His Excellency Macky Sall of Senegal raises hope for a diminishment of corruption and fraud. In the article published by The Council on Foreign Affairs, President Sall speaks of the challenges that the small nation faces in light of past decade of illegitimate governance. From the onset of the article, persistence as a means of limitation to the successful execution of democratic institutions in the region is stressed; citing Senegal's stand-alone constitution and Torodbe revolution, among others. Stability is also highly emphasized as a means of ensuring institutional success and legitimacy. 

Sall does critique his own countries underdevelopment of infrastructure, citing shortfalls in the military, educational systems, and public health care. Another key component of this article is the progressive attitude portrayed when accounting for the country's reliance on foreign aid. Similar to Acemoglu and Robinson's idea of productivity and profit being directly linked to investment, Sall presents foreign aid as a direct means to executing the necessary developments and infrastructural overhauls required to increase the standard of living across Senegal.                                 

Political Metamorphis in Ghana?

Over the past few weeks as a class we have been reading about different types of Political institutions in Acemoglu and Robinson's "Why Nations Fail." Many nations fail to prosper due to bad political institutions where the "elected" officials often times tamper the results preventing democratic change for the people. In Ghana Web,  Ghanaian President John Mahama says that Ghana's electorial process has experienced a "political metamorphisis" over the years and is continuing to "enrich Ghana's democratic dispensation." This coming after his election was petitioned as it was believed that he had in fact tampered with the results to ensure his victory over the New Political Party's Nana Addo Dankwa Akufo-Addo. It is even believed that Mahama payed off the judges in the election petition case. If this fraud is in fact true, political change in Ghana is not moving in the right direction and is still very corrupt. In a corrupt government, the people will be unjustly represented and the nation will fail to succeed as a whole.

Myanmar's Uncertain Future

Having recently seen the end of what have been decades on decades of extractive military rule, the Republic of the Union of Myanmar is at a critical juncture. In a recent by-election the opposition party (National League for Democracy) to the military-backed Union Solidarity and Development Party saw a massive victory, that just 20 years ago would have been overrode and covered up by the military. Though the president Thein Sein has deep rooted ties to the Union Solidarity and Development Party, Burma does seem to be taking steps towards more inclusive economic institutions.

Acemoglu and Robinson argue the persistence of extractive political and economic institutions. Burma has a deep history of militarily enforced extractive political institutions, and is now at a critical juncture where these institutions are being challenged. With that said, one ought to be cautious to be too optimistic for Burma's future. Like many other countries that have seen challenge to their extractive ruling classes, there is a pattern of persistence, and the newly powerful often fall back on the institutions of the ruling class that came before them. This is not to discount the steps Burma has made towards progress, but rather to suggest that Burma has come to a fork in the road and we have yet to see the path the country will head down.

Maquiladoras, an Extractive Economic System in Mexico

Maquiladoras can be defined as small, sweatshop-like factories that can be found throughout Central America, and especially just over on the southern side of the Rio Grande. Maquiladoras form an intensive, extractive economic system in many of these countries. Workers work long hours for very little pay and are sometimes not even permitted the right to use the bathroom. These factories are highly extractive and resultant of developed countries outsourcing manufacturing jobs to avoid their own country's human rights laws to produce their commodities for the cheapest price possible. The maquiladora system is reminiscent of similar extractive labor systems mentioned by Acemoglu and Robinson (encomiendas, reducciones, mita, etc).

This first video is a bit dry, but explains the system pretty well. If you're feeling adventurous and want to test your Spanish skills, check out the last one!

Malaysia's "Magical" General Election 2013

Malaysia's supposedly democracy system, and therefore inclusive political institution, has been in question after its General Election (GE) 2013. The election was filled with many irregularities and dirty politics, from money politics (bribing people to vote), foreign votes, indelible ink that allows a person to give multiple votes to the infamous magical blackout where two additional ballot boxes suddenly appeared after the electricity resumed. These dirty tactics have secured a victory for the incumbent Barisan Nasional and let the political party retain its power for 56 years. 

This unfair election has led me to believe that the inclusive political system in Malaysia is dubious. At first glance, Malaysia seems to put in place an inclusive political system as every Malaysian is given the right to vote and thus, as defined by Acemoglu and James Robinson, power is broadly distributed within the society. However, upon closer examination, it is not entirely true because the manipulation of votes during the GE2013 would mean that the votes given by Malaysians are as good as worthless; and this means that political power is wielded only by a handful of people in the current ruling government. As such, this analysis actually points out that Malaysia has an extractive political institution, though wrapped in a seemingly beautiful inclusive political institution from the outside - a subtle political move, indeed.

Ask a Slave!

In Why Nations Fail, Acemoglu and Robinson delineate between extractive and inclusive institutions in the politics and economics. Inclusive institutions provide a broad base of access to the means of acquiring wealth and power, while extractive institutions attempt to bolster one segment of society in these respects at the expense of others. In Chapter One, the authors describe how Spanish colonialists set up varying types of slavery in the New World - from the localized encomienda to the massive forced labor camp that was the Potosi mita. And while the authors view North American colonists as fostering a more inclusive network of institutions, it's undeniable that there was one widespread and extractive process in the English colonies - African slavery.

In the last few weeks, an African-American actress named Azie Dungey has been producing a new comedy webseries called "Ask a Slave." The gist of the series is to relate the most idiotic questions Ms. Dungey was asked when she worked at Mount Vernon in a historical re-enactment. However, the inspiration for her work is most interesting: she became powerfully aware of the racial divisions still undergirding our society when she was employed there. While slavery may be gone, racism still exists - giving weight to Acemaglu and Robinson's theory of persistence.

The Violent Overthrow of Extractive Institutions

     The extractive political institutions most prevalent in the Middle East have faced significant opposition since the inciting of the "Arab Spring" by a Tunisian fruit vendor's public self-immolation.
     Acemoglu and Robinson's idea of persistence in these dictatorial and "presidential" regimes, namely in Tunisia, Egypt, and Libya, has come to a critical juncture as the largely violent overturning of these regimes has and continues to occur today.


This widespread upheaval is a necessary step in the adoption of inclusive political institutions, but Ahmed Salah, a former stock analyst turned revolutionary from Cairo, reminds us: "We started the revolution, but we're still completing it."

The Extractive Nature of the NFL

The Extractive Nature of the NFL

The National Football League, though not a nation, conducts its operations similar to the Spanish Conquistadors in the New World.  Rather than promote the general welfare of the masses, as Acemoglu and Robinson assert successful nations do, the NFL has extractive institutions in place in order to acquire the most wealth for the owners, while putting the health of the players at risk.  Playing the role of the Spanish Crown is NFL Commissioner Roger Goodell, the man in charge of creating the NFL's institutions.  Bill Simmons, the man whose article brought this extractive policy to light (for me at least) had this to say about Goodell:

"[He's] a total hypocrite for pretending to care about the welfare of his players as he's pushing for an 18-game regular season that would lead to more injuries, more concussions, more collateral damage, more everything. Hey, Roger: If you cared about the welfare of the players, you'd shorten the season to 15 games and add another week of byes. Right? But hey, that would cost owners money."

As Simmons elaborates in his article, the NFL is forgoing obvious solutions to protect the vast majority of the league (the players) such as a shortened season or an added bye week, in order to bring in more wealth for the minority (the owners).  Just as the Conquistadors and extractive nations everywhere knowingly exploit the masses for the gain of a few, the NFL knowingly exploits its over 1600 players to the benefit of its 32 owners.

Exclusive Institutions in Zimbabwe

The political institutions in Zimbabwe should not be considered inclusive.  Acemoglu and Robinson describe inclusive institutions as those that encourage participation by the great mass of people.

In Zimbabwe, elections were recently held, but these elections are similar to all recent elections in Zimbabwe: they are not free and open. 

Somehow, the "President," Robert Mugabe has won yet again.  As the Business Day Live reports:

Mr Mugabe was declared the resounding winner of the vote, extending his 33 year-rule by a further five years...

But this report from Policymic claims what many others have felt. That is that the results are due to a combination of rigged ballots and military threats.