The Roma People: Disadvantaged by Nomadism

The Roma people have long been excluded from European society, consistently segregated and discriminated against by whichever European country they happen to reside in. "Faced with stubbornly high unemployment and strained budgets, some European Union members are finding it easier to stigmatize and expel Roma than to provide them with the education, housing and employment they seek."

As Acemoglu and Robinson explain, a sedentary lifestyle is the key to establishing institutions to promote economic growth. With nowhere to settle, the Roma cannot develop their own educational and vocational institutions, and thus are dependent on eventual integration into European society to have access to education and employment. As long as the EU continues to segregate and deport the Roma, the Roma people will be trapped in nomadic life and unable to become successful participants in European society.

2013 TV135: Critical Juncture Headed Our Way

A team of Ukranian astronomers have discovered a massive asteroid that poses a real threat of hitting the earth in August 2032. It has made it on to NASA's "Space Danger List" and is the second asteroid ever to make it to the top of the list.

Though it is yet unclear wether the asteroid will hit the earth or not, should it hit it would likely become a critical juncture of massive proportions as it would release enough energy to destroy a state like New York and change the global climate which would doubtless necessitate institutions across the planet to change rapidly in order for their survival.

A Lost Season of Hockey

In September of 2004, the NHL closed its doors and locked out its players as a new collective bargaining agreement could not be struck with the NHL Players' Association. Ask a hockey fan about the season that wasn't, and you will still be met with anger. But eight years (and an additional lockout) later, the 2004-05 season appears to be a major critical juncture that launched the NHL into relevancy once more.

In the decade preceding the lockout, the NHL operated as a highly extractive league allowing richer teams to prey on smaller markets. The NHL was plagued by massive disparity between elite teams and chronic bottom feeders, and the on-ice product suffered considerably. Fans stopped coming and revenues stagnated and fell in many markets. The game was in despair as the league's unsustainable business model was being exposed.

The lockout presented an opportunity for the NHL and NHLPA to tackle its fundamental issues head on. The collective bargaining dispute was polarizing, highly divisive, and a major frustration for fans of the game, but it paved the way for the implementation of inclusive institutions, namely the salary cap, that allowed for upward mobility for teams that were previously trapped in the basement. As a result, the on ice product dramatically improved with higher parity, and record revenues were established in the NHL for each consecutive year following the lockout. Additionally, franchise values skyrocketed across the league, and the long-term health of small market teams was finally established.

While the lockout is a sore spot for many fans, it also serves as a critical juncture that fostered tremendous growth around the league as a result of the inclusive institutions that it implemented.

Those Civilized Vikings

A common misinterpretation is that vikings were savages. Though it is true that they plundered and extracted wealth from the rest of Europe, the domestic Viking society was relatively peaceful and civilized. They had the "thing" which is "the Viking cradle of democracy because their establishment, [the "thing,"] was an early attempt to introduce a representative system, allowing disputes to be settled in a neutral forum rather than by blood feud and violence alone." 

The "thing" was a general assembly where "Political decisions were made... laws upheld and disputes settled" and where "any free man was entitled to vote." According to A&R, the "thing" would be characterized as an inclusive political institution. However, whats so interesting about the "thing" is that it "was also a focus for religious activity, as well as trade and exchange." In other words, the thing was an inclusive economic institution as well. It created a huge incentive for trade with "booths, or huts, where traders came to do business with people attending the meeting." The vikings were highly civilized for their time with their own runic scripture, nordic religion, and hints of inclusive institutions. Many of the current scandinavian parliaments have their names derived from the "thing." Though I am doubtful, according to A&R's theory of persistence and path-dependent change, the "thing" may be a small part of why the Scandinavian countries have always been fairly stable, productive nations.

Critical Junctures and the Boston Red Sox

Any baseball fan reading this will remember Boston's epic plunge from the top of the American League's standings in August 2011 to missing the playoffs completely by their last game in September.  That collapse alone is arguably even more devastating than their league-worst record in 2012.  However, as Mike Salk explains, this monstrosity of a season led to a critical juncture paving the way for the current Red Sox team that will be playing in the World Series this upcoming Wednesday.
A&R theorize that a nation, in this case "Red Sox Nation", can often only throw off the shackles of extractive institutions to pave the road of a brighter future using inclusive institutions if a critical juncture occurs.  Salk asserts that the 2012 season as a whole was such a juncture, as "[i]t showed that the system was so flawed it needed to be burned to the ground."  Whereas before the juncture the ownership made all the decisions, such as bringing in the detestable tyrant-of-a-manager Bobby Valentine and assembling, in Salk's words, a "loathsome team", the new inclusive nature of actually allowing the front office, namely GM Ben Cherington and his advisers, to make decisions allowed Red Sox Nation to surpass virtually everyone's expectations. 

I Take My Tea with Money

The Koch brothers, widely credited with co-opting the Tea Party Movement that has swept extremist fiscal conservatives across the nation, may not hold office, but they are certainly able to decide who does. With a multi-billion dollar family fortune, Charles and David Koch have amassed both extravagant fortunes as well as immutable political influence.

By completely legal means, attributable to blatant deficiencies in campaign finance regulations, the brothers serve the same capacity as a large special interest. Just as increases in the economic strength of the burgeoning industrialist class of seventeenth century England led to a more pluralistic political institution, great concentrations of wealth also leads to the augmentation of individuals' political capital.

The Book-burning And Scholar-killing In Qin Dynasty

The people benefited from the extractive political structure always try to avoid creative destructions. Keep knowledge from spreading, keep the public innocent is certainly a good way to do it. 

The Ottoman Empire did this by imposing high restrictions on printing press while in China, there were two noteworthy incidents of destroying existing knowledge and forbidding new learning. While one being the famous "Cultural Revolution" leaded by Mao, the other was the "Burning of books and burying of scholars" in the Qin Dynasty happened after Qin Shi Huangdi, the first emperor in China, united China and tried to seize more centralized power. Following his chancellor's idea, Qin Shi Huangdi ordered to bury Confucian scholars alive and to burn all the non-official thought books and most of the history books, which was about 80% of the total collection of books at that time.

By doing this, he successfully forbad free thoughts (people talking about thoughts from different schools were to be killed if discovered) and created a "more stable" society, which, remained highly extractive, quickly failed within 50 years, largely resulted from the incident.

"Grassroots Marketization"

Acemoglu and Robinson frequently write of the need for inclusive institutions in fostering sustained economic growth. One group that's very close to home is helping create a more inclusive environment in a country known for institutions that are severely extractive: North Korea.

Liberty in North Korea (LiNK) is an on-grounds club dedicated to raising awareness of the oppression in North Korea while aiding refugees in establishing roots in the Charlotteville area. The idea behind LiNK is that it uses people power rather than international political coercion to undermine the Korean Government. It takes advantage of a little-known and infrequently discussed fact; that North Koreans are turning to unofficial and inclusive markets to better themselves.

Extreme extraction leads to debilitating poverty. LiNK is

helping to alleviate these conditions.

As the video on the national organization's home page indicates, North Koreans are acquiring contraband technologies to help facilitate their escape. If and when they do reach their goal - usually America or South Korea - they send money back home to help foster the unofficial market that helped them leave. To quote the video, "It's fueling the grassroots marketization of the country." This provides a sphere of inclusivity within the shell of the totally extractive political reality. Hopefully, LiNK can help North Korean refugees transform their country through this furtively bottom-up, inclusive approach. 

Where is China headed?

     A&R have asserted that the success of a nation comes from the correct combination of institutions both political and economic. The idea has been that these institutions must be inclusive in order to sustain long-term growth. The former Soviet Union served as an example of what was for a time thought to be an incredibly powerful combination of state power and economic extraction leading to massive growth. However, we learned that the growth created by these institutions can only be temporary and inevitably leads to collapse.

A booming Chinese metropolis. 

     China's state run economy, political inequality, and extractive economics has lead to remarkable growth in recent years, but it may slowing. In the next ten or so years we can hope to see whether China falls victim to their institutions, or redefines where sustained national progress can come from.

Child Marriages in Yemen

In the picture, the pretty, seemingly-ordinary Yemeni girl holding a pink scarf called Nujood Ali is not an ordinary girl at all. In spite of her radiant and cheerful expression, she has a scar deep within her - she is 10 and divorced. It might be surprising to some of us, but child marriages are indeed common in Yemen. Yemeni parents try to marry their daughter to middle-aged men in exchange for money. 

Child marriages in Yemen involve an extractive institution, in this case the girls' cold-hearted parents, who trade their daughters for money. This extractive institution thrives in Yemen especially because Yemeni judges, who represent the legal system, do not seem to be bothered by the ubiquity of these child marriages to the extent that they even support it, as the article mentioned,"There are plenty of judges who support him and are unsympathetic [to Nujood]."

Urban Decay in Britain

Small cities in Britain were once economic powerhouses. They were engines of industrial growth for years, supporting the larger cities in the quest for profit. However, as Acemoglu and Robinson could well predict, creative destruction left these towns behind. As Britain's economy became increasingly more dependent on forms of production and globalized trade that differ from the old industrial model, the Northern towns that thrived under it have, naturally, been hard-hit.

 

The North of England's decline was forestalled by the artificial pump of government money from Tony Blair and Gordon Brown's Labour governments. Public funding went to large building projects and arts promotion as well. However, with the rapid succession of the 2008 economic crisis and the election of the David Cameron's Tories into a coalition government, that decline has deepened. The larger cities have been able to diversify their economic output, while the smaller and medium-sized ones - places like Wolverhampton, Hull, and Hartlepool - have utterly failed in this regard. All three of the cities' unemployment is well over the national average. On top of this stagnation, there's another problem; 

"Fully 22% of people in Wolverhampton have no qualifications—against a national figure of 9%. As in Hull and Hartlepool, while not all the local schools are bad, their overall performance is appalling," ("The urban ghosts"). 

This has led some commentators to suggest that, instead of building civic institutions like aquariums or art museums, it would be more appropriate for the government to help the struggling masses from these areas to relocate or commute. After all, there is a precedent for such a shift. As cottage industries declined with the advent of industrialism, vast numbers of displaced peasants moved from the Cotswolds to London and other major centers of the new economic movement. Perhaps a similar migration will save the people currently suffering in the North's languishing cities.

The Catholic Church

The path of the Catholic Church is a great example of many of A&R's hypothesises. The Church can be seen as an extractive institution that underwent a critical juncture which eventually led to a change towards a more inclusive nature.

The Catholic Church in the 14th and 15th century was a very powerful and highly extractive institution. It preyed on the poor and the weak who sought redemption and peace in the church, so the Church became extremely rich through this extraction. This over-dominating power remained untouched until around year 1500 where Martin Luther challenged the church and its exploitation of the people. The Reformation was a critical juncture in which the Catholic church lost a great deal of its power as a large part of it split of into becoming protestants. This critical juncture led to the Counter-Reformation in 1545 which was the beginning of a more inclusive Catholic institution. One of the key creations of the Counter Reformation was the Council of Trent.

"The Council of Trent aimed to remedy the problems within the Catholic Church that had contributed to the Protestant Reformation. For instance, the Council sought to end clerical abuses and corruption, especially associated with the selling of indulgences."

From there on out, the power within the Catholic Church became more spread out, which lessoned the incentive for an extractive system.

Gold Rush in Darfur

Just a decade after genocide in Darfur, the region has once again been plagued by violence and infighting, this time because of large quantities of gold recently being discovered deep below the Sudanese ground. The mad dash to cultivate the massive amount of gold has made way for "state-sponsored violence" as the Sudanese government attempts to extract as much as possible from this new source of wealth.

"Humanitarian groups say the Sudanese government, led by accused war criminal President Omar Hassan al-Bashir, is pitting tribes against each other in a bid to get the most possible out of some 4,000 mines."

Led by al-Bashir, the Sudanese government is using the desperation of a poor and war-torn population to encourage infighting in order to concentrate the government's grip on the gold. The Sudanese president has thus far relied on loyal tribes to eliminate would-be threats to the government's extraction of the gold from privately cultivating their own share of the prize. In essence, al-Bashir is ensuring that minimal amounts of the newly found wealth find its way into the possession of private individuals. Rather, al-Bashir is promoting tribal violence in order to extract the gold through tribes that have already proven themselves loyal to his regime.

The ongoing situation in Darfur is not unlike the numerous examples of extractive institutions that defined the development of Latin America over the course of the past 500 years. In particular, the Spanish extraction of gold from their new world colonies provides an apt comparison for the extractive nature of the Sudanese government's response to the new sums of wealth. Just as conquistadors hoarded gold from the New World that would be extracted for the crown, al-Bashir is using his loyal tribes to claim as much gold as possible in an arrangement that will no doubt be mutually beneficial to the Sudanese government and the tribes that it chooses to sponsor. However, extractive institutions such as these leave the rest of the population in the dust and represent a stark contrast to inclusive institutions that would instead promote and encourage cooperative arrangements that benefit society collectively.

Bread and Circuses in Ancient Rome

In the Roman Empire, there were not as many opportunities for economic advancement as today for the common man. Many homeless and very poor people lived in Rome and they had few choices. To placate the poor and homeless of Rome, Emperors frequently gave out free wheat and public games at public expense, know to many as bread and circuses. The plebeians were content with free food and entertainment. The system worked for many years, but it was only a stop gap for the problem of economic inequality in Rome, caused by a lack of inclusive economic institutions. Plebeians were dependent on handouts from the state, so politicians could effectively buy the support of the masses, instead of helping them support themselves. As a result of placating the people instead of fixing the root of the problem, the Roman economy stagnated somewhat contributing the collapse of the Empire.

Corrupt Politics in Azerbaijan

     The country of Azerbaijan declared its independence from the Soviet Union in 1991. While Azerbaijan's economic future has been described as "promising", they continue to have extractive political institutions. The country recently re-elected President Ilham Aliyev, who has been serving for the past 10 years. The problem is the results announcing his re-election were reveal a full day before voting had even began. The country's facade of free elections was essentially broken with this incident. The election was not anticipated to be fair, but this incident just further confirmed the extent of authoritarian power in Azerbaijan.

     The extractive political power in Azerbaijan means that even though people are technically allowed to vote, their vote does not actually have any affect on the outcome of the election. The opposing candidate's appeals were rejected, further stifling opposition to the ruling powers.

Why the USSR failed

The collapse of the Soviet Union is invertible, resulting from numerous reasons.Some were showed in the video called “the tears of Russia – the collapse of the USSR”, like the threats from other countries and the corruptions of the high-position people. Dig deeper, we will find that its failure actually originated from its political and economic structures.

The Soviet Union was politically highly extractive, especially so after the 1980s. All of its policies and laws were determined solely by the few people in the government and all to their benefits (help them to steal more easily from the nation for instance). With all the power and 95% of the wealth rested in the hands of the privileged ones, millions of people starved to death, and the rest were monitored and prosecuted by the secret police. Its economic was extractive, too. Because people were not allowed to have personal properties, they generally lack the incentives to work, and were not trying to innovate at all. Due to the extractive structure, there was no creative destruction either.

As the problems resulting from the two aspects got bigger, the USSR tried to transit into the capitalism, but eventually failed and collapsed.

Creative Destruction Necessary for Cleaner Energy

      Recently I wrote a paper for my ENWR class that involved much research about the proposal for the construction of a crude oil pipeline through the Midwest of the United States by the TransCanada oil company titled Keystone XL. Research on the various pros and cons of this project brought to my attention the opportunity for creative destruction that crude oil brings to the table in the United States. I am now of the opinion that instead of perhaps supporting the  perpetuation of the US's dependency on foreign oil through the potential approval of this pipeline, more resources should be invested in the development and availability of renewable energy to the masses. The creative destruction/phasing out of oil,  and in its place the diffusion of sustainable energy would admittedly be a very precarious and difficult situation due to the prevalence of oil in our everyday lives, however it would provide a great opportunity for economic growth. In the debate over Keystone XL and developments in clean energy some embrace this opportunity for creative destruction while others are fearful of it and cling to the oil industry that they know and somehow love. The article from Pew below gives many insightful statistics about who does or does not not support  Keystone XL and the continuation of the US' involvement with foreign oil as our primary source of energy.

Pew article: 
http://www.people-press.org/2013/09/26/continued-support-for-keystone-xl-pipeline/


http://www.youtube.com/watch?v=680ZSxYJcUQ

Above is a link to a Youtube video that is demonstrative of a particular groups' stigma against Prop 39, a proposition proposed in 2012 in California that would encourage job growth in clean energy. The newscaster representing this opinion seems to be more concerned about potential job loss because of this proposition than the job creation it could foster.

Violence Continues in Egypt

Over the past week, the violence in Egypt has continued to escalate as dozens more of protested were killed. The United States is expressing concern over these events as the bloodshed has been extensive in Egypt. The protests began after the democratic, inclusive government  was overthrown and changed into a military backed regime with exclusive tendencies. The democratically elected leader, Morsi, had been a Muslim and the first leader in Egypt considered to have been truly chosen by the people, as previous elections were more than likely rigged. The new extractive political institution has began to persecute Muslims living within the country, claiming they are trying to stop terrorism. They outlawed the Brotherhood last week, and seized all of their assets as a way of enforcing this policy. The protestors are taking extreme measures to rebel against the religious persecution, most recently shooting guards and setting off car bombs. Although violence is never the right answer, these protestors are trying to push back a government that has become an extractive, unfair institution compared to the inclusive political environment that they thought they were finally achieving during the elections. 

The United States does not condone the actions of the Egyptian Government, saying they have "a responsibility to protect all Egyptians and create an atmosphere in which all Egyptians can exercise their universal rights, including free assembly, expression and press." USA TODAY However, the United States government has refused to offically call the act of the military overtaking the government a coup, as that would force them to stop funding to the country. Although the U.S. does not agree with the extractive institution's actions, they do not wish to take action due to the backlash that would most certainly ensue. 

Equatorial Guinea: Extractive Disaster

Francisco Macias Nguema exacted an extractive reign of terror over Equatorial Guinea. Economically F.M. Nguema was a disaster, a true enemy of creative destruction: "[Nguema] was distinctly uneasy around educated people. Before long, he had killed everyone who wore spectacles, a sure sign, in his peculiar opinion, of superior educational accomplishment, and it was dangerous for any Guinean to own so much as a page of printed matter." Acemoglu and Robinson explain the natural tendency of extractive institutions to stifle creative destruction is a major reason growth under extractive institutions is not only rare, but impossible to sustain. As a nation rich in resources, that owes 90% of its GNP to foreign aid, Equatorial Guinea certainly exemplifies this claim.

Additionally, he was infamous for reintroducing forced labor and executing thousands, among much else, it was no surprise his reign ended with a coup. Acemoglu and Robinson would argue that it's also unsurprising Francisco Macias Nguema's successor (his nephew Teodoro Obiang Nguema Mbasogo) yet another leader supporting very similar, very extractive, political and economic institutions.