The Black Death and the Evolution of Institutions

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David Frum: I think it's taking a step backwards to say, well, these guys had good institutions. These guys had bad. And the contrast that we give as between western europe and eastern england is quite fascinating. What happened in western europe is that the cities were able to get better hand-to-hand protection for their workers. But against that, once labor came more scarce, its political power increased. When wasmost pull from urban areas, there was no way you could bargain with your employer because he or she would be dependent on you. So now, if wages are high, i can take even more of that.

Daron Acemoglu of MIT and author (with James Robinson) of Why Nations Fail talks with EconTalk host Russ Roberts about the ideas in his book: why some nations fail and others succeed, why some nations grow over time and sustain that growth, while others grow and then stagnate. Acemoglu draws on an exceptionally rich set of examples over space and time to argue that differences in institutions--political governance and the inclusiveness of the political and economic system--explain the differences in economics success across nations and over time. Acemoglu also discusses how institutions evolve and the critical role institutional change plays in economic success or failure. Along the way, he explains why previous explanations for national economic success are inadequate. The conversation closes with a discussion of the implications of the arguments for foreign aid and attempts by the wealthy nations to help nations that are poor.