Daron Acemoglu
Appearances
Planet Money
A Nobel prize for explaining why there's global inequality
The very distinguished economist came in and asked us, so what are you guys up to? And Daron, like all excited, explained this idea of sort of historical mortality of European settlers. And he just laughed himself silly. He thought it was the most ridiculous idea he'd ever heard in his life.
Planet Money
A Nobel prize for explaining why there's global inequality
People were just somehow so fascinated by it. And we were like, oh, man, you know, we hit it out the park, basically. It's just like the... You could just see people loved it and they found it fascinating. It was really kind of elating. That's what I remember.
Planet Money
A Nobel prize for explaining why there's global inequality
We thought this is just like devastating evidence on the impact, A, of colonialism in kind of reshaping those societies, and B, showing that the geographical hypothesis can't possibly be right, you know, because there isn't persistence. When colonialism comes, it reverses this picture. Then it turned out that's not just true in the Americas. It's true more generally in this colonial world.
Planet Money
A Nobel prize for explaining why there's global inequality
One of the things we tried to do in our book is come up with this sort of flexible language to talk about institutional differences, which kind of encompasses many things. Like I can say, your society has sort of extractive institutions, or it has inclusive institutions, and that can incorporate all sorts of differences in the details.
Planet Money
A Nobel prize for explaining why there's global inequality
We find very robust evidence that, you know, democracy is associated with better provision of public goods, better investment in education, in infrastructure, higher economic growth. Great. Okay. So... That's true. But he says all democracies aren't created equal. There's many different types of democracies and there's many different types of dictatorships.
Planet Money
A Nobel prize for explaining why there's global inequality
So I think that's useful to know just in terms of like, is it a good idea to push for democracy? Yes. You know, is pushing for democracy a kind of magic wand? No.
Planet Money
A Nobel prize for explaining why there's global inequality
People are born into this caste, you know, where occupations are rigid and specified. And that enormously holds back social mobility and the potential of the country.
Planet Money
A Nobel prize for explaining why there's global inequality
the transition towards economic growth in China starting in the late 1970s is clearly, you know, driven by this move to much more inclusive economic institutions, sort of dismantling central planning and cooperative agriculture, kind of introducing incentives, getting rid of price controls, allowing people to kind of make decisions and start firms.
Planet Money
A Nobel prize for explaining why there's global inequality
And, you know, that's exactly, you know, our theory. But what's tricky is how could this happen under a sort of totalitarian dictatorship?
Planet Money
A Nobel prize for explaining why there's global inequality
Yeah, I think, you know, this is social science. I think the world is very complicated. So, and our understanding of many things, you know, is incomplete. So we should be humble about that.
Planet Money
A Nobel prize for explaining why there's global inequality
You know, every slide I put up, you know, he objected to something. Oh, look, assumption two. No, if you change that, that result wouldn't follow. He was that guy. Yeah, exactly. Who's this really irritating guy?
Planet Money
A Nobel prize for explaining why there's global inequality
Then the seminar ends, and the chairman kind of introduces me, oh, this is Daron Asamoblu, you know, he's going to come to dinner. I was like, oh, seriously? Now they have to bring the guy to dinner?
Planet Money
A Nobel prize for explaining why there's global inequality
He looks at me and he says, have you read this paper by North and Weingast? And I had read the paper. And then, what do you think about it?
Planet Money
A Nobel prize for explaining why there's global inequality
You know, I grew up in the colonial world. It's not like rocket science. You know, you might think in retrospect to think that colonialism might have had something to do with the relative poverty of the Caribbean. OK, but no one talked about that in economics, like zero discussion.
Planet Money
A Nobel prize for explaining why there's global inequality
It was amazing how sort of fringe a lot of these ideas were, basically because it's just not presented in the way that mainstream economists do research.
Planet Money
A Nobel prize for explaining why there's global inequality
We almost said exactly the same thing, which was like, this is what economists study. But over there is all the things that I'm really passionate about. And then we were like, OK, you know, you only live once. Let's let's figure out how to bring these things together.
Planet Money
A Nobel prize for explaining why there's global inequality
The thing that we latched onto is it's got to do with colonialism.
Planet Money
A Nobel prize for explaining why there's global inequality
You know, why are institutions in Nigeria, you know, so lousy compared to the United States or Canada? You know, well, that's got something to do with the very different types of institutions that were created in the colonial world.
Planet Money
A Nobel prize for explaining why there's global inequality
And so we started reading like mad about colonialism and like trying to understand the incentives and what to explain different institutions. Why did such good institutions emerge in the United States and why not in Nigeria?
Planet Money
A Nobel prize for explaining why there's global inequality
The historical mortality environment for Europeans enormously influenced whether or not these places became settler colonies.
Planet Money
A Nobel prize for explaining why there's global inequality
But then several early colonizing attempts were basically decimated by tropical diseases and then decided like, OK, forget that. Let's go to Massachusetts. Like it's rocky. It's kind of unappealing. But we're not all going to die of tropical diseases.