The Nobel Prize in Economics this year was awarded to Turkish-American Daron Acemoglu and British-Americans Simon Johnson and James Robinson for their research into the legacies of colonialism and global inequality, especially in countries dogged by corruption and dictatorship.
The economists studied institutions created by the European colonial powers.
The three economists “have demonstrated the importance of societal institutions for a country’s prosperity,” the Royal Swedish Academy of Sciences Nobel committee said.
Acemoglu and Robinson were expected to win the Nobel Prize in 2012 when they published their seminal Why Nations Fail: The Origins of Power, Prosperity, and Poverty.
It is of no surprise to anyone that they have scaled new heights since its publication.
Researching 1,000 years of global history, they have identified the historical roots for the vast differences in income between countries and discovered why rich nations can sustain their prosperity.
The key for societies to maintain prosperity is the type of economic and political systems they employ, their research showed.
Inclusive institutions create long-term benefits across the board, while extractive institutions — created to exploit populations — provide only short-term gains for the people in power and are bad for long-term growth.
Societies with weak rule of law and institutions that exploit the population do not generate growth or change for the better over the long term, it showed.
Robinson in an interview following the announcement of the award said that he doubts China can sustain its economic prosperity if it keeps its repressive political system.
He also said that Taiwan is a modern example of a formerly exclusive system that transitioned to a relatively inclusive and open society.
Speaking to reporters in Athens last week, Acemoglu said: “Authoritarian growth is often more unstable and doesn’t generally lead to very rapid and original innovation.”
He said that China posed “a bit of a challenge” to open and inclusive societies.
The theories and knowledge that these researchers provide are rich and far-sighted, and could be used to improve the governance of a country, region or an organization.
Their research highlights that China’s overproduction of electric vehicles, infrastructure, housing construction and building materials is against market principles.
Excessive market intervention and printing currency cause inflation, industry regression, local debt crisis, countermeasures from other countries and poverty for its 600 million people, as suggested by former Chinese premier Li Keqiang (李克強).
This is the calamity of a country ruled by the Chinese Communist Party (CCP). China’s road to economic recovery is destined to be shaky.
In the final analysis, tyranny is a losing system.
However, Acemoglu warned in the same interview that studies show that public institutions and the rule of law in many parts of the world are being weakened.
Taiwan’s Republic of China Consitution is the source of the “one China framework” which shackles Taiwan and is an obstacle to the forging of a national identity.
After all, a fair and just constitution is the foundation of a long-standing system.
A democratic society relies not on rule by law or rule by one, but on strong institutions. These are the key to avoiding failure.
Lin Wen-ping is a Yunlin County councilor.
Translated by Fion Khan
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