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Acemoglu, Piketty, and Comparing Apples to Apples

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Tyler Cowen at Marginal Revolution links to Daron Acemoglu’s paper refuting Piketty:

Thomas Piketty’s recent book, Capital in the Twenty First Century, follows in the tradition of the great classical economists, Malthus, Ricardo and Marx, in formulating “general” laws to diagnose and predict the dynamics of inequality. We argue that all of these general laws are unhelpful as a guide to understand the past or predict the future, because they ignore the central role of political and economic institutions in shaping the evolution of technology and the distribution of resources in a society. Using the economic and political histories of South Africa and Sweden, we illustrate not only that the focus on the share of top incomes gives a misleading characterization of the key determinants of societal inequality, but also that inequality dynamics are closely linked to institutional factors and their endogenous evolution, much more than the forces emphasized in Piketty’s book, such as the gap between the interest rate and the growth rate.

“South Africa and Sweden”???

To be a superstar economist these days, it helps to push your ideas past the point of self-parody.

 

51 Comments to "Acemoglu, Piketty, and Comparing Apples to Apples"

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  1. Is this Acemoglu character making some sort of joke or did he suffer a stroke or other mental malady?

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  2. South Africa, is that more of a triple package or just a double

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  3. Anonymous
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    I find this emphasis on ‘institutions’ by certain contemporary economists to be both entirely unsatisfactory in terms of gaining any true understanding of the forces that shape the real world and also to be a complete cop out in attempting to analyzing economic failure. Putting it all down to ‘institutions, is the grown up way of blaming the gremlins.
    ‘Institutions’ are purely man made artifacts, as artificial as the membership rules of your local country club, the law of supply and demand is not however being the commercial equivalent of a fundamental law of physics. By putting all the blame on ‘institutions’ all that happens is that bad economists, bad politicians and low IQ populaces are let off the hook. In other words it’s a get out of jail free card and merely another obfuscation for the sake of obfuscation and best ignored by all thinking persons.

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  4. Sweden is making valiant efforts to change itself in a South Africa-like direction.

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  5. And yet the debate, at the policy level, in all areas, is between the likes of Piketty and the likes of Acemoglu.

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  6. Acemoglu, Piketty, and comparing apples to apples | Reaction Times
    says:
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    […] Source: Steve Sailer […]

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  7. Sweden is actually governed in a very decentralised way, rather like Switzerland. Economic elites have quite a lot of freedom in both counties. The real big government country is Denmark, the land of girly men.

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  8. To be fair, isnt he making the point that it would be absurd to draw the conclusion that Sweden and South Africa differ because of income inequality? If so, then I would agree. Thats not to say that his own explanation is any better…

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  9. “South Africa and Sweden”???

    Steve, you seem to really hate Acemoglu. I read your review of his (and Robinson’s) book, and you completely mischaracterize his thesis. I guess any theory of human and societal variation that does not lay heavy emphasis on race and genetics really bothers you.

    In this particular sentence, there is nothing problematic about using South Africa and Sweden in the same sentence, but you jumped to a pre-conceived conclusion because of your bias. He is not positing a similarity between the two countries, but rather a contrast. He is a big fan of the Swedish model and says Sweden is a successful country because their institutions are fair and inclusive. He is critical of the South African model, which has always been built on an explicit racial hierarchy; he calls that an exclusive institution and shows that concentrating all political and economic power in the hands of white people results in blacks getting poorer and black communities getting more dysfunctional. This is obvious and should be non-controversial, but I am not sure you see it that way.

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  10. “Institutions” in Acemoglu’s parlance is just shorthand for how people in a society treat each other. If they treat each other fairly, trust each other, and deal honestly with each other, he says the institution is “inclusive” and such a society will do well for itself and its members; If they treat each other badly, establish hierarchies, indulge in dishonest behavior, and have a very small circle of trust, the society and most of its people (all except the elite) will do pretty badly. There is no evidence to correlate IQ with how a person treats another; it’s completely based on how one is socially conditioned, which in itself is based on the history of that society/culture. Relatively dumb people in a high-trust and egalitarian society can do well for themselves and make progress too.

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  11. Maybe “institutions” is just a clever, career-protecting, euphemism for the human clades that created and support the local culture. Thus one could rephrase Acemoglu in a way that makes sense: The sturdy, northmen ancestors of the Swedes gradually evolved a communal culture that provided rule of law and the other institutional necessities for a thriving modern economy. This economy was strong enough to survive the communalistic urges of these Swedes’ descendants but is gradually being destroyed by an influx of foreign clades.

    Similarly, the Boer settlers of South Africa and the later English invaders who overwhelmed them brought north European genes and cultural values to the southern tip of Africa. The institutional consequences produced a first world economy that was even strong and sophisticated enough to briefly, albeit surreptitiously, join the very selective nuclear powers club. Now, like a shadow following in the footsteps of Zimbabwe, South Africa is experiencing the destruction of the institutions that originally empowered the region as the once dominant north European clade is supplanted by Bantu(?) Xoisan invaders. The result is the on-going political, economic, and cultural dissolution of the country. We can see similar micro-patterns playing out in various US cities and suburbs as I write this.

    Bravo, Professor Acemoglu! Despite the occult and craven manner you employed, you have explicated the major factor behind the creation and sustenance of modern economic development.

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  12. Like Greg Mankiw, Tyler knows who ultimately signs his paychecks. His job is to craft intellectually-respectable arguments (or at least passable arguments) for preordained conclusions.

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  13. Well when it comes to “inequality,” wealth in South Africa is very Jewish dominated. As was anti-apartheid politics, with Mandela being little more than a stooge for Jews like Joe Slovo. In fact, South Africa and Rhodesia were the first places that overtly anti-white politics became “respectable.”

    I’m sure there’s a few rich Jews in Sweden, but I don’t know how dominant they are. Sweden is, of course, a nation obsessed with overtly anti-white politics.

    So maybe there are some similarities.

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  15. Acemoglu may well be blinded by doubleplusgoodthink, but in this case he seems to be making a point which Sailer would at least partially agree with. The great difference between Sweden & South Africa is exactly what Acemoglu wants to emphasize. Examining the factors Piketty focuses on, they seem similar, ergo Acemoglu concludes Piketty is overlooking something very important. Acemoglu always reduces everything to “institutions”, but the reader doesn’t have to share his favored explanation to see the point with regard to Piketty.

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  16. Even the Afgnani rebels (Taliban) have been accused of not believing in strong institutions:

    http://hosted2.ap.org/APDEFAULT/3d281c11a96b4ad082fe88aa0db04305/Article_2014-08-05-AS–Afghanistan-Insider%20Attacks/id-d58e22be02fc42299fd9350cce7e0f5a

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  17. In this piece Acemoglu points that two very different countries can have a similar trajectory for very different reasons and is hard to argue with that.

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  18. And yet the debate, at the policy level, in all areas, is between the likes of Piketty and the likes of Acemoglu.

    As Jared Taylor once wrote, ‘sanity is a distant dream’.

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  19. Yet across the border in Rhodesia, where black leadership is absolute, we see a once prosperous country unable to feed itself. If anything, when whites are the ones in charge blacks are generally better off. Whether or not this need be explicit depends on the demographic makeup of the nation–in mostly white Sweden white rule is implicit, in apartheid-era S. Africa the only way whites could rule was by avoiding the idiocy of mob-rule democracy.

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  20. I’ve just glanced at the paper and as far as South Africa is concerned it seems to take as its starting point the slanted left wing analyses that dominate anti-apartheid discourse. For instance on p.11 it says: “Shortly after its inception, the Apartheid state passed the Native Land Act in 1913, allocating 93% of the land to the white economy while the blacks (around 80% of
    the population), got 7% of the land.” Firstly, when the Land Act was passed the 93/7 split was the de facto situation. The aim of the act was to prevent more tribal lands from passing into the hands of the economically more successful white farmers, not to prevent blacks from owning land. The fact that the National Party later sought to acquire more land from white owners and through forced expropriation of white farms managed to increase the black share to 13% fatally undermines their narrative. They also seem to assume that the black population always constituted 80% of the population, yet in 1910 it was closer to 60%. The explosion of black population growth in the 20th century could on its own explain the decline of black per capita income relative to that of whites, yet that is clearly not being taken into account.

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  21. “He is not positing a similarity between the two countries, but rather a contrast. He is a big fan of the Swedish model and says Sweden is a successful country because their institutions are fair and inclusive. He is critical of the South African model, which has always been built on an explicit racial hierarchy; he calls that an exclusive institution and shows that concentrating all political and economic power in the hands of white people results in blacks getting poorer and black communities getting more dysfunctional. This is obvious and should be non-controversial, but I am not sure you see it that way.”

    You have a point but you miss that Assmugly’s intuitions about institutions are dead wrong because he always leaves out the context. True, Assmugly is CONTRASTING the two nations, but one cannot understand the problems UNLESS one takes race/culture into account.

    After all, for MOST OF SWEDISH HISTORY, things were not fair in Sweden by any modern definition of the term. There was the privileged class and lots of poor Swedes, many of whom got a raw deal from the system. (See EMIGRANTS and PELLE THE BONQUEROR). Only in the modern era did Sweden become something of a social-democratic paradise.

    So, how come Sweden was able to overcome its centuries/millennia of hierarchical oppression where elites used class privilege and power to keep most people poor and on the bottom?
    How did Sweden overcome historically deep-rooted problems so quickly? Because Swedes are all of one race and culture. So, there was unity. Swedish work ethic and sobriety were hardened under centuries of hardy Protestantism. Because the IQ and ‘national character’–molded by 10,000s of evolution and centuries of culture–were shared by most Swedes, rich-middle-and-poor. So, despite the fact that Sweden was, for so many centuries, an oppressive and unfair(by modern standards) society, it was able to overcome its ‘injustices’ quickly in the modern era.

    To leave all that out and speak only of institutions is crazy. Institutions cannot simply be imposed on people. It’s like you can’t just plant seed in sand and rock and expect a plant to grow. It has to be planted in rich soil that will nourish to seed to grow.

    Though democracy and liberalism–and modern sense of rule of law–came to Sweden late, the Swedish had the racial/cultural material to make the seed grow if planted there. And the fact that Swedes were homogeneous also helped because there was less likely to be dissension along ethnic lines. Good thing Sweden let Norway go because ruling over Norway would have been like Brits trying to rule over Irish. Can’t go on forever.

    Imagine two scenarios.

    Suppose both societies are unfair and repressive.

    1. Nation A. It has a repressive political and social system. It has privileged rich at top who’ve rigged the system in their favor and it has many poor people. But it is homogeneous, people look the same, people share similar personalities and national character. Most people of roughly same IQ.

    2. Nation B. It has a repressive political and social system. It has privileged rich at top who’ve rigged the system in their favor and it has many poor people. But it is diverse, elites and rest look very different, different groups have different personalities, cultures, and national characters. There is sizable difference in group IQ levels.

    Now, suppose we have a formula for modern institutionalization of Rule of Law, and we want to impose it on both nations.

    Which nation, A or B, do you think will make better use of it?

    Besides, Rule of Law isn’t simply about imposing an ideal on a system but how well the ideal is practiced by the system. So many nations have adopted democracy and the ideal of ‘rule of law’, but they don’t practice them in any meaningful way.
    China is still a one-party state and eschews our sense of ‘rule of law’, whereas India is a democracy that embraces the ideal of ‘rule of law’. But many observers say Chinese are more constructive with lack of ‘rule of law’ than Indians are with their ‘rule of law’. Why is that? While it’s true enough that China is corrupt and rotten in many ways, the Chinese national character and Chinese Han homogeneity do provide pillars of stability, order, and cooperativeness that Indians, even with Rule of Law, can only dream about.

    So, purely from an abstract angle, Assmugly is right about the importance of Rule of Law and institutions. But whether he’s using different nations as comparisons or contrasts, he’s missing the point–often willfully–when he disregards factors of race/culture/national character/diversity.

    People like to blame the problems of South Africa on apartheid, but then, how come the other black African nations are even more corrupt and worthless?
    Does anyone think South Africa would be Sweden-like today if, in the 1950s, the white government had called for total integration and equal black participation in government? What happened to Zimbabwe under Mugabe after such was instituted? What happened to Detroit after blacks got total freedom?
    Black elites in South Africa are better off than black elites in other African nations because they had an economy and political system to inherit from whites. If anything, the inconvenient truth is that South Africa has been at beacon for rest of Africa before and after Apartheid BECAUSE whites had used special powers to rule the place and run the economy.

    True, the Apartheid system favored dumb whites over smart blacks, but as smart people tended to be white and dumb/crazy ones tended to be black, Apartheid hardly proved to be counterproductive to the economy of South Africa.

    And there’s still more Rule of Law in South Africa than in most other African nations, and why? Because whites in South Africa at least maintained Rule of Law among whites, and so, some degree of that ideal remained in that country–even if hadn’t been extended to blacks–, whereas in black-run nations, Rule of Law wasn’t practiced on any level from top to bottom. Today, Nigeria overtook South Africa in economy–due to oil sales–, but the elites of Nigeria are many times worse than elites of South Africa, some of whom are still white and some of whom are blacks who inherited a white-devised system(though, in the long run, the likes of Zuma will prolly go the Mugabe route).

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  22. “He is not positing a similarity between the two countries, but rather a contrast. He is a big fan of the Swedish model and says Sweden is a successful country because their institutions are fair and inclusive. He is critical of the South African model, which has always been built on an explicit racial hierarchy; he calls that an exclusive institution and shows that concentrating all political and economic power in the hands of white people results in blacks getting poorer and black communities getting more dysfunctional. This is obvious and should be non-controversial, but I am not sure you see it that way.”

    You have a point but you miss that Assmugly’s intuitions about institutions are dead wrong because he always leaves out the context. True, Assmugly is CONTRASTING the two nations, but one cannot understand the problems UNLESS one takes race/culture into account.

    [MORE]

    After all, for MOST OF SWEDISH HISTORY, things were not fair in Sweden by any modern definition of the term. There was the privileged class and lots of poor Swedes, many of whom got a raw deal from the system. (See EMIGRANTS and PELLE THE BONQUEROR). Only in the modern era did Sweden become something of a social-democratic paradise.

    So, how come Sweden was able to overcome its centuries/millennia of hierarchical oppression where elites used class privilege and power to keep most people poor and on the bottom?
    How did Sweden overcome historically deep-rooted problems so quickly? Because Swedes are all of one race and culture. So, there was unity. Swedish work ethic and sobriety were hardened under centuries of hardy Protestantism. Because the IQ and ‘national character’–molded by 10,000s of evolution and centuries of culture–were shared by most Swedes, rich-middle-and-poor. So, despite the fact that Sweden was, for so many centuries, an oppressive and unfair(by modern standards) society, it was able to overcome its ‘injustices’ quickly in the modern era.

    To leave all that out and speak only of institutions is crazy. Institutions cannot simply be imposed on people. It’s like you can’t just plant seed in sand and rock and expect a plant to grow. It has to be planted in rich soil that will nourish to seed to grow.

    Though democracy and liberalism–and modern sense of rule of law–came to Sweden late, the Swedish had the racial/cultural material to make the seed grow if planted there. And the fact that Swedes were homogeneous also helped because there was less likely to be dissension along ethnic lines. Good thing Sweden let Norway go because ruling over Norway would have been like Brits trying to rule over Irish. Can’t go on forever.

    Imagine two scenarios.

    Suppose both societies are unfair and repressive.

    1. Nation A. It has a repressive political and social system. It has privileged rich at top who’ve rigged the system in their favor and it has many poor people. But it is homogeneous, people look the same, people share similar personalities and national character. Most people of roughly same IQ.

    2. Nation B. It has a repressive political and social system. It has privileged rich at top who’ve rigged the system in their favor and it has many poor people. But it is diverse, elites and rest look very different, different groups have different personalities, cultures, and national characters. There is sizable difference in group IQ levels.

    Now, suppose we have a formula for modern institutionalization of Rule of Law, and we want to impose it on both nations.

    Which nation, A or B, do you think will make better use of it?

    Besides, Rule of Law isn’t simply about imposing an ideal on a system but how well the ideal is practiced by the system. So many nations have adopted democracy and the ideal of ‘rule of law’, but they don’t practice them in any meaningful way.
    China is still a one-party state and eschews our sense of ‘rule of law’, whereas India is a democracy that embraces the ideal of ‘rule of law’. But many observers say Chinese are more constructive with lack of ‘rule of law’ than Indians are with their ‘rule of law’. Why is that? While it’s true enough that China is corrupt and rotten in many ways, the Chinese national character and Chinese Han homogeneity do provide pillars of stability, order, and cooperativeness that Indians, even with Rule of Law, can only dream about.

    So, purely from an abstract angle, Assmugly is right about the importance of Rule of Law and institutions. But whether he’s using different nations as comparisons or contrasts, he’s missing the point–often willfully–when he disregards factors of race/culture/national character/diversity.

    People like to blame the problems of South Africa on apartheid, but then, how come the other black African nations are even more corrupt and worthless?
    Does anyone think South Africa would be Sweden-like today if, in the 1950s, the white government had called for total integration and equal black participation in government? What happened to Zimbabwe under Mugabe after such was instituted? What happened to Detroit after blacks got total freedom?
    Black elites in South Africa are better off than black elites in other African nations because they had an economy and political system to inherit from whites. If anything, the inconvenient truth is that South Africa has been at beacon for rest of Africa before and after Apartheid BECAUSE whites had used special powers to rule the place and run the economy.

    True, the Apartheid system favored dumb whites over smart blacks, but as smart people tended to be white and dumb/crazy ones tended to be black, Apartheid hardly proved to be counterproductive to the economy of South Africa.

    And there’s still more Rule of Law in South Africa than in most other African nations, and why? Because whites in South Africa at least maintained Rule of Law among whites, and so, some degree of that ideal remained in that country–even if hadn’t been extended to blacks–, whereas in black-run nations, Rule of Law wasn’t practiced on any level from top to bottom. Today, Nigeria overtook South Africa in economy–due to oil sales–, but the elites of Nigeria are many times worse than elites of South Africa, some of whom are still white and some of whom are blacks who inherited a white-devised system(though, in the long run, the likes of Zuma will prolly go the Mugabe route).

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  23. Anonymous
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    ‘Numinous’ whom I suspect to be Acemoglu himself, says that ‘institutions’ is merely codeword for ‘the way individuals in a given society treat each other’ or words to that effect. Be that as it may,one of the constant themes in Steve is of evolutionary biology and the origin and dare I say it of so-called low trust and high trust societies and the evolutionary forces operating through the agency of tens of thousands of years that shaped those societies. For example you’ got Steve’s favorite man, after Sir Francis Galton of course, Carlos Slim, a Lebanese, an ethnicity that is notorious for doing very well in other peoples’ countries whilst being unable to hold together a functioning society in their own native homeland – a classic symptom of a clannish/low trust society using their clannish against outsiders to get the better of them. All Steve is trying to do is to unearth these hidden biological facts and to expound the genetic root of all economics.

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  24. “He is critical of the South African model, which has always been built on an explicit racial hierarchy; he calls that an exclusive institution and shows that concentrating all political and economic power in the hands of white people results in blacks getting poorer and black communities getting more dysfunctional. This is obvious and should be non-controversial, but I am not sure you see it that way.”

    So Black people are not poor and dysfunctional under Black government rule ?

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  25. In this particular sentence, there is nothing problematic about using South Africa and Sweden in the same sentence, but you jumped to a pre-conceived conclusion because of your bias. He is not positing a similarity between the two countries, but rather a contrast.

    Wow, you are dense. Steve didn’t accuse him of saying they were similar. Steve is accusing him of using Occam’s butterknife to explain the differences.

    He is critical of the South African model, which has always been built on an explicit racial hierarchy; he calls that an exclusive institution and shows that concentrating all political and economic power in the hands of white people results in blacks getting poorer and black communities getting more dysfunctional. This is obvious and should be non-controversial, but I am not sure you see it that way.

    It’s obviously false and it should be non-controversial that it is obviously false. Blacks in both Africa and the US got enormously richer under the exclusive institutions of Jim Crow, Colonialism, and Apartheid. Getting rid of those things has led to Detroit, Johannesburg, and Congo, aka fistula-land.

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  26. How has Sweden’s inclusiveness helped it assimilate its Muslim immigrants?

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  27. http://www.redflagnews.com/headlines/obamas-new-admiral-she-cant-fly-but-she-rules-over-navy-pilots

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  28. Sailer is right, readers above don’t get it. Acemoglu claims that “institutions”, mainly recent political institutions, explains why Sweden differs from South Africa.

    http://economics.mit.edu/files/9834

    “Turning to Sweden, though the story is very different, the role of de facto and de jure
    political power in shaping political and economic institutions once again appears central. In
    the Swedish case, the important turning point was the creation of democracy. Adult male
    su¤rage came in 1909, but true parliamentary democracy developed only after the Reform Act
    of 1918, with signiffcant curbs on the power of the monarchy and more competitive elections.”

    When trying to explain why Sweden is more equal than South Africa Acemoglu ignores demography. According to his theory, if South African elites would have followed Swedish elites around 1900, the two countries would be more or less similar.

    It’s harmless, a useful distraction even, but insipid.

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  29. Note to Unz.com : the “MORE” button in the comments doesn’t work.

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  30. Acemoglu really seems to believe in institutions rather than describing them as a “code word”. I’m also not sure he’s even aware of Sailer’s existence. It would seem incredibly unlikely that he’s Numinous.

    Steve complained about comparing apples to apples, but since Acemoglu’s point is that the countries really are fundamentally different (though they shouldn’t be per Piketty’s theory) I don’t think that goes very far. Other commenters have correctly pointed out that Acemoglu doesn’t make any checks to see whether demography is causing these differences, perhaps even through demography’s effect on institutions (obviously less motivation for apartheid in Sweden)! That’s a more detailed response than Steve’s brief snark.

    Bill actually seems to be agreeing with Acemoglu that institutions like Jim Crow and apartheid are important, he just flips the normative lens. I don’t agree with Bill, the Jim Crow south was always relatively backward and Detroit wasn’t an example of Jim Crow. Blacks have been moving on net to the post-segregation more Republican south, which is actually similar to the rest of the population (cheaper land seems to be a big factor vs the coastal cities). I don’t know as much about South African history, but it is not my impression blacks have been doing worse since 1994 than before (although the end of sanctions could be part of that). It does appear to be the case that inequality has increased, and that’s one of the things Acemoglu writes about in the paper.

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  31. Didn’t work for me in Firefox, but did in Chrome.

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  32. Perhaps I AM dense. But other commenters also seemed to think that Steve was accusing Acemoglu of saying that Sweden and SA were similar in some way. If so, he should have elaborated, as Acemoglu’s point was clear.

    The comparisons you make are silly. In a rich country, even slaves will be relatively prosperous compared to average people in poor, resource-starved countries. What matters is not how rich people are in absolute terms but how they fare relative to their neighbors; the latter can only be achieved through inclusive institutions, according to Acemoglu. Blacks never did well in places like Detroit and Johannesburg; the decline you lament is in the condition of white people in those places; blacks are marginally better off there compared to how they were under Jim Crow and apartheid.

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  33. LOL….I am not Acemoglu, but I’ll take it as a compliment. :)

    I believe Acemoglu is aware of Sailer and noted the TakiMag review in one of his articles (though I can’t find the link now); from what I recall he called the review “vicious” and left it at that.

    If any of you have read his book (and I think Steve Sailer just read a small portion and didn’t bother with the rest), you’ll see that he provides a lot of examples that indicate (though not to a scientific certainty) how institutions trump race, North Korea vs South Korea being an obvious example.
    He also talks a lot about Botswana (black African country with black people) having inclusive institutions, the result of which is that people there seem to live well. Now I know next to nothing about Botswana, but I have also not seen Acemoglu’s claims about it being debunked anywhere.

    Acemoglu also says exactly the same things about Carlos Slim and how he got ahead by gaming Mexico’s extractive institutions. One would think Steve would find common cause with Acemoglu on this point.

    But it’s not much fun arguing with you folks on this topic. You see white people doing well (generally speaking) and black people doing badly (again generally speaking) at this point in human history, and you attribute it all to race, genetics, evolution, etc. It almost rises to the level of religious belief for you. And one can’t argue against religious belief.

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  34. How do you know Sweden is inclusive towards its Muslim immigrants? Allowing people in and letting them establish ghettos is not inclusion. Inclusion is about giving everyone a fair shot and having non-discriminatory rules (even unwritten ones). Clannishness implies exclusivity, as Acemoglu puts it. How do you know Swedes are not clannish towards these Muslim outsiders? If one of the latter were to go apply for a job, or a place in a university, there could be subtle discrimination (regardless of what the laws on the books say).

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  35. Acemoglu posits Botswana as an example of black people doing well under a black government. Now that’s obviously not sufficient proof to conclude anything either way, but asserting that black people faring badly under black governments is completely attributable to blackness is far more unscientific. Correlation is not causation.

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  36. Isn’t Mexico itself pretty low-trust? Maybe not quite as low trust as a poisonous couldron like Lebanon but still pretty low trust. So Slim may not be exploiting the non-existent gullible trust of native Mexicans but Slim is probably well adapted to success in a devious Byzantine like society.

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  37. Anonymous
    says:
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    Botswana can hardly be taken as a serious example. Although having a huge land area it has a very small population, what’s more it has massive reserves of strategic minerals which are exploited by foreign miners paying huge royalties for the privilege hence resulting in a big GDP per capita that not even an African nation could f*ck up.
    Its rate of HIV is another story however.

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  38. Anonymous
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    When does North Korea v South Korea stop being about ‘institutions’ and about economic dogma?

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  39. Correlation is not causation.

    More facile tripe.

    Correlation requires explanation.

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  40. He is a big fan of the Swedish model and says Sweden is a successful country because their institutions are fair and inclusive. He is critical of the South African model, which has always been built on an explicit racial hierarchy; he calls that an exclusive institution and shows that concentrating all political and economic power in the hands of white people results in blacks getting poorer and black communities getting more dysfunctional. This is obvious and should be non-controversial, but I am not sure you see it that way.

    What is obvious to a poor thinker is usually not so to a better thinker.

    The alternative is that the Swedish model of inclusive institutions works well in Sweden when they were all white.

    Sweden seems to be conducting an experiment to see whether that model still works when you change the people. I guess we will know the result in perhaps another ten years.

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  41. What is obvious to a poor thinker is usually not so to a better thinker.

    To anyone who is not a part of the echo chamber that is this blog, the “thinking” that goes on here seems quite poor. To reduce everything to race and genetics is lazy and self-serving (i.e., for a white person who needs an ego boost.)

    Definitely the Swedish model model worked petty well for Sweden because everyone was white, had shared kinship, shared language, and shared culture. No one denies this. What I said about South Africa is perfectly consistent with this. White South Africans have always been extremely clannish and set up the institutions of their country to serve only whites, with blacks only allowed to serve cheap labor functions. It is no wonder that blacks didn’t end up well off. And in modern south Africa, trust between blacks and whites is almost nil, and it’s well-nigh impossible establish any kind of inclusive institutions. To the ambitious and smarter blacks, it makes much more sense to inveigle themselves into the white-controlled economy than to fight for inclusiveness, the result of which will be a much smaller share of the pie for everyone. All this is common sense. And it’s also all about race, with whites having high solidarity and clannishness but blacks being too large and tribally fragmented to think of doing anything other that which will benefit their near and dear ones.

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  42. Correlation requires explanation.

    And explanations ought to be based on scientific, not magical, thinking.

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  43. And explanations ought to be based on scientific, not magical, thinking.

    I must have missed where you pointed out all the magical thinking. Perhaps you could run it by me again.

    In the mean time, I am reading this:

    http://arxiv.org/pdf/1408.3421v1.pdf

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  44. Acemoglu et al say:

    But like Marx, Piketty goes wrong for a very simple reason. The quest for general laws of
    capitalismó or any economic systemó is misguided because it is a-institutional.

    and

    History cooperated no better with Marxís general laws.

    Perhaps someone in the future will get to write: History cooperated no better with Acemoglu’s Institutions Only explanation for the way things are.

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  45. “You see white people doing well (generally speaking) and black people doing badly (again generally speaking) at this point in human history, and you attribute it all to race, genetics, evolution, etc”
    It’s not just the present time, and Botswana really does seem to be atypical. Sub-saharan Africa seems to be a latecomer to large-scale agriculture, urbanization, etc. That’s what allowed it to be colonized in the first place.
    I also think Steve’s views are more sophisticated than you make out. He has never claimed that race/genes are everything. That’s why it’s correct to point out that he would probably agree with Acemoglu (unlike Piketty) if the two were discussing Carlos Slim.

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  46. Until credit got really democratized in the U.S., i.e. banks forced to make cheap car loans to blacks, I never saw people driving with their passenger-side window down, inflicting their music on others (breakdown in rule of law). What Acemoglu should do is politely ask 50 black drivers to raise their windows so as to spare others the racket. Then see how many broken bones he suffers.

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  47. I have read much of the paper now.

    1. I think that Steve was wrong in his statement above.

    2. I assumed that Economists would be able to give us numbers. Ie, with Institution Type 1 (10% racist, 90% inclusive) we will see X amount of inequality and the country will be bankrupt in N years, and with Institution Type 2 …

    However, They seem to regard Institutions as some sort of magic and not as something arising out of the competing interests of the various powerful factions within a country (although they hint at it.)

    I am left wondering, if we magically replaced all Swedes with Africans over night, would things stay the same, or would the country become an African shit-hole within a generation or two.

    I guess, as someone pointed out, Sweden is in the process of replacing Swedes, but it might take a couple of generations before we know the answer.

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  48. White South Africans have always been extremely clannish and set up the institutions of their country to serve only whites, with blacks only allowed to serve cheap labor functions. It is no wonder that blacks didn’t end up well off.

    But Blacks did wind up well off. The entire Black population of South Africa consists of immigrants and the descendants of immigrants who chose to move to a society created by White settlers who preceded any Black migration to South Africa. The Black immigrants moved there to become “well off” by their standards.

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  49. But Ben, you can’t expect people to remember facts that are contrary to the narrative.

    An additional question is: When have blacks ever set up such strong institutions that lots of whites were flocking to their countries to live.

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  50. Some facts:

    – The Bantu emigrated to northern South Africa before the Boers did. The Boers remained in the Cape Colony for more than 2 centuries until they trekked north to get away from British imperial rule. and that’s when they clashed with the Zulu and Xhosa tribes (and of course won, as their fighting technology was far superior). While the Boers were living in the Cape, the natives (Khoisan/Hottentots) either assimilated (to become the Cape Colored population) or died out. The Bantu did not emigrate to South Africa to be near whites, and definitely not to work as cheap labor.

    – In the 20th century, a lot of Africans have emigrated to South Africa, but they have come from further north (like Nigeria). South Africa is definitely the most advanced economy in all of sub-saharan Africa, and that owes a lot to the British, who connected that country to the global capital system in the early 20th century.

    In any case, what people desire is to be well-off relative to other people who live close to them. Even if the average black south African eats a better mean than the average Congolese, while being a low-wage laborer forced to live in ghettos and forbidden free movement (as was mandatory under apartheid), that does not imply he lives well.

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  51. Most black immigrants came from countries immediately to the north. Even during apartheid illegal immigration was such a problem that an electric fence was erected on the northern border.

    It is not only that blacks ate better. They had improved life expectancy and as early as the sixties the apartheid state had more black medical students than the rest of the continent combined. Black South Africans had a higher rate of car ownership than Soviet citizens.

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