Last year I read a really good book called Why Nations Fail, by Daron Acemoglu – a professor of economics at MIT – and co-authored by Harvard professor James Robinson.
He joined me for a conversation related to the book.
Here’s the summary.
- The state creates incentives for people to invest and innovate through guaranteeing private property rights and enforcing contract law.
- The state enables investment and growth through providing education and infrastructure.
- The state is controlled by its citizens, rather than monopolised by a small elite. Crucially, there needs to be a democratic principle at work in which people in politics establish institutions and laws which work for the majority of people, rather than just working to benefit the rich.
- The state also needs to maintain a monopoly on violence.