March 27, 2012

What blocks change? Resistance to Change #9

"Why do some nations, such as the United States, become wealthy and powerful, while others remain stuck in poverty? And why do some of those powers, from ancient Rome to the modern Soviet Union, expand and then collapse?

... Countries that have what they call “inclusive” political governments — those extending political and property rights as broadly as possible, while enforcing laws and providing some public infrastructure — experience the greatest growth over the long run. By contrast, Acemoglu and Robinson assert, countries with “extractive” political systems — in which power is wielded by a small elite — either fail to grow broadly or wither away after short bursts of economic expansion.

Elites resist innovation because they have a vested interest in resisting change — and new technologies that create growth can alter the balance of economic or political assets in a country.

“Technological innovation makes human societies prosperous, but also involves the replacement of the old with the new, and the destruction of the economic privileges and political power of certain people,” Acemoglu and Robinson write. Yet when elites temporarily preserve power by preventing innovation, they ultimately impoverish their own states.

... “Most consequential ‘policy mistakes’ are by design,” Acemoglu says. “These leaders are choosing policies that don’t maximize economic prosperity, because their objective is different: to hold onto power or simply enrich themselves.”

A case in point: Fox News is doing it's best to kill the Chevy Volt in it's cradle with relentless attacks, filled with misinformation and cues to it's followers that "we" don't drive EVs.

This despite the fact that Fox News pretends to be patriotic, and the Chevy Volt has a dramatic potential to help the US car industry and reduce US dependence on oil imports.

A wealthy elite is willing to hurt the economy and forego general growth (by preventing a transition away from Fossil Fuels) to preserve it's privileges.