Opinion

Why Nations Fail

The time for talks in Syria has passed


Kofi Annan’s mission is unlikely to lead to a meaningful resolution to the crisis in Syria (see here). This is not only because the conflict has in all likelihood reached the point of no return, but also because the Syrian regime would have probably never acquiesced to a peaceful transition in the first place. It is useful to understand why Bashar al-Assad’s regime decided to fight it out, with only the flimsiest attempt to reform and placate opponents.

In the past year protest movements have rocked the Middle East’s authoritarian regimes. There have been three types of outcomes. In Tunisia and Egypt they have succeeded in deposing the autocrats without great loss of life. Zine El Abidine Ben Ali and Hosni Mubarak were pushed from power without a civil war. This was greatly facilitated in Egypt with the defection of the military, a bulwark of the repressive edifice that Mubarak had built. In consequence, the future path of democracy is still uncertain in Egypt as many key parts of the coalition that Mubarak had built are still wielding power openly, and this is at the root of the frequent flare-ups of protests and clashes between the security forces and the protesters.

In another sub-set of these countries, typified by Saudi Arabia and Bahrain, the existing regimes managed to buy off the protestors via massive pay raises, expansions of government services and small political reforms. The situation has been very different in Libya and Syria. In both cases, the regimes decided to fight the protests with overwhelming force. In Libya the outside assistance enabled the rebels to conclusively defeat and depose Colonel Muammar Gaddafi. In Syria the outcome of the conflict, which began in March 2011, is still uncertain, and the death toll is rising constantly.

This path has been mostly shaped, and the possibility of reform shut out, by the underlying logic of the regime Bashar’s father, Hafez al-Assad, created in 1970. On the face of it this was a one-party state under the control of the Ba’ath Party, which came to power in Syria via a military coup in 1963. Though the Ba’ath Party, which also brought us Saddam Hussein in Iraq, espoused a nationalist Pan-Arab ideology with heavy tinges of socialism, the reality in Syria is that it became a vehicle for a particular Syrian community, the Alawis. The Alawis, who make up around 10% of the Syrian population concentrated in the northwest, adhere to a particular interpretation of Islam. On assuming power in 1963 the Ba’athists, already dominated by Alawis, inherited a state molded by centuries of imperialism under the Ottoman Empire and a rather shorter span of French colonialism between 1920 and 1946. This state sat atop a set of extractive economic institutions, designed to enable the extraction of resources by a small minority from the rest of society. During the Ottoman and French times, this minority comprised the colonial powers as well as its allies in Syria. Under the Ba’athist rule, it comprised mainly the Alawis.

These extractive economic institutions have several consequences. One of the most important is poverty. No society which organizes the economy to benefit just 10% of the population will generate prosperity. To grow and become prosperous the most critical thing a society must do is to harness its talent and human potential, which is widely disbursed in the population. Though post-independence Syrian regimes have invested in education, heavily laced with propaganda, only those with the right connections stand to benefit from a government appointment or having the chance to open a business.

Caste and coercion in Nepal

Slavery in Nepal was abolished only in 1921. Corvée, forced labor, was made illegal in 1952, but survived. It was only in 2000 that various sorts of coerced and bonded labor finally disappeared.

As late as the early 1990s in the Western parts of Terai, the lowland forest area of Nepal which borders India, many rural people were forced to work 30 to 35 days a year in unpaid labor services. The most important institution in this region was that of Kamaiya labor. Kamaiya was a particular type of servile labor relation where superficially workers and landlords freely entered into contractual relations during the festival of Maghesakranti (first day of the Magha month of the Nepali calendar), which starts on January 14. In practice, the majority of the workers were in debt to various masters, and debts are passed between generations with landlords buying and selling Kamaiya, a situation akin to chattel slavery. In 1992 a government report estimated that there were still about 20,000 Kamaiya households, possibly 116,000 adults and children. The report found that on the average, a Kamaiya worked about 13 hours a day and a male adult worker might receive a daily income of only around 11 Rupees, about 14 US cents. Using the legal minimum wage of 60 rupees for eight-hour work per day, such a worker ought to be getting 102 Rupees for the 13-hour work, about US$1.29, not exactly a fortune but better than 14 cents. Other research by the International Labour Organization using data from Banke district suggests much longer work hours, with a working day for men of as much as 17 hours a day during the heyday of the Kamaiya system.

Time Use for Bonded Male Laborer; Source: Bhadra, Chandra (2006) “Gender Dynamics in Bonded Labour in Nepal,” International Labour Organization.

Who’s afraid of economic development?

Surely even the most kleptocratic dictator would be in favor of economic development. Economic development means greater income, greater taxes and more stuff to grab, so what’s not to like about it? But actually, it often doesn’t work that way.

In the early 1980s in Takasera, a village in Rukum District in western Nepal, a group of locals decided to begin a development project and bought a Swiss-made water mill which would power machinery such as a press to make oil and a saw mill. The community sent a group of men to Kathmandu who learned how to dismantle the machinery and then put it back together again. The machinery was brought back and successfully put into operation. In 1984, a government official wrote saying that in autonomously undertaking this project the community had “usurped the role of the king” and the mill would have to be shut down. When the locals refused, the police was sent to destroy the mill. The mill was only saved because the villagers were able to ambush and disarm the police.

So why was the Nepalese government opposed to the mill? The answer is that the monarchy and the elite surrounding it, who controlled the government, were afraid of becoming political losers. Economic progress brings social and political change, eroding the political power of elites and rulers, who in response often prefer to sacrifice economic development for political stability.

Is the one percent the same everywhere?

Allan Meltzer’s article raises a lot of interesting issues. The main argument is that top one percent has increased its share of national income pretty much everywhere, and this underscores that the causes of this trend should be sought in global trends. It is true that there have been important global trends — in particular, skill-biased technological change and growing international trade — increasing the demand for skills. See for example Claudia Goldin and Larry Katz’s magnum opus on this, or this discussion of their book, or this article on technology and inequality. None of this is (very) controversial.

But Meltzer claims more than this — that these trends account for the increase in share of the top one percent in the US. This is much more controversial. First, the book on the share of the top one percent, has been written by Anthony Atkinson, Thomas Piketty and Emmanuel Saez’s careful and painstaking work, see here. They show that the US — to some degree together with the UK — stands apart from others in terms of the extent of the increase in the share of the top one percent in national income. The next chart, which uses their data, summarizes this pattern and shows that the top one percent’s share increased little or not at all in several European countries (but caution: one has to be careful about how capital income, which is not available in every country; so it is definitely useful to read their paper carefully).


Data from Anthony Atkinson, Thomas Piketty and Emmanuel Saez (source).

Second, cross-country differences are even more jarring when one looks at the bottom of the income distribution. Here is the US picture:

The unending warfare in Africa

Sierra Leone is not the only African nation that has been ravaged by civil war. They have been all too common, and any explanation for African poverty that does not come to grips with these all-too-frequent civil wars is bound to be incomplete. Though the number and death tolls of African civil wars have been declining, they are still ongoing in many parts of the subcontinent, including in various parts of the Niger Delta, the Democratic Republic of the Congo, Uganda, Sudan, South Sudan, and of course Somalia.

A recent book by William Reno, Warfare in Independent Africa (see here), is a must-read for anybody wishing to understand the never-ending cycle of civil wars in Africa. Among the many useful theses in the book the most notable concerns the transformation of the nature of civil wars in Africa — or more appropriately in sub-Saharan Africa. Reno identifies earlier movements as anti-colonial and majority rule rebels, who fought colonial powers throughout the subcontinent and minority rule governments (e.g., in South Africa, Namibia, and Zimbabwe). Consistent with the vicious circle of extractive institutions and the pattern in Sierra Leone we saw in an earlier blog (see here), the successful rebels simply took control of the extractive institutions themselves. Thus it was natural that another round of rebellions, led by what Reno calls reform rebels, aimed at replacing these regimes would follow.  Typical examples include Yoweri Museveni in Uganda and Meles Zenawi in Ethiopia. But the vicious circle was not to be broken so easily, and these rebels, when successful, did not change institutions underpinning poverty and the widespread inequities in the subcontinent.

But over the last two decades most civil wars have been fought by what Reno calls warlord rebels (and on which a key reference is Reno’s own book Warlord Politics and African States; see here), and parochial rebels. These rebels have little ideological commitment. Sometimes, like Charles Taylor in Liberia or Foday Sankoh in Sierra Leone, they are fighting to line their pockets. Sometimes, like Joseph Kony whose Lord’s Resistance Army has been killing indiscriminately in Uganda, the Democratic Republic of the Congo, and Sudan, it is not clear at all what they’re fighting for. Like both sides in Sierra Leone’s conflict, many of these warlord and parochial rebels use child soldiers (because they do not have the ideological basis to attract a regular force) and are responsible for many of the recent atrocities. Reno deserves a lot of credit for putting the spotlight on these rebels and helping us understand their breed.

Schooling in Egypt vs. Schooling in Uzbekistan

An Egyptian friend reacted to our blog on schooling in Uzbekistan (see here) saying that schools under Mubarak weren’t all that different.

When he was 10, five hours a day for months were spent not in the classroom, but preparing a dance show for Suzanne Mubarak’s annual visit. This was not an isolated event. There would be such a visit almost every year, and a large chunk of the school year would be spent on this. Not as bad as picking cotton, though probably contributing not that much more to useful knowledge. (For more on Suzanne, see here.)

Not that things were that much better when they were in the classroom. Key assignments included writing letters to President Mubarak thanking him for all his tireless work for Egypt; designing a logo for Mubarak’s campaign in elections (no matter that the elections were already fixed); drawing scenes of loyal Egyptians gathering in the streets out of their love for Mubarak. You get the picture.

Fear and loathing in Sierra Leone

By 1991, Sierra Leone was a failed nation, mired in poverty, with an economy almost continuously shrinking for almost three decades. And then failure turned into total collapse…

On March 23 a group of armed men under the leadership of Foday Sankoh crossed the border from Liberia into Sierra Leone and attacked the southern frontier town of Kailahun. Sankoh, formerly a corporal in the Sierra Leonean army, had been imprisoned after taking part in an abortive coup against Siaka Stevens’s government in 1971 and had ended up in a training camp for African revolutionaries ran by the Libyan dictator Colonel Qaddafi. There he met Charles Taylor, who was plotting to overthrow the government in Liberia. When Taylor invaded Liberia on Christmas Eve 1989, Sankoh was with him, and it was with a group of Taylor’s men that Sankoh invaded Sierra Leone. They called themselves the RUF, the Revolutionary United Front, and they announced that they were there to overthrow the corrupt and tyrannical government of the APC.

The RUF even had a manifesto called “Footpaths to Democracy” (see here) which started with a quote from the black intellectual Franz Fanon: “Each generation must, out of relative obscurity, discover its mission, fulfill it or betray it.” The section “What Are We Fighting For?” begins:

The problem with Sierra Leone’s chiefs

The economic institutions that keep Sierra Leone poor are not just national. Most people in Sierra Leone still live in villages, and their lives are governed by chiefs. Chiefs raise taxes, hire the local police, dispense justice and control the most important resource in rural Sierra Leone today – land. The chiefs are the “custodians of the land” which in effect means that they decide who gets what. Here are two imposing Paramount Chiefs photographed in the 1980s, Madam Yatta K. Saffawab II and M.K. Mustapha Ngebeb IV (from “Portriats of Paramount Chiefs of Sierra Leone”, by Vera Viditz-Ward and Roslyn A Walker, Smithsonian, 1990).

Only economic institutions that guarantee some degree of property rights, so that people know that they will be able to reap the benefits of their investments and efforts, will generate prosperity. But there are no property rights to land in rural Sierra Leone — at least not in the sense that we understand it in the United States. Nobody has a written title, though some dynasties and families do have traditional user rights to use certain pieces of land. Most out of luck are “strangers” meaning anyone not born in a particular chiefdom (like say the two of us in Cambridge, Massachusetts). A stranger has to “beg” (the word the Sierra Leoneans use) for land and even if he or she gets it they cannot plant any perennial crops, like bananas, cocoa, coffee or oil palm because this would be tantamount to trying to establish de facto property rights on the land. Jim once asked a chief in Kono district what would happen if a stranger tried to grow coffee or oil palm. “We’d come and cut it down” he said. During the same visit as the chief was showing off his plantations of cocoa, Jim asked (rather naively in retrospect) “for example, how did you get the right to use this land?” “That man used to farm it and he gave it to me” said the chief, pointing out a man on the other side of the road. “What would have happened if he hadn’t given it to you he asked” (again rather naively) to which he got the rather puzzled question back “why wouldn’t he give it to me, I’m the chief?”.

Lack of property rights and arbitrary allocation of land, without regards to who will be more productive in using it, are not the only extractive institutions in rural Sierra Leone. The perennial extractive economic institution, labor coercion, is also widespread. Chiefs also use their power to coerce youths to work for them on their plantations and in building roads and other local public goods.

The cow eats where it is tethered

We saw the fancy school and the nice new houses in Sierra Leone’s president Ernest Bai Koroma village, Yoni, in our last blog. Koroma is in good company among Sierra Leone’s presidents.

The school in Yoni will educate the children of the elite of the All People’s Congress Party (APC), which ran the country from 1967 until 1992 and then returned to power in 2007. The first APC president, Siaka Stevens, used to like to quote the aphorism, “the cow eats where it is tethered”. And eat he did. He created a whole gamut of extractive institutions enriching himself and his APC cronies, and impoverishing Sierra Leone, which experienced almost nonstop economic decline after independence in 1961.

Like many other post-colonial leaders in sub-Saharan Africa, Stevens used the agricultural marketing boards that the British had created to expropriate farmers by setting a fraction of the world price for the main export commodities, such as palm kernels, cocoa and coffee. Not that the British were saints, actually they were already doing the same thing, except not quite so excessively. Stevens looted the country’s diamond wealth, and handed out monopolies, such as that on the import of rice, the main staple food, to his friends.

The easiest way to live well in a poor country?

Where do you think this fancy school is located?

Not in the United States. Not on a Greek island, financed by tourism revenues and EU funds. It is in Sierra Leone, one of the poorest countries in the world with about 1/50 of the income per capita of the US, where only 41% of the adult population can read and write. But it is not in Freetown, the capital city, nor is in Bo, the next biggest city and capital of the south. Indeed, it is not in any of the major urban centers. It is a small village, Yoni in Bombali district. It was recently built there by China Aid. Why would anyone want to build a wonderful school in the middle of what Africans call “the bush”?

Here is a hint: Yoni is the home village of Sierra Leone’s president, Ernest Bai Koroma. The next photo shows a bit more of Yoni. Everyone has a new house.

Those readers living in affluent western countries may not be impressed by these houses but by the standards of rural Africa they are palaces. Could the fact that such fancy schools and houses are being built in the president’s village, while most villages have no school and most villagers live in a decrepit houses be related to why Sierra Leone is so poor?

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