Why nations fail

The economic, political and social success of the Hungarian nation depends on how well the non-governmental institutions, the main economic players and the media can strengthen themselves and to what extent they can become independent of the government. Daron Acemoglu, one of most cited economist in the world, points out in his bestseller “Why Nations Fail” and in the interview given to alapblog.hu that it is not history, geography, weather or nationalism that makes a nation successful; it is he institutions’, the education system’s, the media’s, and the society’s advancement, mentality, and independence from the leading political elite that is crucial in whether a country will prosper or not.

The professor of the number one university in the world, the MIT (Massachusetts Institute of Technology) says that out of the European democracies, only Hungary’s government is limiting the power of monitoring institutions and the media. And these politicians can do so because there is no real social opposition. Acemoglu finds it remarkable that while in the European democracies there is no disappointment in the democracies during the recession, what is more, people want to strengthen it, in Hungary, it is the other way around. According to the Turkish researcher, who is now living in the United States, the argument that the institutional democracies are more successful economically and in some other aspects than autocracies is bogus and self-interested. In the interview, Acemoglu aims to prove the opposite of this argument.

Zentai Péter: The Hungarian nation is quite pessimistic, which is supported by historical and scientific research. It is a general conviction by us that in the end, we will always lose; the bad outcome is inevitable and is in the nature of our history. To what extent does the history or the geography determine whether a nation will be successful or will fail?

Daron Acemoglu: There is no such predestination following from history or geography. Nevertheless, history does matter, provided that economic success is always linked to a good institutional system. And institutions are shaped historically. Hungary is neither historically nor geographically nor in terms of its most recent experiences in a situation where failure is inevitable. Since the beginning of the 1990s, things have looked quite positive for Hungary. Based on that, there is certainly no reason for being pessimistic as this is not something that you can just blame on the historical factors going back several hundred years. The problems that can lead to the downfall of your country are political.

In your book “Why Nations Fail” you are dealing with certain South American countries. Argentina is similar to Hungary in many aspects: it lets the opportunities slip by again and again, although objective circumstances seem to be very good. Behind the failure, there is always the self-interest of the political elite.

Without disagreeing with what you said, I would put it in different words: the political elite in no country is uninterested and would put the society’s interest before their own. It is not a question of choice of the political elite; this is a question of what the institutions and the society at large allow politicians to get away with. In countries, where there are no such constraints, politicians can do whatever they want to. But why would a nation accept abuse of power by the political elite? I am very far from an expert of Hungary but your country is one of its kind in Europe: 20 years after the change in the political system and the transition to market economy and democracy, people elected a single party and decided not to put more constraints and limits on its power. And this party uses its power granted by the populace to undermine some of the independent institutions that would be able to control their executive power. So the question is not why the political elites are betraying Hungary; it is why the Hungarian people, the media, and the rest of the political establishment are letting the politicians get away with it.

I would again refer to the chapters of your book dealing with the South Americal countries. In Peru, Argentia, and Veneuela, the democratically elected leaders control the television, the radio, and the national papers. So the public or private media ruled by the government delivers the following messege to the people: those countries are successful where authority or political power is respected and where the government does not yield to the monitoring institutes. Because where a government yields to such an external power, there will be sooner or later chaos, which leads to the downfall of the nation…

Yes, the media have the role to unveil the lies of the parliamentary democracies and present them as decadent, corrupt, inefficient, involving chaos and leading to failure. At the same time, they praise autocratic societies. Autocracies are role models, democracies are negative models. The media have to deliver this message and to try to convince the society to delegate more and more power to the government instead of complaining.
These governments are usually referring to Asian countries, first of all to China. China has achieved huge success in the past three decades; however, this success is coming to an end. Eventually, it will turn out that its failure was caused by its antidemocratic, autocratic system.

In Hungary, the media – especially close to the government – refer to smaller Asian counties with a similar size to ours. The media state that these countries are successful because they realized that the Western model does not fit in their history and the attitude of their nation.

I know this argument well. I think it is a bogus argument because it contracts two things which are not in contrast with each other. Economic growth is not in contradiction with democracy. In fact, in the long run, stable economic results depend more on democratic institutions than autocratic systems.

However, nowadays, we experience that Western democracies are struggling more in the economic and financial crisis. Even the very successful Scandinavian and North European democracies are in trouble. Social tensions are strengthening there and not in the Eastern autocracies. This might be an excellent argument for those who describe the Western societies as decadent.

Still none of these successful nations turn their dissatisfaction into an opposition to democracy – except of Hungary. Other Western societies do not want to solve the economic and financial problems by giving up democracy. In brief, our recent research supports that economic evidence that consensual, parliamentary democracies tend to grow faster and stably in the long-run and succeed economically after a crisis than autocratic systems. Just look at the big economic crisis that we underwent in the twentieth century. It were not  the anti-democratic, autocratic countries that came out successfully from the Great Depression in the early 1930s but countries like the United States, which improved its economy, military, politics, and technology. I think the same is true for today. Those nations will recover the fastest from the recession of the last four decades that rather strengthen than weaken their parliamentary democracy – despite the inefficient choices and imperfections. It is still true if a party gains clear majority in an unquestionably democratic way – like in Hungary – but use this authority to implement an electoral dictatorship. In other words, although democracy is not perfect, it demonstrably tends to do better – economically as well – than autocratic systems.

In South America (in Venezuela and in Argentina), in some countries in Eastern Europe, and in Asia, the governments with great power and their media emphasize that instead of economic results national pride and strength – if other countries look up to them and envy or fear them – are the measure of success.

The reason why they do so is that they are not economically successful. That is why the media can be called the Achilles’ heel of these autocratic regimes. The more frequent economic failures occur, the more the restricted media have to emphasize national strength. The economic failure is must be covered by nationalism and presented as success: the success of that the nation does not let itself repressed by external forces. Let’s compare Poland versus Hungary. Nobody would say that Hungary is benefitting more because of its autocratic government.

In your homeland, Turkey, economic success does relate to Erdogan’s nationalist views, doesn’t it?

Well, I think Turkey is much more complicated. First of all, Turkey big economic success goes back to 2002 when Erdogan’s government was opening to democracy. He shifted the economy out of the hands of a very narrow elite supported by the military. His first and second term were about introducing Turkey into the global economy, making the system more transparent and eliminating corruption.  However, it turned out now, in the third term, that new competition was formed in this more transparent and democratic system, who are able to defeat him on the elections. In order to retain his power, Erdogan turned to nationalism and religion. At the same time, the economy began worsening.

But let’s return to Hungary! Based on historical and economic patterns, the EU must come out of the crisis stronger – including Hungary.  The EU’s political framework will help Hungary get out of its current problems and develop better alternatives to strengthen its inclusive institutions. The EU is a barrier that prevents democracies to inevitably turn into autocracies. In my view, in the long run, it is impossible for a democratically elected government to keep everything under its control. If it is keeping about 80 percent of the media under its control, it is still less than 100 percent. Moreover, that small percentage will gain more influence.  Therefore, I am optimistic about Hungary, as well.