Thursday, August 02, 2012

Israeli's Advantage Over Palestine: Not Culture!

One of the greatest stars in modern economics is Darron Acemoglu (right picture), who wrote Why Nations Fail with Harvard political scientist James Robinson. Commenting on Mitt Romney's quip that Israel has a more productive 'culture' than Palestine, Robinson notes: "Mitt is confused." The article interviews these experts who point out the true culprits: human capital, institutions, elites, and government corruption.

That's academic insight for you. In their minds, culture has nothing to do with human capital, elites and institutions, which as post-colonial Africa demonstrated, are pretty much exogenous (joke!). No wonder 'young stars' say things like 'firms seem to be unproductive in large part because of bad management.'

Of course, these were the guys that admitted they had no clue why the Dominican Republic has outperformed Haiti over the past century. I say macroeconomists should not expect to be taken seriously as scientific specialists until they come to a consensus on that, because if they can't explain the past on a case that has a 5-fold income differential, why should I expect them to predict things that will add or subtract 1% from GDP growth next year?


Anonymous said...

Compare and contrast the lives of Israelis and Palestinians living outside the Mid East. There is where you see the effects of culture.

Israelis are way ahead on measures like Nobel prizes, business success, academic success, literary success, and so on.

W.C. Varones said...

Culture also explains the failure of Keynesian clown macroeconomists like Ben Bernanke being consistently, spectacularly wrong about everything while their non-Keynesian, private-sector counterparts predicted exactly what happened.

Anonymous said...

Acemoglu's point about 'extractive institutions' seems reasonable, but that doesn't make the culture differential argument wrong either. Can bad culture create/reinforce extractive institutions?

AHWest said...

What Acemoglu misses is that a society's culture (or philosohy) is generally the capital which buys one's institutions.

Mercury said...

Unbelievable: it’s not simply the case that the positive, performance enhancing power of multiculturalism is greater than the sum of its parts, it is also the case that each of those parts has a zero value because if they didn’t, it would follow that some cultures and cultural traits have greater value than others…and that’s impossible.

How would one express that verity mathematically EF?

bjdubbs said...

For forms of gov't let fools contest, whatever's best administered is best.