Daron Acemoglu

Published by Cambridge University Press in 2006, Economic Origins of Dictatorship and Democracy by Acemoglu and Robinson analyzes the creation and consolidation of democratic societies. They argue that "democracy consolidates when elites do not have strong incentive to overthrow it. These processes depend on (1) the strength of civil society, (2) the structure of political institutions, (3) the nature of political and economic crises, (4) the level of economic inequality, (5) the structure of the economy, and (6) the form and extent of globalization."[36]

Romain Wacziarg praised the book and argued that its substantive contribution is the theoretical fusion of the Marxist dialectical materialism ("institutional change results from distributional struggles between two distinct social groups, a rich ruling class and a poor majority, each of whose interests are shaped primarily by economic forces") and the ideas of Barry Weingast and Douglass North, who argued that "institutional reform can be a way for the elite to credibly commit to future policies by delegating their enactment to interests that will not wish to reverse them."[37] William Easterly called it "one of the most important contributions to the literature on the economics of democracy in a long time." Edward Glaeser described it as "enormously significant" work and a "great contribution to the field."[38]

Why Nations Fail was included in the Shortlist of the 2012 Financial Times Business Book of the Year Award.

In their 2012 book, Why Nations Fail, Acemoglu and Robinson argue that economic growth at the forefront of technology requires political stability, which the Mayan civilization (to name only one) did not have,[39] and creative destruction. The latter cannot occur without institutional restraints on the granting of monopoly and oligopoly rights. They say that the industrial revolution began in Great Britain, because the English Bill of Rights 1689 created such restraints. For example, a steam boat built in 1705 by Denis Papin was demolished by a boatmen guild in Münden, Germany. Papin went to London, where several of his papers were published by the Royal Society. Thomas Newcomen extended Papin's work into a steam engines in 1712, and became a commercial success, while Papin died in 1713 and was buried in an unmarked pauper's grave.[40]

Acemoglu and Robinson insist that "development differences across countries are exclusively due to differences in political and economic institutions, and reject other theories that attribute some of the differences to culture, weather, geography or lack of knowledge about the best policies and practices."[41] For example, "Soviet Russia generated rapid growth as it caught up rapidly with some of the advanced technologies in the world [but] was running out of steam by the 1970s" because of a lack of creative destruction.[42]

The book was written for the general audience.[41] It was widely discussed by political analysts and commentators.[43][44][45][46] Warren Bass wrote of it in The Washington Post: "bracing, garrulous, wildly ambitious and ultimately hopeful. It may, in fact, be a bit of a masterpiece."[47]

Clive Crook wrote in Bloomberg News that the book deserves most of the "lavish praise" it received.[48] In his review in Foreign Affairs Jeffrey Sachs criticized Acemoglu and Robinson for systematically ignoring factors such as domestic politics, geopolitics, technological discoveries, and natural resources. He also argued that the book's appeal was based on readers' desire to hear that "Western democracy pays off not only politically but also economically."[49] Bill Gates called the book a "major disappointment" and characterized the authors' analysis as "vague and simplistic."[50] Ryan Avent, an editor at The Economist, responded that "Acemoglu and Robinson might not be entirely right about why nations succeed or fail. But at least they're engaged with the right problem."[51]

In September 2008 Acemoglu signed a petition condemning the Bush administration's bailout plan of the U.S. financial system.[66] As the main cause of the 2008 financial crisis he stated that policy makers were "lured by ideological notions derived from Ayn Rand’s novels rather than economic theory" and opined that "In hindsight, we should not be surprised that unregulated profit-seeking individuals have taken risks from which they benefit and others lose."[64] In an early analysis of the Great Recession, Acemoglu wrote: "When channeled into profit-maximizing, competitive, and innovative behavior under the auspices of sound laws and regulations, greed can act as the engine of innovation and economic growth. But when unchecked by the appropriate institutions and regulations, it will degenerate into rent-seeking, corruption, and crime."[24] He suggests that progressive tax may reduce the rent-seeking activities of those at the top of the income bracket.[65] According to him the U.S. financial system has become increasingly concentrated due its high profitability and investment in high-risk assets. He voices doubt about the effectiveness of the Dodd–Frank Act in preventing the next financial collapse if the financial system continues on its current trajectory, especially what he calls the bonus culture.[34] He argues that the heavy overrepresentation from the financial sector in the top 1% "has been an outcome of the political processes that have removed all of the regulations in finance, and so created the platform for 40 percent of U.S. corporate profits to be in the financial sector."[34] He argues that a platform, particularly in Wall Street, has been created "where the ambition and greed of people, often men, has been channeled in a very anti-social, selfish and socially destructive direction."[65]

Acemoglu has voiced concerns regarding the increasing inequality in the United States, which, he argues, turns into political inequality which, in turn, undermines the inclusiveness of American institutions.[44] In a 2012 interview Acemoglu identified societal polarization, caused by economic inequality, as the biggest problem for the United States. He argues that the political system is dominated by the wealthy, while the voices of ordinary Americans are not heard.[67] According to him "democracy ceases to function because some people have so much money they command greater power."[60] He and Robinson wrote in 2012 that "those who are further empowered politically will use this to gain a greater economic advantage by stacking the cards in their favor and increasing economic inequality yet further — a quintessential vicious circle."[68] He states that he is comfortable with economic inequality which comes through different social contributions as it is a "price that we pay for providing incentives for people to contribute to prosperity." However, high levels of inequality create problems as the rich who control significant portions of the societal resources use them to create an "unequal distribution of political power."[65] He sees the solution in increasing social mobility by "providing an opportunity for the bottom to become rich, not forcing the rich to become poor."[60]

He has praised the American tradition of vibrant protest movements dating back to Populists and Progressives.[69] He has also praised Occupy Wall Street for "putting the question of inequality on the agenda, but also for actually standing up for political equality."[68] He notes that Occupy Wall Street brought the 1% to the attention of the wider public, academic attention was brought by Tony Atkinson, Thomas Piketty, and Emmanuel Saez.[65]

Acemoglu is in favor of raising and indexing the minimum wage.[70] He argues that minimum wages and unemployment benefits "shift the composition of employment toward high-wage jobs. Because the composition of jobs in the laissez-faire equilibrium is inefficiently biased toward low-wage jobs, these labor market regulations increase average labor productivity and may improve welfare."[71] Furthermore, he argues that "minimum wages can increase training of affected workers, by inducing firms to train their unskilled employees."[72]

Acemoglu believes that universal basic income is "expensive and not generous enough" and that a "more efficient and generous social safety net is needed."[73] He further called it a "flawed idea" and a "poorly designed policy." He instead advocates for a "guaranteed-income program would offer transfers only to individuals whose monthly income is below $1,000, thereby coming in at a mere fraction of a UBI’s cost." He calls for "universal health care, more generous unemployment benefits, better-designed retraining programs, and an expanded earned income tax credit (EITC)."[74]

Acemoglu et al. found that "democracy has a significant and robust positive effect on GDP" and suggest that "democratizations increase GDP per capita by about 20% in the long run."[75] They also found that "there is a significant and robust effect of democracy on tax revenues as a fraction of GDP, but no robust impact on inequality."[76]

According to Acemoglu the three obstacles for economic growth under authoritarian regimes are the tendency of authoritarian regimes to become more authoritarian, their tendency to use power to halt "Schumpeterian creative destruction, which is key to sustaining growth" and the instability and uncertainty caused by internal conflicts.[24] Authoritarian countries are, by definition, extractive.[77] He believes that Saudi Arabia would be like a poor African country without the oil, while the "only thing that is keeping [Russia] going is a big boom in natural resources and a clever handling of the media."[78]

He believes that China has managed to achieve significant economic growth because it "sort of picked up the low hanging fruit from the world technology frontier, but that sort of growth is not going to last until China goes to the next step, which is harnessing innovation," which he argues will be impossible "unless economic institutions become even more open and the extractive political institutions in China will be a barrier to that."[67] He and Robinson wrote for the HuffPost that the "limited rights [China] affords its citizens places major restrictions on the country’s longer-term possibilities for prosperity."[79]

Acemoglu argues that socialist countries have not been successful in creating prosperity.[63] He wrote that socialist regimes "from Cuba to the eastern bloc have been disastrous both for economic prosperity and individual freedom."[80] With Robinson, he argues that the Soviet Union and all of the other communist regimes were extractive from the beginning because of failure to provide economic incentives and concentrated political power in the "hands of a very narrow elite and backed it up with coercion and force."[81]

In a review written with Robinson, he argues that Thomas Piketty and Karl Marx are "led astray" due to their disregard for "the key forces shaping how an economy functions: the endogenous evolution of technology and of the institutions and the political equilibrium that influence not only technology but also how markets function and how the gains from various different economic arrangements are distributed."[82]

In 2019 Acemoglu argued in favor of social democracy. He stated:[80]

[Social democracy, when practiced by competent governments] is a phenomenal success. Everywhere in the west is to some degree social democratic, but the extent of this varies. We owe our prosperity and freedom to social democracy. [...] [Social democracy] did not achieve these things by taxing and redistributing a lot. It achieved them by having labor institutions protecting workers, encouraging job creation and encouraging high wages.

Acemoglu also noted that the economists of US presidential candidate Bernie Sanders, who is a self-proclaimed advocate of social democracy, "don’t understand basic economics. They are not just dangerous, they are clueless."[80]

Acemoglu has argued that a "tradition of strong labor movement or social democratic party, by constraining the actions of the social planner, can act as a commitment device to egalitarianism, inducing an equilibrium in which the country in question becomes the beneficiary from the asymmetric world equilibrium."[83] According to Acemoglu and Robinson, unions, historically had a significant role in creating democracy, especially in western Europe, and maintaining a balance between political power of established business interests and political elites.[84]

Acemoglu and Philippe Aghion argued in 2001 that although deunionization in the US and UK since the 1980s is not the "underlying cause of the increase in inequality", it "amplifies the direct effect of skill-biased technical change by removing the wage compression imposed by unions."[85]

In a 2012 paper titled "Can't We All Be More Like Scandinavians?", co-written with Robinson and Thierry Verdier, he suggests that "the more 'cutthroat' American society that makes possible the more 'cuddly' Scandinavian societies based on a comprehensive social safety net, the welfare state and more limited inequality." They concluded that "all countries may want to be like the 'Scandinavians' with a more extensive safety net and a more egalitarian structure," however, if the United States, the "cutthroat [capitalism] leader", the economic growth of the entire world would be reduced.[83] He argued against the US adopting the Nordic model in a 2015 op-ed for The New York Times. He again argued, "If the US increased taxation to Denmark levels, it would reduce rewards for entrepreneurship, with negative consequences for growth and prosperity." He praised the Scandinavian experience in poverty reduction, creation of a level playing field for its citizens, and higher social mobility.[86] This was critiqued by Lane Kenworthy who argues that, empirically, the US's economic growth preceded the divergence in 'cutthroat' and 'cuddly' policies and there is no relationship between inequality and innovation for developed countries.[87]

"The Colonial Origins of Comparative Development", co-written by Acemoglu, Robinson, Simon Johnson in 2001 is, by far, his most cited work.[31] Graham Mallard described it as "excellent example of his work: an influential paper that has led to much debate."[25] They argue that Europeans set up extractive institutions in colonies where they did not settle, unlike in places where they did settle and that these institutions have persisted. They estimated that "differences in institutions explain approximately three-quarters of the income per capita differences across from former colonies."[88] Historical experience dominated by extractive institutions in these countries has created a vicious circle, which was exacerbated by the European colonization.[81]

Acemoglu argued just before the 2016 presidential election that the Democratic Party "should seek a coalition that stands for the most vulnerable people in society" which, he believes, "could not stand by itself without the support of influential, well-off members of American society."[89]

In an op-ed in Foreign Policy Acemoglu claimed President Donald Trump shared political goals and strategies of Hugo Chávez, Vladimir Putin, and Recep Tayyip Erdoğan such as "little respect for the rule of law or the independence of state institutions [...] a blurred vision of national and personal interests [...] little patience with criticism and a long-established strategy of rewarding loyalty, which can be seen in his high-level appointments to date. This is all topped by an unwavering belief in his abilities."[69] In a 2019 interview Acemoglu stated that he sees similarities between Trump and the Republican Party and the Nazis: "Surely, Trump and the Republicans are no Nazis. But they are exploiting the same political sentiment." He argues that Trump "poses a great risk to U.S. democracy," because he is "looking for a new order with elements of anti-liberalism, misinformation and a lax attitude to corruption. If he is re-elected next year, it will be the beginning of the end of American democracy."[90]

Acemoglu believes that nation-building by the West is no longer possible around the world because the West now lacks the resources and commitment that were present in post-World War II Germany and Japan and because countries where such work is required today (many in the Muslim- and Arab-majority countries) do not trust the West.[91] He views the U.S. war on drugs as a "total and very costly failure"[92] and supported the 2013 ballot referendum Colorado Amendment 64, a successful popular initiative that legalized the sale of recreational marijuana.[93] According to him "it is clear that public schools are failing and alternatives are necessary."[94] In a 2016 interview he opined that the US infrastructure is in a "pitiful state, with negative consequences for US economic growth."[95]

In March 2011 Acemoglu was offered by Foreign Minister Ahmet Davutoğlu to become Turkey's permanent representative to the OECD in Paris, which he rejected in order to continue his academic career.[96][97][98][99] It was seen in Armenia as a politically motivated move to earn "political dividends" on Armenian issues.[100]

Acemoglu opined that the Republic of Turkey, formed in 1923 by Atatürk, "is very continuous with the Ottoman Empire." Although the shift from empire to republic brought some positive changes, he argues, the model was largely maintained by the reformers who took power, citing a persistent concentration of power and economic activity.[101] He suggests that the Republican period has been characterized by an unwillingness to accept ethnic minorities.[102] In 2014 Acemoglu condemned the widespread anti-Armenian rhetoric in Turkish textbooks, and demanded that the books be pulled from circulation.[9]

Acemoglu has criticized Recep Tayyip Erdoğan and his government for its authoritarian rule.[103] In a 2013 op-ed in The New York Times, following the crackdown of Gezi Park protests, Acemoglu wrote that "Even before the brutal suppression of the demonstrations, the belief that Turkey was on its way to becoming a mature democracy — a role model for the rest of the Middle East — had already become untenable."[104] In a May 2014 op-ed Foreign Affairs Acemoglu wrote that the drift from democracy by Erdogan is lamentable, but an "almost predictable, stage of Turkey’s democratic transition."[105] In the late 2010s, Acemoglu often criticized Turkey's economic policies and consequently became popular with the opposition.[106]

Acemoglu, an ethnic Armenian, stated in a 2015 interview with the Armenian service of Voice of America, that he has always been interested in economic, political, and social developments in Armenia.[11] Talking via video, Acemoglu partook in the Armenian Economic Association's annual conference in October 2013 held at the Yerevan State University, during which he argued that Armenia's problem is political, and not geographic, cultural, or geopolitical. He called for the Armenian government to be "more responsive to the wishes of its citizens so that through that political process Armenia ceases to be an oligarchy."[107] In a September 2016 conference in Toronto Acemoglu criticized the Armenian diaspora for legitimizing the successive governments in Armenia, especially when the rights of its citizens are violated and a wrong economic and political line is being followed for the country.[108] In an April 2017 conference held by the USC Institute of Armenian Studies Acemoglu stated while "Armenia could have looked much more like the Czech Republic or Estonia and what we got instead is a country that looks much more like Azerbaijan or Uzbekistan, which is a real shame." He suggested that in the immediate post-Soviet years Armenia was "stronger and it's been getting worse and worse." He criticized the level of corruption of the government, which has systematically closed the political system.[109]

Following the 2018 Armenian revolution, opposition leader-turned-Prime Minister Nikol Pashinyan wrote on his Facebook page that Acemoglu told him that he is ready to help Armenia to "restore and develop" its economy.[110][111] Pashinyan and Acemoglu talked via the internet in June 2018.[112] Acemoglu met with Deputy Prime Minister Tigran Avinyan in Boston in July 2019.[113][114]

Acemoglu predicted that the UK-EU deal is "likely to be similar to the status quo ante" and the Brexit referendum will not have a significant impact on the UK's real per-capita income.[115]

Acemoglu argued that the Greek government-debt crisis was caused by the "terrible state of Greek institutions, and the clientelistic nature of its politics" and that the country's problems are "political not just macroeconomic." He identified lack of political integration within the EU as Greece's problem and that "the only way forward for Europe is to have greater fiscal and banking integration or to abandon monetary integration." He criticized the policies of Syriza and stated that it is "unclear whether default will help."[116][117] On the 2015 bailout referendum, Acemoglu argued that "Greece may be better off without the euro but political risks, especially with current government, would be great, so a 'no' [vote] is very risky."[118]

In an op-ed for The Globe and Mail following the 2014 Ukrainian revolution, Acemoglu advocated Ukraine "to break with its past as quickly as possible. It needs to move away from Russia, politically and economically, even if that means an end to the natural-gas subsidies Russia has used to keep it in the position of a client state. Even more important is for Ukraine’s leaders to spread political power and economic benefits to the maximum number of its people, including Russian speakers."[119]

Economics awards

• John Bates Clark Medal (2005) by the American Economic Association[127][10]
• John von Neumann Award (2007) by Rajk László College for Advanced Studies[128]
• Erwin Plein Nemmers Prize in Economics (2012) by Northwestern University "for fundamental contributions to the understanding of political institutions, technical change and economic growth"[129]
• BBVA Foundation Frontiers of Knowledge Award (2016) "for proving the influence of institutions over economic development"[130][131]
• Jean-Jacques Laffont Prize, Toulouse School of Economics (2018)[132][133][134]
• Global Economy Prize, Kiel Institute for the World Economy (2019)[26]

State orders and awards

• Presidential Culture and Arts Grand Award in Social Sciences (2013) by Turkish President Abdullah Gül[135]

Honorary degrees

Acemoglu has been awarded honorary degrees from the following universities: Utrecht University (2008),[34] Bosporus University (2011), Bilkent University (2015),[136] University of Bath (2017),[137] ENS Paris-Saclay (2017), London Business School (2018), Boğaziçi University, and the University of Athens.[13]

Other

• Carnegie Fellow (2017)[138]

• Acemoglu, Daron; Robinson, James A. (2006). Economic Origins of Dictatorship and Democracy. Cambridge University Press. ISBN 9780521855266.
• Acemoglu, Daron (2008). Introduction to Modern Economic Growth. Princeton University Press. ISBN 9781400835775.
• Acemoglu, Daron; Robinson, James A. (2012). Why Nations Fail. Crown Business. ISBN 978-0307719218.
• Acemoglu, Daron; Laibson, David and List, John (2014). Principles of Economics, Pearson, New York.
• Acemoglu, Daron; Robinson, James A. (2019). The Narrow Corridor: States, Societies, and the Fate of Liberty. Penguin Press. ISBN 978-0735224384. Description, arrow-searchable preview, & reviewers' comments (at bottom).

• Shimer, Robert (2007). "Daron Acemoglu: 2005 John Bates Clark Medalist". Journal of Economic Perspectives. 21 (1): 191–208. doi:10.1257/jep.21.1.191. JSTOR 30033707.