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The *Poor Economics* in *Why Nations Fail*

A review: The first impression is that the authors of Poor Economics (PE) and Why Nations Fail (WNF) are productively at loggerheads over the causes of poverty and wealth. Acemoglu and Robinson (WNF) find fault in the optimistic “engineering” approach of Banerjee and Duflo (PE) and question their preference for the decentralized “power of small changes” which dispel ignorance at-the-margin in health or education and improve local decision making. The authors of PE criticize the “melancholy political economy” of WNF with its hard-to-change political institutions relentlessly locking-in developmental success and failure. Here is the caricature: 

  • WNF is the realistic-pessimistic historical vision of the primacy-cum-stasis of central institutional governance and social masses.
  • PE is the idealistic-optimistic people-centered vision of meaningful change in local institutions and technologies “from below”, facilitated by outside experts.

The locking of horns -- possibly more theatrical than real -- is only the latest in a string of public bullfights between economist-authors of popular books on development. PE versus WNF supersedes aspects of older debates; in other respects it leaves the bullring a muddier more churned-up battle ground than it already was after previous encounters.