Article published by Mr. José Alberto León in La Gaveta Económica in the May 2017 issue.
The book “Why nations fail” by Acemoglu and Robinson once again highlights the importance of institutions in the economic development of nations. In this book, the authors develop a new theory of political economy according to which countries grow economically if they are able to create an inclusive set of rules of the game, and stagnate or decline if their norms and institutions are exclusive. It is the political conflict and the way it is resolved that determines the path to prosperity or poverty of a society.
In his own words, “the key to economic development is not good or bad rulers (since their effect is ephemeral), nor favorable geography, nor culture (the Protestant ethic), but rather having robust and well-designed inclusive institutions that, economically, guarantee property rights, law and order, the functioning of markets, free entry into markets, the freedom to establish new companies, the effectiveness of contracts, access to education and equal opportunities for the vast majority of people. citizens; and, in the political sphere, they guarantee participation and pluralism and the imposition of restrictions and controls on the arbitrariness of politicians.”
Economic institutions are important because they influence the structure of economic incentives in society, helping to allocate ever-scarce resources in the most efficient way, and determining who benefits from it and who controls this allocation. That political parties act in search of their own interest and not the general interest is increasingly evident, but in reality when Buchanan, Nobel Prize winner in Economics in 1986, formulated this hypothesis, building his theory of “public choice” around it, it was enormously controversial. Buchanan, in summary, defended that although in most schools of economic thought it is assumed that the State, and the politicians who make decisions, act in search of the “general interest”, in reality, like the rest of human beings, when executing public policies, politicians act fundamentally guided by their own interest. In Spain, never since the Transition has institutional discredit been so widespread at all levels (national, regional and local). For example, the perverse use of delicate institutions such as Savings Banks by the parties was not corrected by the supervisors because, simply, they had been placed there by their political “friends.” Ruiz Soroa says in his article "The fault is the rest's", published in the Diario Vasco, that "the only part of the Spanish economy that has been saved from the disaster has been that which the politicians did not control or could not manipulate. The map of the damage suffered reveals a constant profile: the closer it is to politics, the more damage has been suffered by economic management."
It is necessary to establish clear rules that limit the arbitrary power of public decision-makers, in order to offer legal security and promote the economic development of society, but in recent years in the Canary Islands we have been doing exactly the opposite, with the most complex territorial legislation and subject to the arbitrariness of the developed world. Then we will ask why nations fail.
