STOCK MARKET WATCH -- Monday, 2 July 2012

[Demeter]

28. 10 Reasons Countries Fall Apart

http://www.foreignpolicy.com/articles/2012/06/18/10_reasons_countries_fall_apart?page=full


States don't fail overnight. The seeds of of their destruction are sown deep within their political institutions...I'M SURE SOME DO, THEY JUST DON'T LAST LONG ENOUGH TO COUNT...Some countries fail spectacularly, with a total collapse of all state institutions, as in Afghanistan after the Soviet withdrawal and the hanging of President Mohammad Najibullah from a lamppost, or during the decade-long civil war in Sierra Leone, where the government ceased to exist altogether. Most countries that fall apart, however, do so not with a bang but with a whimper. They fail not in an explosion of war and violence but by being utterly unable to take advantage of their society's huge potential for growth, condemning their citizens to a lifetime of poverty. This type of slow, grinding failure leaves many countries in sub-Saharan Africa, Asia, and Latin America with living standards far, far below those in the West....AND THEN, THERE ARE COUNTRIES LIKE OURS, RAPIDLY APPROACHING THOSE SAME CONDITIONS...

What's tragic is that this failure is by design. These states collapse because they are ruled by what we call "extractive" economic institutions, which destroy incentives, discourage innovation, and sap the talent of their citizens by creating a tilted playing field and robbing them of opportunities. These institutions are not in place by mistake but on purpose. They're there for the benefit of elites who gain much from the extraction -- whether in the form of valuable minerals, forced labor, or protected monopolies -- at the expense of society. Of course, such elites benefit from rigged political institutions too, wielding their power to tilt the system for their benefit. But states built on exploitation inevitably fail, taking an entire corrupt system down with them and often leading to immense suffering. Each year the Failed States Index charts the tragic stats of state failure. Here's our guide to 10 ways it happens:

1. North Korea: Lack of property rights

2. Uzbekistan: Forced labor

3. South Africa: A tilted playing field

4. Egypt: The big men get greedy

5. Austria and Russia: Elites block new technologies

6. Somalia: No law and order

7. Colombia: A weak central government

8. Peru: Bad public services

9. Bolivia: Political exploitation

10. Sierra Leone: Fighting over the spoils


11. USA: ALL OF THE ABOVE, PLUS A SLEEPING CITIZENRY