Thursday, May 24, 2007

The World System of Locally Driven Politics

As I jumped out of the shower and was toweling off one morning last week, an epiphany came to me: I realized DC isn’t where the action is. After living in Washington for six years, I have met some of the most amazing, inspiring, life-changing individuals who desire the best for the US government and the world. Diehard liberals, hardworking bureaucrats and deep pocketed conservatives are my neighbors who live doors down in the two by two mile radius of our nation’s capital. Yet, it’s not just those amazing bright individuals who will change the world, but instead the average American Bob, John and Barbara who will ultimately make the difference.

DC reflects some of the greatest paradoxes of our global village. While its population is diverse—the policies that come from it are not. Washington hosts extremely impoverish inter-city bums, ambassadors from around the world, veterans, the rich American elite, recent immigrants from El Salvador and Ethiopia and an active contingent of vocal gay and transsexual individuals. Yet, the US government’s policies on welfare, gay rights, economic development or social security do not necessarily reflect this diverse population. Rather, policies must be approved by the impassive US population.

What is more grueling? The US population comprising less than ten percent of the entire world population makes policies that affect the rest of the world. This was certainly notably when millions of anxious world citizens glued their eyes to CNN International to hear the precious results of the US presidential races in 2000 and 2004. More and more the world sees the US as a global leader in politics and policies. Yet the US population, in its majority do not care what Washington says or does. They hardly even come out to vote every four years. There is not a more important job than to keep the US government transparent and honest at these vital times. Internet may reach these people, but most importantly, the discussion must be set in a basic language that is understandable by all in order to make a difference. Only listening to this multitude of voices and discussions will change the world.

Wednesday, May 16, 2007

Institional Economics on People's Choices

In Structure and Change in Economic History (1981) I abandoned the notion that institutions were efficient and attempted to explain why "inefficient" rules would tend to exist and be perpetuated. This was tied to a very simple and still neo-classical theory of the state which could explain why the state could produce rules that did not encourage economic growth. I was still dissatisfied with our understanding of the political process, and indeed searched for colleagues who were interested in developing political-economic models. This led me to leave the University of Washington in 1983 after being there for 33 years, and to move to Washington University in St. Louis, where there was an exciting group of young political scientists and economists who were attempting to develop new models of political economy. This proved to be a felicitous move. I created the Center in Political Economy, which continues to be a creative research center.

The development of a political-economic framework to explore long-run institutional change occupied me during all of the 1980s and led to the publication of Institutions, Institutional Change and Economic Performance in 1990. In that book I began to puzzle seriously about the rationality postulate. It is clear that we had to have an explanation for why people make the choices they do; why ideologies such as communism or Muslim fundamentalism can shape the choices people make and direct the way economies evolve through long periods of time. One simply cannot get at ideologies without digging deeply into cognitive science in attempting to understand the way in which the mind acquires learning and makes choices. Since 1990, my research has been directed toward dealing with this issue. I still have a long way to go, but I believe that an understanding of how people make choices; under what conditions the rationality postulate is a useful tool; and how individuals make choices under conditions of uncertainty and ambiguity are fundamental questions that we must address in order to make further progress in the social sciences.

by Douglass North

Wednesday, May 09, 2007

Decision making

Do individuals make decisions in institutions?
How do grassroots organization arrange to make better decisions?
Are they influenced by external forces (funds)?

Decision making
1. anthropological role of participation
2. organizational theory and group theory
3. institutionalized economics exchange/information asymmetries
4. social political power relationships
5. geography, political and historical influences

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