Tuesday, November 24, 2009

What Makes Us Rich?

Daron Acemoglu, professor of MIT, answers a big question, "what makes us rich?".

He says incentive is the key role in what makes us rich or poor:

People need incentives to invest and prosper; they need to know that if they work hard, they can make money and actually keep that money. And the key to ensuring those incentives is sound institutions — the rule of law and security and a governing system that offers opportunities to achieve and innovate. That's what determines the haves from the have-nots — not geography or weather or technology or disease or ethnicity.

Put simply: Fix incentives and you will fix poverty. And if you wish to fix institutions, you have to fix governments.

Very simple answer!

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