Feud watch: Acemoglu and Robinson on why Bill Gates fails

A few days ago I wrote about Bill Gates’ scathing review of  Daron Acemoglu and James Robinson’s book "Why Nations Fail". The authors have replied to Gates’ assessment in a new essay for Foreign Policy:

To start with, Gates makes some pretty baffling statements about our book, such as his assertion that "important terms aren’t really defined." Actually, all of the major concepts we use in the book are defined; one just needs to read the book. Other assertions demonstrate not only that Gates is unfamiliar with the academic literature, which is understandable, but that he actually did not bother to consult the bibliographic essay and the references at the end. He writes, "The authors … attribute the decline of Venice to a reduction in the inclusiveness of its institutions. The fact is, Venice declined because competition came along … Even if Venice had managed to preserve the inclusiveness of their institutions, it would not have made up for their loss of the spice trade."

This is just bad history. Venice didn’t decline because of the loss of the spice trade. If that were the case, the decline should have started at the very end of the 15th century. But the decline was already well underway by the middle of the 14th century. More generally, research by Diego Puga and Daniel Trefler shows that Venice’s fortunes had nothing to do with competition or the spice trade.

Likewise, Gates seems to think that the Maya declined because of the "weather." Though there is certainly scholarly dispute over why Mayan civilization decayed, to our knowledge no reputable scholar argues that it was due to the weather. Instead, most scholars emphasize the role of inter-city warfare and the collapse of Mayan political institutions. Nor does the book, as Gates would have it, "overlook the incredible period of growth and innovation in China between 800 and 1400." We discuss that period, and explain why it didn’t translate into sustained economic growth (see Chapter 8, in particular, pp. 231-234).

Gates also says at one point that our book "refers to me in a positive light." Sorry, we do no such thing. We point out that Gates, just like Mexican telecom mogul Carlos Slim, would have loved to form a monopoly. He tried and failed. What our book shows in a positive light are the U.S. institutions, such the Department of Justice, that stopped Gates and Microsoft from cornering the market. We say, "sadly there are few heroes in this book." Bill Gates was not one of them.

They also accuse Gates of mischaracterizing their arguments about the effectiveness of foreign aid. I’m a little biased having worked with these authors before, but on the merits I’d probably score the exchange for Acemoglu and Robinson, who’ve gotten quite a bit of practice at defending their thesis at this point. 

I have to say, having read Why Nations Fail around the time it came out,  I find the controversy it’s provoked a little baffling. Readers may disagree with the emphasis the authors place on institutions as opposed to other factors, but the fact that robust and inclusive institutions are at least one of the important factors for growth seems fairly intuitive.