I HAVE been meaning to link to our review of the new book "Why Nations Fail" by economist Daron Acemoglu and professor of government James Robinson. The book draws on their research to tell an institutional economics story of the gaps between rich countries and poor ones:

They offer...a striking diagnosis: some governments get it wrong on purpose. Amid weak and accommodating institutions, there is little to discourage a leader from looting. Such environments channel society's output towards a parasitic elite, discouraging investment and innovation. Extractive institutions are the historical norm. Inclusive institutions protect individual rights and encourage investment and effort. Where inclusive governments emerge, great wealth follows. Britain, wellspring of the industrial revolution, is the chief proof of this theory. Small medieval differences in the absolutism of English and Spanish monarchs were amplified by historical chance. When European exploration began, Britain's more constrained crown left trade in the hands of privateers, whereas Spain favoured state control of ocean commerce. The New World's riches solidified Spanish tyranny but nurtured a merchant elite in Britain. Its members helped to tilt the scales against monarchy in the Glorious Revolution of 1688 and counterbalanced the landed aristocracy, securing pluralism and sowing the seeds of economic growth. Within a system robust enough to tolerate creative destruction, British ingenuity (not so different from French or Chinese inventiveness) was free to flourish.

The book is not without its weaknesses. Its primary argument, however—that bad policies are often the result, not of ignorance or malice, but of the incentives created by an institutional structure—is quite powerful.

The authors use this framework to discuss global inequality: that is, the reason that after two centuries of modern economic growth prosperity remains surprising limited in its spread. Human capital and technology are not enough to generate growth. An economy must also put in place the institutions necessary to support businesses anxious to apply and build upon skills and technology. In society's where governments can't credibly promise not to steal the fruits of any investment, investment doesn't occur and poverty is the rule. Worst of all, institutions are often self-perpetuating. In America, for instance, vigorous private enterprise is constantly creating new sources of wealth and influence that prevent the state from becoming too dominated by an extractive elite. In much of sub-Saharan Africa, by contrast, what little wealth there is flows to and strengthens oppressive governments.

I've been unable to resist applying the framework to the politics of the advanced world, however. Every opinion section in America has spent some ink demanding tax reform and long-run budget discipline of the current Congress. That's fine. At some point, however, we need to stop and ask why the most sensible of ideas aren't adopted by the American government. It's not that congressmen are corrupt dolts—they may be, but that's beside the point. It's that America's legislative institutions are not set up to encourage the adoption of the policies opinion editors want to see. Every once in a while an op-ed writer stumbles toward the truth with a "Washington is broken" sort of piece. It is incredibly rare to see a systematic analysis of the incentives facing legislators, which follows its logic through to the end: if Americans want Congress to behave differently, then it may make sense to devote more energy (or, really, energy) to assessing areas of institutional weakness and figuring out whether reform is needed.