This is CBS, I on the World. I'm John Bachelor. The Nobel Prize for Economics

awarded to three men of distinguished careers. There is Darren Asamogl, Simon Johnson, and James

Robinson. The first two are at MIT, the third at the University of Chicago. The reason for the attention of the

Nobel Committee is they're thinking about how nations succeed and fail in history. This is the nations of the last 500

years, the colonizers, the imperial colonizers, the empires, and those who are not.

I welcome David Henderson of the Hoover Institution.

He is editor of the Concise Encyclopedia of Economics.

His earlier review of a book written by two of these noblest. of it has a compelling thesis David a very good evening to you

extractive and inclusive

uh... what is the difference and

how did these gentlemen understand our five hundred history of the new world.

I want to do it in two steps.

First of all, the extractive and inclusive what those mean

and how those explain things and then how that came about. So extractive means a government just basically

robs the people. They extract resources from them and they point out and

Adam Smith pointed out as I said in my Wall Street

Journal review that if you have governments extracting you don't have much

incentive for normal people to produce wealth and so you don't get much economic growth.

Inclusive means that they allow people to have their own resources and then of course

people have an incentive to produce.

So that's a huge part of what's in why nations fail,

which I reviewed some years ago.

...