Thread by @MoghaluKingsley

#BIGVision #MoghaluSeries

VISION 5: Institutions and Why They Matter (Contd).

The institutions of the modern state are a relatively recent phenomenon. They go back only about 300 years or so, even in the western world. As Daron Acemoglu and James Robinson explain in their book

"Why Nations Fail", a major factor in the wealth of the western powers today lies in the evolution of inclusive institutions that, over time, checked the absolute power of European monarchs, created a level playing field in society, governance and the economy, and led to the

Industrial Revolution. The European nations that went through this process first such as England, became global economic powers, while the countries such as Spain, where the process was delayed, didn't attain the same economic heights.

Strong economic institutions can develop only if preceded by strong political institutions. History teaches this. It's why I have long argued that if we dont fix Nigeria's dysfunctional politics,we have little hope of becoming an economic power that lifts millions out of poverty

This is why I moved beyond being content to be an economic technocrat to run for president. Strengthening economic institutions is first of all a political act which requires political will. In doing so, the political authority reduces the scope for autocratic interventions

in the economic realm and creates a level playing field for economic actors, more rational economic policies, and, ultimately, increased national wealth. This is why I called out President @MBuhari when he "directed" a supposedly independent @cenbank to stop forex allocation to

imports of food items (please ignore the wilfully misinformed or the online trolls that must earn a living in our poverty-stricken country!)

England provides a good historical lesson. Between the 13th and 17th centuries, the monarchy and its subjects, and even different factions of the society, fought bitterly for power and advantage. Not just politically, but including civil war!

In 1215, the barons (the layer of aristocracy beneath the king) pressed King John into signing the Magna Carta (Bill of Rights) which limited the king's authority to levy taxes by requiring him to consult with the barons before he could do so.

King John eventually got the Pope to annul the Magna Carta, but its influence remained. The second constraint on the monarch's absolute power was the establishment of the first elected parliament in England in 1265. This empowered a broad class of people.

Other conflicts followed, including the Peasants Revolt of 1381.The monarchy tried to cling on to despotic power, but social change was afoot, with the balance of power gradually being redistributed. In 1623 Parliament passed the Statute of Monopolies, curtailing King James I's

power to create domestic monopolies for his cronies (the way some of our governments still do!) In 1642 King Charles and the Parliament fought a civil war. The parliamentarians, led by Oliver Cromwell, defeated monarchy, put Charles on trial, and executed him in 1649.

The monarchy was abolished, but was restored in 1660. Charles' brother James II ascended to the throne and tried to restore the "divine right of kings". Another civil war, and the Glorious Revolution, followed. A new constitution and the Declaration of Rights followed in 1689.

From then on, political authority in England effectively shifted from the monarchy to the parliament. Parliament reformed taxation in a manner that encouraged manufacturing, began a reform of financial markets, and created the Bank of England (central bank) in 1694.

This sequence of events and reforms stimulated a financial revolution that made loans easily available to anyone who could provide the required collateral. An economic and industrial revolution followed.