[Script Info]
Title: 
[Events]
Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text
Dialogue: 0,0:00:01.02,0:00:04.89,Default,,0000,0000,0000,,Today we're going to take a brief look at \Nthe importance of institutions
Dialogue: 0,0:00:04.93,0:00:07.96,Default,,0000,0000,0000,,this'll be brief and that we're not going \Nto look today
Dialogue: 0,0:00:07.98,0:00:11.84,Default,,0000,0000,0000,,at which institution are important, and\Nwe're not going to try and explain
Dialogue: 0,0:00:11.86,0:00:15.08,Default,,0000,0000,0000,,the mechanisms by which institutions work
Dialogue: 0,0:00:15.15,0:00:17.38,Default,,0000,0000,0000,,instead what we want to do is offer \Nthe big picture:
Dialogue: 0,0:00:17.38,0:00:19.48,Default,,0000,0000,0000,,Why do people study institutions?
Dialogue: 0,0:00:19.51,0:00:23.93,Default,,0000,0000,0000,,Why do people think that institutions are\Nimportant for economic growth?
Dialogue: 0,0:00:23.93,0:00:25.16,Default,,0000,0000,0000,,Let's take a look
Dialogue: 0,0:00:26.75,0:00:30.24,Default,,0000,0000,0000,,North and South Korea provide almost a \Nperfect natural experiment
Dialogue: 0,0:00:30.28,0:00:32.59,Default,,0000,0000,0000,,demonstrating the power of institutions
Dialogue: 0,0:00:32.59,0:00:36.65,Default,,0000,0000,0000,,In 1944, North Korea and South Korea were \Nvery similar
Dialogue: 0,0:00:36.65,0:00:38.37,Default,,0000,0000,0000,,they had the same people
Dialogue: 0,0:00:38.41,0:00:41.66,Default,,0000,0000,0000,,the same culture, the same language,\Nthe same history
Dialogue: 0,0:00:41.68,0:00:44.06,Default,,0000,0000,0000,,very similar economies
Dialogue: 0,0:00:44.12,0:00:46.84,Default,,0000,0000,0000,,If anything, North Korea was a little bit \Nmore industrialized
Dialogue: 0,0:00:46.100,0:00:49.77,Default,,0000,0000,0000,,South Korea, a little bit more agrarian
Dialogue: 0,0:00:49.84,0:00:53.54,Default,,0000,0000,0000,,Then in 1945, the country was split
Dialogue: 0,0:00:53.63,0:00:58.18,Default,,0000,0000,0000,,and North Korea chose communism, a\Ntotalitarian state
Dialogue: 0,0:00:58.35,0:01:00.57,Default,,0000,0000,0000,,centrally planned, centrally directed
Dialogue: 0,0:01:00.76,0:01:02.54,Default,,0000,0000,0000,,no private property rights
Dialogue: 0,0:01:02.73,0:01:06.06,Default,,0000,0000,0000,,very little room for private initiative,\Nno free press
Dialogue: 0,0:01:06.22,0:01:09.56,Default,,0000,0000,0000,,South Korea, broadly speaking, chose\Ncapitalism
Dialogue: 0,0:01:09.78,0:01:12.49,Default,,0000,0000,0000,,private property rights, a free economy,\N
Dialogue: 0,0:01:12.71,0:01:15.51,Default,,0000,0000,0000,,much bigger scope of private initiative,\Na free press
Dialogue: 0,0:01:15.71,0:01:17.92,Default,,0000,0000,0000,,not always honored, of course
Dialogue: 0,0:01:18.11,0:01:24.35,Default,,0000,0000,0000,,but broadly speaking, South Korea chose\Ncapitalism, North Korea chose communism
Dialogue: 0,0:01:24.37,0:01:26.51,Default,,0000,0000,0000,,Now, \Nwhat were the results of these choices?
Dialogue: 0,0:01:26.70,0:01:33.01,Default,,0000,0000,0000,,50 years later, the results are so clear:\Nan alien could see them from outer space;
Dialogue: 0,0:01:33.20,0:01:37.38,Default,,0000,0000,0000,,that this is a picture of North and South \NKorea, taken from outer space
Dialogue: 0,0:01:37.59,0:01:42.19,Default,,0000,0000,0000,,and what you see is South Korea has lights,\Nbroad lights
Dialogue: 0,0:01:42.19,0:01:44.73,Default,,0000,0000,0000,,people going out to parties, lighting \Nup their home
Dialogue: 0,0:01:44.87,0:01:48.60,Default,,0000,0000,0000,,what you see in South Korea is a developed\Nmodern economy
Dialogue: 0,0:01:48.66,0:01:53.20,Default,,0000,0000,0000,,Up here, in North Korea,\Nwhat you see is darkness
Dialogue: 0,0:01:53.40,0:02:00.04,Default,,0000,0000,0000,,With the one exception of Pyongyang, the \Ncentral city where the ruling elite lives
Dialogue: 0,0:02:00.20,0:02:03.54,Default,,0000,0000,0000,,Massive differences created in just\N50 years
Dialogue: 0,0:02:03.71,0:02:11.21,Default,,0000,0000,0000,,Today South Korea has a GDP per capita at \Nleast 10 times, probably 15 times higher
Dialogue: 0,0:02:11.37,0:02:13.25,Default,,0000,0000,0000,,than that in North Korea
Dialogue: 0,0:02:13.43,0:02:17.88,Default,,0000,0000,0000,,South Korea is a modern developed economy,\Nthe most wired economy in the world
Dialogue: 0,0:02:17.95,0:02:21.73,Default,,0000,0000,0000,,the standard of living, equal to that of\Nmost western countries
Dialogue: 0,0:02:21.84,0:02:27.89,Default,,0000,0000,0000,,North Korea is in periodic starvation,\Na militarized state
Dialogue: 0,0:02:27.96,0:02:30.43,Default,,0000,0000,0000,,where the people are regularly starving
Dialogue: 0,0:02:30.58,0:02:32.97,Default,,0000,0000,0000,,That is the difference which institutions \Ncan make
Dialogue: 0,0:02:33.06,0:02:36.37,Default,,0000,0000,0000,,in just a matter of a few generations
Dialogue: 0,0:02:38.57,0:02:42.52,Default,,0000,0000,0000,,Here's another picture which could suggest\Nthe power of institutions
Dialogue: 0,0:02:43.14,0:02:44.81,Default,,0000,0000,0000,,This is Nogales
Dialogue: 0,0:02:44.84,0:02:47.18,Default,,0000,0000,0000,,On the right is Nogales, Mexico
Dialogue: 0,0:02:47.21,0:02:49.50,Default,,0000,0000,0000,,On the left is Nogales, Arizona
Dialogue: 0,0:02:49.64,0:02:52.07,Default,,0000,0000,0000,,Now there's a lot here which is the same
Dialogue: 0,0:02:52.23,0:02:54.46,Default,,0000,0000,0000,,clearly, for example, the geography is \Nthe same
Dialogue: 0,0:02:54.56,0:02:57.96,Default,,0000,0000,0000,,you might think the people are different,\Nbut actually the people and the culture
Dialogue: 0,0:02:58.09,0:02:59.60,Default,,0000,0000,0000,,are also very similar
Dialogue: 0,0:02:59.69,0:03:03.96,Default,,0000,0000,0000,,So until the 1850s, both parts of Nogales\Nwere parts of Mexico
Dialogue: 0,0:03:04.03,0:03:10.50,Default,,0000,0000,0000,,so many of the people share, on both sides\Nof this fence, share the same ancestors
Dialogue: 0,0:03:10.53,0:03:12.57,Default,,0000,0000,0000,,they have a very similar culture
Dialogue: 0,0:03:12.64,0:03:13.97,Default,,0000,0000,0000,,So what differs?
Dialogue: 0,0:03:14.00,0:03:22.25,Default,,0000,0000,0000,,In Nogales, Arizona, income is about three\Ntimes higher than in Nogales, Mexico
Dialogue: 0,0:03:22.38,0:03:24.31,Default,,0000,0000,0000,,which is actually one of the richer parts \Nof Mexico
Dialogue: 0,0:03:24.46,0:03:28.38,Default,,0000,0000,0000,,Life expectancy is higher on the left
Dialogue: 0,0:03:28.51,0:03:33.63,Default,,0000,0000,0000,,the infrastructure, the roads, the other\Npublic infrastructure, the hospitals
Dialogue: 0,0:03:33.74,0:03:36.36,Default,,0000,0000,0000,,and so forth, is better in \Nthe United States
Dialogue: 0,0:03:36.43,0:03:41.42,Default,,0000,0000,0000,,It's easier to open a business in Nogales,\NArizona than in Nogales, Mexico
Dialogue: 0,0:03:41.53,0:03:46.100,Default,,0000,0000,0000,,democracy is more reliable on the left of \Nthis picture than it is on the right
Dialogue: 0,0:03:47.07,0:03:52.56,Default,,0000,0000,0000,,crime is lower on the left than it is\Non the right
Dialogue: 0,0:03:52.60,0:03:57.80,Default,,0000,0000,0000,,Well, why?\NThe difference here again, is institutions
Dialogue: 0,0:03:57.87,0:04:00.41,Default,,0000,0000,0000,,Institutions make the difference
Dialogue: 0,0:04:00.51,0:04:06.56,Default,,0000,0000,0000,,These two examples, I think, are good\Nillustrations of the fact that
Dialogue: 0,0:04:06.59,0:04:07.77,Default,,0000,0000,0000,,institutions matter
Dialogue: 0,0:04:07.93,0:04:12.21,Default,,0000,0000,0000,,but we haven't said which institutions \Nmatter and why do they matter
Dialogue: 0,0:04:12.30,0:04:15.85,Default,,0000,0000,0000,,in future lectures we'll be talking more\Nabout some of the possibilities
Dialogue: 0,0:04:15.93,0:04:19.41,Default,,0000,0000,0000,,about institutions like property rights,\Nthe rule of laws, free press,
Dialogue: 0,0:04:19.48,0:04:23.53,Default,,0000,0000,0000,,honest government, open markets\NWe'll also be talking about facts which
Dialogue: 0,0:04:23.56,0:04:27.81,Default,,0000,0000,0000,,may underlie something such as \Nhonest government, like trust
Dialogue: 0,0:04:27.85,0:04:32.22,Default,,0000,0000,0000,,and then we'll be asking not only what \Nare the effects of institutions,
Dialogue: 0,0:04:32.29,0:04:34.93,Default,,0000,0000,0000,,but what are the causes of institutions?
Dialogue: 0,0:04:35.00,0:04:38.27,Default,,0000,0000,0000,,Why is it, that some countries have\Ndifferent institutions than others?
Dialogue: 0,0:04:38.40,0:04:40.81,Default,,0000,0000,0000,,Is this due to accidents of history?
Dialogue: 0,0:04:40.82,0:04:43.63,Default,,0000,0000,0000,,Is this due to differences in geography or \Nin culture?
Dialogue: 0,0:04:43.65,0:04:46.08,Default,,0000,0000,0000,,All of these questions are really \Nimportant,
Dialogue: 0,0:04:46.15,0:04:48.93,Default,,0000,0000,0000,,and we'll be dealing with them more as \Nwe go on
Dialogue: 0,0:04:48.93,0:04:50.16,Default,,0000,0000,0000,,Thanks