show that this fact comes from the way that political and
economic institutions interact.
This persistence and the forces that create it also explain
why it is so difficult to remove world inequality and to make
poor countries prosperous. Though institutions are the key
to the differences between the two Nogaleses and between
Mexico and the United States, that doesn’t mean there will
be a consensus in Mexico to change institutions. There is
no necessity for a society to develop or adopt the
institutions that are best for economic growth or the welfare
of its citizens, because other institutions may be even
better for those who control politics and political institutions.
The powerful and the rest of society will often disagree
about which set of institutions should remain in place and
which ones should be changed. Carlos Slim would not have
been happy to see his political connections disappear and
the entry barriers protecting his businesses fizzle—no
matter that the entry of new businesses would enrich
millions of Mexicans. Because there is no such consensus,
what rules society ends up with is determined by politics:
who has power and how this power can be exercised.
Carlos Slim has the power to get what he wants. Bill
Gates’s power is far more limited. That’s why our theory is
about not just economics but also politics. It is about the
effects of institutions on the success and failure of nations
—thus the economics of poverty and prosperity; it is also
about how institutions are determined and change over
time, and how they fail to change even when they create
poverty and misery for millions—thus the politics of poverty
and prosperity.