Why Nations Fail: The Origins of Power, Prosperity, and Poverty (63 page)

No less important, the contingent path of history worked in Botswana’s favor. It was particularly lucky because Seretse Khama and Quett Masire were not Siaka Stevens and Robert Mugabe. The former worked hard and honestly to build inclusive institutions on the foundations of the Tswanas’ tribal institutions. All this made it more likely
that Botswana would succeed in taking a path toward inclusive institutions, whereas much of the rest of sub-Saharan Africa did not even try, or failed outright.

It was December 1, 1955. The city of Montgomery, Alabama, arrest warrant lists the time that the offense occurred as 6:06 p.m. James Blake, a bus driver, was having trouble, he called the police, and Officers Day and Mixon arrived on the scene. They noted in their report:

Rosa Parks’s offense was to sit in a section of the Cleveland Avenue bus reserved for whites, a crime under Alabama’s Jim Crow laws. Parks was fined ten dollars in addition to court fees of four dollars. Rosa Parks wasn’t just anybody. She was already the secretary of the Montgomery chapter of the National Association for the Advancement of Colored People, the NAACP, which had long been struggling to change the institutions of the U.S. South. Her arrest triggered a mass movement, the Montgomery Bus Boycott, masterminded by Martin Luther King, Jr. By December 3, King and other black leaders had organized a coordinated bus boycott, convincing all black people that they should not ride on any bus in Montgomery. The boycott was successful and it lasted until December 20, 1956. It set in motion a process that culminated in the U.S. Supreme Court ruling that the laws that segregated buses in Alabama and Montgomery were unconstitutional.

The Montgomery Bus Boycott was a key moment in the civil rights movement in the U.S. South. This movement was part of a series of events and changes that finally broke the mold in the South and led to
a fundamental change of institutions. As we saw in
chapter 12
, after the Civil War, southern landowning elites had managed to re-create the extractive economic and political institutions that had dominated the South before the Civil War. Though the details of these institutions changed—for example, slavery was no longer possible—the negative impact on economic incentives and prosperity in the South was the same. The South was notably poorer than the rest of the United States.

Starting in the 1950s, southern institutions would begin to move the region onto a much faster growth trajectory. The type of extractive institutions ultimately eliminated in the U.S. South were different from the colonial institutions of pre-independence Botswana. The type of critical juncture that started the process of their downfall was also different but shared several commonalities. Starting in the 1940s, those who bore the brunt of the discrimination and the extractive institutions in the South, people such as Rosa Parks, started to become much better organized in their fight against them. At the same time, the U.S. Supreme Court and the federal government finally began to intervene systematically to reform the extractive institutions in the South. Thus a main factor creating a critical juncture for change in the South was the empowerment of black Americans there and the end of the unchallenged domination of the southern elites.

The southern political institutions, both before the Civil War and after, had a clear economic logic, not too different from the South African Apartheid regime: to secure cheap labor for the plantations. But by the 1950s, this logic became less compelling. For one, significant mass outmigration of blacks from the South was already under way, a legacy of both the Great Depression and the Second World War. In the 1940s and ’50s, this reached an average of a hundred thousand people per year. Meanwhile, technological innovation in agriculture, though adopted only slowly, was reducing the dependence of the plantation owners on cheap labor. Most labor in the plantations was used for picking cotton. In 1950 almost all southern cotton was still picked by hand. But the mechanization of cotton picking was reducing the demand for this type of work. By 1960, in the key states of Alabama, Louisiana, and Mississippi, almost half of production had become mechanized. Just as blacks became harder to
trap in the South, they also became no longer indispensable for the plantation owners. There was thus less reason for elites to fight vigorously to maintain the old extractive economic institutions. This did not mean that they would accept the changes in institutions willingly, however. Instead, a protracted conflict ensued. An unusual coalition, between southern blacks and the inclusive federal institutions of the United States, created a powerful force away from southern extraction and toward equal political and civil rights for southern blacks, which would finally remove the significant barriers to economic growth in the U.S. South.

The most important impetus for change came from the civil rights movement. It was the empowerment of blacks in the South that led the way, as in Montgomery, by challenging extractive institutions around them, by demanding their rights, and by protesting and mobilizing in order to obtain them. But they weren’t alone in this, because the U.S. South was not a separate country and the southern elites did not have free rein as did Guatemalan elites, for example. As part of the United States of America, the South was subject to the U.S. Constitution and federal legislation. The cause for fundamental reform in the South would finally receive support from the U.S. executive, legislature, and Supreme Court partly because the civil rights movement was able to have its voice heard outside the South, thereby mobilizing the federal government.

Federal intervention to change the institutions in the South started with the decision of the Supreme Court in 1944 that primary elections where only white people could stand were unconstitutional. As we have seen, blacks had been politically disenfranchised in the 1890s with the use of poll taxes and literacy tests (
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–
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). These tests were routinely manipulated to discriminate against black people, while still allowing poor and illiterate whites to vote. In a famous example from the early 1960s, in Louisiana a white applicant was judged literate after giving the answer “FRDUM FOOF SPETGH” to a question about the state constitution. The Supreme Court decision in 1944 was the opening salvo in the longer battle to open up the political system to blacks, and the Court understood the importance of loosening white control of political parties.

That decision was followed by
Brown v. Board of Education
in 1954, in which the Supreme Court ruled that state-mandated segregation of schools and other public sites was unconstitutional. In 1962 the Court knocked away another pillar of the political dominance of white elites: legislative malapportionment. When a legislature is malapportioned—as were the “rotten boroughs” in England before the First Reform Act—some areas or regions receive much greater representation than they should based on their share of the relevant population. Malapportionment in the South meant that the rural areas, the heartland of the southern planter elite, were heavily overrepresented relative to urban areas. The Supreme Court put an end to this in 1962 with its decision in the
Baker v. Carr
case, which introduced the “one-person, one-vote” standard.

But all the rulings from the Supreme Court would have amounted to little if they hadn’t been implemented. In the 1890s, in fact, federal legislation enfranchising southern blacks was not implemented, because local law enforcement was under the control of the southern elite and the Democratic Party, and the federal government was happy to go along with this state of affairs. But as blacks started rising up against the southern elite, this bastion of support for Jim Crow crumbled, and the Democratic Party, led by its non-southern elements, turned against racial segregation. The renegade southern Democrats regrouped under the banner of the States’ Rights Democratic Party and competed in the 1948 presidential election. Their candidate, Strom Thurmond, carried four states and gained thirty-nine votes in the Electoral College. But this was a far cry from the power of the unified Democratic Party in national politics and the capture of that party by the southern elites. Strom Thurmond’s campaign was centered on his challenge to the ability of the federal government to intervene in the institutions of the South. He stated his position forcefully: “I wanna tell you, ladies and gentlemen, that there’s not enough troops in the army to force the Southern people to break down segregation and admit the nigra race into our theaters, into our swimming pools, into our homes, and into our churches.”

He would be proved wrong. The rulings of the Supreme Court meant that southern educational facilities had to be desegregated,
including the University of Mississippi in Oxford. In 1962, after a long legal battle, federal courts ruled that James Meredith, a young black air force veteran, had to be admitted to “Ole Miss.” Opposition to the implementation of this ruling was orchestrated by the so-called Citizens’ Councils, the first of which had been formed in Indianola, Mississippi, in 1954 to fight desegregation of the South. State governor Ross Barnett publicly rejected the court-ordered desegregation on television on September 13, announcing that state universities would close before they agreed to be desegregated. Finally, after much negotiation between Barnett and President John Kennedy and Attorney General Robert Kennedy in Washington, the federal government intervened forcibly to implement this ruling. A day was set when U.S. marshals would bring Meredith to Oxford. In anticipation, white supremacists began to organize. On September 30, the day before Meredith was due to appear, U.S. marshals entered the university campus and surrounded the main administration building. A crowd of about 2,500 came to protest, and soon a riot broke out. The marshals used tear gas to disperse the rioters, but soon came under fire. By 10:00 p.m. that night, federal troops were moved into the city to restore order. Soon there were 20,000 troops and 11,000 National Guardsmen in Oxford. In total, 300 people would be arrested. Meredith decided to stay on campus, where, protected from death threats by U.S. marshals and 300 soldiers, he eventually graduated.

Federal legislation was pivotal in the process of institutional reform in the South. During the passage of the first Civil Rights Act in 1957, Strom Thurmond, then a senator, spoke nonstop for twenty-four hours and eighteen minutes to prevent, or at least delay, passage of the act. During his speech he read everything from the Declaration of Independence to various phone books. But to no avail. The 1957 act culminated in the Civil Rights Act of 1964 outlawing a whole gamut of segregationist state legislation and practices. The Voting Rights Act of 1965 declared the literacy tests, poll taxes, and other methods used for disenfranchising southern blacks to be illegal. It also extended a great deal of federal oversight into state elections.

The impact of all these events was a significant change in economic and legal institutions in the South. In Mississippi, for example,
only about 5 percent of eligible black people were voting in 1960. By 1970 this figure had increased to 50 percent. In Alabama and South Carolina, it went from around 10 percent in 1960 to 50 percent in 1970. These patterns changed the nature of elections, both for local and national offices. More important, the political support from the dominant Democratic Party for the extractive institutions discriminating against blacks eroded. The way was then open for a range of changes in economic institutions. Prior to the institutional reforms of the 1960s, blacks had been almost entirely excluded from jobs in textile mills. In 1960 only about 5 percent of employees in southern textile mills were black. Civil rights legislation stopped this discrimination. By 1970 this proportion had increased to 15 percent; by 1990 it was at 25 percent. Economic discrimination against blacks began to decline, the educational opportunities for blacks improved significantly, and the southern labor market became more competitive. Together with inclusive institutions came more rapid economic improvements in the South. In 1940 southern states had only about 50 percent of the level of per capita income of the United States. This started to change in the late 1940s and ’50s. By 1990 the gap had basically vanished.

As in Botswana, the key in the U.S. South was the development of inclusive political and economic institutions. This came at the juxtaposition of the increasing discontent among blacks suffering under southern extractive institutions and the crumbling of the one-party rule of the Democratic Party in the South. Once again, existing institutions shaped the path of change. In this case, it was pivotal that southern institutions were situated within the inclusive federal institutions of the United States, and this allowed southern blacks finally to mobilize the federal government and institutions for their cause. The whole process was also facilitated by the fact that, with the massive outmigration of blacks from the South and the mechanization of cotton production, economic conditions had changed so that southern elites were less willing to put up more of a fight.

The Communist Party under the leadership of Mao Zedong finally overthrew the Nationalists, led by Chiang Kai-shek, in 1949. The People’s Republic of China was proclaimed on October 1. The political and economic institutions created after 1949 were highly extractive. Politically, they featured the dictatorship of the Chinese Communist Party. No other political organization has been allowed in China since then. Until his death in 1976, Mao entirely dominated the Communist Party and the government. Accompanying these authoritarian, extractive political institutions were highly extractive economic institutions. Mao immediately nationalized land and abolished all kinds of property rights in one fell swoop. He had landlords, as well as other segments he deemed to be against the regime, executed. The market economy was essentially abolished. People in rural areas were gradually organized onto communal farms. Money and wages were replaced by “work points,” which could be traded for goods. Internal passports were introduced in 1956 forbidding travel without appropriate authorization, in order to increase political and economic control. All industry was similarly nationalized, and Mao launched an ambitious attempt to promote the rapid development of industry through the use of “five-year plans,” modeled on those in the Soviet Union.