Why Nations Fail? | Economics Explained 

Some economists have projected that both the U.S. and parts of Europe could slip into a recession for a portion of 2023. A global recession, defined as a contraction in annual global per capita income, is more rare because China and emerging markets often grow faster than more developed economies. Essentially the world economy is considered to be in recession if economic growth falls behind population growth.

more than half of my life, there has been some 'crisis' going on that directly or indirectly affected me and im not even in my 30s...im kinda getting tired of this BS

Thank you. Just what I needed to watch. My wife and I are directors of our own business and own a few property, plus other income . I am nearly 52, We have started to save to retire perfectly, and possibly live on rental income, I'd really appreciate you talk about how to earn passive income online and retire comfortably

The broad-based Standard & U.S. consumer confidence has sunk to record lows, thanks mainly to inflation. Retail spending, home-building, and manufacturing output all declined and those who drive the U.S. economy, are starting to cut back on discretionary purchases, such as appliances and services. Regardless of our market conditions, however, we should continue to promote savings and smart investments.

Since Biden took office, there seem to have been more unfavorable results in America. These results include effects on the markets, such as price declines and sharp increases in inflation, as well as bank failures. I wonder if the sudden increase in interest rates will help value investors or if it would be wiser to stay away from the stock and financial markets for the time being.

EE’s full length videos are so much better than his shorts!

Economy grows by 5% every year for 15 years: “This is normal” Economy grows by -1.2% for one year: THIS IS THE END

I'd put it down to two factors acting in combination. 1) The money economy is falling out of sync with real productivity, the thing that causes most economic crises. 2) When something cannot go on forever it won't.

I would like to counter that Korea basically grew under coup de tats and very non democratic governments. I think what is really important is how Korea funded many bright minds to go out to great foreign schools which in turn will help the economy grow as theirnhome country has family and familiarity. Education is key to economic growth.

I think economists are looking at the wrong factors and statistics. Instead of paying attention to GDP, and unemployment which are flawed by themselves and look at other factors. For example, can we really say that people are better off when credit card debt balloons to 986 billion??? Or when lottery tickets hit an all time high? Do we look at fuel and food costs increasing in double digits and say “yep! All good!” This is the downside of economics where we focus on a few stats and don’t delve deeper into the cause and look for alternative statistics that could paint a better picture

The biggest problem with the notion that democracy is the best tool to promote economic growth is that for democracy to work, you need a stable economy and government in the first place, as well as a well educated population. Democracy in a nation where most of it's citizens is illiterate and never finish high school is most likely not a democracy, but rather a demagoguery where voters don't really know what's actually good for the country and politicians are just paying lip service to the masses. Granted this happens even in highly educated country, but think about it for a second. If say the president of the united states says that taking on more debt for building infrastructure is a good thing, there will most likely be at least some quality critics about why it might not be actually that good, critics which is build from many sources and after careful analysis. In a country where that is not the case, the people will most likely just listen to the reasons why it is good from the politician and just agree because they don't have the resource or knowledge to make an opinion on why it's a bad idea, people that don't have basic education or illiterate most likely won't know basic economic theories. By extensions, people with low education in a democracy will be more susceptible to bribes and making bad decisions. They will be more impressionable and base candidates based on short term promises that directly benefits them rather than the candidates long term plans or ideologies. Democracy in my opinion also need a stable economy in the first place. Poor farmers that are working all day in the fields with no good access to political resources to make decisions most likely won't make for a good voter, and the process of decisions making and elections itself also need money and an economy that isn't going on a nosedive or at rock bottom

The best way to describe the present economy is 08' 2.0. Yes stocks are at a discount and things will eventually get better but my monthly living expense is up $3750 from $1600 and I'm left wondering what retirement have in store for me 5years down the line, I'm ill-prepared tbh, my 401k gains are zero-nothing and my stock portfolio?...OH WELL!

America is currently plagued by the hydra-headed evil duo of inflation and recession. The worst part about this recession is that consumers are racking up credit card debt. In April alone, credit card debt went up 20% while rates have doubled in a year. Inflation is so high that consumers are literally taking debt for basic life necessities. Collapse has indeed begun.. Lloyd Bernard

I think a lot of actions taken during COVID pushed the negative consequences of the pandemic into the future. Governments borrowed a lot of money just to keep their economy from imploding. And it worked, for the most part, but now we're having to face some of those negative consequences. That's affecting developed economies significantly, as we have seen, but their overall resilience means you might have a few protests, even some riots, but the government doesn't collapse. In developing economies there isn't so much resilience.

Everything is so interconnected - banks relying on bonds which rely on other banks and their bond system... which rely on investors and incomes and networths and sales and retail and international shipping and consumerism and government taxes and interest rates. Its all insanely connected.

Corruption is huge in developing nations as well. Money supply as you went over too is important. Developing nations often borrow a lot of capital either against their own government in the form of printing more cash or bonds or they'll go to other wealthy nations and try to work out a deal. Part of the reason right now things are failing as you stated is that a lot of foreign investment won't see developing nations as a good place to park cash during a downturn as they're more volatile and susceptible to slide very fast if things go up whereas a developed nation has many safeguards in place.

Economist : line goes up 🥳 Workers : life's got shitter 😒 Elite : I've got gold taps in my yacht

I’m so glad you picked “why nations fail” to talk about. It’s been one of my favorite book in years

Is the global GDP figure adjusted for inflation?

Your global gdp growth interpretation is potentially misleading as it doesn't account for inflation. Are we really producing 3 times more stuff? Or did the stuff just get more expensive? You need to show the real gdp growth to be more accurate.

I've been diligently working, saving, and investing toward financial independence and early retirement, but the economy since the pandemic has eaten up the majority of my $3 million portfolio. I want to know: Do I keep contributing to my portfolio in these unstable markets, or do I look into alternative sectors?

What if the reason for the waves of economic collapse is because real economic prosperity can only be achieved by the Power of Friendship 😃

I think economists have forgotten that when people are angry and without hope they can always fall back on an axiom of nature, and just take what they want, if what they want exists. The future is mad max, if governments keep acting like people exist to service the government and not the other way around.

I don't know much about 🇭🇰. But , countries like 🇱🇧 , 🇱🇰 and 🇵🇰 are facing big economic crises because of having a huge unsustainable debt. And also because of economic mismanagement and corruption.

I always appreciate that you try to include an appropriate amount of discussion around context of the issues we see today.

What I love about this channel is that he explains economics the way an engineer would explain a piece of machinery. There is no spin, no agenda, no personal ideologies or weird theories thrown in. It just does what it says on the tin. He explains how these systems operate and invites you to think without ever trying to tell you *what* to think. It's a refreshing an oasis in our desert of endless spin.

I love that we're talking about undeveloped economies as the ones that are able to provide all their own needs, if anything, that sounds like a developed economy. Ours are the real undeveloped economies who rely on the market.

Amazing how so many things are interconnected!

Academics, economists, corporate CEO’s politicians and business leaders do not have any new ideas. They basically keep repeating the same old stories and keep blaming the same old things based on the same old economic models. To me, one of the most stunning things I learned about modern economies is that money is created out of thin air when someone takes out a loan and goes into debt. I was well into my forties when I learned this about modern money. At first I did not believe it and it is certainly not what I was taught about money in my younger days. The money is created by entering numbers into the borrower’s account when the borrower takes out the loan. As the loan is paid back, the money that was created for the loan is eliminated and no longer exists, but the bank or financial institution that created the money gets to keep the interest that was paid. So, the more debt there is, the more money there is and the more interest that is paid to the bank. Modern money is mostly about getting governments, corporations, businesses and people into debt and there is also quite a bit of smoke and mirrors involved. On the international level, debt has been used as a tool to gain power, status and influence over other countries for centuries. In the past century, the US perfected this technique. In the 21st century, China and some other countries have also learned this trick. The idea is to keep the borrowers continuously in debt so they can continuously keep paying interest to the “lenders”. The joke is that the money given out for the loans that make up this debt does not exist. It is basically a “fake loan” and to make the joke even better, to get a loan like this, most of us including governments of other countries have to put up some collateral, so if you default, they can take ownership of your collateral. So basically, they get whatever collateral you put up for free and with no risk since the money they “lent” you did not exist. Supposedly, this has been determined to be a legitimate way to do business! This is how the US has been able to be the dominant player in the world economy but is now being challenged. The Gross Domestic Product (GDP) represents the size of the economy which is the amount of money the economy is worth. When the economy is continuously growing, the GDP is also continually growing. Similar to any addiction, more and more borrowing is needed to have the same effect on economic growth. When the government debt starts to become greater than the value of the Gross Domestic Product (GDP), technically it will no longer be possible to pay back the government debt. If it continues, the buying power of money will start to be significantly reduced and if the government debt starts to become several more times higher than the GDP, the money and financial systems will probably collapse. If this happens, the system is reset and the cycle is repeated. During the run up there will be some good times but, after the reset, times will probably not be good and war is also a possibility. This cycle has been repeated continuously throughout history from the Chinese Dynasties to the Roman Empire to Germany after World War One and to Argentina, Venezuela and to many African and Asian nations in the 21st century. If the American Empire can avoid this cycle, they would be the first. The idea and thinking that the economy always has to grow for there to be innovation, progress and prosperity may be a problem on a finite planet with limited resources and the focus now needs to be on sustainability not on growth! Presently if the economy is not growing, it is considered a failure. This type of thinking cannot go on uninterrupted on a finite planet with finite resources. There needs to be flexibility in the system for the economy to expand and contract and for a contraction to be considered normal and not a problem or a failure. The contraction needs to be just as prosperous and productive as the expansion. For this type of thinking to work, there needs to be some new economic theories and models developed along with some new types of money and financial systems based on economic sustainability not on economic growth and money inflation. I am sure there will be some Nobel prizes awarded to the academics, economists, corporate CEO's and business leaders and of course politicians and government officials that can figure out how to make a sustainable economy work and how not to devalue the nation’s money in the process. The way this can begin and improve peace and fairness at the same time is when our business, government and academic leaders along with our wealthiest and brightest and smartest among us can learn to be much more truthful, honest and trustworthy and learn how not to become corrupt and can start to understand that the wellbeing of others benefits everyone and is the bases for morality.

I have a production question if it’s ok to ask: When you call out previous videos your graphics (the mocked up RU-vid pages with the thumbnail in place of a video player) are very consistent. Is there a tool or template you use to generate these? Would love to use something similar in my own work 🙂

Nice to hear a positive outlook, its not that common these days.

Well , Sri Lanka, Pakistan are democracy yet they suffered from crisis. China and Singapore were not democracy yet they developed. Most of the so called advanced economies became democracy only after becoming rich and advanced in first place.

1) The pandemic response (often mistakenly stated as "The pandemic") 2) Momentum. An object in motion stays in motion, until acted upon. It takes time to spend all the reserves, and then borrow and print your way to an unrecoverable position.

I would love to see deep and long term impact of AI on economy. With current progress in mind (something what many experts would say never happen or in next 100 years)

The idea that the influence of voters is positive is ludicrous. As a Greek I can say for sure that any party that dared to address the debt issue by reducing benefits would be heavily punished, which is why it didn't happen. Argentina Brazil, even France is the same. The current world leader thr US has reached the point that it has no power to respond to emergencies due to its debt. Even an easy war like the invasion of Iraq is out of question nowadays.

"If someone invented a new way to build more efficiently on the same amount of land" spoken over a shot of detached single family house suburbia with super wide roads and law-mandated minimum size of the plot of land made me chuckle.

Me: How come millennials can’t afford a house? Economists: Things are better than ever! Me: …

Chinese loans are not 'generous' by any measure. They are commercial i.e match debt market interest rates. However, they are (were) more available to developing countries at a time when anything other than IMF/WB concessional loans were. He nce an attractive option (as compared to nothing).

Like and subscribe? In this economy?!?!? Impossible 😔

Advanced economys can outsource their economic negative to developing economys. In this video, I heard like 9 different ways the first world screws the third world so their positions stay the same

Hi, just a small silly question Could the increase of GDP be a result of inflation rather than increase in production? Or perhaps this increase is a combination of both inflation and production

Governments and the economy in general are too focused on the consumer and not the workers. Workers are what really makes the economy work. Unproductive consumers that don't produce anything (aka don't work) are great at generating inflation and paper gains in economic numbers...but everyone feels they are getting poorer as the economy seems to powers thru (all smoke and mirrors), the economy doesn't feel quite right to anyone, like it is heavily distorted in many ways. That exactly is what is going on, we have plenty of money moving around from government stimulus and monetary stimulus, strong consumers with plenty cash to keep the economic numbers looking somewhat good...but the workers know they are getting shafted, that is where everything breaks down... productivity goes down, employee turnover increases, workers demand ever increasing wage adjustments, and stuff like quiet quitting and the quit rate increase dramatically. Working is just not a very attractive option nowadays, in many cases completely unnecessary, and in other cases can be even counterproductive when many live better by doing nothing at all. The INCENTIVE to be productive is broken...the push to equalize pay at any cost and lift unproductive people from sometimes very arbitrary poverty lines has made it completely pointless to actually be productive and get a job. It is still extremely amusing seeing "the experts" and politicians completely baffled by the very basics of human psychology and economic principles 😂. Sooner or later they will figure it out...they can try changing the world all they want, but they can't change how people think.

Great video, keep doing awesome work

Great video. You should do a video on the woes of former soviet states. Also how do they become prosperous?

It'd be interesting to hear what the global economic situation is like if you exclude the top 1 or 2 % of wealthiest people, or how the economy is going for the median person. A lot of the times you get the feeling that when they say the economy is improving, they really mean for the top echelon. Who then pull up the world average by a tonne!

One must wonder what historical events might have happened that resulted in some countries to be advanced economies and other developing ones…

Zvláštní video na energetické nápoje určitě chceme😍

Very informative video One of the best channels of RU-vid

Why Nations Fail is probably my most recommended book for someone to read ever. It’s easily the best explanation of why some countries do better than others and it’s all backed up by solid data. Acemoglu is one of todays best economists.

India is a democracy while china is a tyranny, yet china is way ahead of India??? Any reasons? Democracy doesn't mean road to prosperity or vice a versa.

4:50 The delivery was just COLD. XD

Can you do a video on the economic effect of AI and automation? Especially talking about ChatGPT and other AI search engines. Also in the video can you talk about the shift from the information age to the knowledge age.

Listening to an Australian lecture you on economics is like a lecture from Chris Hemsworth on how to make it in Hollywood.

I will never understand why @EconomicsExplained doesn't see greed as a big part of this problem. On all scales there is a lack of public trust between individuals which causes a reflexive hoarding mentality in the market. People don't want to get burned not realizing that the very systems they put in place to guarantee their own success comes at a cost of others doing horribly. This is "instinctive" but counterproductive as you hurt yourself in the long run by reducing the amount of specialized individuals in the cohort. Companies are to worried about satisfying their shareholders when their shareholders provide nothing to the economy but pieces of paper. Labor is value

Interesting - thank you

Excellent content

Here in Argentina we are always in a crisis

7:04. The idea that companies actually pay taxes to support the publicly financed infrastructure they use might be the way it's supposed to be. But it doesn't happen

Great video

Thank you

13:27 Isn't that a description for shortage -- when demand exceeds supply?

We've been delaying the collapses long enough to be "out of COVID" but the collapse is still due, delayed or not.

So the organic farming disaster in Sri Lanka is an example of supply shock? Sort of funny no one mentions this anymore.

Must watch video on this topic

Democracy? Really? What about China , Vietnam ?

Most of todays leading economies reached their rank as leading economies when they were not democratic at all. When the US became the no.1 economy (around 1900) majority of the population didnt have right to vote. So democracy has nothing to do with economic success of any organization, that is why none of the corporations are democratic. Quite the opposite. Democracy is a consequence of economic success in many cases. Also who would call todays US a functioning democracy? No one knows who makes the decisions, but everyone knows who does not - that guy who was elected by the ppl

what’s missing from this video is the fact that some countries went from undeveloped to developed. It’s not like it was given like a gift. It goes the other way too - Argentina was a leading economy in the early 1900s, it’s now a basket case.

Looking forward to the Denmark video!😊

are you using real GDP numbers or nominal at the beginning of the video there? If it's nominal that doesn't really mean anything or that we're producing 3x as much

Massive wealth/power inequality in democracies; (re)creates a stagnant ruling class -a monarchy/nobility with a different name and a few extra steps when enacting their will.

Didn't you mean to say the rba shock? Let inflation rage and say there is none, then admit there is inflation and we need to crush the consumer to stop it! Much better analogy MATE.

That's the reason why developing countries are going for trade in own currencies and dedollarising. It reduces transaction costs and prevents capital flight

How great Norway is 😂

One word: hubris.

Watching it again again again until it sinks in and makes me SUPER THING.

Love the B roll footage of the Rhode Island state house.

People still repeating the mantra, we are better than what we have ever been are a tragic joke.

A bunch of us tried to warn about the consequences of what was happening, we were called evil for our troubles. We are still warning about some of the other stuff that's going on, and we're still being called evil for our troubles. Things are going to keep getting worse until people stop mistaking what we would like to be true for what is true.

The whole video I was just hearing different ways of saying "It is more expensive to be poor for countries too".

10:04 Singapore is an example of not needing a democracy for economic growth. So democracy doesn't always equal good economic growth.

Jobs will pay your bills business will make you rich but investment makes and you keep you wealthy the future is inevitable!

An addiction to negative real interest rates and free money

Well-done

I love your videos, i've learn so much from your channel, thank u so much

Really excited for Lebnon’s episode! It’s a very interesting case

I wish you did a video on Bangladesh. I am not really sure if its collapsing or growing!

One thing I also realize is modern advanced areas regarding geography producer awful lot of landfill

Decades of quantitative easing. With countries tying themselves to the dollar, they also did well during quantitative easing - but are not, with quantitative tightening. USA, EU. and China are in or heading into a recession, and other countries are, not surprisingly, affected. Of course, CoVid and its supply chain disruption was the major catalyst for worldwide inflation and recession.

There is a simple answer too much Debt

Do GDP increases adjusted for inflation

I know this is just an introduction, but I take issue with the framing of this video around aggregate indicators such as GDP. No, global output has not been increased over the past 3 years even though GDP might have. In a world where most countries on Earth are facing the highest inflation in 40 years, in many cases going above 2 digits, an increase in pure GDP means nothing if you value it in a dollar denominated sense because it means even a 10% GDP growth is a material impoverishment of 1% given an 11% average rate of real inflation (those numbers are fictitious to illustrate a point). That is also without mentionning the per capita breakdown and the moustrous increase in shelter costs over the past 3 years (about 20% per year in most countries). Considering this, these aggregate numbers are meaningless for about 90% of the Earth's population. So no, ''global output'' has not, in fact, significantly increased in the past 3 years. Shelter costs alone might account for 50% of the added GDP, I doubt anyone here would argue that paying more for the same shelter is you getting richer...

Great video, but missed the real answer here. The issue is that the US dollar is the world’s reserve country and all these countries issue bonds in USD. When the fed raises the interest rate, these developing countries can’t repay - simple as.

In the US, there are more millionaires than happy children. The las time time I saw a genuinely happy smile in a child was in a third world country. Enough said. 🧒

"What's Causing This Wave of Economic Collapses?" My guess would be... rich people, who control the masses via the social engineering of the media they own and politicians they fund, but not as a monolithic team operation, ie, there are many players, not all of whom see eye to eye, but most of whom have the resources available to promote what they believe the rest of us - or the majority who pays attention - should adhere to. That there are various ideas, some married together, like culture war and economic issues, as in anti-abortion stances attached to corporate tax cuts, or educational elitism (often class-based, purported "meritocracy") attached to financial or technocratic sector friendly policies, and this just muddles the issue further, so that the voting people are distracted by a culture issue, and then wonder who voted to make sure big business gets a tax cut, or that decades of economic choices have led to a tendency of plateaued wages versus ballooning executive pay, plus the rise of the billionaire-class and the continued erosion of old age pensions and social safety nets in favor of working till you drop to make some other joker rich, just so you have, maybe, enough to survive - and maybe pay down some of that debt they also convinced you to take on. If you get sick or your trailer burns down or your car with which you need to get to work falls apart, at least in my country... they - the ever present they - have even set it up so you can easily create a GoFundMe or similar in order to beg for money from all your friends, family, and neighbors, who are also all broke, so if you're lucky or particularly good at begging, you can get part of your bills covered, and then maybe won't lose everything you've saved up in order to survive... if you're lucky. I could go into the foibles of the real estate market and affordability, and continued rising food costs whilst inflation and supply chain expenses continue to *not* cut into ever growing profits, but... eh... I get tired of writing about stuff people aren't going to fix (and in fact are *happy* to allow to continue in order that there are no transgender athletes competing against the same nominal gender or that "assault weapons" get banned or that somebody else can't get an abortion or that homeless people have a nicer tent city they can live in instead of being moved on down the road). Anyway, yeah... who, I mean, uh, *what* did this? Hm. *What* indeed...

Great video! Please, do Chile!!

I challenge you to return to this video at the end of this year and point out all of the inaccuracies and why they were inaccurate.

Democracy or not , you ultimately need a leader who legibly gives his 100% to improve his country no matter what. And has the guts to literally stand by his vision and his policies, regardless. Like an army personnel who's only and only priority is his country, not his position, nor his progeny , nor his pleasure. One of the very reasons why those top two countries with highest gdp growth continues to grow unlike the rest of the world.

I just want to be able to afford a home, a family, and retirement.

How are you churning out so many videos all of a sudden?

Democracy being beneficial assumes people vote for logical reason, when in reality it's usually emotional