Why Nations Fail asks, "Why are some nations rich and others poor, divided by wealth and poverty, health and sickness, food and famine?" Image: Crystal Davis World Resources Inst. (Flickr

Poverty isn’t random or predetermined—it’s man-made.

That’s Daron Acemoglu and James Robinson’s answer to a simple, ancient question: why are some countries rich while others are poor? Why do some people live in poverty while others prosper?

In their new polemic, Why Nations Fail, Acemoglu and Robinson explore the growing gap between rich and poor countries and what the root causes of poverty mean for aid efforts. It’s not culture, weather, geography, or ignorance, they say: poverty is created by man-made economic and political institutions.

Why Nations Fail is the newest book to tackle the question of global inequality—after Sachs’ the End of Poverty, Easterly’s the White Man’s Burden, and Banerjee and Duflo’s Poor Economics.

In a review of the book, Paul Collier for the Guardian praises its accessibility: "not just readable but engrossing.” Adam Davidson for the New York Times says Acemoglu “is about as hot as economists get.”

While you ponder whether to go for the deep dive and read the book, check out what these intellectual heavyweights have to say on the issue of inequality through the following interviews and articles:

In the Huffington Post, Acemoglu and Robinson speak to the problem of inequality in the U.S.:

Economic inequality will lead to greater political inequality, and those who are further empowered politically will use this to gain a greater economic advantage by stacking the cards in their favor and increasing economic inequality yet further -- a quintessential vicious circle. And we may be in the midst of it...Whatever we may think of the views, rhetoric, and tactics of OWS [Occupy Wall Street], not only does it deserve our respect for putting the question of inequality on the agenda, but also for actually standing up for political equality.

Acemoglu talks about what growing inequality means for society in an interview with book review site Browser. According to Acemoglu, prosperity rests on political foundations—not on culture, weather or geography, as some scholars argue:

We are conditioned to think of factors such as culture and geography as so determining because we see them as immutable. They’re there and therefore they must be important. How could it not be important that Mexico City is so much warmer than New York? How could it not be important that some people are Muslim and others are Christian? But actually none of it is really as obvious as it appears.

And he talks about how inequality affects economic markets:

I do believe in markets. I passionately believe in the importance of property rights and private property. I think they are absolute sine qua nons for prosperity. But I also believe that these things are very political and the politics shouldn’t be one-sided.

Mercy Corps made cutting down trees for cooking fuel more sustainable through a reforestation project in Alta Verapaz, Guatemala. Photo: JGrant for Mercy Corps.

A new program in Brazil is turning tragedy on its head by paying the poor to preserve their natural surroundings.

Resource depletion and environmental degradation are common echoes of poverty. Desperate to get by, many rural poor turn to the only income source around: the natural environment.

That's why Brazilian president Dilma Rousseff outlined a new program called Bolsa Verde (green allowance) to promote environmental protection and decrease deforestation in the Brazilian Amazon, according to mongabay.com. The program will provide BR $300 (US $180 US) every three months to extremely impoverished families living in national forests and sustainable reserves. Recipient families must currently have monthly incomes of less than BR $70 (US $40) to qualify.

In exchange, residents pledge not to deforest illegally or to poach timber. It’s a huge jump in income for the poor, and in one of the world’s most rapidly growing economies, it's a small price for the public to pay.

“Incentive is important because we assign an economic value to nature. It's as if it were compensation for conservation," said Manuel Cunha, president of the National Council of Extractive Populations of Amazonia.

The program is modeled after Brazil’s existing and widely respected Bolsa Familia (family allowance) program, which has helped reduce poverty and inequality over the past several decades, according to The Economist.

Bolsa Verde seeks to expand these successes, reducing the strain of poverty on ecosystem services as well. And when the environment is protected, the poor lead better, healthier lives. So Brazil plans to increase people’s income so they take better care of their environment and themselves.

The government, however, isn’t trying to stop resource consumption that people depend on. "It is an incentive to have sustainable use of natural resources. [Residents] have the right to use biodiversity, but in a sustainable manner," Roberto Vizentin, Secretary of Sustainable Rural Development of the MMA, told Globo News.

If effective, this could mean both improved financial livelihoods and reduced vulnerability for Amazonian residents. And the environment and the rest of the world get something from the deal as well.

In recent years, the net worth of minority households have plummeted drastically. Photo: Pew Research Center

Equality has been one of the defining tenets of the United States since its establishment. Yet it's disparity, not equality, that is on the rise.

According to data recently analyzed by Pew Research Center, the wealth gap in the U.S. has grown drastically in the past few years. More disturbingly, these wealth disparities are not just between the traditional categories of rich and poor but between whites and minority groups.

The Pew Research Center report, based on 2009 figures, indicates that "the median wealth of white households is 20 times greater than that of black households and 18 times greater than that of Hispanic households." It also acknowledges that the housing bubble and subsequent Great Recession are somewhat to blame, as the crises had "a far greater toll on the wealth of minorities than whites."

For minorities, things have been getting worse fast. Check out the declines in net worth of minority households between 2005 and 2009 (See graph above). Since 2005, they've all more than halved while the net worth of white households — already the highest total — fell by only about 16 percent. Why have minorities seen greater declines in wealth than whites? The answer is two-fold, says the Pew Research Center: different investment choices and regional demographics.

Minority households experienced greater losses because they are more dependent on home equity as a source of wealth. As noted above, housing values started to fall sooner than stock prices and, unlike the stock market, the housing market has not begun to recover. Hispanics and Asians were further affected because they are disproportionately likely to reside in states that have been among the hardest hit by the housing crisis: California, Florida, Nevada and Arizona.

Reliance on a singular financial asset, such as a house, increases risk of losing everything and that's just what happened. Families lost everything — their homes, their one major financial holding. In fact, it seems that the system is slated against those less wealthy. Instead of easing the burden on lower income families, enabling them to make sound financial decisions, and helping to improve their economic status, many U.S. policies favor the wealthy. And lower income families are not getting their due even after lifetime contributions to public programs like social security, according to an article from Forbes

While the income inequality between whites and minorities has fallen over the years, the wealth gap has remained large, says The Washington Post. And there are no breaks for the poor. After coughing up 12.4 percent of their income for social security and paying years upon years on home mortgages, these hardworking Americans now have little to show for it. Is that what we mean by equality?

China's getting wealthier, but the U.S. still leads by a wide margin. Photo: Fab O Lens (flickr)

For most economists, it isn't a question of if China will surpass the U.S. in terms of GDP, it's when.

Goldman Sachs estimates China will take the lead by 2027 and Standard Chartered suggests it will happen as soon as 2020, according to a recent article from the Economist.

So what does China's rise mean for the United States? Two recent articles in Foreign Policy explores what has become conventional wisdom regarding China's growing economic and military power, and turns this wisdom on it's head.

There's no doubt China has become one of the world's great powers. But American's tendency to view China’s rise as symbolic of U.S. decline and a new world order is an incorrect and even dangerous fear, argues Foreign policy contributor and Tufts University professor Daniel W. Drezner in Foreign Policy.

Exaggerating Chinese power has consequences. Inside the Beltway, attitudes about American hegemony have shifted from complacency to panic. Fearful politicians representing scared voters have an incentive to scapegoat or lash out against a rising power — to the detriment of all.

According to a recent poll by the Pew Research Center, 44 percent of Americans believe China is already the world’s top economic power, compared to 27 percent who think it’s the U.S. “That perception is completely at odds with the facts," explains a recent article in the Washington Post.

And even if China's economy does overtake that of the United States, China still has massive infrastructure and poverty challenges, explains Harvard University's Joseph S. Nye in another Foreign Policy report.

Even if China's GDP passes U.S. GDP around 2027 (as Goldman Sachs now projects), the two economies would be equivalent in size, not equal in composition. China would still face massive rural poverty and enormous inequality, and it will begin to encounter demographic problems from the delayed effects of its one-child policy. Moreover, as countries develop, there is a natural tendency for growth rates to slow.

Then why do so many Americans think China is the world’s economic leader? Drezner argues Americans are looking at the wrong metrics – total GDP being one, currency reserves being another. China’s currency reserves are the largest in the world. People assume this gives China leverage over the U.S., and let’s them dictate terms. This just isn’t true, explains Drezner, “China needs American consumers at least as much as the United States needs China to buy its debt.”

Even though China and the U.S. may need each other, Nye worries American fear could get in the way of a mutually beneficial relationship between the two superpowers.

China and the United States also have much to gain from working together. Unfortunately, faulty projections that create hubris among some Chinese and unnecessary fear of decline among some Americans could make it difficult to ensure this future.

So, what does it mean for Americans if China surpasses the U.S. as the world’s largest economy? Given the arguments made in Foreign Policy, maybe the best response is to stop worrying about it. What do you think?