The Physics of History and Its Implications for Policy

Study, live long, and prosper! These imperatives motivate the UN's Human Development Index, a measure of a nation's economic performance that can, unlike GDP, distinguish between Japan and Equatorial Guinea. Though the mean of its distribution in 177 nations grows like e^+t/70 between 1870 and 2020, the distribution's autocorrelation function decays like P(t)~e^-t/625. If rich nations and poor differ because of the quality of their institutions, or if institutions rule, as the thrice-Nobel'd New Institutional Economics proclaims, then how can it be that the immense institutional change of these last 150 years has resulted in so little change in the distribution of wealth?

We introduce a many-body physics inspired, dynamical systems theory of the coevolution of a nation's institutions and its economy. It predicts that P(t) is materially constant on a time scale exceeding a century, and that the dominant factors driving development are slowly-varying climate, geography, and culture. It resolves the paradox by rejecting the paradigm that institutions rule.

That paradigm guides the spending of more than $100B in foreign aid annually. These programs are famously failures. Our empirically confirmed theory explains why they fail, and suggests a new direction for policy that might work.