My rating: 5 of 5 stars
Easterly is well known economist, who used to be one of the people he characterises as a “Development Economist” in the book. His central thesis is that experts think that the world’s poor don’t worry about their rights; they’re far more worried about their poverty and must be “helped” by the experts’ expertise to get out of poverty. Only then do their rights matter.
Easterly demonstrates with masterful strokes how, in fact, respecting rights is the cornerstone of sustainable growth. You won’t put effort into something if the government can arbitrarily turn up with a truck full of soldiers and take it away from you. If a king can just confiscate what you make you won’t make much, or trade with other people, because what’s the point?
Once the individual’s rights are respected, only then, can growth happen.
He goes right back to Adam Smith’s invisible hand from the wealth of nations and gives a far more nuanced reading of Smith than the current dogma about markets would lead you to believe is the case. For example, Smith would have been appalled by the monopolists cartels that run much of our economy. The invisible hand is, instead, people working in a self-interested way with the limited knowledge at their disposal, with each other, to create an economy that works for them. There is no expert saying how it should work in an abstract sense. There is no way an “expert” can possibly have all of the knowledge needed to create an economy, or have a deep understanding of people’s individual needs. It’s simply too big a problem. The knowledge needed is in no single head, and creates a different structure with a different history depending on what the individuals knew or discovered when they collaborated with each other. Of course, there can’t be any miracles caused by some anointed leader either.
His other target is what he calls the “blank slate” approach. Experts and the dictators that appoint them start from the assumption that whatever poor country they are about to blight is a blank slate, with no history, no already operating, particular, invisible hand that gets things done. So they proceed to impose a way of doing things on people instead of letting them find it out for themselves, and also trample on the rights of those people in the process “for their own good”.
He also discusses at length the works of Friedrich Hayek and Gunnar Myrdal. Hayek has been somewhat hijacked by later thinkers such as Milton Friedman but in The Road to Serfdom he outlines why the old state-socialist vision of experts telling us how to live our lives is deeply flawed, if not fascistic, and he also defended the right of the individual to not have their lives decided for them by the state. In contrast Myrdal’s vision of removing children from their families and having them brought up by more “efficient” state-controlled organisations is frankly terrifying. Myrdal’s vision for what we now call the third world suffered from the benevolent expert illusion. He wrote a huge treatise Asian Drama An Inquiry into the Poverty of Nations without once mentioning anything to do with the history and culture of the place or the needs of the people there, but instead talking of them like they are children. Myrdal’s work invented the so-called science of development economics that Easterly’s book is a polemic with.
Easterly makes the point that local custom and democratic tradition meant that Myrdal’s vision in his native Sweden made his ideas about reorganising the family not start. People wouldn’t let this happen because democracy and basic rights mean such harebrained ideas can’t take root. However, in the non-democratic, less developed world they can, due to the lack of individual rights and the dominance of dictators. Of course, the custom and tradition is the product of many generations of trial and error, it won’t be perfect, but the best people have come up with so far. It will almost definitely be better than something just made up in the mind of a Myrdal, because it has been tested by the people living with it.
There is a detailed discussion debunking the myth of dictators promoting growth, and what is a mountain of evidence pointing the other way. Also, evidence of growth is called into question. In the long run you will get periods of apparently high growth for purely statistical reasons followed by low or average, but our human propensity for seeing patterns will credit it to an individual or government because it makes a better story, even when the dates don’t overlap. A far better measure is to look at the growth on average for a region and see if it matches that of neighbouring countries, then see if there is a significant difference that might be caused by the dictator. This explains the miracle of Singapore far better than any story about Lee Kuan Yew being responsible for it.
One of the most striking examples Easterly covers is that of Korea. People living in an area where the land was awful for growing food, and where “experts” may have spent a lot of time and energy getting the crop yield from terrible to bad instead gained skills servicing motor cars, they swapped these skills with the people who had land that could grow food. This became the motor for the massive technology companies in Korea, but if the experts had arrived they all would still be subsistence farmers growing slightly more food than they might have done otherwise on marginal land.
One of the most telling arguments about the abuse of statistics comes when the Gates foundation are taken to task for claiming they reduced infant mortality in Ethiopia. In essence the figures are made up from guesses looking at what might have happened and have no rigour. The Ethiopian government are also rights abusers on a grand scale, and use British aid to drive people of their land and pay for their political prisons, as well as hold people to ransom (vote for us or starve) over political reform. The book opens with the story of some farmers in the USA being forced off their land and moved to model villages so a British company can grow wood there. Of course, this could not happen in a democratic country like the USA, but it did happen in Ethiopia and Easterly uses this to make the point that individual rights against the government are paramount if you want economic progress. They are not a nice to have, at some undefined point in the future. I am personally very angered that my government’s much lauded ethical foreign policy was a smokescreen for this. Of course the government has changed since then, but I am sure the same ignorant, condescending, rights ignoring view holds.
I have used some quite emotional language writing this review, but in fact Easterly is scrupulous in making sure the evidence speaks for itself and does not make any polemical points the way I have here for brevity’s sake. He also goes into some depth looking at an area in New York that is now one of the most desirable places to live that was left alone by the zealous bureaucrats by a process of accident and prevention by protest, and how it was transformed because it was left alone while the invisible hand found a better use for it, this is fascinating and also calls into question the current zeal for tearing everything down and evicting people from perfectly good houses because of some grand plan.
To sum up, this is a well written, engaging book. It recasts some writers who have been unjustly hijacked by some of the more extreme political views of the last half century and lets their ideas breathe. The central thesis, that people find excellent solutions themselves when not interfered with or stolen from by the state, is valid. It also calls into question the grip the monopolists have on our economy, to create a metaphor of my own, the invisible hand has become a strangler’s and Adam Smith would have had no truck with it.