Recently I read one of the most influential economists in the world, William Easterly’s book The Tyranny Of Experts (2014) and will share some important lessons from it. While much is well-established common sense at this date, such as that benevolent autocrats rarely exist and historical conditions matter for economic development, there are still less obvious points to absorb and learn about.
The book essentially argues that the Austrian-British economist Friedrich Hayek’s classic liberalism is preferred over the Swedish technocratic economist Gunnar Myrdal’s ideas. They both shared the Noble prize in economics in 1974, but the debate between them never took place in public, and perhaps if it had, some of the misguided remedies for poor countries could have been avoided. Easterly is unhesitatingly on Hayek’s side on the political-economic spectrum, although with a nuanced understanding of this complicated issue. Both markets and governments matter.
1. Individual economic and political rights are more important than national policies
There are not just cultural and social but also economic benefits from nationalism. For instance, as the likewise distinguished economist Dani Rodrik (which Easterly refers to in other regards) has emphasized, domestic markets are for a variety of reasons generally more well-functioning than international markets.
However, national policies as such have only a limited effect. Essentially, the wisest thing a government can do is to provide for public infrastructure and secure individual economic and political rights for its citizens. From there on the people, especially the more talented and industrious such, will create spontaneous solutions to local problems (a lesson from Adam Smith which commonly has been misunderstood as that the Scotsman cherished greed), and create wealth and prosperity for themselves and others.
An excellent example are the people from the Fujian province in eastern China, which have dominated the trade and investment in East Asia and affected the development in mainland China 1978 onwards.
Also from older history there are clear examples of this:
Spain and Portugal had Atlantic trade access but they had absolutist institutions and values. Northern Italian cities had relatively free institutions and values but they did not have Atlantic access nor free values. The winners were the United Kingdom and the Netherlands, which had Atlantic access and already had relatively free institutions and values by sometime in the 1600s.
2. Also poor people yearn for freedom
There has been a tendency among technocratic economists and development “experts” to assert that poorer people do not care about freedom. Although it might be true in some instances, surveys and interviews indicate that this is indeed not the case. Easterly summarizes:
The general picture is that poor people (like rich people) do not like being told to shut up; they like to speak up to protest any goverment abuses of them.
It seems that the near-universal model of individual rights (within the nation’s border) and market-based economy is the most appropriate model for real development.
3. Economic growth has large measurement errors
GDP is an adequate rough estimate for national wealth but the measure of it tends to be very flawed, to say the least. For instance, the World Bank’s World Development Indicators (WDI) tend to present vastly different data than the Penn World Tables (PWT), not just on sub-Saharan African countries – which often fail to collect and present adequate data – but also on high-performing states such as Singapore. The discrepancies can sometimes be vast.
The reason why this is relevant beyond accuracy is because it makes it very misguided to either celebrate or accuse a government of incompetence if the data is not correct and unambiguous.
4. Growth over time is more crucial than temporary miracles
The truth is that economists rarely can predict growth. When they look at past experiences they can pinpoint that which in fact does work and that which does not, but the future is yet to be unfolded and is unpredictable in many significant ways. Easterly stresses:
The root cause of these findings is simply that annual growth rates are extraordinarily volatile. The average change in GDP per capita growth rates (in either direction) from one year to the next is over 4 percentage points, usually reflecting the appearance and disapperance of temporary factors like a commodity-price boom.
That is why one often has to wait and see and not be excited about sudden growth miracles, which rarely last more than a couple of years (or less). There are exceptions, such as Hong Kong, South Korea, Singapore and Taiwan, which managed to have growth that lasted for several decades, but the growth rates have eventually slowed down in these countries. Easterly predicts the same regarding China.
Conclusion
Easterly’s book provides relevant data and perspectives on economic development, both success stories and failures due to misguided beliefs that the inadequate knowledge and agency of governments will cure the ills of the world.
It is intriguing to read about historical instances from places as different and distant – in both time and space – as Genoa, New York City, Colombia, Benin, Syria, South Korea and China. It does not address every relevant topic, such as human capital, cultural differences and the effects from women competing with men in the job market, but a single work rarely covers every important aspect. Many academics do also have a tendency to avoid contentious issues, or take for granted that industrious Jews, women and Chinese should be praised within the modern West.
Some of these ideas indeed question the benefits of nationalism, but as far as I see it has never been autocratic nationalism that masculine men cherish but rather a more libertarian such. Economically, the government should let its habitants have the opportunity to prosper and then stay away as much as possible. Internationally, a delicate balance between nationalism and restricted globalism appears to be the best prescription.
Read More: 5 Important Insights From Red Pilled British Economist Peter Bauer
What I’m deriving from this (as tempered by my own perspective) is that long-term thinking is the greatest asset to any nation.
When the people have a long-term perspective on things, they tend to favor actions that will provide more benefit as time goes on over short-term gains. Things like developing a business with a particular aim and focus on quality customer experiences take longer to show returns than working at the local coffee joint, but they pay longer dividends and drive economic advancement for the community. In this way, even the poor can advance themselves (and, by extension, their offspring) to better lives.
When a nation has a long-term perspective, it seeks to incentivize continual improvement over short-burst economic explosions. They are more likely to encourage businesses to develop and expand (and, at the same time, limit “tripping” behaviors like enforced monopolies). They seek to promote citizens’ skills and bloodlines instead of importing unknown assets, ensuring a sense of continuity within the people and that further expansion and development is always a possibility for the citizens.
Freedom is the greatest asset to any nation.
“Tempered freedom.”
A people who have freedom without ethics are a people destined for destruction. When you conflate “can” with “should”, you enter a world in which evils are rewarded and goodness is punished.
Freedom tempered with reason and ethics is the maximal form of human society (not ideal – maximal).
Such is why I left the Religious Right and conservatism: they enshrine ‘freedom’ as the ultimate virtue and use the label of ‘God’ to justify their choices rather than using God as the standard for virtue, from whence flows the definition of ‘freedom’.
Stable family life with actual children being born within it is a sine quo non for both Freedom and prosperity. That’s where shadowscale is wrong.
A society where the people think this way would tend not to fall for ridiculous doomsday beliefs like the rapture. The rapture naturally appeals to society’s losers with a high time-preference, and the belief contributes to their bad habits which leave them trapped in failure and poverty.
Though now we’ve seen the rapture secularized and made pseudo-scientific by calling it the “singularity.”
Your roommate’s mom is a damn ho.
You’re right about the rapture/apocalyptic beliefs which appeal to people whose lives have become either so unbearable or are marked by such low energy and general apathy towards the world, that they’ll rather see it destroyed, rather than change their relationship with it. It’s the ultimate cop-out in which folks just passively wait like sheep ready for the slaughter.
Cultures who value savings are the most succesful: i.e. China, Germany. The difference with African cultures is abysmal.
“Guns, Germs, and Steel” is a great book that explains the necessary conditions required for the growth of civilisations able to produce food surpluses and fund standing armies. It explains the early success of societies in temperate zones. It also provides a good explanation for why Sub-Saharan Africa wasn’t able to make the same progress. Even in the 21st Century, farming in the tropical regions of Africa is held back by endemic diseases, such as tsetse fly which causes sleeping sickness and prevents the widespread use of beasts of burden in cultivation.
Culture and religion did play a role in the success of certain civilisations, particularly in providing the spiritual and philosophical rationale and drivers for expansion across the globe and subjugation of other peoples. But, it was the economic benefits of expropriating national resources and the widespread use of slavery that enabled the growth of empires and enriched Western nations. The slave trade enabled vast shipments of agricultural produce and mined minerals which funded the industrial revolution and scientific innovation. This is the basis for the current economic dominance of Western nations.
I’m proud of my Mexican roots, yet I never hesitate to tell my brethren that this, what you just said, is why the USA is a world power and Mexico isn’t. So what if the gringos played dirty to get Texas and the Southwest? Mexicans weren’t saints either. At least gringos made the most of it. An example: gold was discovered in California in 1849, just one year after the Treaty of Guadalupe Hidalgo. If Mexicans and their Spanish predecessors were more proactive and didn’t treat California as a mere outpost just to protect their interests from the Russians, the British, and the French, the story would not doubt be different.
I’ve gotta give you one thing. Mexican history is a lot more interesting than US history, which is all about this act and that act and who invented the reciprocating cotton fermenter. Mexican history is like a playground of the European powers, it just sucks how tragic it had to be at times for its people (indios and everyone else) as a result. I found your country’s history very interesting from the time of the Toltecs, Aztecs, and Tarascans to Cortes and onwards to all the different wars of rebellion and religious/spiritual revival movements like La Senora de Guadelupe.
I read that Pio Pico – the last Mexico governor of California did not want Washington D.C. or Mexico D.F. to govern California. He wanted the British. Imagine California if it was governed like Hong Kong!
I have Mexican immigrant grandparents too. The whole “they stole it from us, we deserve to live here” is BS.
Some dude from Oaxaca has no automatic right to the Southwest than do my great-grandchildren have the right to claim Maine as theirs because it was once politically connected to California.
Well, in fairness the Spanish were too few to exploit those lands and no discovery justified massive immigration to that place from Europe, so during their administration (before independence) their behavior was justified and rational. ON the rest you are spot on.
The Spanish were ruined by the sudden influx of wealth from American gold and silver. Once that flow slowed, the American colonies were net losers that the Spanish held out of pride rather than any logical anaylsis of their true economic value.
Interesting observation. I’ve heard that before, but I think more damaging were the pirate attacks, the constant wars and the fact that the Spanish never had the manpower, even with slaves, to develop the vast region. The original 13 colonies were way smaller than today’s Venezuela, however their population numbered in the millions (2.5 million people) vs less than 700.000 for Venezuela at the time of its indepedence (1820s).
By the way once the colonies were lost to Spain, it didn’t get to enjoy any “savings” of it…
If only Santa Anna were not such an ass, history would have been different.
Politicians want a good economy. A good economy is defined by certain metrics. The experts use government power to juice those metrics or just outright undermine the metrics.
I tend to agree with some environmentalists on this issue. I think measures like GDP are a gross and blunt way of detailing of the progress of any nation. Issues like the amount of resources that are used and wasted in the process of achieving a high GDP are not taken into account for example.
Short-termism and profiteering at all costs are the ugly,selfish and destructive faces of capitalism. Ask, all the folks in Ohio or Michigan who were dumped on the scrap heap by this credo? The folks who voted for Trump. It’s a peculiar fact that both mainstream parties, especially, the Democrats ignored the vast wastelands, both environmentally and socially, that these companies produced, by outsourcing etc in their own heartlands.
The only viable way to deal with issues like global poverty, mass immigration and climate change (or simply conversing our natural resources) is to built from the grass-roots up, local, substantial, high quality goods and services. To move away from the idea of a ubiquitous global economy that measures output solely in narrow GDP terms in which a few people at the top profit most. What a bitter legacy will those parasites who “play around” with other peoples money leave for future generations and we should remember, it was precisely this class of vermin which produced the recent economic collapse.
Have you ever seen a starving American? I haven’t. Our poor people are fat and on drugs. I believe it was Maine; asked those who were collecting EBT credit to work in a soup kitchen to earn their credit and miraculously everyone was employed the next day. Funny how that works.
There are legitimately poor people in America. Unfortunately, many of them got that way because they were chewed up and spit out by the government. There are also kids who go hungry in America. And most of them actually end up that way because of parental neglect.
You’re not talking about the single moms who collect $1800/month for child support, are you? They get an EBT card.
smokes, acrylic nails, cell phones
Dude, you don’t understand. Them girls need manicures so they can be able to hold their kids.
Funny thing is, after dating a manicurist for so long, I got some bit of an inside look at the industry. Amazing how women, even the ones who are on welfare, have to have their mani pedis and their hair done. Don’t get me wrong, I’m not much of a foot fetishist, but I do appreciate a woman that can take care of her own feet. However, that’s where you can tell women apart. The ones with welfare do a lousy job of taking care of their own feet. They’re all dry and chapped, not to mention that black women in particular have horrendous feet by nature. But they don’t care. There’s always the government and a chump ready to take care of them.
Dude. I’m not a dude. I am a female who has become enlightened by reading RoK. My own gender has not improved by being “liberated”. I hate living in Vaginastan but have become increasingly adept at sniffing out the lipstick Taliban BS. I don’t agree with everything on RoK but I certainly enjoy many of the articles, and the comments frequently demonstrate the intellect and intelligence of the males on this site. But I digress……..moving on to your comment…..
I had a mani/pedi lady tell me that when the social assistance/welfare cheques roll in, the nail shops are CRAZY busy. So much for using the money for the kids and necessities.
Those big acrylic nails are awful!! They are bacteria traps and money pits. Ever see what happens when those horrid things are removed? The nail bed is destroyed by months and years of layering chemical after chemical on the nail. My policy is to wear or don’t wear nail polish because chipped nail polish says lazy white trash to me. Yes, buying cream (even at the dollar store) and putting it on your feet seems to be a foreign concept to many. Buy a pumice stone, a foot file, a pair of nail clippers and a nail file, and use them – you are not limbless. Of course too many women are too busy yapping and texting on their phones to just stop and do basic grooming maintenance.
I will partly disagree with you. It’s also the morons that have to have a boat, even though they only use it once or twice a year. Or the morons who buy trampolines for their kids. Or the morons who had to have a backyard pool. Or the morons who had to have a big backyard for the dogs even though nowadays the dogs live inside, never mind the kids are also inside tapping on their phones.
You’re right, but I don’t think many people will understand what you are getting at. From what I surmise the Byzantine system of public welfare does in fact create poverty of its own accord. Much like water flowing in a river when it comes upon rapids creates whirlpools and counter-currents. The same way does the government through entitlements create poverty by blocking the natural formation of healthy unions and encumbering business activities. In such a way does government through its altruistic and misguided nature create the foe it has declared to fight…………………………………………….oh there I go again I get carried away when I’m drinking.
……
Benign neglect cures most of these ills. Government exacerbates them, true?
I was a skinny kid due to going hungry. As a result, I’ve been full-time employed since I was 17, with the goal to never end up on government assistant. Yesterday I had a conversation with a liberal who was upset with a case that a “poor” kid was not receiving aspirin, because her parents had to pay for it as it wasn’t free. I don’t want kids to suffer, however maybe the parents should show some responsibility in coming up with the $4.49 for a bottle of aspirin? Same parents I’m sure have a cell phone, CableTV and A/C. Yes it is most often parental neglect.
When I have done with the 48 laws of power this book is next. Thank you for an excellent article.
Thank you. Glad to hear.
Great book title.
“The general picture is that poor people (like rich people) do not like being told to shut up; they like to speak up to protest any government abuses of them.”
Well, duh! No one likes government abuse.
The idea that experts should run things is inherently flawed because no individual or small group can ever possibly know what is best for millions upon millions of people. The experts will end up acting on their own self interest and biases.
Experts exist and are employed by rulers to convince the people to go along with what benefit the ruling class. They used to be called priests.
Good night to you merry gentlemen. I leave you with words of wisdom from the ages. A strong man doesn’t put others down; he lifts them up.
https://uploads.disquscdn.com/images/adf25e4c5529344083cf3f3443d09b5200fd31904ec95ee0f36e4a32838727b5.png
Collection52b
He’s and expert on experts.
Very proud of all the Americans who were tonight at Charlottesville. Congrats! #unitetheright.
“Also poor people yearn for freedom”
Do they? Sure looks like most are looking for free shit in a successful Western nation. The only “freedom” they yearn for is the freedom to sit around at nothing all day and get taxpayer cash for it.
Where the productive man dreams of the things he might create if only left alone by his fellows, the Progressive dreams of the world he could create if only the lives and property of his fellows were at his disposal.
This evil stems from the desire for power to rule over other men.
“They” are not monolithic. They are, among other nations, China before 1978, South Korea before 1987, and Taiwan before 1996.
As for poor people in autocratic states like Central Asia and sub-Saharan Africa, of course they would prefer better societies in their home countries. But I agree that a lot of people come to the West for welfare. The problem is the welfare system and especially the immigration policies.
What is this libertarian bullshit?
This libertarian bullshit is a large part of the reason why America and the West became great. But of course, one can always have isolationistic, authoritarian ethno-nationalism. I’ve heard Belarus is great.
Libertarianism is a Jewish propaganda effort manifest in the post-war era to co-opt the right into accepting the fixed exchange rate systems the United Nations was founded to manage. It did not exist in any way previously. You can make a great many claims about Libertarianism if you are stupid enough to believe that money is some crap you dig up out of the ground rather than a unit of account of political power. But you can’t possibly argue that it has anything to do with “The West” or America.
What is particularly amusing to the deluded such as yourself is the “smaller units of government” that are the hallmark of internationalist libertarianism. The ultimate vision of the world that was discussed at the founding of the United Nations is a division of the world, largely along ethnic lines, into these smaller units of government that you see today in places like Catalonia. They would be autonomous with laws about things that don’t really matter, but would cede their monetary sovereignty to the UN, along with most control of military weapons. It was believed this was the only way to prevent another Third Reich from arising and challenging the internationalist order.
Ethno-nationalism is in fact the only defense against the internationalist regime.
Classic liberalism is pretty much what the US is based on. Since it is so large it can largely self-sufficient, which I have written anout on ROK.The political and economic rights are the basis. Why is that “libertarian bullshit”?
I rarely read this site, mostly because the quality of work has gone down. I have some friends who write here, which I will read from time to time.
While there is no question that autistic libertarianism is a pernicious cancer on the right, it is much less intense than it was in the far right than it was even 5 years ago. The “alt right” really can only be described universally as one thing: anti-liberal.
And that means rejection of all liberal conceptions, including the notion of “rights”. Broadly, all liberal principles are fundamentally against nature. Of all of them, the concept of “rights” is the most obviously unnatural.
What fucking kool aid are you on?
Rights means that one can work and function in a largely open society. It is pragmatic.
Your delusional, cult like belief that you have the right to use coercive violence by proxy to steal the fruits of other people’s labor to be spent on what you want is unnatural. It makes you a thief without the balls to do your own robbing. But you keep telling yourself how morally superior you are to those that don’t believe in forcing their beliefs on others.
Just like any other animal, we humans can employ violence to any degree we wish. That is nature. We can strive for something greater, and impose another order on society, which you mistake for nature. But it is not nature.
In any event, your logic is no longer relevant. The vast majority of people are economically obsolete, and this libertarian bullshit has nothing to offer the present with respect to economics.
Let me guess. You think these pre-modern people also just decided to use money one day instead of barter as it was so convenient.
There is zero evidence for the society you describe, and by all accounts and evidence, pre-modern times before the rise of the city state was brutal, short, and decidedly uncivilized.
Not the libertardian kind. They have drugs now that help with this kind of autism.
I meant that rights were absent in pre-modern societies. You misunderstood the sentence.
You can’t possibly be suggesting that legalistic rights are some kind of guarantee of anything. This, of all weekends.
filthy commie jew
I get your point. Too bad.
Leftist it is.
You sound like a typical House Nigger trying to justify picking a new Massa because you didnt like the taste of the other ones boots.
Telemachus, you’re delusional. The modern Libertarians and what is today the Libertarian International Organization have been in continuous existence since 1582.
Libertarians gave you the web. Use it to do a websearch once in a while.
yeah it’s called MMR – gives you Autism. but I don’t need to tell you that do i – physician heal thyself
The Mystery of Capital. A pretty good book. Looks like the US will be like these ‘turd world’ shitholes soon.
https://www.amazon.com/Mystery-Capital-Capitalism-Triumphs-Everywhere/dp/0465016154
45 comments on what could be a thought-provoking discussion on thoughts, versus 532 comments on an article that is able to draw men in with fat-skimpily-clad women.
Let’s talk about how frivolous women are, and how they are responsible for the banality of modern man’s existence…First, let me find a disgusting picture of a female, to draw the Zetas and Alphas over…
Collection52b
“The economy is bad because there aren’t enough broken windows. Work for the window making industry will boost the economy”- John Maynard Keynes
Easterly’s book makes a good case for economic liberalism and free trade being the basis for historic economic success. It also illustrates why Trump’s policy of protecting America’s industry with tariffs and government funding and intervention is bad economics. Aid to the developing world, especially African countries, historically is shown to enrich corrupt ruling elites and does not lead to economic development. The removal of trade barriers and the diversification of developing economies dependent on monoculture, which makes them hostage to falls in market prices, will do much more to grow the wealth of the developing world and improve health and living conditions. Protectionism, donor aid conditional on adverse trade agreements and economic reform that undermines the power of the state to provide basic conditions for growth (law and order, basic amenities such as water and health) are all bad for economic growth.