Russ Roberts

How Important are the Rights of the Poor?

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by Russ Roberts
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The Best Easterly Essays... What Role Can (and should) Dat...

In the Easterly Essay questions, I asked:

Easterly maintains that one of the biggest problems in the development world is that the rights of the poor are not respected. What does he mean by this? What are the implications for development policy?

Read on for two very different answers to this question.

The two responses I liked more were from Luke Edwards and Conor Lennon. They are very different:

Luke Edwards writes:

When you start to view society as an organism that evolves, rather than as a machine, it makes you pessimistic about the possibility of spreading prosperity by transplant - it seems as fanciful as grafting gills onto a man. William Easterly advocates for exactly this. He believes that economic development can and should be catalyzed in poor countries by injecting into them institutions evolved in the West - namely democratic government and civil rights.

Based on a complete history of economic development, I have doubts about Easterly's ideas. The history of development should begin with "the Great Divergence" - a process starting circa 1500 whereby growth in European nations accelerated, leaving the rest of the world behind and escaping the Malthusian trap for the first time. I note that none of the European states of 1500 were modern democracies - but neither were they totalitarian. Mostly they were autocracies that allowed a good deal of economic and social freedoms, freedoms that were protected by custom and by overlapping power hierarchies of king, noble, magistrate, and church.

Over time, some of these multi-polar states evolved into democracies. But many of them were rich before the final victory lap of Democracy in Europe. That came only in the 20th century with the victories of the Anglo-American alliance in the great wars.

Easterly believes that democracy and rights to political speech and protest hold politicians accountable for delivering good policy, and are therefore the keys to kickstarting economic development. But this raises the question of how the rich world did so well without these institutions for so long. Furthermore, the dysfunction of modern American politics serves as a challenge to Easterly's belief in democratic accountability. In America the approval rating of congress sits below 10% and yet incumbent legislators have near-perfect job safety.

Taking a broader view of the democratic world, the track record of democracy transplanted into foreign soil is poor. In multicultural societies implanted democracy leads not to growth, but to factionalism, infighting, and even civil war. Recent examples of elected governments hounded by religious rivalries in Egypt, Iraq, and Afghanistan should stand fresh in our minds. Decades earlier the democratization of former European colonies in Africa led to the invention of the sardonic description - "One man, one vote, one time", describing the repeated process of democratic collapse into civil war and then into dictatorship. Why should people who lived through the cycle once live through it again?

It appears there is some topsoil of tolerant, pluralistic culture that is needed for Western-style democracy to thrive. Before we can use democracy as a development tool, we have to figure out how to make it healthy. If that expertise exists it is not getting to the right places.

Meanwhile, many development success stories happen under autocratic regimes. Sometimes, as in South Korea and Chile, these have transitioned into stable democracies *after* a period of rapid economic growth. In the middle-ground are successful single-party states like Japan, Singapore, and China.

What matters most doesn't seem to be the form of government, but having leaders who are public-spirited, educated, and strong enough to maintain a monopoly on the use of force. While markets can work fueled solely by self-interest, it seems we have not yet invented a political system which does not rely on wise and just men.

Democratization has been tried, and has failed, in much of the world. Easterly supports democratization in China. If he is wrong and China fractures under democratic rule, how many decades will pass before it stabilizes enough to resumes its rise?


Conor Lennon writes:

To me, Easterly's use of the word "right" has two distinct meanings in the podcast. The first is that wolves in sheep's clothing - autocratic government actors masquerading as bastions of democracy - exploit a monopoly on the use of force to limit their electorates' freedom to think, speak, assemble, and protest. This leaves the poor powerless to hold political actors responsible for abuses of power, corrupt behavior, and explicit support for an oligarchic, faux-democratic society.

The second meaning Easterly implies is that the poor are not granted agency. The poor are simply assumed to be incapable of helping themselves. Therefore, development must be performed for them by so-called "experts."

Easterly's two meanings are distinct but connected. Tyrannical institutions leave the poor unable to enact changes which would allow them to flourish and improve their own lot. This institutional failure manifests itself as a lack of infrastructure, poor health, malnutrition, and high rates of infant mortality. Unfortunately, because the lack of infrastructure and poor health are seen, and the institutional problems are unseen, this leads economic "experts" to insist that successful economic development can be reduced to solving a series of technical problems. Essentially, the tyranny of political leaders is so difficult to grasp/measure that "experts" assume that the problem poor people face is a lack of re-
sources. These experts fail to realize that the presence of resources is an outcome of a free and prosperous society and not an input into them.

The simplest illustration of this technical approach is the malaria-reducing bed-net. Easterly echoes Frederic Bastiat when he notes that being against the provision of bed-nets does not mean he wants people to die from malaria. The bed-nets, even if they reach their intended recipients, cannot remove the tyrants from power and are a perfect example of experts imposing their choices, rather than granting agency to the poor. A simple cash transfer would not remove the tyrant either, but it would at least allow people to choose for themselves what it is they want.

Instead, the bed-nets are provided without concern for what it is that would truly help and are a Band-Aid that does not address the fundamental issue of why these people could not afford a bed-net in the first place. A move to a free society, with legal protection of property rights, supported by democratic institutions would be a revelation to these people. Within a free society, the poor could find their own solutions to the problems they face. This is simply because, in a very Hayekian sense, they, and only they, know the best solution to the problems they face.

The implications for development are at least two-fold. Firstly, experts need to be humble. As Easterly says, successful top-down, autocratic interventions are both rare and poorly-understood. While some succeed, only their very best outcomes are comparable to those seen in free, democratic societies ("democracies don't have famines"). This insight can be viewed as a corollary to John Stuart Mill's harm principle - "the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. His own good, either physical or moral, is not a sufficient warrant."

Secondly, if their choices are not being artificially constrained by oppression from corrupt and incompetent government, poor people in these societies must be granted full agency. Their decisions, both individually and those made within and by voluntary collective institutions, must be viewed as rational and optimal. If they do not appear so, the research question at hand must always be "why can I not see why this is the best choice?" rather than "how do I force these people to change?".

The invisible hand will figure the rest out.

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COMMENTS (10 to date)
Neil Salmond writes:

Bonus points to Edwards for "this raises the question" not 'begs'.

MTipton writes:

To Luke Edwards:

I would think Easterly is not for transplanting democracy. Just making the claim that you need to have accountability in government for long-term economic development to be possible.

I loved your essay, and I think it makes important points and raises deep questions.

I read Sach's 'The End of Poverty' about 7 years ago and am currently reading 'Tyranny of Experts', I've also listened to a lot of discussions on YouTube, including Dambisa de Moyo's different take on China. I've also read 'Guns, Germs and Steel' by Jared Diamond, which presents another perspective on why the west got rich having more to do with Geography.

Have to say I haven't found an answer to the question of wealth, that takes a holistic approach to the question. And analyzes how historical events, political organization, legal traditions, religious traditions, geographical factors, institutional, technological, and ideological factors through out time have resulted in the wealth differentials we see today throughout countries. Concluding with moral and practical implications.

It makes me wish some economist would take on the task of writing a sequel to Adam Smith's 'Wealth of Nations'. Like 'Wealth in the 21st Century,' addressing this question given everything we know.

If we compared those factors for all countries maybe we would have a deeper understanding of how countries that are extremely poor today, might become wealthy. What things are necessary? Is there a trajectory they have to follow? Are their multiple ways of arriving? I am sure history has provided with a lot of experiments. Maybe the experiment of wealth creation hasn't been long enough?

Luke Edwards writes:

MTipton,

Thanks for the kind words. I'm a long time listener of the show and it's an honor to be writing here. I am not well-read in the economic development literature, so I worry that someone more expert will stop in to shoot holes in all my arguments but I figure I learn that way too. In this area my biases are towards qualitative analyses given the scarcity and diversity of the data points, though I know that drives economists crazy.

It seems to me that different areas of the world vary widely in their institutions and so therefore different development approaches are necessary. I buy Diamond's idea that geography causes of civilizational differences, but geography is only the first cause. It had knock-on effects through technology, politics, culture, and warfare which are more proximate causes for differences. Since geography is hard to change, development must be concerned with these more malleable variables.

For example, the technology to conduct large-scale warfare was only introduced to sub-saharan Africa by European colonizers. So there are states today like Kenya with 70 ethnic groups, none with over 20% representation. On the other hand, China is 91% Han Chinese. Presumably there were other groups that existed but were killed or assimilated over the millennia.

China has a long history of existing as a centralized state with roughly the current borders, whereas the arbitrary, colonial borders of African states were introduced recently.

China and Kenya had roughly the same GDP per capita in 1960, but macro-statistics obscured meaningful qualitative differences in culture, technology, and history. Maybe it's a case of 20/20 hindsight, but it seems obvious that China would have an easier time developing than Kenya.

You are asking the right questions. The different characteristics of civilizations seem to have had an effect on their fate. I'm not an expert, but my heretical belief is that you can't treat every country the same and I see a lot of evidence for it.

I have some ideas on what I would do if I were dictator of a diverse, poor state. Holding an election or creating a robust, adversarial free press wouldn't be on the top of my agenda.

My general program for a dictator (borrowing from Moldbug's hierarchy of politics) is first establish a leviathan state that can easily crush any rebel militia. In a diverse country, this requires producing national identity that is stronger than local identities so that the national army has popular support. Otherwise, the national army only represents the ruling faction.

This is hard to do, but it has been managed before (A state church? Desegregation policies?). Peace achieved, the state can attract foreign investment, while keeping a wary eye that foreign investors do not subvert the state. Tax dollars from investment funds public works and education, allowing the country to move up on the value chain from mining to manufacturing to knowledge work.

Later, as stability lasts and prosperity grows, democracy and freedom can be gradually introduced. If ethnic and religious rivalries have been thoroughly snuffed, an election is possible to avoid the risky process of dictatorial succession. If not, then a successor must be found.

Anyways, I appreciate the tips on things to read. Is there anything in particular that you found exceptionally rewarding?

K-Veikko writes:

Democracy needs the poor because their votes are the cheapest to buy. So big institutions are created to maintain powerty. - The class of tax receivers.

When only the votes count the economy must be adjusted accordingly.

Mike F writes:

Luke Edwards - I also enjoyed your essay and your reading suggestions in your reply above. Your general program for a dictator looks similar to the plans being implemented in some of the poor nations. Unfortunately, it seems to take a long time to get past step 1 of building a leviathan state that can easily crush any rebel militia. Building legitimacy and crushing rebels don't always seem to go hand in hand in a diverse country. Holding elections and creating free press doesn't often seem to work any better when nobody agrees on anything. Not for creating prosperity anyway.

Conor Lennon writes:

Thanks for running these essay contests Russ, it's great to be able to be part of the conversation in some way.

dullgeek writes:

I was very moved by Luke Edwards post. My biggest question is related to the timing of wealth. He claims that we started getting rich in about 1500.

But this raises the question of how the rich world did so well without these institutions for so long.
How does this mesh with the idea that, when you graph wealth over time, you don't start to see the hockey stick explosion until about 1800? The most graphic representation of this comes from Diedre McClosky: https://www.youtube.com/watch?v=a0nsKBx77EQ

If it's true that the wealth explosion really started in 1800, doesn't that suggest that liberty really is a much more important component?

Luke Edwards writes:

Mike F,

My program for a benign dictator is hard to follow in certain countries. For example, it would be hard to forge a single nation out of the pieces of Syria where a ~20% Alawite minority rules over a ~80% Islamic majority. It would be easier to forge a nation out of African melting pots with 70 ethnicities where none holds too much power. Libertarians would be bad at it because illiberal policies might be necessary. For example, Lee Kwan Yew kept a lid on ethnic tension with forced integration, ethnic quotas in government bureaus, and lots of propaganda.

Unfortunately, most dictators are bad and don't really care about improving the lot of the people as a whole. A lot of them come from one faction or another in the population and only care about extracting rents to benefit their faction. Growth under a dictator depends on having a public-spirited dictator willing to rise above the interests of his faction, or a homogenous country without factions (like Chile and S. Korea).

It might be easier for an outside dictator to lead development in some places. A reasonably benevolent and militarily superior imperialistic power could rule in the public benefit, and its own self-interest through the mechanism of higher taxes, without succumbing to the game of factionalism.

Another recipe for getting rid of factionalism is a national crack-up where it makes sense (Syria, Iraq, Afghanistan).

The one country I can't wrap my head around is India - a diverse democracy. It has its share of dysfunction, but it is also growing nicely after a series of pro-market reforms in the 90s. It is a mish-mash of civilizations that were old before the West was born. So in some respects it is more like China - an advanced, literate culture with ancient histories of governance at a large-scale. But in other ways it is like Africa - a diverse state with colonial borders. I don't understand why India works and I feel uncertain about its future.

Luke Edwards writes:

dullgeek,


European per capita income goes hockey-stick with industrialization in the 19th century, but the technological and economic divergence of the west starts before that. Historians argue over dates for the beginning of the exponential curve, Nick Szabo argues for a very early date (1400 or so) here and here. Wikipedia's article on the Great Divergence can lead you to scholars that argue for later dates. By 1600, European powers oversee the first truly globalized economy and literacy is growing exponentially thanks to the printing press, so I have a hard time believing much later dates.

I don't know what "liberty" is such that Europeans in the 19th century had it and those in the 17th did not. It seems to me that the 19th is merely further along the same exponential curve.

Seth writes:

"When you start to view society as an organism that evolves, rather than as a machine, it makes you pessimistic about the possibility of spreading prosperity by transplant - it seems as fanciful as grafting gills onto a man. William Easterly advocates for exactly this. He believes that economic development can and should be catalyzed in poor countries by injecting into them institutions evolved in the West - namely democratic government and civil rights." -Luke Edwards

I didn't take that away. I could be wrong.

I think a more apt analogy is if you have a serial killer holding people hostage, the hostages could be made better off by getting rid of the serial killer rather an aiding and abetting him.

'...Easterly implies is that the poor are not granted agency. The poor are simply assumed to be incapable of helping themselves. Therefore, development must be performed for them by so-called "experts."' -Conor Lennon

That's what I thought Easterly meant. And, furthermore, the experts are doing the very same thing as the autocrats, which doesn't help. The people are treated as pawns rather than people.

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