William Easterly on the Tyranny of Experts
Jun 16 2014

William Easterly of New York University and author of The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor talks to EconTalk host Russ Roberts about the ideas in his book. Easterly argues that poverty endures in many poor countries because of a lack of economic and political freedom for its poorest members. He argues that the aid process and the role experts play in that process reinforces the oppression of the poor. Other topics discussed include data-oriented solutions, autocracy vs. democracy, and Easterly's perspective on development from Bill Gates and recent EconTalk guest Jeffery Sachs.

William Easterly on Benevolent Autocrats and Growth
William Easterly of New York University talks with EconTalk host Russ Roberts about the oft-heard claim that poor countries led by autocrats grow faster than poor countries that are democratic. Drawing on a recent paper, "Benevolent Autocrats," Easterly argues that...
Arnold Kling on Reforming Government and Expertise
Economist and author Arnold Kling talks about improving government regulation with EconTalk host Russ Roberts. Kling suggests ways to improve the administrative state--the agencies and regulatory bodies that often write the regulations that they enforce. The conversation concludes with Kling's idea...
Explore audio transcript, further reading that will help you delve deeper into this week’s episode, and vigorous conversations in the form of our comments section below.


NC Law
Jun 16 2014 at 11:07am

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Jun 16 2014 at 11:25am

I would love to hear William Easterly talk a little about the most common approach to poverty within the USA. Robin Hanson once said that we like to give education and healthcare to the poor but that is not what they ask for. It seems to that the goal is to make the poor more like the middle class whether the poor want that or not.

Greg G
Jun 16 2014 at 11:44am

No doubt there is plenty of legitimate criticism to be made of development economics but there is a certain irony to bringing in an expert to warn against the dangers of relying on experts.

Everyone thinks the experts that agree with them are helpful and the ones that disagree with them are having pernicious effects.

I suspect we will be stuck with experts even longer than we are stuck with poverty.

Rick G
Jun 16 2014 at 3:56pm

A very enjoyable listen, but the response to the question of what positive action we could/should take was more-or-less a dodge. It is clear that Easterly would have us (be that as a nation, an NGO, or a concerned individual) NOT work with/through an existing autocracy, but no alternate prescription was offered.

To put more of a point on the question: How does one “back the free side” through something more than words? Advocating for people to “make the switch” without actually providing an alternative seems to be the precise problem that sits at the heart of development. I imagine Gates, et. al would happily work around autocrats if there were plausible means of doing so. That they haven’t may be telling us something.

Professor Roberts, if your guests truly believe that there are better active approaches to development, it would be great to hear them, even if that takes the form of military action or progranda aimed at undermining autocracy. But if they cannot or will not do so, it would be nice to support non-intervention with conviction. One can not act based on a recommendation of what not to do.

Jun 16 2014 at 10:41pm

This podcast touched on a theme that reminds me of a theory I’ve had for awhile: Professors tend to be liberal (as in “on the left”) because they want experts like themselves making top down decisions for the rest of us. If you consider yourself to be an expert, of course you want more power given to experts. “If only people like me were in charge…”

Jun 17 2014 at 10:34pm

I want to begin by saying I support free markets and free people. I believe that on the whole, these are the best way to achieve both the highest average standard of living as well as the lowest rates of poverty. Now, that said . . .

I have not read his book, so my comments are directed at Easterly’s comments in this podcast. Here is what I heard that I take issue with:

1) the only hope for people in autocratic nations is for them to rise up and take control of their country. OK, so do we arm them? Ignore them? Much easier said than done.

2) Experts have no role in the transfer of knowledge when you cross international boundaries. We all learn from experts and to think that people in less developed nations cannot learn from people in more developed nations seems a very odd proposition.

3) To me, comparing Bill Gates actions to Jeffrey Sachs is misguided. Bill Gates is primarily spending his own money, is focused on activities where he can have measured results, is not claiming that his is the one-ring-to-rule-them-all solution and is very open to criticism. Jeffrey Sachs, the World Bank, Clinton Global Foundation, etc. are the polar opposite in my view.

Ben Crandall
Jun 18 2014 at 11:40am

I have certain sympathies with some of Easterly’s criticisms…. But this podcast seemed to be putting forward the worst kind of overly simplistic straw-man false dilemma (Sorry if that is too many fallacies for one phrase!)…

“You can either choose freedom or autocracy!”

Does anyone honestly think that even someone like Tom Friedman who speaks fondly of China would choose autocracy if asked to choose between those options?

I am sorry but these issues are much more complex than who is for and against “freedom” (a hard term to define to begin with).

Certainly Russ and other Chicago economists should at least have the sympathy to realize that these are complex political, economic, and moral issue (I am sure you haven’t forgotten the strong criticism of people like Milton Friedman working with the Chillean government)… I am not here arguing one side or another, just urging actually ADDRESSING the difficult arguments.

Jack Stone
Jun 18 2014 at 7:04pm

Dr. Easterly seems to imply that development professionals should organize poor people to challenge autocratic regimes for development programs to work. Since that may mean the elimination of some autocratic regimes, I don’t see how such an approach could be successful.

[comment moved from wrong thread. –Econlib Ed.]

AJ Goddard
Jun 18 2014 at 7:05pm

The assumption shared by most is that these experts and the aid agencies they are associated with are trying to do what is best for other countries. Don’t we need to define what we mean by “best” and “countries” first?

Some might believe that a region is too populated for it’s own good and what would be “best” is compulsory birth control or some other form of population control program.

Some might believe that a nation’s people do not necessarily owe their mandate to leaders in one restricted geographic designated area. Rather that these people are part of a world population that fall under some kind of global governance or management scheme.

Daniel Barkalow
Jun 18 2014 at 8:27pm

I’d really like to hear what various people think about Sierra Leone, which is still badly off but (currently) unusually free among developing countries. It’s been growing rapidly and pretty consistently since the restoration of political stability (~7%/year for a decade straight), but still has problems with malaria and infant and mother mortality, as well as high rates of unemployment and poverty. A huge part of the economy is mineral mining, with the usual problem that you can’t increase mineral production all that much by hiring your population.

I think Sierra Leone would be a great place to look at, because things there are bad in some ways but not in others, so you can see whether your outcome matches expectations for “freedom” or “poverty trap”, or maybe some of each. And you can have a more nuanced discussion of whether we should supply bed nets to people there now, because a short-term benefit would presumably tide people over until the country rebuilds its war-torn infrastructure in response to the people’s demands.

Jun 19 2014 at 4:44pm

It seems extremely difficult for Easterly to get his point across, whether correct or not. People just don’t get it, he keeps getting misunderstood. In a nutshell his point is this:

There are ‘technocrats’ like Gates, Sachs and people at the World bank that credit Autocrats and themselves for increases in economic growth in certain countries. (is this statement true or false?)

By doing this technocrats harm the poor in three ways:

1.They help spread the idea or give the impression that economic growth happens through technocratic intervention. Even though all long-term examples of increased prosperity have all been accompanied by expansions of individual rights and freedom (ie. all rich countries). In doing this they make freedom/rights a nice thing to have but not crucial/fundamental for long-term economic well being.

2.In giving credit to autocrats and themselves they diminish the importance of the ordinary people and how they’ve helped themselves. Indirectly treating them as inferiors and taking credit for the efforts of innumerable others, which is what really matters.

4. On the bigger offense. In giving credit and praising Autocrats, they trivialize the violations in human rights that the autocrats inflict on their subjects. In their compromise they turn their backs on the poor whose rights are being violated (they turn a blind eye, or even praise the oppressor). For what?? So they can implement their petty technocratic solutions that have never lifted anyone out of poverty. Instead of standing strong on the side of the kind of the thing that has really mattered and has improved the conditions of people throughout history; defending, advocating and fighting for the principles that; all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are life, liberty and the pursuit of happiness.

They are missing the big picture. People seem to have an incredibly hard time getting out of the technocratic mentality.

Oppose/Condemn violations of rights (unambiguously with conviction), always and everywhere for everyone, even the extremely poor. Give the poor a voice. Do this first and foremost!!THEN worry about what technocratic solution to implement in a given case to try to help improve the lives of others less fortunate.

Jun 19 2014 at 7:15pm

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mark e
Jun 20 2014 at 8:55am

So I think it’s impossible to remove the “Social Do-Gooder” externality from this issue, and explains, IMO at least, a good deal about Messrs. Gates and Sachs (and company, of course) efforts.

Mr. Easterly’s insightful point about how for 80 years it had been known how to effectively combat malaria and, yet, this solution keeps being “discovered”, is a very clear symptom of the problem, which I will state thusly;

It is almost inescapable to conclude that the social intentionalities of Gates and Sachs, and their well-intentioned-but-misguided minions, are as, if not more, important drivers of their efforts then the results.

There…I said it.

Put in another way, it seems rather obvious these technocrats are far more interested in being perceived as social do-gooders for public relation and social media reasons then as being seen a solvers of poverty problems. The social cache they receive by “working with the starving millions” among their peers and at cocktail parties and Facebook “likes” is what really matters here.

And please, I’m not saying giving millions to starving and disease ridden children and families is a bad thing…but perhaps, that is one of the deeper problems here.

Harsh? Somewhat…and probably stating this rather obvious opinion isn’t the point. I’m not the only one who can read between the lines with this issue but you never know who is reading these forums.

Jun 20 2014 at 10:28am

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Jun 20 2014 at 12:43pm

“Jack Stone writes:
Dr. Easterly seems to imply that development professionals should organize poor people to challenge autocratic regimes for development programs to work. Since that may mean the elimination of some autocratic regimes, I don’t see how such an approach could be successful”

Jack Stone,

You misunderstand Easterly. For the moment forget about what ‘westerners’ can do to help poor people in other countries.

“Imagine there are no technocrats, I wonder if you can.”

Imagine that this is not your role. Now thinking as a citizen of the world. Imagine there are people living under oppressive governments, imagine people whose human rights are being constantly violated, they are treated without dignity and respect, they are treated like trash by their governments, like inferiors. The government does as they please with them.They have not rights. Their rights are not protected. They have no voice. Now these people are just like you and me, ordinary people with families trying to live their lives.

Now imagine another person that happens to be rich, and happens to live in country where they’ve inherited the institutions and traditions that have allowed for their human rights to be realized, life, liberty, and property are respected, respected to the outmost. In this world even a slight violation of these rights creates uproar, outrage. Officials are held accountable, they try to cater to the people.

Why is this outrage not there when more egregious violations of rights, more violence is inflicted on poor people? This is the double standard that Easterly talks about.

We defend our freedoms and rights like crazy, NOT the poor’s that are living in oppressive regimes.

Are the poor not as human and equal to you as people in rich countries? Are their lives not as valuable?

When it comes to rights, why do we not experience the same outrage as if it was done to a fellow American?

How do you think an Ethiopian that is treated with no dignity by his government, whose rights are trampled on whenever convenient feels about someone from the rich country praising their oppressor, their bully, their tyrant, for supposed economic growth?

This book was not about policy recommendations.
It was about the Technocratic Development community dropping the double standard. It’s about them treating people that happen to be in poor countries as TRUELY EQUALS, as deserving of the same respect and rights that the rich enjoy.

Why do we accept the possibility of a benevolent autocrat as a means to improving poor’s peoples lives, when we would never accept it for ourselves?

I have to say Lord Acton’s famous remark, “Power tends to corrupt, and absolute power corrupts absolutely,” has fallen on deaf ears. As the idea that Authoritarian rulers, as in the case of China, can successfully use their power of coercion to “steer” the country to successful long-term economic growth is alive and well.

Jun 20 2014 at 3:05pm

Easterly sure seems to be using red herring…
He claims it’s Freedom vs Autocracy..

when in reality he’s claiming rising out of poverty follows from democracy,and others claim that democracy will follow the people rising out of poverty.

Also, he seems to be throwing a lot of rocks at famous people. I heard very few suggestions on what he would do better than all the people he criticizes. The more cyncial side of me thinks that is his plan for selling books…

Greg G
Jun 20 2014 at 4:57pm

I can’t help wondering if everyone here who thinks that it’s bad for technocrats to help autocrats thinks it was bad that Hayek and Friedman helped Pinochet?

Jun 21 2014 at 5:36am

spot on

the rights of human beings who happen to be poor versus self appointed experts making a good living off taxpayers and supporting tyrants

Brian G
Jun 21 2014 at 9:45am


This paragraph…

This book was not about policy recommendations.
It was about the Technocratic Development community dropping the double standard. It’s about them treating people that happen to be in poor countries as TRUELY EQUALS, as deserving of the same respect and rights that the rich enjoy.

is a contradiction. You say the book is not about policy recommendations. You then go on to talk about specific policy recommendations, they just happen to be political recommendations rather than social recommendations.

Mr. Easterly’s criticisms of Bill Gates and Mr. Sachs seem more than a little off the mark. The entire goal of a technocrat is to seek solutions. In this case they are seeking to eliminate malaria and malnutrition. They are taking steps to help eliminate them.

Perhaps Mr. Gates speaks positively of various autocrats because he knows that failure to do so would end his access to the people he is trying to help? Criticizing these autocrats would have no material impact. Praising them has no material impact either. But at least they are still able to help the people.

It’s all well and good to mention that the malaria prevention steps that Bill Gates is implementing have been around for 80 years. But rather that criticizing Bill Gates for “taking credit for them”, which seems petty to me, perhaps we should ask ourselves “Why is malaria still around if the solution has been known for decades?” Perhaps because no one is actually DOING anything about it?

And that speaks to my fundamental issue with Mr. Easterly’s argument. He seems to be arguing that people should do nothing more than wag their fingers disapprovingly at autocratic regimes and hope that someday the people will rise up. This reasoning is self-serving as it absolves the person from having to do ANYTHING.

Lastly, I did not read the book so I can only go on what he said in this interview but he seems to focus almost exclusively on the most oppressive regimes that the Gates Foundation helps. What about its work in South Africa and Nigeria? Is that also bad?

Brian G
Jun 21 2014 at 10:20am

last post should have said Brian G not Brian H.

Anyway, when did Bill Gates start making a living off of taxpayers?

[nick in previous post corrected–Econlib Ed.]

Jun 21 2014 at 9:55pm

Hi Brian G,

This paragraph…

is a contradiction. You say the book is not about policy recommendations. You then go on to talk about specific policy recommendations, they just happen to be political recommendations rather than social recommendations.

One of the most common reactions to Easterly’s views is; “Well what would YOU have them do instead?” While his point can influence how technocrats go about trying to do good, it’s not in itself a specific plan of action or policy.

A specific technocratic policy would be something like:

1. Only give funds to governments whose budget is democratically determined.

2. If the implementation of a development program results in rights violations. The person administering the program will be immediately fired.

Just to give an example. Easterly doesn’t attempt to do this in the book.

His primary goal seems to be to raise awareness about the way technocrats have gone about trying to help the poor. And how in the process of “trying to help the poor,” the poor’s rights have pretty much been ignored, in some cases as a matter of policy, like in the case of the world bank where it is policy to only take into account economic considerations in programs not “political”.

Brian G
Jun 22 2014 at 12:48am

Hi mtipton,

The problem I have with that argument is that it assumes that the actions of the technocrats are somehow perpetuating the oppression.

Putting aside for a moment that Gates & Co. are not funding the actual governments, why is Easterly assuming that the Gates money is negatively impacting the growth of democracy in Ethiopia?

His logic is flawed to me. He seems to be saying that we should not help poor people in oppressive regimes because we are hurting their ability to become free. I find this premise faulty.

I find Larry Diamond’s arguments in Spirit of Democracy to be far more compelling. He claims that the single largest oppressive force in the world is high value commodity goods. In particular oil but really any country that can live purely off of proceeds of a state controlled commodity is capable of perpetually oppressing their people.

I don’t know the specifics of Ethiopia but I find that Mr. Easterly is cherry picking a little in order to gore has particular ox.

Jun 22 2014 at 2:37am

Brian G –

Do you believe thus far the way technocrats have approached trying to help poor people has in big part ignored the rights of poor people, yes or no? In their different schemes and programs how much are rights mentioned? Lets imagine Easterly is onto something, and a lot of these organizations haven’t taken the rights of the poor seriously. Do you think maybe this should change? Do you believe it is crucial for organizations to care about rights when they think about the problems of the poor?

Easterly believes so. A focus on rights could lead to a movement to end poverty, like it’s never been seen before.

Brian G
Jun 22 2014 at 9:03am


I guess you could say that they have been ignoring the rights of the poor but I don’t think that is a relevant point. Does Easterly criticize churches for focusing on providing charity support for the poor while ignoring their political rights?

And that is fundamentally the problem. Easterly is criticizing Gates & Co for not focusing on the political problems in Africa but that isn’t their objective.

Maybe the better objective to pursue is to fight for their political rights but that is also a far more difficult task that cannot be solved simply by applying technical solution.

Jun 23 2014 at 1:02pm

I’m with MTipton in this discussion, though I would go one step farther.

Despite the best and most honourable of intentions, the aid industry is trapped in a tragically flawed model of development.

To be more blunt than MTipton, the model is that outside experts deliver development to helpless victims.

Unfortunately, the model perpetuates a saviour/expert-victim narrative that downplays the agency of developing country nationals while justifying the position and status of development experts. Elites in developing countries also benefit from the expert model, speaking the language of development and positioning themselves as the necessary partners of the development experts, using the legitimacy the outside experts provide, and the money they obtain through developed country political processes, to solidify the elites’ grip on power. This symbiotic relationship between development elites and local elites is classic regulatory capture and, beyond commendable accomplishments in the reduction of sheer misery, has ill-served developing country nationals.

William Easterly’s hypothesis is that the core challenge of development is basic respect for human freedoms. Freedom to associate with whom you want, to trade with whom and how you want, to create and own property free of fear of expropriation, freedom to change providers of public services with as much ease as one could change providers of private services. In this model, all countries are on the development continuum, with the extent of their development defined by the extent of their freedoms.

While the saviour/expert-victim (SEV) model has served admirably to reduce the misery of life in the developing world, it has hit its limits and consistently fails to produce lasting economic improvement. In other words, it has worked as aid but not as development.

Lasting economic improvement requires a different development paradigm, one that de-emphasizes the role of experts, recognizes the agency of people themselves and focuses first on freedom.

Jun 23 2014 at 3:52pm

Brian G –

The goal of churches are of a different category than that of economic development experts, like Sachs and the world bank. You don’t see churches going around saying they have a plan or plans that are aiming at ending world poverty. If this is your goal? Should you pay more attention to the problems of the poor arising from a lack of individual rights?

Also churches don’t work with governments in trying to implement plans. One of the most egregious manifestations of the lack of concern with the rights of the poor is the example cited by Easterly regarding a World Bank forestation project in Mubende, Uganda (I believe), where farmers were kicked out of their homes at gun point, their homes and their crops burnt down, an eight year old died in the process since their parents weren’t allowed to go rescue him/her. So that this land could be used for purposes deemed more appropriate by the experts. Was ANYONE held responsible for what resulted in this horrible act? You can guess the answer. Absolutely nothing happened, total impunity for EVERYONE involved in any way.

Accountability? I guess this is not important, as long as your intentions are good.

This paragraph………
“Maybe the better objective to pursue is to fight for their political rights but that is also a far more difficult task that cannot be solved simply by applying technical solution”

What you say here is the heart of the problem/disagreement. You see political rights as too complicated a problem to solve with a technical solution. Isn’t poverty as complicated, if not more? How can you expect IT to be solved by simply applying technical solutions? Can you have long-term economic growth without the rights of poor people being respected? Can you really separate that neatly politics from economics? Easterly argues not only that you can’t separate one from the other, but that the main cause of the poor being in this situation is the fact that their rights are not respected. Basically you do a de-service to the poor by insisting that you CAN ignore this reality and still help them climb out of poverty.

Luke Mullen
Jun 24 2014 at 7:34pm

Two Questions:

  • to what extent does William Easterly believe he is/is-not aligned with Dambisa Moyo regarding African/ThirdWorld Development Economics. Where do they agree? Where do they disagree? Where have they not yet decided?
  • why hasn’t Dambisa Moyo been interviewed on EconTalk about her book “Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa”

Trivia: William Easterly wrote an unpublished review of Dambisa Moyo’s book “Dead Aid” for the “London Review of Books” here … http://williameasterly.files.wordpress.com/2011/07/moyoreviewforlrbjune2009neverpublished.pdf

Jun 27 2014 at 4:32am

The question approached on this podcast—how to best help the poor stop being poor—is really difficult. I think I can contribute meaningfully to the conversation, but not with any brevity. This answer requires nearly everything I know about economics.

First, William Easterly is very critical of Bill Gates. I have seen Bill Gates testify before congress on the topic of foreign aid, which included a conversation about bed nets. He did not seem arrogant when he spoke before congress though he was easily the smartest person in the room—in my judgment. If anything, he seemed amused. Anyway, he told the congressional panel on foreign aid that when the bed-nets were given away free, they were trashed by their new owners and unusable within a year. He then changed his tactic and instead sold them to the poor [at greatly reduced/subsidized prices] and discovered that they were better cared for and lasted longer. [If I remember right, they almost never needed replacing]. It seems to me he takes the approach of a venture capitalist when it comes to philanthropy. Not knowing what approaches will ultimately work, he supports a large number of approaches in small ways until he finds a winner then he throws a lot of effort into getting the word out about what works. How can anyone fault this approach, given all we know about the limits of knowledge?

On the other hand, the “Who-We-Are” page of http://www.Gatesfoundation.org has quotes like, “The problems we seek to solve are complex and demand the coordination and focus of many – leaders, government, communities, and individuals around the world.” The quotes author is not named, but perhaps Easterly does have a legitimate criticism regarding some of Bill Gates interventionist tactics.

Dr. Roberts, could you ask Bill or Melinda to speak on your program?

Second, the problem William Easterly is concerned about is poverty and the best means to reduce it. As others have pointed out in the comments, he mostly just say’s “increase freedom” throughout the podcast. Fortunately, he is correct….in part.

The Free-Market is the greatest tool for wealth creation—and therefore the greatest tool for poverty elimination—ever discovered. But it is mis-named. It is more accurate to call it the Free-Competitive-Informed-Just Market, since all of those environmental variables are causally related to higher standard-of-living for the market’s participants.

So when Easterly says to give the poor more freedom to make them less poor, he is [partly] correct. When he says to give them more Justice—which he calls “rights”—he is [partly] correct. He did not say—but should have—that giving more competition and information to the poor will—in the long run—make them less poor too. And for the maximum poverty-decreasing benefit, give them all four!

But therein is the crux of the problem. How do you GIVE someone freedom? How do you GIVE someone competition? How do you GIVE information, and what kind do you give, and in what format, on what topic, at what time, etc. And how do you GIVE someone Justice? AND if we assume freedom, competition, information, and Justice can be given away, how can we hope to give to others what we in many ways also lack?

Third, I think the insight Easterly is groping for is that the variables necessary for true wealth creation cannot be given…they must be earned. And that is why the poor must SavethemSelves.

How do we get Justice, Freedom, Information, and Competition to the poor so they can climb out of poverty? Easy, we sell it to them. Why must we sell it? Why can’t we give it away for free?

There are two reasons.
1) Because the true cost of an item is its “opportunity cost”—the worth of the next best alternative which was forgone in order to obtain the desired item. An item obtained for free requires nothing to be forgone so it has no opportunity cost outside of whatever time or effort it took to obtain and use. Thus the free bed-nets Bill Gates gave away were trashed because, to their new owners, they literally had almost zero value. If we want the poor to assign value to the factors that will lead them to greater wealth then we must offer it to them for a price, which also means we must offer it to them through a market.
2) Because we know that the benefits of markets only accrue to the market’s participants. So if we want the poor to get wealthy, we have to get them to participate in markets. And that means trade. We can’t hope to abolish poverty by engaging the poor outside of markets. It is the markets—not our gifts—that will, ultimately, make them productive and wealthy.

Fourth, so we want to increase competition around the markets poor people use. How do we do that? Simple, we enter their markets and offer similar services to others already in those markets, thus increasing competition on the supply side. Or, as will often be the case for the truly poor, we will have to start the markets from scratch and allow others to compete with us within them. Simultaneously, we must buy goods and services from the poor through these markets, thus increasing competition for their goods and services on the demand side.

And we also want to offer information to the poor through markets. How do we do that? Simple… We research what the poor want to know, find answers, and offer those answers to them at a lower cost than they would get if they did the work themselves.

And finally, we want to offer the poor Justice through a market. What price can they possibly afford? This is the easiest to answer because it is the same price we paid when we were poor and it is the same price we still pay to remain wealthy–Citizenship. We allow them to join with us in a common commitment not to harm other citizens AND a common commitment to aid and defend other citizens who are being harmed. That is a trade. That has value. And, in making those two commitments and becoming Citizens, the poor have laid the foundation of both Justice and Freedom. [Justice is the set of negative precepts that collectively expand the “do no harm” principle and it also contains an expectation of fairness in accounting whenever harm does occur. Freedom is the ability to make any choices and take any actions except those that violate the “do no harm” principle. Justice, therefore, is a limit on freedom. Limits on freedom other than Justice diminish both. Both are required in ample quantities for markets to work even tolerably well. Freedom and Justice are cemented for the individual and the society through the two part Citizenship-agreement. The same Citizenship-agreement from which all legitimate laws are later derived.]

In summary, ending poverty requires market participation. Participation in a market requires trade. Gifts do not count as trade and thus do not reduce poverty in the long run. The most effective trades, and thus the trades most likely to reduce poverty, occur in a Free-Just-Competitive-Informed market. The cornerstone of healthy markets and wealthy societies is the Citizenship-agreement.

Diana Weatherby
Jul 3 2014 at 3:26pm

There are some striking similarities between the technocrats’ treatment of students and treatment of the poor.

1) The top down approach of Common Core and its predecessors has great kick back for good reason. A general body of knowledge will qualify you to do nothing special. It is the individual gifting, talents and even corresponding disabilities of a student that will allow the student to know which path will make him or her the most successful. It is the same for the poor who have their own unique cultures, societal gifts and problems, and especially governmental problems and individual gifts and talents that make lasting change impossible from the top down from lack of knowledge.

2) The idea that technocrats can fix the problems of a poor society is on par with the idea that we can give a child an education. A child must seek his own education. It cannot be given to him. A teacher will be greatly used by those who seek their own education but the teacher can only affect an uneager student in a minimal way if at all. At one time in history a student was both blamed and given credit for the education he received. The parent did not blame the teacher but rather whipped their child. I like that we have more understanding of children’s differences and don’t want to go back to whipping but just shifting all blame to the educational system will make things worse. The child must be given responsibility for his education and the credit of succeeding in an endeavor. It seems that Easterly is implying this somewhat for those who are in these developing countries. That really they need the freedom to pursue their own prosperity rather than just the stuff of prosperity even though the stuff of prosperity is certainly a good thing to have.

3) Those two points lead to the third point that it is also a matter of knowing what you have to offer the world and that you have something to offer the world and that you have worth. Sometimes I think the best teachers are simply the most inspiring ones. Whether you are an inner city youth or a poor rural farmer you have to have some hope that you can make a difference or you will simply be resigned to your “fate”. I firmly believe people will have to believe change possible before they will even attempt it. There is a cost to change also. If you are simply trying to survive sometimes that cost is simply too much.

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0:33Intro. [Recording date: May 19, 2014.] Russ: What do you mean by the tyranny of experts? Guest: It's an unintentional tyranny that results when experts think that poverty has a purely technical solution, and they can ignore whether the rights of the poor are respected or not. So, in practice they accept the status quo in which the rights of the poor are not respected. And what the experts wind up doing is sort of being in charge, and then in unintentional collusion with the autocrats that are the status quo in the poor countries that they are operating. The experts and the autocrats that are running development from the top down, and that is neither morally desirable, nor does it work. Russ: Now, you talk about the rights of the poor not being respected by experts. Isn't it more than that? Isn't it the behavior of the poor, sometimes? Just respect generally, that's missing? Guest: Yeah, there is a more fundamental paternalism and condescension towards the poor, this inability to believe that the poor, that poor people are really capable of developing themselves. Development is thought of as something that we, the experts, have to do to and for them, as we really don't believe they can do it themselves. This kind of double standard in that we, when we think of our own history of how we developed, we don't think about it that way. We think we developed ourselves. We think we, as free people, were able to problem-solve [?] ourselves, or motivate other problem-solvers, political and economic, to solve our needs. But we don't think about poverty and development in poor countries that way. We think of it as this eternal [?] enterprise that we the experts are doing for them. Russ: Isn't the risk of that approach, which I happen to share, as listeners know, that it gets rid of our moral responsibility, anything we might do to actually help: we just say, well, they have to develop themselves, it's up to them; and therefore we can leave them alone. But that isn't your conclusion, is it? Guest: No, not at all. And I think the fear of that conclusion has kind of distorted the whole development debate, puts us [?] in the direction of the overemphasis of experts and technical solutions. And [?] we rich people can do. It's like the fear of our indifference has driven us way too far in the other direction, in which we have this frankly sort of self-centered arrogant, conceited view of ourselves and being the key to other people's development. And that's just as bad and evil as the opposite extreme of the evil of indifference and doing nothing. Russ: Now, your book has quite a bit of history of the idea of development. You go back further than I was aware of in that history. One of the issues you talk about is the intellectual differences between Gunnar Myrdal and Hayek. Many of our listeners may not know Gunnar Myrdal. Talk about who he was and the debate between Myrdal and Hayek that never happened. Guest: Yeah, so Myrdal was one of the early development economists. His writings started appearing in the 1950s as the field of development economics was emerging. And his sort of natural pairing with Friedrich Hayek because he and Hayek got the Nobel Prize in the same year, in 1974. And so there is this kind of juxtaposition of, here are these two Nobel Laureates who had actually wound up writing about pretty much the same issues, about the big picture issues of how societies do or do not successfully develop. But they had never engaged with each other, because there was this sort of strange thing that had happened, that Myrdal was very much a part of, that development economics sort of seceded from the rest of the economics profession, and had this kind of new view of economics. So it was very planning oriented, very kind of top down, nation-centric idea of how development happens, which is totally alien to the way development had been happening up to them, at that moment in the 1950s. But those were the ideas that were embraced by this sort of unanimous body of development economists, who only achieved unanimity by declaring anyone who didn't agree with them not to be a development economist. So, Myrdal was kind of a founding member of this large group, and they became kind of the only voices in the room on development forever after. And Hayek was not considered at all a development economist. His ideas were not considered at all relevant to development. Of course, Hayek had a brilliant exposition of how free societies develop. But that was simply considered not relevant to poor societies by the development economists. Russ: Why do you think that was? Besides the fact that everybody likes to keep their club. Guest: Yeah. I think it has something to do with a lot of condescension and paternalism towards poor people that we've already talked about, which is easier to understand if, like you said the book goes back much further than usual in tracing the ideas of what we could call kind of technocratic development, development done by experts from the top down. And that goes all the way back into pre-revolutionary China in the 1920s and 1930s when the Rockefeller Foundation was starting to think about promoting development in China. And then it went into British colonial Africa and was really formulated to a degree of sophistication very similar to what exists today, already in the late 1930s in British colonial Africa. With even some of the same technical solutions, talked about them as they are talked about now. A random example would be a British colonial reported in 1938 said a way to prevent malaria is to spray a chemical called pyrethrum on the walls of the houses. They killed some mosquitoes. A U.N. report 70 years later, around 2005, said, the way to kill off malaria is to spray pyrethrum on the walls of the houses. And so, this emergence of technocratic development had already happened during colonial times. And I think that's kind of an important clue because it kind of shows that technocratic development when nobody could even conceive of poor people having equal rights to rich white people. And could not conceive of poor people being able to help themselves. This sort of colonialist mentality, and overtly racist mentality, was when the formative years of technocratic development were. I don't think that automatically discredits any technocratic development idea; that's not fair. But it does give some insight in the long history of sort of paternalism and the way we think about development. And a kind of double standard in which we can't conceive of what happened in rich countries and their successful development as being applicable to the rest of the world and how they development.
9:05Russ: I just want to put in a plug for Adam Smith, while you are on this subject. Because when you read The Wealth of Nations or The Theory of Moral Sentiments one of the things you are struck by is the dog that doesn't bark--it's that there's very, very little condescension toward poor people or the Irish, say, which a lot of elites looked down on at the time. He gives everybody the respect to make their own decisions with the information that they have available to them. It's easy to forget how radical that was in 1759 or 1776. Guest: Yeah. He was very much the progressive revolutionary at that point. And I think economists have carried on that role, the liberal economists that followed Smith have carried on that role for many years. John Stuart Mill is another one advocating very radical ideas about personal liberty, the freedom to do whatever you want as long as you don't harm anyone else. And when I was tracing the history of technocratic development in China and Africa, as I just talked about, alongside them were the heirs to Adam Smith and John Stuart Mill, who were for very liberal development ideas, a very liberal approach to development that did stress the rights of the individual and the ability of the individual to be very entrepreneurial and problem solving. And there's this long list of forgotten economists that I will join someday soon, forgotten liberal development economists. Russ: It's a very honorable club even though it's small and not noticed so much. Guest: There was a guy named John B. Condliffe, forgotten, kind of arguing the case for liberal development in pre-revolutionary China opposed by the Rockefeller Foundation and the U.S. State Department who wanted to support the dictator Chiang Kai-Shek, and a very top down, planned approach to development. And then in colonial Africa there was a South African economist named Herbert Frankel who had argued all his life for the political and economic rights of Africans, and he was opposed by the whole development establishment, in Africa. And there's several more. There was even a student of Hayek who was a Chinese economist who had studied at LSE (London School of Economics) under Hayek who had argued very much for the liberal view of development in China and during the war between kind of liberal and authoritarian development. It was conclusively won by authoritarian development in China, even before the Communists came along. And his name was Yuan-Li Wu. He was completely forgotten, completely erased from history. There were all these voices, all the attempts, to offer this kind of free, liberal alternative as kind of the great battle of ideologies of the 20th century, that this was offered to the rest of the world, to what was called the Third World. But tragically the voices from the West who were ever advocating the authoritarian alternative really drowned out the liberal economists. Russ: Well, I appreciate your bringing their names back up. Maybe someone will be kind enough to do that for you in 70 or 100 years. Or even me. Guest: Yes.
12:33Russ: Now, you suggest that collectivist ideology can affect values and have a persistent effect of over time and have an affect on growth, and I'm a little bit skeptical of that. I'd like to think it's true but I wonder how you might possibly know. So, make your case for that argument. Guest: Well, I'm just drawing on a lot of the recent academic literature which is kind of exploding literature on value and culture and economic looks at very, very long run trends and data. And the basic idea that emerges from that literature that's relevant to this discussion is there's this kind of vicious circle between a history of autocracy and collectivist values. And the collectivist values are those in which you sort of make a big distinction between insiders and outsiders; that you see nothing wrong at all with doing horrible things to outsiders but you will behave well with regard to your own kin or ethnic group. And that's, so that it's a complete lack of trust and respect for outsiders and strangers; whereas the individualist values, you have much greater trust and respect for strangers, which then opens the door to kind of equal respect for every individual to do whatever they want. Which is kind of the basis of individualist of real society. So, the vicious cycle happens because if you are already in a collectivist society--and again, another big aspect of this is that you in the collectivist values you conform and you punish any dissenters who deviate in their norms or behavior, in either thinking or behavior from the norms. And that's the kind of behavior that parents will want to teach to their children in an authoritarian society where there is a [?] autocrat who will put any dissidents in jail, where the ethnic and clan elders will be in collusion with the autocrats to punish dissent from their own hierarchical rule, and the only value that everyone stresses is just obedience to the hierarchy of sort of father/ethnic group/dictator, at the top. And that's the kind of behavior that parents teach to their children because if children don't follow that behavior they are going to have a horrible life, living in jail or socially ostracized or having to flee the country or whatever. So that's why autocracy and collectivist values tend to feed on each other. Russ: Does that persist over time? Guest: Yeah, the evidence is it persists for a very long time. Some of the European culture researchers have shown this by comparing different parts of Europe with each other. One of the most famous is sort of North versus Southern Italy. Southern Italy had centuries of autocracy. Northern Italy was where sort of free, some limited measure of political freedom emerged among the earliest of any places in Europe, in the city states of Northern Italy. And they are still correlated today with values that you can measure, like how much you trust and respect strangers. Russ: I wonder if causation clearly runs in that direction, though. Guest: Well, I think the point is that it does run in both directions. Again, because there's either this vicious circle in which a history of autocracy perpetuates collectivist values, which then make more possible, you are more likely to have an authoritarian system if you have collectivist values; and few can get out of that vicious circle. And you have a virtuous circle that happened in Northern Italy and then in the Netherlands and then in the United Kingdom and in the United States, where you get sort of trust and respect and tolerance for others making possible a degree of individual freedom in which individuals can do what they want, and that forms a basis for a free society with individual rights.
17:12Russ: You talk a lot about some very ugly examples from the early and mid-20th century where aid advocates had, as you mentioned earlier, some pretty ugly attitudes toward the people they were allegedly trying to help. There are some classic, what we call here 'bootlegger and baptist' examples, where a lot of times what looked like helpful aid was really pushing a different agenda, say of foreign policy or goals. But let's talk about today's world, where the top down experts are advocating various things. And I want to talk about in particular somebody like Bill Gates whose approach to development is very data-oriented, wants to have goals. And you are not a big fan of that. So, why not? Guest: Yeah. Well, Bill Gates is kind of the classic technocrat example. It seems like he can only think of poverty in terms of really specific technical problems that need to be solved by really specific technical fixes. Like malaria is indoor[?] spraying plus bed nets plus malaria medications if you do get malaria. Russ: Is that wrong? That seems like--those all seem like good things. Guest: They are good things. And this is the technical[?] solution of malaria. That's correct. So it's not--the point is not challenging that these are the technical solutions. It's taking a deeper view of, asking questions like, if these technical fixes are so easy, why didn't they happen already? Why are--the technical knowledge has been there for decades. I gave you the example of spraying the walls with pyrethrum having been there for 70 years. And that's true of many of these technical fixes. And so you have to ask: Why didn't the technical solutions every stick when they were tried? And that makes you worry that they won't stick again today, if you put only your focus on technical fixes and don't worry about why, what is the broader system in which they are or not sticking permanently. And I think the fundamental reason is really Econ 101 and Political Science 101, that you need motivated actors on the ground who do have the motivation to keep supplying the technical fixes. The absence of technical fixes is a symptom and not the cause of poverty. It's a symptom of poverty. And the fundamental cause is the lack of rights of poor people. Russ: Let's talk about malaria for a minute. Jeff Sachs was on this program a little while back, and he actually criticized you, personally, for opposing, so he claimed, the bed net initiatives in Africa to fight malaria, quoting one of your earlier books where you expressed some skepticism, as you are expressing it now. So, I want to make sure you have a chance to defend yourself. In particular, won't the people on the ground--don't they want bed nets? Don't they want their houses sprayed? Why is it--where is the Econ 101 in the bed net problem in terms of incentives or knowledge that makes a top down solution problematic? Guest: Right. So, first of all, I think people like Jeff Sachs or Bill Gates, they like to characterize me or others that are skeptics of their ideas as being, like, openly in favor of malaria. I want to make that-- Russ: That's correct. And we'll talk about that in a minute. But yeah, that is the implication. You want to go on the record you're against it? Guest: I want to forcefully go on the record that I'm opposed to malaria. I'm opposed to people dying from malaria. I have just as much empathy and caring about this tragedy as they do. It's more about wanting to really find out what works and what works is not limited to what works for 5 minutes, but what will work permanently to fix the problem. And, so you are asking: What is the Econ 101? Let's be very clear about this. The solution to malaria involves either a private good or a public good. And probably some combination of both. Econ 101 tells us very well how to motivate suppliers of private goods. The market does that. Russ: Profit. Guest: And that's, in the long run, where we should profit. Where there are private good solutions to poor people's problems, poor people are willing and able to pay for these goods. And if we think that there are some poor people that are so poor that they are being excluded, then probably the best solution would be to subsidize their incomes rather than to directly have the aid experts take over the provision of the private goods. And then I'd certainly agree that it's not all about markets. There is a role for public goods; there is a role for the state. And I think this is where the most fundamental disagreement comes with the technocrats--is, how do you properly motivate the state to supply the public goods? Suppose we did decide there are major externalities to malaria eradication campaigns, that it's mainly a public good. Let's just take that as a possible hypothesis. Even then--and it's one I'd be very willing to consider. But we still have a problem of motivating the state to provide this public good of a malaria eradication campaign. How do states get motivated? They get motivated when poor people have political rights to hold them accountable. To punish them for failure, reward them for success. We do that in our own societies--we gave a horrible amount of grief to one poor New Jersey governor who just created a traffic jam on a bridge. Now that's a way in which we manifest political rights and action, that we keep politicians from doing bad things to us and we try to have them divert their energies to doing good things to us by supplying public goods. Democracy, the freedom of speech, freedom to protest, freedom to dissent, freedom of thought--all of these are really vital ingredients in making sure that if it is a public good that is the answer, that a state will be motivated to not do bad things, and instead do very good things to make these technical fixes stick. It's like--Amartya Sen said very famously a while ago that 'democracies don't have famines'. And that was one of the big things for which he got the Nobel Prize. And that's been debated up and down, but I think it's fundamentally correct--that there's something about democracy and political--we'll talk more about what democracy means. I'm talking about political rights in general. The ability to protest and freedom of speech that create a sort of early warning system, which really motivates states to do the technical fixes that prevent famine or to prevent malaria. And those incentives are really, really absent in authoritarian regimes that rule through repression and terror and coercion. They have no motivation to do good things for the public and make the technical fixes for malaria or famine stick. Because their fundamental incentive is simply to just stay in power by more coercion and repression. That's the fundamental point here really at stake, that really the technocrats do not get. States are not benevolent on their own. They are only benevolent when we the citizens have the political rights to force them to be benevolent. That is the key point. Russ: But to stick with bed nets for a second--are you opposed to the idea of a centralized government, democratic or autocratic, giving away bed nets as a way to fight malaria? Guest: Um, yeah, I'm very willing to consider that as part of the menu that would fight malaria. You could argue that malaria does have, because it's contagious, and then in an indirect sense--the mosquitoes are the vector that spread malaria from some people to other people. So any time you have an element of contagion there is an externality that calls for some public intervention. So maybe mass distribution of bed nets could be justified with, free distribution of bed nets could be justified to deal with that externality. But I think that Sachs and Gates really underestimate the way the market can very much contribute to the solution. And actually has already in a major way. Contributed to major health improvements, major improvements in other areas. Take antibiotics as examples. These are purely, these are goods that are usually distributed, very often distributed through markets in poor countries and that are bought by poor people, pretty much unregulated markets. And have made major contributions to the progress on child mortality that we've witnessed, now, thankfully, in the past few decades.
27:31Russ: You talk about a reduction in child mortality in Ethiopia as being an example of some of the challenges of using data-driven solutions. Again, it's a little challenging to come out against 'data-driven solutions'--what's the alternative? Gut instinct? Intuition? Your mood this morning? So it's a little bit bold to suggest the data-driven stuff is not a good idea. So, what's wrong with celebrating the fallen child mortality in Ethiopia, which seems on the surface to be quite sizable? Guest: I'm not criticizing the reliance on data to get some sense of what is working and what is not. What I'm criticizing is the use of very short-run improvements to render verdicts in what's actually a very sloppy, non-empirical way, in which any sort of improvement in child mortality observed by Bill Gates, he attributes right away to Meles Zanawi, the dictator of Ethiopia who was in power at the time. Ignoring a lot of direct evidence that Meles Zanawi was not a benevolent dictator. We can talk about that more later. But part of it is, it's ironic that he, in his Wall Street Journal article that came out in 2012, he was kind of celebrating the precision of medicine men toward data-driven solutions as this magical way in which the solution could be engineered and technocratically fine-tuned to really make it work. Because the national child mortality data that he was talking about are just notoriously awful and unreliable. You can show that by looking just at alternative estimates of the same number, child mortality in Ethiopia, which you can anything from a kind of major increase on trying to meet the Millennium Development Goals of a huge reduction in child mortality--some numbers could actually even imply an increase in child mortality in Ethiopia. That's how imprecise the alternative sources of numbers are. Now, the solution of that is not to give up relying on data altogether. There's a much better solution which is simply to rely much more on long run trends, and long-run evidence, and not rely on short-run evidence. Because the short run evidence are just way too noisy to know what's really going on or what's really working or not. And that's just directly contradictory to Bill Gates's fantasy that you could year-by-year know what's really going on to fine-tune your engineering solution from the top down. Russ: Well, when you are steering the car, you do want to know the GPS (Global Positioning System) to be very accurate. You want to get a measurement every second. So, the more often, the better. Guest: Well, the more often, the more often you are going to be very badly wrong. Because the short run data are just too unreliable. What those data are useful for are really to give you much more of a long run verdict. Which system is better: a system based on individual rights or a system based on technocrats and dictators? And there I think the long run evidence is very conclusive. The gigantic reductions in child mortality have come mainly in free societies, and not in autocratic societies. It came much earlier and much bigger in free societies than they came in autocratic societies. That's what I think the data is telling you. And so the data is really weighing in on this big debate that Bill Gates is completely ignoring and avoiding, about: Is the autocrat of Ethiopia actually a big part of the solution to development in Ethiopia? Or is he actually a part of the problem? I think the big long-run picture says he's actually part of the problem, not the solution. Russ: Well, we had an episode with Morten Jerven on the unreliability of data, often--in the long run and in the short run. So, one of my concerns is that in many of these poor countries, data collection--it's not so great in the United States sometimes. So in a wealthy country that has lots of resources-- Guest: Yeah. But it's not just the long run and the short run. You can't equate the two. The great saving value of the long run is that no matter how big the measurement error is--and it is very big--but if it's just unbiased and just sort of fluctuating up and down even by a large amount, over the long run that tends to average out. And so you do tend to get a more accurate measure even with measurement error when you go to longer run data. That's one thing this book really insists on repeatedly, is that to really get the right evidence for what's working in development and what's not. You really need to go very long run and not over-react to kind of short run episodes of improvements in either development or child mortality or whatever. Those are just really not reliable. But the long run is reliable.
32:58Russ: Let's talk about an issue that we discussed the last time you were on EconTalk, which we were kind of talking about through much of this conversation but I want to talk about it explicitly with respect to China. A lot of people, I think, misinterpret the data. By people, I mean everyday people. They say, 'Well, look, China is the greatest success story of the last 25 years in the world; China is doing great; China is an autocracy, it's not a democracy. So autocracy is good for growth. You are claiming it's not.' So, meet that head on and talk about it. Guest: Yeah. One reason China could have the potential for such rapid growth was it was such a disaster at the starting point. And so, when you start from a disastrously low point, which itself had the long run evidence other places would suggest that China had a very low starting point, has a lot to do with it. It's a long history of unbroken authoritarian rule and violence and warlords and foreign occupation. And I think a much better explanation for the rapid Chinese growth is simply that you started from this kind of brutal, totalitarian, authoritarian starting point of, you had the psycho named Mao in power who was just engaged in savage repression of citizens' everyday liberties during the Cultural Revolution and the Great Leap Forward, which created the Great Famine. And from that low point, you have actually a positive change in both economic and political freedom. Even political freedom, even though it's still terribly absent today in China, it is better than it was under Mao. There is scope for Chinese citizens to make their own individual choices. Personal freedoms are much greater than they were under Mao. And that's very obvious, economic freedom is far greater than it was under Mao. And I think that change in freedom, and, or put it negatively, the decrease in autocracy, is what explains China's rapid growth. It's really sort of a mismatch to attribute what is a change--the rapid growth rate of China--to a level thing, which is autocracy. The correct match would be the change in autocracy and the change in development. That is a correlation that supports the freedom side, because you have a positive change in freedom and you have a very positive change in development when the [?] growth. Russ: But they still have a very, very top down society. They have leaders who are building cities everywhere, building infrastructure everywhere. And you get folks like Thomas Friedman, who you mention in the book, who bemoan the unpleasant partisanship and messy gridlock of democracy in our constitutional republic. If you could just have, cut through those annoying constraints we could fix stuff like they do. What's wrong with that argument? Guest: This is kind of an awkward moment to be making a strong case for a free society, when our Congress and President and everyone seems so dysfunctional. But I think we're putting too much attention in the wrong place somewhat, what constitutes free society. It's not just about the majority vote elections that creates elected officials who pass and enforce laws. That's not the only thing going on in a free society. I think the main thing going on and the--what's important is both what is going on and what's not going on. So, what is going on is that we have this sort of free society in which any problem at the local level generate a lot of protest. So, like we talked about Chris Christie and the bridge as an example. And a lot of pressure to fix that problem, in the political system. And our political system is very decentralized and allows that freedom of speech and freedom of protest to fix problems in a decentralized way. And that's how a lot of our infrastructure actually winds up working. So that, our infrastructure is a lot better than that in most authoritarian societies in the world, that don't have this kind of pressure to fix the infrastructure. Even though our infrastructure is far from perfect. It's still a lot better than that, than the average of all the authoritarian societies in the world. And of course, that's the right comparison that we should be doing, is compare all authoritarian societies to all free societies. That would be how you decide the argument. Not kind of pick out one favorite anecdote in China of how the Chinese autocrats might have gotten one good project true. And then the other important thing is what's not happening in a free society. You are not putting people in jail; you are not shooting people down in the streets. Whereas that is what is happening in China. That is both a terrible moral wrong in itself, that you are putting, like the famous artist Ai Weiwei is being terribly hounded and persecuted. Or the blind lawyer who is advocating for protecting women from being forced to have third-term abortions, who was eventually exiled and driven out of China, Chen Guangcheng. Final on[?] saying and tormenting people like that is what is happening in China. And that's what is morally wrong in itself; and it's also preventing a sort of self-correcting decentralized problem solving that happens in a free society. And that's a secret of why we in the United States today are still many, many times the per capita income of China as a whole. Which is really what we should be focusing on in the big picture. Not just China's recent rapid growth, creator[?] one or two infrastructure projects in China. And for China to continue to progress and reach the same level of development that we are, I really think the evidence is they will have to [?] politically that relies [?] and allow political rights [?].
39:50Russ: Well, let me speak in defense of cherry picking. My tongue somewhat in my cheek. It's an interesting claim I sometimes hear. If we think about education. The United States has a weird mix of top down elementary and high schools, side by side with private schools. Same thing going on at the university level. A lot of countries, it's all top down, all the way down. And a lot of times when I speak in defense of decentralization or getting the government out of it, education people will respond and say, 'But what about Finland? Finland, they have a great public school system.' And I think the implication there--and actually, in international tests, the last round they didn't do so well; they got passed by a bunch of Asian countries. But let's just take this example as sort of emblematic of a general type of argument. I think the argument is: Sure, top down doesn't work very well lots of times. But look at Finland; let's just take what they did, which did work. Okay! Sometimes it doesn't work. But let's cherry-pick their good results and we'll just use their system. Because we see that it works. What's wrong with that argument? Guest: Right. Well-- They, um-- Russ: I thought I did a pretty good job there, actually. Guest: Yeah, you did. That was a great [?]. So, this is not how social science should be done. Or not how any kind of empirical research should be done. You don't just cherry-pick one example of success that fits your case and that clinches the argument. We look at all the examples of countries that are following the system that you are said to be in favor of, and compare them to all of those that have the opposite system. And that's the right comparison to do a systematic study of whether that system works or not. So, in the case of kind of the idea of the benevolent autocrat that China has been so influential in reinforcing, that all of China is so wonderful, there's such a benevolent autocracy--well, that's really cherry picking. Because you ought to look at all of the autocratic societies that have an equally large number of really big disasters. We have the Central African Republic that was overseen by a series of autocrats that has now completely collapsed and dissolved into chaotic ethnic violence and civil war. And it's been an economic disaster, going backwards to a really extreme level of poverty. When we talk about autocrats we are talking way too much about China and way too little about the Central African Republic. And that's a bias that [?], a kind of confirmation bias that we really want to believe and [?] about autocrats, we really want to believe that the autocrat on the scene is just going to take the advice that the tyranny of experts gives them. Takes our advice on how to develop their own societies. So that will so easily solve the problem of development, if we the experts can just come up with the right expert solutions. Russ: But I think it's more than that. I think--it seems to me--obviously your point that you need to look across all examples when you are trying to evaluate the general argument is true. But I'm trying to make a subtler argument. Which is: Let's admit the fact that autocracies don't work very well. Let's admit the fact that top down educational systems often fail. But let's just use the good ones. We've got evidence that Finland's works, so let's just take the features of that one. Of course most of them are awful. But trial and error--let's take advantage of that there have been a lot of experiments with bad top-down, and we'll take the good ones and adapt them to our system. Guest: Yeah. Well, the delusion to think that we understand well enough what makes the more successful top down examples work that can be applied to, around the world. And it's a very similar delusion to what happens with China. Which the World Bank President, Dr. Jim Kim, himself kind of fell for. On his visit to China he said, 'Oh, this is so wonderful. We should spread the model of China's success around the world.' So, of course, what we are leaving out here is that we really don't understand all that well what's making the so-called more successful autocratic examples different from the failed autocratic examples. We understand much better the big picture--simply that free societies have a much better outcome than autocratic societies. That's really the big, dominant thing that should be driving most of our opinion on the subject. What's going on as far as within autocracy that some of them seem to be doing better than others--I think there's a good argument that it may have very little to do with the personality or the individual autocrats themselves. Which is the usual argument--you just have good and bad autocrats. And several reasons to think that. One is that, just that poor countries in general are really prone to boom and bust economies that are much more volatile than rich countries. That's a very well-known, stylized fact, that poor countries are more volatile. That means that you get the worst growth rates in poor countries; and you get the best growth rates in poor countries. Some of them will have really great booms in which they are taking advantage of things like technological catching up. And others will have real disasters in which commodity prices are declining and sending into receivership the main export industry of the country. And so poor countries in general are just very volatile. And the poverty is the thing that's driving the volatility, that's explaining the so-called success and failure, the high variance of success and failure. And of course poverty is also associated with autocracy, because that's why they were poor in the first place, is because they had autocrats on the scene. And so autocrats will be on the scene while there very highly variable growth outcomes. But it's simply spurious to attribute the high growth outcomes to the so-called good autocrats who happen to be on the scene. And to put all blame on the so-called bad autocrats who happen to be on the scene when you get a poor country that's on the negative end of that variance, getting a big bust instead of a big boom. And I've actually confirmed this more systematically with my colleague at NYU (New York University). We've done a paper in which we tried to time, use the timing of the booms and busts to see whether they match the timing of leadership changes, to see whether we can kind of prove or disprove the idea of benevolent and malevolent, good and bad, autocrats. And we find very little evidence that it's the individual leaders that explain success and failure. It just seems to be that changes do not line up in timing to booms and busts, do not line up in the timing with the changes in leadership. It seems to be just that some autocrats just happen to be in power while there is a boom going on for other reasons. And then we are spuriously giving them credit, when they don't deserve it.
47:17Russ: So, one way to look at that summary is to--the way I would phrase it is: The world is a complicated place. Cause and effect are elusive. And that really pushes you, as you've done in this book, methodologically toward a very big picture; again, sort of the opposite of the Millennium Development goals, going tiny, micro-piece of the economy, seeing if I can just fix that. Because a lot of times there's luck; there are a lot of factors; you don't know whether the levers you are pushing and pulling and turning and adjusting are the ones that are actually making a difference. And it pushes you toward a much broader approach that is unfortunately prone to the other problem we have: which is that it's true you can't run effective regressions, I think, on minute, tiny parts of economic growth and failure. But when you go to the level you want to go to, generalize about autocracy and freedom, the other side will say: 'well, you've cherry-picked these examples; you've left out a lot of the history.' And you've said that, oh, freedom works better than autocracy. 'We don't really know that; there's too much going on. I'm more comfortable,' says the alternative view, 'with looking at these things that can actually measure statistically.' Guest: Yeah. Well. First of all let's not forget the role of having a theory about the way the world works. And then we're having alternative theories that we're testing against each other. And then deciding which theory does the weight of the evidence suggest. That's really how social science, or science in general, works. There's no such thing as theory-free empirics, where the data are able to speak and tell you what the truth is without having some kind of clarity about what you are trying to test by having two alternative theories that give two different predictions. If we have two big-picture theories of autocracy versus freedom, we have very good theories that we've built up over decades and centuries in economics of why free societies work. And I'm not saying that's enough to accept them. But it's enough to take them seriously and take them to see which the relative weight of the evidence is going to support. We understand the problem of incentives, the problem of knowledge, solves much more easily by a free society when you have decentralized entrepreneurs who have both local knowledge and strong motivation, that they'll be much more motivated to solve problems. We have the political economy version of that at both local and federal government officials will get motivated to get the right knowledge and be politically motivated to do good things when they get political rewards for problem solving, as opposed to autocrats who don't get political rewards for solving the problems of the majority of the population. So that's the theory of freedom. And then you test that against a large body of historical and modern evidence. And reality is, both science and the reality of our daily lives suggests we do have to make choices. It's not--we don't just say, oh, the evidence is not rigorous enough, we're going to believe in nothing. People are making choices between autocracy and freedom as their default view of how they think development happens, and they are often doing so in a very sloppy way based on a few anecdotes. I think if you systematically process most of the long run evidence and the modern experience, the evidence on the side of freedom is much, much stronger than the evidence on the side of autocracy. You just don't have an overwhelming number of autocracy been[?] successful examples in the long run of having attained a high level of development. You don't have a lot of examples of ever-escalating autocracy going together with ever-escalating higher development and education and health and so on. You have the opposite. You have a lot of free societies that have attained a high level of development. And their history was of an escalating degree of individual rights for a majority of the population and ever-expanding, larger circles of the population going together with better health, education, and development. Russ: So, as a social scientist, I certainly agree with you. And as an activist, I also agree with you. But it seems to me we have to be humble in the following way--and I know you are, so I want to give you a chance to say so. The implication of what you just said is, we should be advocating for more economic freedom and better economic policies on the part of the poor nations of the world, less autocracy. And yet, when we look at so-called Washington Consensus and various types of advice that international organizations have given poor countries, their suggestions to move toward more market-based solutions haven't always panned out successfully. So, one, how do you reconcile that with your story? And, two, what's to be done then? Guest: I think that's a big misconception. That if you do decide that freedom is the right approach--usually people are only deciding that economic freedom is the best approach, and they have a shameful neglect and disinterest in political freedom. Let's leave that aside for the moment. If you do decide that economic freedom is the best approach, what then does that imply that you do? And I think this is where political freedom does really become very relevant. The great thing about both kinds of freedom is that they are self-correcting systems that punish those who fail to solve problems and reward those who do solve problems. Problem with IMF (International Monetary Fund) and World Bank experts parachuting in saying 'here's what I think you should do to become a free market society that I think will benefit you,' is the experts themselves are not accountable. And they themselves do not have either the opportunity or the motivation to acquire enough local context-specific knowledge to make those solutions work. So, the fundamental problem of successful problem solving is always coming down to the motivation--that is, incentives and knowledge. And the problem with the tyranny of experts is that the experts have needed sufficient motivation not[?] being held accountable for their successes and failures, nor do they have enough local knowledge. And that applies just as much to those experts that are recommending freedom as to those who are recommending autocracy. So that's a sort of paradox that arises here: When you come to acknowledge the power of freedom to be the successful problem-solving system that will work to achieve development, that sharply reduces the role of the overall, guiding, planning expert with a lot of power. Experts within a free society have to be embedded within a system of accountability in either markets or politics, that they will be held accountable if they fail; they will be rewarded if they succeed. Which is not what's happening today in the world of development experts.
55:22Russ: So, I'm sympathetic to that view. It does allow the other side to say that they have not only good intentions, but they are trying. A lot of people respond to Jeffrey Sachs, and Gates, by saying, Okay, it may not work so well but at least they are trying. Whereas you and I, we're not even trying. We're just saying, oh, we don't know what could be done; we don't have the local knowledge, and so our best policy is to stand back. How do you defend yourself against that moral criticism? Guest: I think first of all that the trying that's going on by Sachs and Gates is part of the problem, not part of the solution, because of the ideas that they are creating about how development happens. They are creating an idea in which the way that development happens is having these better Western experts, foreign experts, at the center, at the heart of the development solution. The profoundly misguided view of how development happens. I think ideas are just as powerful or more powerful than these direct technical solutions, and helping development happen, that economists and others around the world who understand and are convinced of the ideals of freedom can play a really powerful role in education and advocacy and spreading those ideals and supporting those ideals around the world who are fighting for those ideals, for the ideals of freedom. In supporting Ai wei-wei, the dissident in China and his campaign for rights and democracy instead of his oppressor. Supporting the jailed dissident blogger, Eskinder Nega, in Ethiopia, who has been sentenced to 18 years in jail for nothing more than writing peaceful blogs advocating democracy. Supporting him instead of supporting his oppressor, which is what Bill Gates and Jeff Sachs are doing by working hand in hand with the authoritarian Ethiopian government, praising them for their successes. I think these ideas and these ideals are very powerful and people are willing to give their lives for these ideals. This is how powerful they are. So advocating these ideals is itself a huge positive contribution to development. And certainly the much more powerful and the opposite of what Bill Gates and Jeff Sachs are doing in putting themselves at the center, kind of arrogantly and condescendingly putting themselves at the center of the development problem of the solution to the development problem of the rest of the world. It's like, we really need a Copernican revolution in development. The Gates-Sachs view puts the Western experts at the center, the Western aid efforts at the center of development. And that's just a delusion. Those efforts are paltry; they are ineffective. And they are not how development happens. And they are condescending towards poor people, in thinking[?] that the main help, the main hope of poor people is these Western experts. The Copernican revolution would revolve around not 'us,' not 'we', but the 'them' that is implied by the we. And not even called the 'them': 'Them' deserve to be 'we', just as much as we do. And when we put 'we'--when we put all of us around the world at the center of development, that we mainly achieve development by advocating for our own political and economic rights with the support of others, friendly supporters around the rest of the world, then that's the correct view to [?] how development will actually happen. And that's more likely to make development happen, if we have that view spread and take flight and flourish around the world, and we support the brave people fighting for that view around the world. Russ: Well, if Jeff Sachs were here, I think he'd say, as he did on this program--he's a big friend of markets; he thinks markets are crucial to development; all he's doing is helping create some infrastructure and other things that are going to unleash the bottom-up solutions that are going to grow. Those are things like fighting malaria, building better roads, scientific knowledge, infrastructure such as schools, etc. He thinks of himself as a market-kind-of guy. Guest: Well, that's fine. There's lots of market kind-of guys in development. I'm not disputing that. The point is that what he's missing is that all these technical solutions that he's talking about--why are they going to be done? Why are they going to last? They are not going to be done and they are not going to last in an environment that depends on the unaccountable, unmotivated, unknowledgeable Western experts. They are going to be done and they are going to last when they are done by locally, home-grown politically accountable, economically accountable entrepreneurs and officials who have all the incentives and the knowledge to make them last. And that's what a free society does. And so what Jeff Sachs and Bill Gates and many others like Tony Villar[?] and Bill Clinton and Jim Kim at the World Bank and all the official aid agencies--what they are unintentionally doing is pedaling this fundamentally misguided view of how development happens, by putting themselves at the center of development. They censor themselves not to even talk about the issue of freedom for poor people and so thereby they miss the main solution to how development does happen, which is free people asserting their own political and economic rights. Just how all those technical and infrastructure do stick and do get done, in the long run. And we have that track record of free societies to show that; and we have the modern examples to show that. And that's where the weight of the evidence lies. And I think there's also a moral case, that these freedoms are good in and of themselves, to begin with.
1:01:53Russ: So let me close with a challenging question: Do you think the world would be a better place if tomorrow the World Bank and the IMF closed their doors and just said, 'we're on the wrong side here? For all our good intentions'--and I have many friends who work there; I know you do, too; they are great people; they mean well--'if we closed our doors' would the world be a better place? Guest: I would not--that's not where I would go first. Where I would go first is I'd say, look, you guys, you've really got the Copernican revolution the wrong way around. You are putting yourself at the center of the problem. You are censoring yourself to not be able to talk about the freedom of poor people, because you conceive that you can only do your job by praising the autocratic governments that you work with and giving them the credit for development. By doing all that you are creating a fundamentally misguided and disheartening view for poor people of how development happens, that it can only happen at their expense. And they are oppressed by their own rulers. And I think you guys can switch sides. You can switch. You can switch away from backing the authoritarian side to backing the free side. And I think you guys in the World Bank and other aid agencies are going to have to make that switch to survive. So, I would invite you to make that switch rather than calling for your abolition.