May 28, 2008

The End of an Era?

Development experts are out according to William Easterly in the Financial Times:
The report of the World Bank Growth Commission, led by Nobel laureate Michael Spence, was published last week. After two years of work by the commission of 21 world leaders and experts, an 11- member working group, 300 academic experts, 12 workshops, 13 consultations, and a budget of $4m, the experts’ answer to the question of how to attain high growth was roughly: we do not know, but trust experts to figure it out.

This conclusion is fleshed out with statements such as: “It is hard to know how the economy will respond to a policy, and the right answer in the present moment may not apply in the future.” Growth should be directed by markets, except when it should be directed by governments.

My students at New York University would have been happy to supply statements like these to the World Bank for a lot less than $4m.

Why should we care about the debacle of a World Bank report? Because this report represents the final collapse of the “development expert” paradigm that has governed the west’s approach to poor countries since the second world war. All this time, we have hoped a small group of elite thinkers can figure out how to raise the growth rate of a whole economy. If there was something for “development experts” to say about attaining high growth, this talented group would have said it.
And development crowdsourcing is in:
There are some general principles and they do not require experts. Another Nobel laureate gave the crucial insight a long time ago – the answer is freedom for multitudinous individuals to figure out their own answers. Friedrich Hayek said: “Liberty is essential to leave room for the unforeseeable and unpredictable; we want it because we have learned to expect from it the opportunity of realising many of our aims. It is because every individual knows so little and ... because we rarely know which of us knows best that we trust the independent and competitive efforts of many to induce the emergence of what we shall want when we see it.”

The evidence for this vision is not found in those baffling fluctuations of growth rates, it is in the levels of development attained in the long run. Confirming Hayek, systems that give more liberty to individuals – featuring both more economic and political freedoms – are associated with much less poverty. The evidence for this comes from both history (for example old, despotic, poor Europe compared with modern, free, rich Europe) and cross-country comparisons (for example South Korea compared with North Korea, former West Germany compared with East, New Zealand compared with Zimbabwe). This alternative paradigm has a much smaller role for experts, because experts cannot direct or impose freedom from the top down (or else it would not be freedom).

The end of the “development expert” paradigm does not mean the end of hope for development. Development is al ready gradually ending poverty (global poverty rates have fallen by more than half in the past three decades) – not be- cause of development experts such as those who wrote the World Bank Growth Commission report – but thanks to more freedom for more of the 6.7bn individual development experts alive today.
I've got some quibbles with Easterly, but talking to individuals who are unfamiliar with development work about its aims I've found that one of the most basic and useful definitions of development is "moving people from a life of many hardships and few choices to one of satisfied needs and many choices."  Moving from point A to point B is often a long and winding road, one down which I think you occasionally do need an "expert" to guide you along the particularly dark spots, but its hard to argue that the power to "figure out their own answers," the power of choice, isn't vastly more important than innumerable $4-million reports.    

1 comment:

Pomeroy Kinsey said...

Not sure about development, but in developed economies, the push needs to always be on individual freedom as a core conviction, and market failure is viewed as the deviation needing correction, and not the other way around. It seems like in development, the history has been the other way around - overt control and transnational transfers with little attention to institutions and individual freedom - and I wonder if Easterly's point is primarily meant itself as a broad correction. For instance, most believe that markets need flexibility and unregulation to function properly, even while acknowledging that they will indeed fail and when they do require some intervention. But it's about getting things in their proper order.

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