Arrested Development

Economists who set out to help the world's poor may actually be part of the problem.


The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor, by William Easterly, Basic Books, 394 pages, $29.99

"I can sympathize with economists who, in their zeal to help the world's poor, unwittingly favor autocracy," writes William Easterly in his new book The Tyranny of Experts, "because for a long time I was one of them myself."

Easterly, the head of New York University's Development Research Institute, has become one of the loudest dissenters against the popular view that government-to-government foreign aid is the best way to improve the lot of the globe's worst off. Development economics, he argues, overprivileges autocratic central planning and neglects the benefits of the spontaneous free play of markets and their proven powers to increase wealth. This leads development experts to disrespect the rights of the poor.

Easterly aims neither to blame nor to shame development economists for their discipline's original sin. But he doesn't pull punches when it comes to telling their intellectual history. Between 1919 and 1949, he explains, "development ideas took shape while racism and colonialism still reigned supreme." Easterly offers up mini-histories of how development economists acted in China between the world wars, Colombia after World War II, and Africa during and after World War II (where, Easterly writes, "African leaders inherit[ed] the role of benevolent autocrat from the defunct [British] empire").

A United Nations Primer for Development from 1951 sums up the mandarins' perspective on development, government, and citizens: "We wish to emphasize that the masses take their cue from those who are in authority over them. [I]f the leaders win the confidence of the country they can inspired the masses with an enthusiasm for progress which carries all before it all problems of economic development are soluble."

The bad ideas Easterly chronicles are unsavory in both moral and scientific terms. They tend to treat migration of peoples away from the Third World as some unthinkable betrayal, a notion captured in the oft-repeated phrase brain drain. Instead of lamenting the loss, he says, economists should focus on the individuals who have chosen to better their circumstances through a process that helps protect rights while alleviating poverty.

To illustrate the absurdity of the argument, Easterly presents the amusing reductio of the "Lost Republic of West Virginia," from which his own family "migrated" to elsewhere in the United States. Because migration out from the state caused a local labor supply to shrink to match falling demand, he explains, "per capita income in West Virginia actually rose at the same rate as the U.S. average" during that period. "West Virginia did not get poor because of out-migration; it was already poor and the out-migration kept it from getting poorer."

Migrants from poor nations improve the world as they move. Easterly profiles the Mourides of Senegal (originally based in a religious brotherhood formed in the 1880s), who formed highly valuable international systems of trade and finance through their diaspora. He provides examples of how that network allows small merchants from poor nations to buy and sell abroad via decentralized "banking" services, to make valuable business connections across the globe, and move goods and processes across the planet in ways that make both themselves and their clients and customers richer.

Development economists too often treat nation-states as blank slates, devoid of history or culture worth understanding or respecting. Easterly dedicates a smart chapter to how historical patterns of politics and culture going back to at least the 12th century continue to have measurable effects today. Northern Italy, for example, is noticeably richer than southern Italy, thanks in part to the Lombard League, a medieval alliance that successfully fought off an invasion from German conqueror Frederick Barbarossa and preserved a tradition of relative market and citizen freedom in a collation of "free cities" in 1176.

Patterns of trust, successful histories of commerce, and mercantile values from centuries ago still contribute to economic success in peoples long after they've left their homelands. On the other side of the coin, areas whose economies depended on slaves-either providing them or using them-still suffer from poor development effects centuries later. One big causal factor in that dynamic is decidedly lower levels of trust in groups, for example the Aja tribes of what is now Benin, who were most victimized by the slave trade. Lack of trust, as Easterly shows, leads to measurably lower levels of both prosperity and liberty among peoples suffering it.

Easterly is particularly sharp on the looseness of much of the "data" that development experts rely on. He mocks Bill Gates, the Uncle Pennybags of modern development econ, for crowing about a five-year improvement in Ethiopian child mortality rates. Easterly convincingly describes a confusing data landscape, marred by lack of well-kept vital records in shoddy states, and wildly varying estimates from different independent sources doing the best they can with the bad source material they have to deal with. In fact, we have no way to get an accurate picture about infant and child death in the Third World. Our macro data on the economies of the poorer parts of the world are too unreliable and inconsistent to use as much of a measure of anything.

The myopic focus on nation-states and the data they provide is the root of some of development economists' most spectacular errors. Variations in national growth patterns tend to be pretty random over time. When it comes to explaining growth, regional patterns are the more relevant measures, Easterly argues. The kind of short bursts of national growth that are often lauded as successes in the autocratic model nearly always revert to the mean. "The dominance of the temporary growth fluctuations over permanent differences between nations," writes Easterly, "explains why there are so few…lasting miracles"-and "why almost everyone has had temporary miracles."

Tyranny of Experts takes various tacks-historical, theoretical, technological, statistical-to explain, in theory and in practice, why international development economics should fundamentally rethink its premises and practices.

But for a book trying to make the case that poor, autocratic governments harm their citizens' rights with the connivance of western development experts, Tyranny of Experts lacks sufficient specifics of how and why that is so, or enough vivid stories demonstrating the specific human costs of development hubris. It's almost as if Easterly thinks his claims are so obviously true that he doesn't have to get bogged down in the details of proving them.

One exception is the doozy of a story that opens the book. Soldiers set fire to the homes and grain stores of a town of farmers in Ohio, machine-gun their cows, and force-march 20,000 farmers and their families away from the wreckage. The World Bank, we learn, has essentially seized their town and handed it over to a British company.

On the next page, Easterly reveals this terrifying true story actually happened in Uganda, not Ohio. It's a great way of making his point about how Westerners too often have a different sense of what is tolerable when it's "them" or "us."

Although a big chunk of the book explicitly uses F.A. Hayek as the proper intellectual model for thinking through development issues, Easterly is overly eager to make sure his readers understand he's not some wild-eyed libertarian who sees everything in terms of "state vs. market." He's defensive in the introduction, worrying that people will see him as an "ideologue" because he uses words like "markets" and "liberty" too often.

Most of Easterly's arguments do fit comfortably in the libertarian perspective, and support the case that free markets can and do outperform states when it comes to increasing human well-being. But Easterly's main concern seems to be that the "states vs. market" question will obscure the more important and core question of respect for individual rights.

But markets and rights are not as separable as that. Markets are simply what result when we respect the individual's right not to be molested by authoritarians when choosing what to do with property. It is development economists, and not Hayek-quoting libertarian-leaners, who should feel intellectually defensive for failing to grasp the powerful, poverty-reducing principle that respecting rights means respecting free markets.