Sunday, May 14, 2006

The White Man's Burden

Henry got me The White Man's Burden by William Easterly on the vague condition that I blog about it. It turns out to be a rather excellent book. Better, I'd say, than The Elusive Quest for Growth, even though that book made me fully appreciate the richness of "thinking like an economist; whereas I'm not sure how much I actually learned from The White Man's Burden.

The argument of the book is that there are two types of approaches to development, planning and searching, and because of the inherent complexity of a society, being a flexible and innovative searcher is rather more desirable than being a blue-print type planner. Characteristic of searching is solutions which arise from a demonstrable need at the local level and respond to the local particularities. This is opposed to the one size fits all approach of the planners. Searchers only try to make concrete improvements; planners are enamored of grand utopian visions of totally transforming society. Searchers are accountable to local needs, and thus have to deliver; planners are only accountable to the grandiosity of their visions and thus never really fail because they still have their visions.

This all goes to argue that Jeffrey Sachs is not to be trusted. While a given intervention may sound reasonable, having a grand plan is fundamentally misguided. This is not only because you cannot have one set of interventions that will transform society but also because it is hard to evaluate the effectiveness of any one piece of a grand plan in that you can never say that this one piece failed because there were so many other pieces and perhaps the whole thing was underfunded anyway. And thus it is very hard to hold the institution accountable. Easterly advocates having development organizations focus on narrow geographical areas, and also focus on narrow goals, such that they gain local knowledge, and can be held accountable.

He acknowledges that development organizations have been effective when they can be held accountable: so there has been great progress in certain kinds of health and education things (child mortality is way down, for example). He also acknoweldges that holding people accountable through measuring outcomes creates a problem in that people work on the measurable thing, when it may be only a proxy for something more important. For example, primary school enrolment is a proxy for actually educating students. And if you only measure primary school enrolment, then there is no guarantee that that enrolment means that the students are learning anything.

Yet for all these broad strokes, the much more interesting aspects of the book are his discussions of history, democracy and free markets. He argues recent development is just a continuation of colonial efforts, both in terms of the foolishness of planning and lack of attention to local specificty, and in how colonialism also mixed good intentions with self-interest. This is a link that very few modern development economists explicitely make. He has a long section about how free markets and democracies do not just happen. There is no magic market dust, or special democracy potion that can instantly, or even forcefully, transform a society. They both rely on norms and customs that take time to develop and have to be based on knowledge of local history. He gives examples of land reforms that worked because they based the assignment of property rights on past practice, and land reforms that failed because they were following some blueprint of a planner in Washington (or wherever). And democracy, well, his point is that democracy isn't just about elections. This all goes against both "shock therapy" -- which he claims he supported when he was at the World Bank -- and the last 50 years of American foreign adventures.

These sections, especially about the functioning of free markets, are really rather surprising to see coming from a neo-classical economist. As Henry says about some economists, Easterly has all the "correct" economic opinions: that is, his normative views are largely those that economic reasoning would imply. And yet he realizes that well-functioning free markets and market institutions aren't the natural outcome of all human interaction, but require substantial nurturing and cultivating and rely on extra-market things that most economists neglect.

Amartya Sen's review of the book criticizes it on the grounds that Easterly spends too much time attacking development orthodoxy and not enough time praising its successes. But that misreads the point of Easterly's book (and his present career): his goal is not really to be an even-handed critic, but to be a gadfly, pointing out the uncomfortable truths about development that everyone acknowledges on some level, and people even write about, but that no mainstream development economist pulls together in a comprehensive critique of the enterprise. The book is both fun to read, and also interesting for the ways in which Easterly reaches beyond economics to try to explain how the development orthodoxy fails.

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