This book wants to provoke, to stir debate and eventually change our thinking on how to help the poor. Its great subtitle, Economist, Dictators and the Forgotten Rights of the Poor, is just the start. Easterly main message is that the real cause of poverty is the unchecked power of the state against poor people without rights. He doesn’t see a battle between free market and state intervention, but one between authoritarianism and free development.
His basic conclusion is that we may never compromise on equality of rights. It comes before anything else; including poverty reduction programs, propagated by the World Bank and the likes of Gates and Blair. It is at those institutions and wealthy individuals that Easterly (himself a former World Bank economist) addresses his critique. In his view, they trust autocrats to be benevolent implementers of their technical solutions – which they never are because ‘oppression is a crime of opportunity’. If you can do it, and you can get away with it, you will do it.
The trouble is that those experts like to work with the state, as stable factors though which they can channel funds and programs. In doing so, the development world seems to care more about Haiti than Haitians or Zambia than Zambians. And it is this thinking that has prevailed.
The solution to all this is: more freedom.
Freedom is the best solution to societal problems, including poverty. And should be achieved through a system based on individual rights – both economic and political – as it tends to reward positive action and stop negative ones. It furthermore tends to stop the hubris of conscious direction and leaves room for the spontaneous solutions that actually create most of the prosperity we enjoy today. Easterly puts it as follows: We find it hard to believe in a world in which outcomes are the unintended result of many actors with different intentions. I personally love the example of the attribution bias; people tend to attribute random outcomes to individual achievements/ actions. We seem incapable of accepting that we are no super heroes: bending economies, changing the course of history and solving poverty as we please.
To me, this makes total sense. And there’s abundant proof, especially from Africa, where we see painful examples of how authoritarian system can devastate countries. Think Zimbabwe, think Sudan, think Ethiopia (where, according to Human Rights Watch, donor money for fertilizer is used to crush opposition).
But what about the Asian examples, notably Singapore? Didn’t those countries need a benevolent autocrat to create economic growth, stabilize the country and get money flowing back into the country? Haven’t they experienced formidable economic growth over the last decades? After all, just look at the numbers!
Well as it turns out, the number aren’t that special, at least there’s no correlation with the leader who happened to oversee this growth. Easterly demonstrates that miracle growth (defined as a yearly growth of 6 percent or more) rarely sustains over a longer period. Moreover, that national policy has nothing to do with it (with the notable, cynical, exception of Mugabe). Almost all countries in the world have had at least one year of 6% growth in the last decades, mostly related to the region they were in as growth in isolation is rare. And as we are witnessing now, 6 percent growth cannot even be sustained by China.
Extreme emphasis on national growth performance, if measurable at all, is misguided as it shows little evidence of paying off. What we do know is that the causalities are the individual rights – suppressed in the name of the nation’s collective pursuit of success.
All in all, this is a clarion call for letting the market, the “association of problem-solvers”, have a far greater role in solving poverty. The current situation, the technocratic approach (solutions by experts) gives us the worst of all worlds. Having experts in charge of solving society’s problems turns things over to agents who face neither a market test nor a democratic test. And checks and balances are an absolute necessity.
Only with a well functioning market will innovation take off. There are two key mechanisms by which the Western idea of the individual helped innovation: the challenge to authority and the private return on innovation. In fact, 78% of the income difference today between Europe and Sub-Saharan Africa can be explained by technology that was already in place by 1500. Simply, because the key predictor of the speed of innovation is the amount of technology one already has. The more, the faster you will innovate. And that’s why China is relatively less well of than inn 1500: they skipped Enlightenment. Countries as The Netherlands and Great Britain did go through an enlightened period, resulting in a system in which checked state power spurred trade. Those countries still profit from this structure.
The economist Hayek found the right words decades ago: “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”.