Technically Correct

David points me to this review of William Easterly’s The Tyranny of Experts. The review summarizes the book and its castigations of “development experts” like Jeffrey Sachs trying to lift up poor nations with hydro dams and fertilizer plants. “It won’t work! It hasn’t worked! It can’t work! You have to give the poor rights first.” he cries.

What seems interesting to me is that Easterly decries the tyranny of experts, while also claiming superior expertise on what makes an economy develop. After all, Easterly isn’t saying that Jeffrey Sachs and the like cannot proscribe a method for developing an economy; he’s saying “You’re using the wrong method!”.

Personally I’m on Easterly’s side in this debate. The legal rights of the poor are a key and often overlooked ingredient in development success. Hernando de Soto has done great work on showing how formalizing property ownership and legal title systems, and then giving the poor access to capital markets through mortgages on their land, is a real multiplier for economic development. The poor need those legal titles, and then the rights to enforce them and borrow against them, to help themselves out of their poverty. Even in developed economies many new businesses are formed with capital borrowed from a family home, and Peru and Indonesia are no different in that respect.

And I might even go further. There has been good research on how family structure plays a role in economic development, and how the difference between England and the Netherlands (nuclear families living apart with distinct ownership rights) and Eastern Europe (multigeneration families with common ownership of farms and businesses) caused the Great Enrichment to start in Europe’s Northwest instead of its East or South. Why not include family law into the bundle of reforms that a developing economy needs?

And even further, because this is Sweet Talk, let us not forget the role of individual virtue. Throughout history men and women have claimed to have honor and to live by a strict code, but most of these codes did not result in the Great Enrichment. The virtues of Love, Faith, Hope, Prudence, Justice, Temperance, and Courage are not only unique in their combination but also in their interpretation. What constitutes “Justice” varies in particular from one culture to the next, and any culture that considers economic outcomes to be a greater Justice than equality in opportunity will not rise to join the wealthy nations of the world. After all, China did not start to rise from its slump until Deng said “Let some people become rich first.”

So what would my ideal development plan look like? It would replace the local law with the English common law, and send promising students to Common Law nations to study it. It would create a “Sesame St” curriculum to instill Bourgeois Virtues among the youth via TV and other media channels. It would make a point of promulgating a sense of what Justice “is” and what it looks like among the people. It would focus like a laser on the rights of the poor and their actual and effective access to the institutions that protect those rights (using methods that de Soto has been a leader in, such as measuring the number of days required to open a business, title land, or resolve a case). It would then keep taxes low and sit back to let the people figure out where to go from there.

But see? I am offering my expertise. I claim no expertise at whether Niger should build a hydro dam or a coal plant, or what crops they should grow and which fertilizers to use. Locals have much more useful information than I on those topics, and what they lack they can learn on Wikipedia or by conversing with experts in foreign countries at the local Internet cafe. Cell phones can tell them the prices of fish in six different markets, letting them plan their businesses better than I ever could. My expertise isn’t in planning, but in setting up conditions so that others may most effectively plan.

Jeffrey Sachs’ problem isn’t that he’s a tyrannical expert, it’s that he’s a well spoken non-expert. He doesn’t actually know how development happens. (And neither do I, 100%, but I’m fairly confident I know more than Sachs). Sachs is technically correct that expertise is needed, it’s just that the expertise needed isn’t the expertise he has. Easterly’s book would be better titled The Tyranny of Over-Confident Ignoramuses

3 thoughts on “Technically Correct

  1. Perhaps it would be helpful to draw a clear disctinction here between content expertise and process expertise? I also claim no expertise at whether Niger should build a hydro dam or a coal plant, but I have expertise that could help them decide for themselves. Last week I blogged an essay I wrote almost 20 years ago on blueprint and process approaches to rural development planning which is feeling as relevent today as it ever was!

    1. Hi Martin, yes, that’s exactly what I was alluding to. Development requires expertise, but expertise in Processes, not Blueprints. As your essay concludes, the Great Planner cannot actually know how much utility locals will derive from a particular investment, or if that capital would be better used elsewhere, and of course the Great Planner also lacks the local knowledge that is dispersed through the economy.

      If it’s not clear from the above, I’m a fan of Hayek (though not a rabid one) and the expertise I think is necessary is the expertise of setting up Processes (to use your terminology) that most efficiently allows for the economy to self-organize and accumulate capital.

      If a Great Planner wants to speed up development any faster than the above Process allows for, I would suggest cash transfers and leave it at that.

    2. And thank you for your comment! I wish your ideas were more in vogue among the development set, but I think there’s a great deal of over-confidence in what they know and also a personal satisfaction derived from controlling and directing activity, the actual results be damned.

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