Monday, May 3, 2010

A prophet who should be honoured

If I thought it would be of any use at all, I would send a copy of a slim volume, published by the Academic Foundation in New Delhi with the support of the Liberty Institute, also in New Delhi and the Cato Institute in Washington DC to the Boy-King of the Conservative Party and a few others at the head of it. (It is, as it happens, available in the UK from the Institute of Economic Affairs.)

The book's title is Peter Bauer and the Economics of Prosperity and it was edited by two eminent economists and followers of the great Lord Bauer, James A. Dorn and Barun S. Mitra. It is an interesting compilation of excerpts from Lord Bauer's books, some of his essays and numerous comments on his work by his colleagues, students and admirers.

One of the most unfortunate aspects of political development in many parts of the world is the lack of attention Peter Bauer's perfectly sensible ideas have received for various reasons, vested interests on the part of recipient governments and organizations being the most important. Other reasons are the dismal sense of guilt that has overwhelmed so much of the West since World War II, the rise of transnational organizations whose interest lies in keeping poor countries dependent on hand-outs and rich countries in a permanent sense of guilt, and a general reluctance to use logic rather than emotion when confronted with poverty.

Hand-outs do not help developing economies. That is a very simple idea, which is entirely logical as well as proven by recent and more distant history. If poor countries were stuck in a "vicious circle of poverty" and could not get out of it without charity, how is it that poor countries managed to become in the past? Why would taking money from the poor of rich countries and giving it to the rich of poor countries help anyone except the corruptocracy in power in the latter and the organizations who batten on to that process?

The best piece in the first part (economists on Bauer) is a conversation between Milton Freedman and Thomas Sowell that was recorded at the Hoover Institution to be used at a conference in honour of Peter Bauer at Princeton University in May 2004.

Here are a few excerpts that I thought might interest the readers of this blog (and, by the way, I cannot recommend the book highly enough).
MF: The thing is, you have to distinguish between what people say and what they do. almost everybody now agrees in principle with theproposition that there are defects in aid. If you gao back, the initial dictum that Peter fought against was teh vicious cycle fo poverty - the idea that was widespread and essentially conventional wisdom in the study of lesser developed countries: that they were poor, and because they were poor they couldn't generate capital, and because they couldn't generate capital they couldn't develope, and that kept them poor. And that the only way they could get out of it was if capital was brought in from outside.

TS: I mean, I must say it sounds plausible even now. It's only the fact that you have to ask the question: if that's true, how did any other rich countries every becfom rich, because they all started out poor?

MF: And once you say that, the view becomes silly. It's hard to see how anyone could ever have set it forth. And yet there is no doubt that it was the dominant view within the profession of development economists for many years.

TS: Well, it's ne of many silly ideas that become conventional wisdom. there are so many things that people simply don't think about. And I often think, it really doesn't matter how smart they are. If you don't really stop and think about things, it doesn't matter whether you're a genius or a moron.

MF: People get into patterns of thinking and it's very hard to get out of those patterns. I think very few people today in the profession would maintain the vicious cycle of poverty argument, because there have been so many

TS: One of the things that he mentioned in one of his later books was that people were saying things like: "We took all the rubber from Malaysia"; "We took all the tea from India". And he pointed out that this was the direct opposte of the truth. The British brought the rubber tree to Malaysia; they brought the thea to India - and the Indians and Malaysians benefited. There's also the example from his later work in West Africa where he points out that most of the cocoa in West Africa was grown by Africans and that cocoa was not native to Africa - it was brought in and the local people took it from there.

One of the things that contrasts with Peter Bauer's notion is that of Gunnar Myrdal, who argued that you had to have westernized intellectuals taking charge of the country and directing the masses, who wouldn't otherwise be able to do anything. And it's ironic because people like Myrdal and others on the Left are regarded as great friends of the masses, but really you see in them the utter contempt for what ordinary people can do.
There is much more, including the wish expressed by an Indian economist that India had followed Peter Bauer's ideas when it became indpendent instead of Harold Laski's, as was the case. But what is not there, because that is not the subject of the conversation is the simple truth that whatever may have changed among economists, politicians, that is the people who shell out our money, remain wedded to the outdated ideas, so masterfully demolished by Peter Bauer over and over again.

1 comment:

  1. You will have socialistic policies even if no one believes in socialism; it is just too useful in empowering politicians.