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Thursday, 29 May 2008

Easterly on the Growth Report

William Easterly has now responded to the World Bank Growth Commission report in the Financial Times.

Trust the development experts – all 7bn
By William Easterly
Financial Times (28th May 2008)

The report of the World Bank Growth Commission, led by Nobel laureate Michael Spence, was published last week. After two years of work by the commission of 21 world leaders and experts, an 11- member working group, 300 academic experts, 12 workshops, 13 consultations, and a budget of $4m, the experts’ answer to the question of how to attain high growth was roughly: we do not know, but trust experts to figure it out.

This conclusion is fleshed out with statements such as: “It is hard to know how the economy will respond to a policy, and the right answer in the present moment may not apply in the future.” Growth should be directed by markets, except when it should be directed by governments.

My students at New York University would have been happy to supply statements like these to the World Bank for a lot less than $4m.

Why should we care about the debacle of a World Bank report? Because this report represents the final collapse of the “development expert” paradigm that has governed the west’s approach to poor countries since the second world war. All this time, we have hoped a small group of elite thinkers can figure out how to raise the growth rate of a whole economy. If there was something for “development experts” to say about attaining high growth, this talented group would have said it.

What went wrong? Experts help as long as there are useful general principles, such as could be established by comparing low-growth and high-growth countries. The Growth Commission correctly pointed out that such an attempt to find secrets to growth has failed. The Growth Commission concluded that “answers” had to be country specific and even period specific. But if each moment in each country is unique, then experts cannot learn from any other experience – so on what basis do they become an “expert”?

The logical next step at this point would have been to give up on experts. But the commission insists that ex­perts, who will communicate their ad­vice to technocratic leaders, are still the answer. Partly this reflects how wedded the World Bank is to the “leaders and experts” vision of how growth happens, since such a world-view does create a big role for World Bank experts.

The commission made the common mistake of anointing high growth rates as the measure of success, whereas high growth mysteriously comes and goes. Indeed, only two of the 13 high-growth episodes the commission studied were still going at the time of the study. Yesterday’s growth failures (for example India) are today’s successes and yesterday’s growth successes (for example Brazil) are today’s failures. Much of this volatility is inexplicable and unpredictable. To give credit to whatever leader happens to be in power during a burst of high growth is just circular reasoning (How do we know they were a great leader? Because there was high growth!).

The details of success are equally unpredictable. Where are the experts who guessed in advance that an obscure Indian company making edible oils would become a $10bn-plus company (Wipro) providing information technology services and call centres? Or that a lossmaking Brazilian state enterprise (Embraer) would go on to capture a lot of the world market for regional jets after being privatised? Or that South Korean entrepreneurs would create a carmaker (Hyundai) with greater market value than General Motors or Ford? Or that a schoolteacher named Dong Ying Hong, formerly earning $9 a month in Datang, China, would become a millionaire making socks?

What to do in a world of such unpredictability? There are some general principles and they do not require experts. Another Nobel laureate gave the crucial insight a long time ago – the answer is freedom for multitudinous individuals to figure out their own answers. Friedrich Hayek said: “Liberty is essential to leave room for the unforeseeable and unpredictable; we want it because we have learned to expect from it the opportunity of realising many of our aims. 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.”

The evidence for this vision is not found in those baffling fluctuations of growth rates, it is in the levels of development attained in the long run. Confirming Hayek, systems that give more liberty to individuals – featuring both more economic and political freedoms – are associated with much less poverty. The evidence for this comes from both history (for example old, despotic, poor Europe compared with modern, free, rich Europe) and cross-country comparisons (for example South Korea compared with North Korea, former West Germany compared with East, New Zealand compared with Zimbabwe). This alternative paradigm has a much smaller role for experts, because experts cannot direct or impose freedom from the top down (or else it would not be freedom).

The end of the “development expert” paradigm does not mean the end of hope for development. Development is al­ready gradually ending poverty (global poverty rates have fallen by more than half in the past three decades) – not be- cause of development experts such as those who wrote the World Bank Growth Commission report – but thanks to more freedom for more of the 6.7bn individual development experts alive today.

23 comments:

  1. What to do in a world of such unpredictability? There are some general principles and they do not require experts. Another Nobel laureate gave the crucial insight a long time ago – the answer is freedom for multitudinous individuals to figure out their own answers.




    Confirming Hayek, systems that give more liberty to individuals – featuring both more economic and political freedoms – are associated with much less poverty.

    But it is important to note that freedom is not just the absence of government interference, but also the presence of opportunity, such as financing, education, business experience and infrastructure. All of those create opportunities for entrepreneurs to exploit.

    Where are the experts who guessed in advance that an obscure Indian company making edible oils would become a $10bn-plus company (Wipro) providing information technology services and call centres? Or that a lossmaking Brazilian state enterprise (Embraer) would go on to capture a lot of the world market for regional jets after being privatised? Or that South Korean entrepreneurs would create a carmaker (Hyundai) with greater market value than General Motors or Ford? Or that a schoolteacher named Dong Ying Hong, formerly earning $9 a month in Datang, China, would become a millionaire making socks?

    What all those examples have in common is the presence of state led initiatives. A parastatal becoming a commercial success is obvious, but of course Hyundai is described as Koreas largest Chaebol and was heavily state influenced.

    So the role of the state in development is crucial, which of course goes contrary neoliberal theory.

    Perhaps we should have an official state funeral for neoliberalism. :)

    I think the state should tax the heck out of the mining companies and use all the resources to create the nation's infrastructure - and I mean infrastructure in the broadest possible sense, including education, healthcare and the financial industry. There is a lot the state could do just reforming the laws on property ownership, financial issues and bureaucracy in setting up as an entrepreneur. And reduce or eliminate taxes in startups and indigenous business, so the informal sector can become formal.

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  2. Gosh this article is bad.

    Of course, "devellopment experts" deserve the mocking. Their track record is incredibly bad and most countries that achieved anything did so by not following any of their trendy advice (and that started long before state intervention was out).

    But that rant on freedom ? WTH ?

    The people who created Embraer probably guessed (or at least hoped and betted) that it would eventually be succesful, the South Korea government spent ressources with the goal of helping Hyundai becoming what it became, the Chinese government hoped that its reforms would create some Dong Ying Hong. And India's story is more interesting and probably less intentional than the others. India kicked out IBM in the late 70's because they wouldn't accept a partial nationalisation and some Indian entrepreneurs jumped to fill the room (i keep wondering what would have happened if IBM had accepted).

    And the correlation between "economic and political freedoms" and prosperity has no basis in reality. Hayek's own writings on Pinochet's Chile should remind him of that.

    The problem is that Easterly is acting like the people he's criticizing. The main problem with devellopment experts is how sheepish they are about trends. They come up with "big ideas" that are supposed to be sure-fire solutions for any country. It has been ISI, it has been mixted-economies, it has been "capital accumulation through higher-savings rates and more investment", it has been privatizations, it has been low tarriffs and each time it was a success in may be 5% of the cases. And here he is ending it with another, supposedly new Big Idea: increase Freedom.


    This is childish.

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  3. MrK,

    Perhaps we should have an official state funeral for neoliberalism. :)

    lol!!

    I couldn't stop laughing when I read this. Very good!

    Random,

    I am probably biased here, since I have read nearly every paper and book written by Easterly (Easterly, Acemoglu and Rodrik are by far my favourite economists).

    What I would say is that Easterlian freedom correctly understood is simply the ability to try out different ideas and see what works. Its very different from the sort of freedom you have quoted in the Chile example. I don't think what Easterly has in mind can actually be tested empirically, and indeed that is his point!

    The only problem I have found with Easterly's position is actually a philosophical one. If he is correct, real development comes from individual people testing out what works as the situation permits, and that there are no "grand solutions"...then that in itself is a BIG IDEA....!!

    Critiques of Easterly actually miss a very simple point - the World Bank / IMF institutions with their development experts have yet to produce a SINGLE COUNTRY which they have applied their remedies....

    I am afraid I remain in that, probably small category, that believes each COUNTRY must find its own path to success and must define that success...and that I think is what underpins Easterly's "growth indicator" criticism....there are simply no solutions...each nation context is unique...

    By the way, Acemoglu's recent paper seems to hint at the same...atleast in relation to democracy and development..see the blog Hope or despair?

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  4. I don't think you're being biased. I would say you're being nice.

    I know that Rodrik and Acemoglu (who are along with Krugman my favorite living economists) have been arguing for freedom of experimentation for a while and because they're right there with Easterly in your list of favorite economists, I bet Easterly have done so too. (i think i've ignored him because he, at least lately, seems more interested in the Big Devellopment in Africa Rethorical War than in the ins-and-out of devellopment economics but that may be a misconception on my part)

    However, this is not what he's arguing here. For two reasons:

    1. He's criticizing the report for being what I called "Rodrikan" in the last post: for being vague, full of "may be"s, not giving clear and definitive policy recommendations, for encouraging flexibility (though it does tell what not to do). If anything,shouldn't that make him happy ? Should that be a victory for him, Rodrik, Acemoglu and the others who have been fighting the devellopment certainities for years now ? You have the WB finally admiting that the growth record is complicated and he's angry ?

    2. he does say "ystems that give more liberty to individuals – featuring both more economic and political freedoms – are associated with much less poverty". That's not freedom for countries to find their own path. And look at the examples: who between North and South Korea diverged from the consensus the most ? Who between Zimbabwe and New Zealand had tried the unorthodox policies recently ? He is crealy arguing for economic and political freedoms for INDIVIDUALS in those societies and not policy freedom.


    Now don't get me wrong, I agree that there has been very few examples of countries develloping by using any big idea-based WB/IMF policy recommendation (and contrary to some, i don't think the problem started in the 80's). I do think that devellopment economists need to drink a big bucket of "humility concentrate" and realize that the world is more complicated than a "two open small economies" model. So I'm not criticizing Easterly for thinking that. I would agree, had he said that.



    However, things should be put in perspective. I think Rodrik does a very good job of explainning what he means in his last book. He argues that 1. GDP growth is desirable. 2. that there are "conditions" that maximize growth. 3. (and that's where he differs from the Washington Consensus) that the policies creating those conditions vary immensely.

    So I agree with you when you say "each country must find its own path to success" (as long as it's not based on one of the things we know don't work, like the Zimbabwean hyperinflationary policies), but I don't know about "defining that success". Growth and all the good things that come with it (health, education, buying power, quality of life and quality beers lol) shouldn't be replaced with by the kind of stupidities we heard in beautiful places like Zimbabwe or North Korea.


    If he is correct, real development comes from individual people testing out what works as the situation permits, and that there are no "grand solutions"...then that in itself is a BIG IDEA....!!

    Not really. Well I mean, not really if we're talking about countries experimenting.

    The thing is Big Ideas are sure-fire, play-by-the-book-and-you'll-be-fine, all-size-fits-all solution and that's the main criticism of them.
    The world is complicated and solutions vary.
    Saying that policies should adapt to local circumstances is not a big idea since big ideas are supposed to be universal.

    If we're talking about individuals, he's wrong too. As Mr K pointed out, limits to individual freedom doesn't only come from the state and the state does have a role in enhancing individuals capabilities, right ?

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  5. ''He's criticizing the report for being what I called "Rodrikan" in the last post: for being vague, full of "may be"s, not giving clear and definitive policy recommendations, for encouraging flexibility (though it does tell what not to do). ''

    Interesting. I thought he was simply mocking them for taking significant time and money to reach a conclusion he reached a while back. He welcomes their conclusions though he's clearly bemused its taken them this long to conclude the obvious. And yes he's angry that the World Bank has wasted money trying to create "a theory of everything".

    ''he does say "systems that give more liberty to individuals – featuring both more economic and political freedoms – are associated with much less poverty". That's not freedom for countries to find their own path. And look at the examples: who between North and South Korea diverged from the consensus the most ? Who between Zimbabwe and New Zealand had tried the unorthodox policies recently ? He is crealy arguing for economic and political freedoms for INDIVIDUALS in those societies and not policy freedom.''

    I think his point about ''economic and political freedoms'' does come off a little confusing. I can see how one can draw the conclusion from the narrative that he is arguing for a positive correlation between growth and political or economic freedoms per se. But I read that to mean freedoms that are geared towards independence of thought within a given policy space. So its not just being free to vote or own a local shop. But creative freedom to experiment within given policy sphere. Its also about creating open institutions that allow that feedback mechanism of creative destruction if necessary. As you said on these issues we agree.

    ''So I agree with you when you say "each country must find its own path to success" (as long as it's not based on one of the things we know don't work, like the Zimbabwean hyperinflationary policies), but I don't know about "defining that success". Growth and all the good things that come with it (health, education, buying power, quality of life and quality beers lol) shouldn't be replaced with by the kind of stupidities we heard in beautiful places like Zimbabwe or North Korea.''

    I think growth expands freedoms but it also restricts others. But Easterly's obvious point is simply that whilst growth may be desirable its not an appropriate measure of development. It therefore begs the question why the world bank focuses on such a narrow criterion.

    ''Saying that policies should adapt to local circumstances is not a big idea since big ideas are supposed to be universal.''

    For many ''experts'' its not. Lol!!

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  6. Interesting. I thought he was simply mocking them for taking significant time and money to reach a conclusion he reached a while back. He welcomes their conclusions though he's clearly bemused its taken them this long to conclude the obvious. And yes he's angry that the World Bank has wasted money trying to create "a theory of everything".

    He's angry, yes. But does it make sense to you that the first reaction one has when the people one has been trying to convince agree would be anger ?

    On the time and money waste, what did he expect ? That the WB would have agreed at the second he published a paper or a book arguing against "big devellopment" ? It takes time for institutions to change.
    Furthermore, the waste is not evident. You have to remember that develloping theories of everything is not the World Bank's main mission. They collect data, write papers on micro-issues and usually absorb Big Ideas coming from academia. Not the other way around.

    I think his point about ''economic and political freedoms'' does come off a little confusing. I can see how one can draw the conclusion from the narrative that he is arguing for a positive correlation between growth and political or economic freedoms per se. But I read that to mean freedoms that are geared towards independence of thought within a given policy space. So its not just being free to vote or own a local shop. But creative freedom to experiment within given policy sphere. Its also about creating open institutions that allow that feedback mechanism of creative destruction if necessary. As you said on these issues we agree.

    Ok, forget everything you read by him and read this very article and imagine that it was written by Ayittey or someone you don't know.
    Would you think the article even mentions freedom in the policy sphere ? or open institutions ?

    He does explicity say that there's a correlation between political and economic freedom of individuals and prosperity, it's not a "conclusion I drew from his narrative". He says it clearly in this sentence:
    Confirming Hayek, systems that give more liberty to individuals – featuring both more economic and political freedoms – are associated with much less poverty.

    I think you're projecting your views in what he said in this very article. Like I said, if it was written by someone else, you would read it differently.

    I actually think that it should be read as something written by someone else. After all, this is not part of a bigger book or something he sent to his usual readers, it's a stand alone op-ed in the Financial Times that will be read by millions who never read Easterly before. And they will read what he actually say, not what he thinks.

    But Easterly's obvious point is simply that whilst growth may be desirable its not an appropriate measure of development. It therefore begs the question why the world bank focuses on such a narrow criterion.

    That is not his point.
    The criticism he makes is on "devellopment experts"'s fixation on short-term "high-growth episodes" and the conclusions reached from it.

    That criticism is actually quite common among hardcore neo-classical economists. They often argue that while high-growth rates episodes happened in economies using heterodox methods, stable prolonged sustained long-term growth happens within economies closer to the Washington Consensus.

    I don't know if he shares that view (though his freedom argument makes me think he does) but he does not argue against using growth as a marker. He's arguing against the focus on short-term high growth episodes. Here are the crucial quotes:

    "The commission made the common mistake of anointing high growth rates as the measure of success, whereas high growth mysteriously comes and goes"
    The evidence for this vision is not found in those baffling fluctuations of growth rates, it is in the levels of development attained in the long run.

    Now if you 're saying you think growth (in general) is a narrow criterion to measure devellopment, we can discuss that.

    I can't think of any criterion that give a better view of the economic well-being of a country year after year. And starting and sustaining growth is still the best way to improve most other devellopment measures.

    But for the sake of discussion, what would you add ? and why ?

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  7. Random,

    I had written a proper response to this on my new mobile phone...but lo and behold it disappeared...

    I would say that on "freedom" ...he seems to have got carried away in this article..certainly his appeal to cross country evidence seems to reinforce your point...quite bizarre as well since we know the weaknesses of cross country econometrics...its extremely unreliable and equally pointless is the fixated and endless search ffor appropriate instruments to handle problems of causality....

    "I can't think of any criterion that give a better view of the economic well-being of a country year after year. And starting and sustaining growth is still the best way to improve most other devellopment measures....But for the sake of discussion, what would you add ? and why ?"

    I think inequality as a measure deserves more attention than it is currently given...

    I am think here of what my friend calls "culmination and comprehensive" equality outcomes..

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  8. I had written a proper response to this on my new mobile phone...but lo and behold it disappeared...

    I hate when that happens..

    I would say that on "freedom" ...he seems to have got carried away in this article.

    He indeed did. He also got carried away on his critique of the report.
    Here's a good critique of his critique (by a rather laissez-faire pro-trade writer on top of that)

    That's also partly why I never "got into" his work. The general tendency to get carried away and the anger and crankiness of his op-eds actually made not want to read his books and papers, even if I bet they're a lot better.

    The same weird anger and use of bad arguments is why I don't like Ayittey. I like my intellectuals, well.. intellectual. lol.

    I think inequality as a measure deserves more attention than it is currently given...

    While I think it's already given much attention I'm torn on that for a few reasons:

    - as I argued before, I tend to think it's a matter of social and not economic policy and it's possible that focusing on inequality would lead to anti-growth policies in places that need both.
    - as suggested above, I do think that growth comes first and equality without growth is irrelevant.
    - Equality is a relative notion. Places with high income and low inequality may have less absolute poverty which quite frankly may be more important than knowing how poor is someone relative to his neighbourgs.
    - Partly because inequality is relative, the calculations are not totally reliable. The existence of one or two Bill Gates (or other succesfull entrepreneurs) can skew the data and make an otherwise relatively equal society look Feudal. And we don't know exactly know to which extend the enrichment of those people is done at the expense of their countrymen or to which extend growth itself generates more inequality simply by generating more pareto improvement opportunities.
    - I think mobility should be taken into consideration. For instance, India has relatively low income inequality (Western Europe levels) but who would argue that India is a nation of equals after looking at their litteracy rates, health care performance or the persistence of their caste system ? Beyond that, the main difference it has with the US or China (which both have more income inequality) is that it's very likely that the richest Indians today are the direct descendants of the richest Indians a century or two ago. So I believe that to a certain extend, high mobility compensates for high inequality.

    All that is not to say I don't care about income inequality. However, I tend to think that improving capabilities (through education and other social policy measures) is the best way to tackle the most relevant issues associated with inequality.

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  9. Random,

    " as I argued before, I tend to think it's a matter of social and not economic policy and it's possible that focusing on inequality would lead to anti-growth policies in places that need both"

    It helps to distinguish the case for a certain policy intervention from the problem. The first question is NOT how does one intervene, its whether we must at all. It is there where "anti-growth" issues need to be discussed. You can point to several Kuznetian studies that confirms that, and I am sure I can point to several that proves the opposite. In any case my support for reducing inequality is not strictly rooted in the utilitarian framework. Growth for me is useful only if it expands freedoms and does not result in restricting them. That is why inequality becomes important.

    " as suggested above, I do think that growth comes first and equality without growth is irrelevant. "

    As I hint above, the view that growth comes first reflects a particular view of the development framework.

    " Equality is a relative notion. Places with high income and low inequality may have less absolute poverty which quite frankly may be more important than knowing how poor is someone relative to his neighbourgs."

    We need to distinguish between equality and inclusion. Equality is about gaps. Inclusion is about meeting certain thresholds that you might set.

    So I don't think equality is a relative notion. Procedural equality (whether something was achieved in a fair way) might be but not culmination equality (Was the outcome fair). Because the assessment is gap based, it is not relative.

    "All that is not to say I don't care about income inequality".

    Income inequality being just one example of course.

    "However, I tend to think that improving capabilities (through education and other social policy measures) is the best way to tackle the most relevant issues associated with inequality."

    A capabalitities approach is rooted in a different economic understanding of the the outcomes. Its not a social approach, it an economic approach to the issues, based on a different view of development.

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  10. It helps to distinguish the case for a certain policy intervention from the problem. The first question is NOT how does one intervene, its whether we must at all. It is there where "anti-growth" issues need to be discussed.

    Hey, I'm a leftie. I think equality is desirable, poverty totally undesirable, equality of opportunities required etc..

    So, I don't discuss whether we must at all because I think we should. My concern about how to intervene has to do with the cost of intervention on everyone and the eventual result.

    To put it simply, the kind of equality that could be seen in late years USSR or pre-reform China is much less desirable than the kind of limited inequality you could find in Japan and Western Europe.

    In short, I want everybody to keep getting more cake. Equal shares of a small cake is not enough. Unequal shares of a growing cake neither. Bigger cake and relatively equal cake, YES.

    As I hint above, the view that growth comes first reflects a particular view of the development framework.

    But what are the alternative views ?
    I mean growth is more income, more stuff, more opportunities. Those things buy health, buy education, buy ACs and cars and computers and beer and clean water and clothes and washing machines.

    What else is devellopment if it's not more people having more access to everything that makes life better ?


    So I don't think equality is a relative notion. Procedural equality (whether something was achieved in a fair way) might be but not culmination equality (Was the outcome fair). Because the assessment is gap based, it is not relative.

    The effect the gap has on people's lives is relative. So is the perception of the fairness of outcomes (but this is another topic).

    You're right to distinguish inclusion and equality. But in the post you wrote about equality a few weeks ago, many of the bad effects of equality had more to do with inclusion than equality per se.

    Income inequality being just one example of course.

    If you use equality or rights or of access, we go back to equality of opportunities.


    A capabalitities approach is rooted in a different economic understanding of the the outcomes. Its not a social approach, it an economic approach to the issues, based on a different view of development.

    Is it or is it not a good way to tackle the most relevant issues ?

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  11. ”In short, I want everybody to keep getting more cake. Equal shares of a small cake is not enough. Unequal shares of a growing cake neither. Bigger cake and relatively equal cake, YES.”

    Of course a larger cake equally shared is better than a smaller cake equally shared. But a smaller cake equally shared is certainly better than a larger cake unequally shared. I believe people place greater weight on “gaps” than the vastness of their own choices. At the end of the day if everyone was the same we would all be happy! Its when others have more choice than us, that cause us to be unhappy.

    ”What else is devellopment if it's not more people having more access to everything that makes life better ?”

    Of course more freedom / choice is development. But so is more equality, if you agree with my assessment above. In any case inequality can impact negatively on growth :)


    ”Is it or is it not a good way to tackle the most relevant issues ?”

    I assume the “it” is growth. Of course growth is critical, but it needs complementary measures. I think we agree on that.

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  12. Of course a larger cake equally shared is better than a smaller cake equally shared. But a smaller cake equally shared is certainly better than a larger cake unequally shared.

    Is it ?
    Doesn't it depend on the size of the slice the poorest get ? What happens if the smallest slice of the big unequally shared cake is still bigger than the smallest size of the small equally shared cake ?

    I believe people place greater weight on “gaps” than the vastness of their own choices. At the end of the day if everyone was the same we would all be happy! Its when others have more choice than us, that cause us to be unhappy.

    2 things:

    - I've been in USSR when it was called the USSR. I've seen the food rationing, I've seen the gas rationing. I've seen people amazed by what I had back at home. And all that. There's no way I'd believe that unequality of the slices matter more than the size of slice itself. Furthermore, think about immigration. Think about people who are middle or upper class in the third world taking a "status cut" in exchange for a "pay cut" by moving to the develloped world and doing lesser jobs or going down the pay ladder. If relative positionning was that important, they wouldn't do it.
    - I don't believe even the most egalitarian people on earth would want perfect equality. If you ask people around and ask if they think it's fair for a medical doctor and a janitor to be paid the same, they certainly wouldn't agree. Or if two employees with obvious productivity/work-ethic differences should be paid the same. And that's the rational part of the acceptance of a "level" of unequality. Add culture, religion and other biases and you'll find people thinking that their chief should make more just because that's how it is.

    So no I don't agree.
    And I definetly think that seeing others "have more choice than us" is not what causes to be unhappy. It's far more complicated than that.


    Of course more freedom / choice is development. But so is more equality, if you agree with my assessment above. In any case inequality can impact negatively on growth :)

    Well I don't.

    I assume the “it” is growth. Of course growth is critical, but it needs complementary measures. I think we agree on that.

    No "it" was "capabilities". And that was in response to:

    A capabalitities approach is rooted in a different economic understanding of the the outcomes. Its not a social approach, it an economic approach to the issues, based on a different view of development.


    I'm also increasingly confused by "different views of devellopment". Are there really large difference in goals among people concerned about devellopment ? Or is it a matter or means ?

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  13. Random,

    I think we would have to agree that ultimately "happiness economics" may not be economics at all. I mean personally I think people care more about gaps that absolute levels. Atleast timeseries data seems to show that. You have given a "cross sectional" example that disputes that.


    In terms of "views" of development. I think there differences in what people mean by development. Some see it as growth leading to more choices etc. Some see it as a search for freedom which growth helps to achieve but it may not necessary be the binding constraint.

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  14. I think we would have to agree that ultimately "happiness economics" may not be economics at all.

    yes.

    Some see it as growth leading to more choices etc. Some see it as a search for freedom which growth helps to achieve but it may not necessary be the binding constraint.

    Those two thing really look close.. "choices" vs "freedom" ?

    Furthermore, what I really dispute is the idea that growth could not necessarily be the bidding constraint in that search for freedom. It's not the only one but it's a necessary one, in my opinion.

    But yeah, could you give examples or something concrete so i can understand what you mean ?

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  15. "Those two thing really look close.. "choices" vs "freedom" ?"

    "choices" are always meant in an "economic" sense. "freedoms" in the capabilities sense go beyond economic considerations.
    Or to put in other work economic freedoms are choices...but freedoms go beyond economic ones..

    "Furthermore, what I really dispute is the idea that growth could not necessarily be the bidding constraint in that search for freedom. It's not the only one but it's a necessary one, in my opinion."

    Hope the clarification I present above makes you less dogmatic about the necessitity of growth...

    "But yeah, could you give examples or something concrete so i can understand what you mean ?"

    A concrete distinction I give is the post A cultural approch to Zambia's development....

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  16. "choices" are always meant in an "economic" sense. "freedoms" in the capabilities sense go beyond economic considerations.
Or to put in other work economic freedoms are choices...but freedoms go beyond economic ones.. 


    Ok, give an example of a freedom you value that is not economical or linked to economic status.

    Hope the clarification I present above makes you less dogmatic about the necessitity of growth...

    It's really that i can't think of anything that I value that is bought (directly or indirectly).



    A concrete distinction I give is the post A cultural approch to Zambia's development....

    I've read it before and quite honestly, there's nothing concrete in it.

    I mean you discuss institutions a good deal but that's about how to deliver devellopment, not about a fundamentally different "view" of devellopment.

    How is it different? What's being develloped? What are the goals? What are those people trying to get?

    And the fact that we're talking culture so much makes me suspect that "freedoms" is not really the "à propos" word here. :-)

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  17. "Ok, give an example of a freedom you value that is not economical or linked to economic status."

    Freedom of religion.

    "I've read it before and quite honestly, there's nothing concrete in it."

    The point I make their is that people may value different freedoms e.g. they may place higher value on the freedom to vote (in a democratic sense) if that delivered growth (economic freedom) or they could trade that for non-democracy in form of chiefs, if they valued cultural freedom before economic freedom.

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  18. "Ok, give an example of a freedom you value that is not economical or linked to economic status."

Freedom of religion.

    I knew you wouls say that. I just knew.

    In any case, economic independence may not guarantee religious freedom, but it sure does help.


    The point I make their is that people may value different freedoms e.g. they may place higher value on the freedom to vote (in a democratic sense) if that delivered growth (economic freedom) or they could trade that for non-democracy in form of chiefs, if they valued cultural freedom before economic freedom.

    I see.
    You say cultural freedom but that's not what you mean, you mean traditions. And traditions aren't about freedom (i don't think you mean freedom of religion either).

    Beyond that, it's still a bit vague and odd. Are we going back to the "chief are the embodiment of our traditions" thing ? Do people knowingly choose a system that they believe will deliver less growth because they value traditions more ? In Zambia ? Or is that "choice" either made by the ruled or made while thinking that the traditional way will deliver more growth ?

    Still, standards or living, health, education, capabilities are not what you had in mind ?

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  19. I am in the middle of responding to your comments on chiefs on the other post..

    But I surprise by this question:

    "Do people knowingly choose a system that they believe will deliver less growth because they value traditions more ?"

    My point is that people knowingly choose systems that restrict their long term freedoms in other areas.

    A religious choice does that e.g. people become monks.

    For an economist this is easy to accept - the whole point of precommitment is precisely to constrain your future freedom.

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  20. "Do people knowingly choose a system that they believe will deliver less growth because they value traditions more ?"

My point is that people knowingly choose systems that restrict their long term freedoms in other areas.

A religious choice does that e.g. people become monks. 

For an economist this is easy to accept - the whole point of precommitment is precisely to constrain your future freedom.

    Yeah, individuals do that and that's fine.

    But we're talking about nations, whole countries.. I mean "growth" doesn't refer to individuals here, does it ?

    So my question still stands, do nations knwingly choose to establish a system they believe to be less efficient than another ?

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  21. Well..the discussion somewhat veered off course. We did start talking about individual choices etc.

    Of course at the national level groth is important and I don't dispute that....but their still remains individual or local choices for which economic freedoms that growth brings may not be vital.

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  22. Well..the discussion somewhat veered off course. We did start talking about individual choices etc.

    hmmm, no, we did start talking about growth.

    Of course at the national level groth is important and I don't dispute that....but their still remains individual or local choices for which economic freedoms that growth brings may not be vital.

    In concrete terms, do people say "do not build and finance a free healthcare facility in this village because i value my traditional therapist more" ? Do farmers voluntarily decide to not use more productive methods because it's not in their culture (i have a story in ethiopia about this) ? Do that many individual refuse to use indoor plumbing or tv sets ?

    What confuses me is that you seem to argue that there are "different goals", if you were arguing that there are different means and people have preferences, I'd understand, but "i don't want economic freedom" ? hmm hmm..

    And even if we were talking about means, I still don't believe that the choice is made in good faith. I mean it's not like Mugabe would ever argue even if land reform disrupts the economy and lowers the living standards, it's still desirable because it's fundamentally just. The official line was that it was just and more efficient. Same with the Ethiopians who oppose land privatization, they argue that it would be unfair and unefficient (though as i pointed out in my post, Zenawi is more than willing to argue that it's only efficient in the short-term). Or with anyone who decided to make different choices.

    Once again, except for exceptions like the Amish people don't pick a system that they believe is less efficient and will bring less growth.

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  23. The point is that people have non-economic preferences which sometimes reveal themselves in national choices.

    Mugabe does believe that access to land as an intrinsic right and that no amount of money from the Europeans would change his position.

    Not everything has a price...

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