Here is how author defines his main idea: “The technocratic illusion is that poverty results from a shortage of expertise, whereas poverty is really about a shortage of rights. The emphasis on the problem of expertise makes the problem of rights worse. The technical problems of the poor (and the absence of technical solutions for those problems) are a symptom of poverty, not a cause of poverty. This book argues that the cause of poverty is the absence of political and economic rights, the absence of a free political and economic system that would find the technical solutions to the poor’s problems. The dictator whom the experts expect will accomplish the technical fixes to technical problems is not the solution; he is the problem.”
PART ONE: THE DEBATE THAT NEVER HAPPENED
Chapter One: Introduction
Author starts this with imagining routine, for developing countries, application of government power to move farmers from their village to another place happening in Ohio. Then he stresses that such raw and cruel power application in developing world would occur under direction of Western technocratic elite, which finds it inconceivable in their own countries. Then author presents his claim that technocratic approach of forcing people to do “right things”, whatever it is, is not working regardless of how much money provided as “help” to support it. Author also discusses in this introduction what he wants to achieve with this book, anticipating accusations that he expects to be pointed at him, and provides a detailed list of what this book is not about.
Chapter Two: Two Nobel Laureates and the Debate They Never Had
The laureates here are Gunnar Myrdal – promoter of soft authoritarianism with socialist central planning and Friedrich von Hayek – promoter of freedom, not only as value of and in itself, but also as source of economic prosperity.
Author then discusses debates that representatives of these two polar views should have, but never did:
- Debate on the Blank slate versus Learning from History
- Debate on the Well-Being of Nations versus that of Individuals
- Debate on Conscious versus Spontaneous Solutions
Finally, author states that Authoritarian point of view obtained practically unanimous support of intelligentsia, while its supporters, especially Myrdal understood that large scale planning does not work neither logically nor practically. So the only way to promote it is to avoid debates at any cost.
PART Two: WHY THE DEBATE NEVER HAPPENED-THE REAL HISTORY OF THE DEVELOPMENT IDEA
Author starts here from referring to Truman’s initiative to start foreign aid in 1949, which is considered the starting point of the process and then reject this idea and demonstrates that it had its roots in colonialism and locates its formative years between 1919 and 1949. This part reviews the development and implementation of Authoritarian, expert led development idea in three areas: China, Africa, and Colombia.
Chapter Three: Once Upon a Time in China
Author start this chapter with introduction of two economists: Condliffe, who supported free development and H.D. Fong who supported authoritarian model. Then he analyses role of racism, which was widely accepted among western intellectuals, who believed that people of “inferior” races could not develop their countries without external direction and control. Author also discusses consequences of Versailles treaty and its system of mandates. Author then moves to discuss development in China where revolution brought to power socialist Sun Yat-sen who fully supported idea of authoritarian development. Author then reviews role of American experts who brought in money from Rockefeller foundation and network from YMCA. He also looks at creation of the Institute of Pacific Relations (IPR) under leadership of H.D. Fong that start looking for development projects in China to implement authoritarian model. Author also discusses attempts to promote democratic development by Condliffe and Yuan-li Wu, which were not successful. All this ended, however, with communist takeover of China in 1948.
Chapter Four: Race, War, and the Fate of Africa
This is the story of another not very successful attempt of expert led development, this time in Africa under leadership of Lord Hailey. This one was driven by idea to save British colonies in Africa by preventing race war that was brewing from the mid of the century. There is interesting narrative here about contradictions between British and Americans when British blamed Americans for racism, while American could not stand even idea of Empire. Author then briefly discusses how out of all this was born African nationalism with strong authoritarian tendencies. As representative type author uses Kwame Nkrumah.
Chapter Five: One Day in Bogotá
This chapter moves to Latin America to trace development of Authoritarian, expert driven development in Colombia. Author starts with two events of April 9 1948: selection of Colombia as test case of development by World Bank and assassination of popular leader Jorge Caitain, which triggered long period of massive violence. Author also trace development US attitudes to Latin America during this period.
PART THREE: THE BLANK SLATE VERSUS LEARNING FROM HISTORY
This part starts with the story of Bill Gates claiming achievement of dramatic improvements in fighting child mortality in Ethiopia. Author looks at this in details and finds that it is pretty much result of poor statistics, which does not allow any serious analysis of results. Author evaluates this as example of “Blank Slate” attitude when experts believe they can apply technical solution to the country without any accommodation of its specifics such as history and cultural values.
Chapter Six Values: The Long Struggle for Individual Rights
Here author looks at history of emergence of individual values and consequently democracy. He tells the story of fight between Emperor Barbarossa (1154) against cities in Italy some of which were able to retain their rights and some were conquered. This difference in history is still shows now in prosperity levels of these places. Author then discusses collectivist values, which always are values of rulers and aristocracy versus individualist values, which lead to the freedom. He traces how individualistic values moved after expansion of trade. First from Mediterranean to Atlantic: from Italian cities to Dutch and British, and then to America. Author also analyses different effects of autocracy vs. democracy on values and how it impacts behavior. He specifically looks at case of Asian type of collectivist values, using the story of British man of Chinese origin Henry Lee who became Lee Kuan Yew – the Singapore autocrat who established seemingly very successful form of political autocracy combined with business freedom. Here author provides an interesting analysis of trust between people in different societies:
At the end of chapter author contemplates on individual rights and values being an end in itself and then discusses findings of research on what poor really want, which turned out pretty much the same that rich and definitely includes freedom. He then points out that tradeoff between freedom and autocrat led prosperity is often illusionary and burden of prove is on experts who promote such tradeoffs.
Chapter Seven Institutions: We Oppress Them If We Can
Here author discusses oppressive institutions, which experts usually support, claiming that forcing people into some kind of behavior or organizational structure they do not want, leads to quick material improvement. Author looks at few case studies that demonstrate that cost of oppression is high, while benefits are dubious or non-existent. Author provides a very interesting data based on history of African tribes that either were victims of slave trade or avoided this, demonstrating that history of oppression carries long lasting damage to culture and attitudes, making it much more difficult to prosper. Interestingly enough, it relates not only to oppressed, but also to oppressors.
Chapter Eight: The Majority Dream
Here author looks at two places: New York and Colombia. Both places started as colonies with slavery. Author traces one street block in New York – Greene Street, who owned this place, how they lived, and what they did. He traces how this place initially was owned by aristocratic family of Bayard whose economic power was based on slavery and sugar plantations back when New York was New Amsterdam. However, by 1780s they lost this property due to changes in economy and mass influx of immigrants, opening it to succession of businessmen whose well being was based on prosperous free economy. Author briefly retells history of Erie canal that made New York into huge hub for trade between American plains with their agricultural production and Europe with its advance manufacturing. Author also traces economic development of refugees Sephardic Jewish family Seixas, who prospered for centuries in this place and still do. Finally, author looks at change in infant mortality and how democracy positively impact this parameter.
PART FOUR: NATIONS VERSUS INDIVIDUALS
This starts with interesting example of how differently could be perceived the same fact by people with authoritarian and collectivistic mindset from individualistic. The fact is migration of professionals, in this case doctors from poor countries to USA. From authoritarian point of view: “America is Stealing the World’s Doctors”, indicating attitude that doctors are less than human, rather kind of commodity produced by the “World” so their migration is equivalent to “America is Stealing” this commodity. From individualistic point of view doctors are human and if they decide that America is better place for them to live and work, then it is just indication that America has better society, at least for doctors. Author also makes important point that authoritarian attitude treats individuals from different countries differently – nobody would even think to say that prominent American doctor was stolen by Africa if he would move there from USA.
Chapter Nine: Homes or Prisons? Nations and Migrations
This chapter is about migration between countries and nationalism. Author’s position is that migrants from poor authoritarian countries to rich and democratic West reduce overall poverty in the world, expand protection of individual rights, send money back home in excess of any official help to their countries and do other nice things. Author also discuss limits and negatives of nationalism.
Chapter Ten: How Much Do Nations Matter?
Here author discusses impact of national policies on economic development- research project that he worked on at the beginning of his career. The point is that it does have significant impact in extreme cases, but generally within limits of normalcy such impact is only marginal. Generally, it is more function of luck and circumstances, so except for periodic good or bad exceptions, the condition of nation is pretty stable. This brings author to discussion of measurement of these conditions and their changes, noise vs. signal, measurement errors, and such. Here is author’s overall conclusion: “In the debate on the prerogatives of nations versus the rights of individuals, the case for the former depended on development that happened mainly at the national level. Yet nations do not matter for development as much as the development community says they do. When they do matter, it is sometimes in a bad way, as we have just seen with Aleppo disease and trade-destroying borders. The worship of national growth success has often led to giving the national state more powers to pursue this success. The extreme emphasis on national growth performance is misguided, for it shows little evidence of paying off—or even of any way to know whether the national strategy really is paying off or not, according to questionably measured growth rates. The casualties as usual are the individual rights suppressed in the name of the nation’s collective pursuit of success.”
PART FIVE: CONSCIOUS DESIGN VERSUS SPONTANEOUS SOLUTIONS
Chapter Eleven Markets: The Association of Problem-Solvers
Here author presents an opposite way of thinking of contemporary high-level bureaucrats such as president of world bank versus thinking of Adam Smith and other supporters of freedom. Author discusses Smith’s approach as “Problem-Solving System” that includes such parts as division of labor, gains from trade, gains from specialization, and other features of free market. However, author stresses that it would be mistake to look at it as market vs. government problem. It is rather about individual rights vs. state power. Here is author’s formulation:” We have now reached another crucial moment in the argument of this book. The technocratic approach—solutions by experts—arguably 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. If they get the knowledge (including localized feedback) wrong, they suffer neither economic nor political penalties. If their solutions should happen to work, they get neither economic nor political rewards. So, there is nothing to spur them on to scaling up successes any more than there is anything to motivate them to kill off failures. The Invisible Hand spurs development through the virtuous circle of specialization, learning by doing, and gains from trade. The Invisible Hand guides nonexperts to something they are good at doing. They start selling it, and they get even better at it thanks to learning by doing. Trade allows them to keep increasing the scale of the virtuous circle, selling more and more, learning to do it better and better, till they take the world market by storm.”
Chapter Twelve Technology: How to Succeed Without Knowing How
Here author presents his point of view on what causes economic development and concludes that it is technology. Technology is another spontaneous order and author looks in details at multiple examples of its development, stressing that it is not really subject to planning or even knowledge of where its development will move, so there is no place here for government direction.
Chapter Thirteen Leaders: How We Are Seduced by Benevolent Autocrats
In this chapter author reviews so called autocratic miracles like Singapore and provides evidence that it is not as good as advertised. Author presents two potential reasons for autocratic success:” The first and stronger variant is simply that autocrats are better than democrats for development (by development in this context we usually mean “rapid economic growth”). The second, weaker variant is that the best autocratic leaders are better for growth than the best democratic leaders, while conceding that the worst autocrats are worse for growth than the worst democrats.” The he proceeds to reject both of them using factual data and parables.
Chapter Fourteen: Conclusion
In conclusion author summaries the ideas of this book based on various stories told in previous chapters, making the point that use of government power to achieve progress generally fails like it did in Ethiopia and Uganda, while uncontrolled natural development generally succeeds as it did on Green Street.
MY TAKE ON IT:
I seldom agree with anybody to such extent as with this author. For me it is obvious that relationship between people, whether as equals with voluntary exchange and cooperation, or as superior and inferior with top down control, define economic success or failure, and generate prosperity or misery. The one important thing I think author did not pay enough attention to is parasitic character of all authoritarian regimes. The typical policy of authoritarian regime in a country with successful economy is to control whatever limited freedom it allows to its productive population, while continuously transferring wealth to themselves. In most important case such as China, which is now trying present itself as viable and even superior alternative to democratic fee market system, this parasitic character expressed by using cheap labor and unlimited power of regime to ignore environment, health, and freedoms of its own population in order to obtain investment and technological transfers from Western hosts. This was successful for a few decades with great help of western elite, which become rich from such transfer. However, at some point, and such point seems to be achieved, population in host democratic countries would recognize that such parasitic transfer has very strong negative impact on their well-being, leading to disconnect between them and autocratic parasite. It is quite possible that we already observing such disconnect expressed by raise op populist powers and resentment against both parasitic allies: foreign autocracies and domestic elite.