Occasionally an economist produces a readable book. When I was young, Canadian born Harvard economist J K Galbraith was the doyen of the historically grounded, compelling read on political economy. In The New Industrial State (1967), Economics and the Public Purpose (1973) and The Age of Uncertainty (1977) Galbraith took aim at the privileged and wealthy, corporate monopolists and technocrats, and weak politicians in roughly equal measure.
Galbraith described the late 20th century tensions between those advocating the laissez-faire policy prescriptions of Milton Friedman and the Chicago School, and those – such as himself – who favoured more interventionist neo-Keynesian economic policies. He irritated and entertained, and he always maintained a long term perspective. No historical ‘blank slates’ for Professor Galbraith.
Among readable economists today we may list Robert Reich, former Secretary of Labor to Bill Clinton, Joseph Stiglitz, former Chief Economist at the World Bank and Nobel laureate, and Paul Krugman, also a Nobel laureate. All three have become influential commentators on how governments and financial institutions do – and do not – deal with poverty and inequality. And now we have William (Bill) Easterly with his theories on international development. Professor Easterly is especially interested in the under-performance of the multilateral development institutions and ahistorical blank slate-making by autocrats and technocrats.
The Economic Institutions of International Development
Ever since their formation in the immediate post-war era, international development institutions like the UN and the World Bank have been critiqued on multiple levels. Bureaucratic incompetence, ineffectiveness and irrelevance are among the milder accusations. Political and ideological bias, support for despots, and systemic institutional corruption represent some of the more serious charges.
As the pre-eminent institutions responsible for reducing global poverty for two generations, it is understandable that the World Bank and the UN receive the fiercest criticism. But they are not alone. Today even well intentioned billionaire philanthropists like Bill Gates, progressive western governments, non-governmental agencies and academics like Columbia University economist Jeffrey Sachs receive severe critical commentary for their attempts to intervene in the future economic prospects of the world’s poor.
Journalist and author Graham Hancock’s 1989 book The Lords of Poverty: The Power, Prestige, and Corruption of the International Aid Business was an early and particularly unforgiving example of the genre. Hancock comprehensively traduced the multilateral and bilateral development agencies and their staff who he saw as self-serving, self-perpetuating and betraying the public trust. Later Michael Maren extended this criticism to the international development NGOs in his 2002 polemic The Road to Hell: The Ravaging Effects of Foreign Aid and International Charity.
Today the entire architecture of international development assistance is in something of an existential crisis. From the top down modern utopianism of Jeffrey Sachs to C K Prahalad’s notion that multinational corporations (MNCs) may be the solution to economic inclusion of the poor at the ‘bottom of the pyramid’, proposals to alleviate global poverty have attracted ever more exotic and outlandish theories. The short term hype around these ideas, fostered by rock stars, billionaires and ex-politicians alike, underlines the level of impatience among high profile advocates of international development for the deployment of magic bullet solutions to complex human problems.
Sachs’ dreams, described in his Bono-endorsed 2006 book The End of Poverty: Economic Possibilities for Our Time, are today taking on more of a nightmare-like quality as criticisms of the experiments based on his theories and practice gather momentum. Canadian journalist Nina Munk’s 2013 book The Idealist: Jeffrey Sachs and the Quest to End Poverty, dismembers the actual experience of two of Sachs’ millennium villages projects in excruciating detail.
And C K Prahalad’s erstwhile colleague at the University of Michigan, Aneel Karnani comprehensively demolished the MNC-led ‘bottom of the pyramid’ theory of development in his book: Fighting Poverty Together: Rethinking Strategies for Business, Governments, and Civil Society to Reduce Poverty.
The Tyranny of Experts
Into this confused and increasingly desperate marketplace for new ideas in international development William Easterly of New York University has launched his latest provocation. The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor (Basic Books, 2014) is a thoughtful contribution in the tradition of J K Galbraith which is guaranteed to irritate many of those well intended managers of international development institutions whose careers and lifestyles also happen to depend on a perpetuation of the status quo.
Easterly is no stranger to iconoclastic commentary on development. His first book was The Elusive Quest for Growth: Economists Adventures and Misadventure in the Tropics(2001) – a publication that apparently earned him dismissal from his post as an economic advisor to the World Bank.
In The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good (2006) Easterly took aim at his previous employer and pretty well everyone else in the west who seeks to plan and prescribe solutions to poverty in the majority world. In the first chapter of the book he contrasted the effectiveness of US and UK publishers to distribute millions of Harry Potter novels with the abject record of western development agencies that have failed to deliver inexpensive medicines to millions of victims of malaria and other preventable diseases despite spending $2.3 trillion in development assistance over the previous five decades.
In Tyranny of Experts, Easterly cites Adam Smith and Friedrich Hayek at length, thereby opening himself up to immediate criticism from the left. But what may be confusing to left-leaning commentators is that Easterly uses Smith’s and Hayek’s arguments in a robust defence of the rights of the poor against both national despots (right or left) as well as their international technocrat advisors. Easterly describes the anti-monopolist and anti-totalitarian perspectives of both of his primary economic influences. And he reinforces his own contemporary analysis by tracing the emergence of authoritarian and racist approaches to international development in the early twentieth century with direct reference to the post-colonial political interests of the UK and the cold war interests of the US – and today the War on Terror.
Building on evidence from geographic case studies as diverse as modern day Benin, China, Colombia, Ethiopia, Ghana, Singapore, South Korea and the SoHo district of Lower Manhattan, Easterly directs withering criticism at experts who base their prescriptions solely on the nation state, whilst ignoring the diverse social, cultural, ethnic and historical contexts of the people who happen to live in those often arbitrarily defined geographies. He uses the comparative histories of slavery and migration to contrast their very different impacts from both human rights and economic development perspectives. Easterly cites a World Bank calculation that remittances from migrants are now three times the size of official development assistance to underline the impact of smart economic migrants who transcend political and economic constraints.
Throughout the book Easterly notes the absence of evidence for many of the claims of development experts for economic growth and social progress fostered by benevolent autocrats. He castigates Bill Gates, Tony Blair and many others in the development community for their predilection for good news stories involving strong leaders. And he points to the political bias, measurement errors and sheer randomness of phenomena such as ‘miraculous economic growth rates.’ He concludes that individual action by the poor within broader regional contexts has much greater explanatory power for temporary periods of exceptional growth.
If there is any takeaway from Tyranny of Experts it is that spontaneous forces (enabled by Adam Smith’s ‘invisible hand’ of the market), grounded in the democratic political and economic rights of the individual – versus the state – represents the greatest long term hope for the world’s poor. Interestingly, although Easterly does not develop his thinking with reference to the management literature, his ideas coincide very closely with the emerging interest in grass roots entrepreneurial approaches to development (including the growth of the micro-credit movement), which are finally getting traction with the mainstream development community.
Back to the Banks, the Development Community and to the Role of Academia
Reflecting on his experience during the 2008 financial crisis, former UK Prime Minister Gordon Brown said in a 2011 speech in Edinburgh: “The institutions we built in the 1940s won’t solve the next crisis.” Unfortunately Mr Brown’s personal stock was by then insufficiently high for his ideas for reform to generate much resonance with policy makers, still less evoke any urgency in their response.
Apparently, the next global financial crisis has now been postponed indefinitely, so the likelihood is we may return to business as usual at the UN and the International Financial Institutions (IFIs). Sadly, that may not help the world’s poor who experience personal crises on a daily basis and may be searching for something different.
But signs of hope are gathering. Tyranny of Experts neatly summarises what we should do less of. This is helpful with respect to the immediate imperative of minimising violations of the political and economic rights of the poor, particularly where it involves the investment of public money. But it does not necessarily prescribe what we should do more of – except in very general terms with respect to the protection of those rights through active support for democratic empowerment.
Happily, today there are growing numbers of development organisations, including IFIs, bilateral agencies and foundations working actively to promote self-reliant enterprise for the poor with or without a pre-existing framework of democratic rights.>
And there are Universities in the west and in the majority world that see their international education and research missions as very much engaged with exploring what community-based economic development looks like through shared learning and shared action. For Cape Breton University, given our regional post-industrial economic context and our global vision, this is a great opportunity for our professors and our students to partner with like-minded institutions in the majority world to research, educate and learn together.
Dr David Wheeler
President and Vice Chancellor
 The Age of Uncertainty was first commissioned as a BBC documentary – apparently much to the irritation of Margaret Thatcher.
 The current migrant oil worker phenomenon between Cape Breton and Alberta can also be analysed from both remittances (positive economic impact) and family disruption (negative social impact) perspectives.