Contra Easterly

This is in response to an essay contest on Econtalk responding to an interview with William Easterly Рan economist who takes the feel-good position that the secret to development of poor nations is that they first adopt Western conceptions of personal rights. There is a 600 word limit.

When you start to view society as an organism that evolves, rather than as a machine, it makes you pessimistic about the possibility of spreading prosperity by transplant – it seems as fanciful as grafting gills onto a man. William Easterly advocates for exactly this. He believes that economic development can and should be catalyzed in poor countries by injecting into them institutions evolved in the West – namely democratic government and civil rights.

Based on a complete history of economic development, I have doubts about Easterly’s ideas. The history of development should begin with “the Great Divergence” – a process starting circa 1500 whereby growth in European nations accelerated, leaving the rest of the world behind and escaping the Malthusian trap for the first time. I note that none of the European states of 1500 were modern democracies – but neither were they totalitarian. Mostly they were autocracies that allowed a good deal of economic and social freedoms, freedoms that were protected by custom and by overlapping power hierarchies of king, noble, magistrate, and church.

Over time some of these multi-polar states evolved into democracies. But many of them were rich before the final victory lap of Democracy in Europe. That came only in the mid-20th century with the victories of the Anglo-American alliance in the great wars.

Easterly believes that democracy and rights to political speech and protest hold politicians accountable for delivering good policy, and are therefore the keys to kickstarting economic development. But this raises the question of how the rich world did so well without these institutions for so long. Furthermore, the dysfunction of modern American politics serves as a challenge to Easterly’s belief in democratic accountability. In America the approval rating of congress sits below 10% and yet incumbent legislators have near-perfect job safety.

Taking a broader view of the democratic world, the track record of democracy transplanted into foreign soil is poor. In multicultural societies implanted democracy leads not to growth, but to factionalism, infighting, and even civil war. Recent examples of elected governments hounded by religious rivalries in Egypt, Iraq, and Afghanistan should stand fresh in our minds. Decades earlier the democratization of former European colonies in Africa led to the invention of the sardonic description – “One man, one vote, one time”, referring to¬†the repeated process of democratic collapse into civil war and then into dictatorship. Why should people who lived through the cycle once live through it again?

It appears there is some topsoil of tolerant, pluralistic culture that is needed for Western-style democracy to thrive. Before we can use democracy as a development tool, we have to figure out how to make it grow healthy. If that expertise exists it is not getting to the right places.

Meanwhile, many development success stories happen under autocratic regimes. Sometimes, as in South Korea and Chile, these have transitioned into stable democracies *after* a period of rapid economic growth. In the middle-ground between autocracy and democracy are successful single-party states like Japan, Singapore, and China.

What matters most doesn’t seem to be the form of government, but having leaders who are public-spirited, educated, and that have strong enough support to maintain a local monopoly on the use of force. While markets can work fueled solely by self-interest, it seems we have not yet invented a political system which does not rely on wise and just men.

Democratization has been tried, and has failed, in much of the world. Easterly supports democratization in China. If he is wrong and China fractures under democratic rule, how many decades will pass before it stabilizes enough to resumes its rise?