Wednesday, August 15, 2007

Farewell to alms

David Warsh takes issue with Gregory Clark's economic history book: Farewell to Alms. Clark essentially says that the UK industrialized through Darwinian improvement in the population -- rich people (with good habits, abilities etc.) produced more chidren than poor people (with bad habits, abilities etc.) eventually leading to a "higher quality" population which could then industrialize and modernize.

I find this rather extraordinary claim hard to believe. I am not an evolutionary biologist, but I find it tough to swallow that "bad" human traits could be bred out within the 6-7 generations that lead up to, and through, the industrial revolution. I also observe that the modernization of the Far East, Japan, China, India, Ireland etc. have occured without any obvious genetic alteration whatsoever, certainly in China with its one child policy, and so do not understand why the UK needs this special driver.

Warsh has different issues with the piece. The first is that Clark self-aggrandizes too much (I cannot judge this claim in any way). The second is that Warsh does not like the policy prescription implicit in the book's message:
[Clark] castigates the community of development economists in general, and the "cult centers" of the World Bank and the International Monetary Fund, in particular, for their failure to recognize that culture -- "socially induced lethargy" -- is the problem. . "[L]ike physicians of the pre-scientific era who prescribed bloodletting as the cure for ailments they did not understand, the modern economic doctors continue to prescribe the same treatment year after year" -- namely, democracy, public health, openness, the rule of law and education -- for countries that lack the social (and perhaps biological?) capacity to take advantage of modern institutions.

History shows, as we have seen repeatedly in this book, that the West has no model of economic development to offer the still-poor countries of the world. There is no simple economic medicine that will guarantee growth, and even complicated economic surgery offers no clear prospect of relief for societies afflicted with poverty. Even direct gifts of aid have proved ineffective in stimulating growth. In this context the only policy the West could pursue that will ensure gains for at least some of the poor of the Third World is to liberalize immigration from these countries..."
Although it is a depressing fact, I also think it is fair to say that the West has no model of economic development to offer still-poor countries. Latin America lags, Africa lags, Central Asia lags. The IMF and World Bank have been around for almost 70 years, rich countries have pumped $B of aid to poorer countries, and yet there seems to be little improvement. I respect Warsh's position, but it seems reasonable to say that the help offered to the developed world by the developing world has not helped. Certainly the portions of the world that have developed: China, India, Japan, Hong Kong, Singapore, South Korea, etc. have all done so without any obvious help from external bodies. I cannot think of a single example of an undeveloped country that has become a developed country primarily because through the help of external bodies -- but I'd love to be set straight here.

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