William Easterly: NYU RDI – ‘New Directions In Development’

Friday March 4th, NYU’s Development Research Institute brought Chris Blattman, Kevin Davis, William Easterly, Raquel Fernandez and Yaw Nyarko together to discuss their research and provide overviews on different aspects of development.   I’m including a summary and some comment on William Easterly’s presentation ‘ From Skepticism to Development’.

Easterly’s analysis on autocracies shows that a) autocracies are rarely benevolent and b) autocracies are very risky.  His two themes on the benefits of healthy skepticism and innovation/surprises did not translate perfectly into a new direction in development.  Individual rights, experimentation and innovation are good but how can they be harnessed for economic growth or even forge a new path for development?

Easterly wanted the audience to rethink the notion of the benevolent autocrat.  He argued that we have four biases that cause us to believe in this idea.  1 – mixed probabilities.  We see that about 90% of big success are autocrats and never pay attention to the fact that only about 10% of autocrats get to be big successes.  2 – the availability bias.  Google provides 271, 687 schollarly citations of successful autocrats but only 19,628 citations of autocrats failures.  3 – leader attribution bias.  We tend to attribute success to the leader even if he is merely riding on the coat tails of strong institutions and an economic upswing.  4 – Bias of the hot hand.  We assume that just because someone has been lucky before they will be lucky again.  This in spite of the fact there is more often a regression to the mean.  In other words, autocratic economies go on to become average.

Easterly went on to provide four facts ,(some more robustly supported by data than others) which demonstrate that autocraties do not always do so well.  For example their is no evidence that autocracies result in higher growth but there is evidence of a higher variance of growth.  This means that autocracies are a more risky path.  Easterly’s doubts about autocracies include the old standby of imperfect information regarding pro growth policies and autocrats ability to plan innovations.   Easterly describes a surprise factor.  Success depends on the unknowable.  For example who could predict that Egypt would become successful selling toilets to Italy and Slovakia selling TV’s?

In his final push against autocracies Easterly examines the notions of individual rights.  Quoting Hayek, he said “It is because every individual knows little and, in particular, 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.”

Should we be skeptical of individual rights?  Easterly argues no, there is no strong evidence against individual rights and long run trends support individual rights.  So if autocrats lack the local knowledge needed to be successful, then top down does not work and bottom up solutions are needed.  We can only assume that individual rights complement bottom up approaches.

Near the end, Easterly argues that people vote/act/decide based on their values.  Thomas Jefferson, he says, did not make his decisions based on analytical research from the Journal of Economics.  It is unavoidable that people make decisions based on values.

Easterly sums up his philosophy against autocracies and for individual rights with several Lincoln quotes the final being: 

“I claim not to have controlled events, but confess plainly that events have controlled me.”

 

 

In the end I found his presentation to be good enough to debunk a myth but almost too fatalistic to help development practitioners find a way to move forward.  Like post-modernist critics which argue for very localized knowledge it is tricky to determine how to bring about wide spread change.  No multi-ethinic developing nation will stand for successful experimentation in the north or west and failures in the south or east of the country.  People want policies that work, that are scaled up and adapted to their needs.  The benevolent autocrat may be a risky myth.  But it’s not clear who will take his place or how multiple individuals will figure out how to develop and implement new solutions.


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