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Easterly’s book on aid and autocracy

My review of William Easterly’s book The Tyranny of Experts for The Times:


Imagine, writes the economist William Easterly, that in 2010
more than 20,000 farmers in rural Ohio had been forced from their
land by soldiers, their cows slaughtered, their harvest torched and
one of their sons killed — all to make way for a British forestry
project, financed and promoted by the World Bank. Imagine that when
the story broke, the World Bank promised an investigation that
never happened.

That is, says Easterly, what occurred in Mubende District in
Uganda. It exemplifies all that is wrong with development in
Easterly’s view. It is too top-down, too crony with despots, too
remotely technocratic and too indifferent to the political and
economic freedom of local people. It is run by a tyranny of

This book is not an attack on aid from rich to poor. It is an
attack on the unthinking philosophy that guides so much of that aid
from poor taxpayers in rich countries to rich leaders in poor
countries, via outsiders with supposed expertise. Easterly is a
distinguished economist and he insists there is another way, a path
not taken, in development economics, based on liberation and the
encouragement of spontaneous development through exchange. Most
development economists do not even know they are taking the
technocratic, planning route, just as most fish do not know they
swim in a sea.

Easterly traces the history of this mistake back to the first
half of the 20th century, when semi-colonial Western powers in
China, in order to preserve their interests, used big charitable
donations to support an autocratic regime under Sun Yat-sen and
then Chiang Kai-shek, who got the message that development was the
card to play in justifying despotism.

In the 1930s, the British had to scramble to find a new excuse
for their colonies — whose occupation had always been justified on
grounds of racial superiority, an argument looking threadbare as
the depression and Nazism made pith-helmeted district commissioners
seem less god-like. A retired colonial office civil servant named
Lord Hailey came up with a technocratic justification instead —
that we were guiding the development of India and Africa. He called
for “a far greater measure of both initiative and control on the
part of the central government”.

During the Second World War Hailey got the Americans to go along
with this, by suggesting a similar line used to uphold southern
segregation — economic betterment would come first; political
liberation could wait. The Cold War meant a new justification for
the same policy in Latin America: use aid to prop up dictators.

The consequence was that it was assumed that the newly liberated
Third World was best ruled by autocrats. “The masses of the people
take their cue from those who are in authority over them,” said
theUnited Nations Primer for Development in 1951. Nanny
state knew best. Top-down development by LSE graduates was not just
the best way; it was the only way. And it was frequently

To this day, the head of the World Bank tours China, praising
its “leadership” and “steady implementation with a determined
will”, as atrocities abound. Tony Blair’s African Government
Initiative believes in “strengthening the government’s capacity to
deliver programs” in its poster-boy of Ethiopia, a country whose
ruler uses aid to crush opposition and grab land through
“villagisation”. Nobody seems to mind.

Easterly believes history undermines the argument that
dictatorship, even of a benevolent kind, is necessary for economic
development. The story of the West’s rise, the roaring of the east
Asian tigers and of China’s sudden growth surge are actually cases
of spontaneous order, unplanned innovation and liberation from
top-down rule, not central planning.

For instance, Deng Xiaoping gets the kudos for China’s miracle
when all he did was recognise after the fact a spontaneous
rebellion against the continuing failure of collective farms. And
Lee Kuan Yew of Singapore was sensible enough not to prevent (and
then to take the credit for) an organic improvement in a city state
exposed to world trade and populated by mercantile Fujian

The decades-old view that conscious policy design offers the
best hope for ending poverty, is just another a form of
creationism, embodying the fallacy of intelligent design – that
because something is ordered and intricate, it must have been
ordained by an intelligent mind. In fact, as Adam Smith and
Friedrich Hayek (and Charles Darwin) realised, no expert can ever
know enough to rival the information that emerges from the
spontaneous interactions of many people.

Technocrats also tend to have a “Blank Slate” view that the
history of a country does not matter much; have traditionally
neglected trade; and have often ignored regional or individual
trends in favour of national ones. Easterly describes the success
of the Mourides from Senegal as a rebuke to the experts. Go up to
an African street retailer in New York, Paris, Madrid or Milan and
ask him where he comes from. The chances are he is a Mouride, a
merchant embedded in a supportive web of credit, trust and
remittances that this religious brotherhood maintains — a bit like
Jews in medieval Europe. The Mourides were practising microfinance
for decades before the development industry discovered it. But
partly because they don’t fit inside a country, conventional
development economics misses such folk.

“It was an unhappy accident,” writes Easterly, “that development
thinking stressed development at the unit of the nation and was
scornful of trade at the moment of independence of many new nation

Easterly is a fluent writer and a good economic historian, at
home describing the differences between Friedrich Hayek (a
proponent of bottom-up development) and Gunnar Myrdal (top-down),
as he is recounting the history of one particular block in New York
city, which he has studied as a case history of spontaneous
development. This group of houses on Greene Street was once a
freed-slave small-holding, then part of a larger farm, then a
brothel, then a garment factory, then an artist’s studio and is now
full of posh apartments and an Apple store.

The book’s weakness is that having set up a strong historical
and theoretical argument against technocracy and for bottom-up
development, Easterly does not then follow through with some
examples of how the latter might work in practice. Nor does he
tackle the question of whether at least some parts of the modern
aid industry, especially among NGOs and charities, might be getting
rather better at helping in bottom-up ways. It would have been good
to see a manifesto for how Easterly would run the World Bank or for
that matter the Gates Foundation.

By Matt Ridley | Tagged:  rational-optimist  the-times