Global Poverty and Its Sad Persistence
To the Editor:
In “The Global Poverty Paradox” [October], Nicholas Eberstadt uses a Western yardstick to measure results in non-Western places. He should consider the proposition that poverty is actually the norm and the West is the freak, the outlier. Perhaps the question is not “Why aren’t they successful?” but “Why are we?” It is an extraordinary situation we take for granted, in terms of human history, that life for most of us in the West is not, as Thomas Hobbes put it, “nasty, brutish, and short.” For the overwhelming majority of humans throughout time, such a bleak (from our privileged perspective) existence has indeed been pervasive. Europe went through many centuries of slaughter to get where it’s gotten. We stand on the shoulders of giants—and also atop a mountain of carnage.
To the Editor:
Nicholas Eberstadt gives a superbly insightful summary of the successes and failures of economic development in the post–World War II period. It’s not easy to fairly represent such a complex and heated debate, and Nick by and large does so. However, I have to register respectful disagreement with my friend and colleague on a few conspicuous areas:
1) Is development as easy as he says?
Here Nick departs from the empirical realism shown in most of the article: if development is so easy, why are there still so few rich countries? When Nick says the odds are against staying poor, he gets it rather backward: both historical and modern experiences suggest that the odds are against becoming rich. He is correct that the developing world as a whole has enjoyed unprecedented progress on material incomes, but this was progress made from a very low base, and meanwhile the rich nations keep getting richer—so there is little or no “catching up” to prosperity. Nick talks about success and failure, but not about the large middle in between. Alas, for every miracle like South Korea, for every disaster like Zimbabwe, there are many more, such as the Philippines, Papua New Guinea, Jordan, Morocco, Colombia, and Mexico, muddling along at stubbornly high or medium poverty rates.
2) Is state-building likely to work?
Again, Nick uncharacteristically departs from the evidence-based realism shown elsewhere in the article. Just as he demonstrates that aid successes are rare and failure much more common, the same is certainly true of state-building attempts—if anything, the track record is worse. When he excuses particular state-building failures as the result of “bungling,” which would work if only “done right,” he opens the door to the same defense of foreign aid. The excuse is not credible for either aid or state-building, because what the record shows is that “bungling” is very likely and state-building “done right” unlikely when outsiders attempt to socially engineer another society they don’t understand. Over the past decade, the Democratic Republic of the Congo has seen one of the most intense state-building efforts in the world, involving the UN’s largest-ever peacekeeping effort. Alas, aid and peacekeepers in the Congo not only show no signs of creating the barest minimum of “good governance,” according to recent news reports, the peacekeepers can’t even protect civilians against rape and murder in the villages next door to their own bases. As Friedrich Hayek pointed out so eloquently, we can’t even socially engineer our own societies, which we think we do understand. Hayek’s revolutionary insight was not only that markets are spontaneous with nobody in charge but that even the rules and institutions that govern markets are the result of spontaneous evolution. In Hayek’s words, there was nobody “designing” our institutions, they “grew.” They grew from values that respected individual freedom. So there has never been anybody actually in charge of “state-building” anywhere, and there is nobody likely to be able to do it anywhere now.
3) What does the culture perspective teach us?
Nick is right to raise culture as a central, long-run determinant of development; I and many other economists frankly had to change our minds after reviewing new research on this. However, which cultural values matter and where do they come from? The fundamental values are more likely to be those that respect individual rights and freedoms, much more so than the work and thrift values stressed by Nick; the latter likely follow from the former. After all, why save and work hard when your rights against theft or expropriation are not respected? We have a good natural experiment on this—people who appear to be lazy and spendthrift in their impoverished and unfree home countries become remarkably hard-working and high-saving after they immigrate to a free society like the U.S. (Just ask your Ghanaian cab driver sending his daughter to medical school—at least that was what the last one I met was doing.) It’s the rarity of the values of individual freedom around the world that is the most likely explanation for the continued rarity of prosperity. The good news is that today, those values are spreading more widely than ever before. This is due in part to the good case that Nick and many others make for free societies. In the end, despite my quibbles, I completely agree with Nick that the values of a free nation are both desirable in themselves and likely to pay off with increased material and physical well-being.
Professor of Economics and Co-Director of Development Research Institute
New York University
New York City
Nicholas Eberstadt writes:
I thank Andrew Maxwell for his kind words. It is always a pleasure to read William Easterly—no less so in the gracious and thought-provoking challenges he poses to my essay. Let us go through his points one by one.
1) With respect to the pace and contours of material advance and economic development in our modern era, Bill’s disagreement with my essay is not so much empirical as it is normative and definitional. He implicitly uses the criterion of “convergence” as his standard for measuring the success of the modern project of augmenting global prosperity: by that definition, global development only succeeds when former low-income countries catch up to or surpass former high-income countries. This relativistic criterion is perfectly defensible, as far as it goes and for what it can indicate—but it perforce ignores the consequential absolute improvements in prosperity and living standards that populations the world over have enjoyed in the postwar era, and indeed over the course of the 20th century.
Take Mexico, one of Bill’s examples of a contemporary society “muddling along at stubbornly high or medium poverty rates.” By the estimates of the late economic historian Angus Maddison, Mexico’s real level of PPP-adjusted per capita GDP in 2008 was 3.7 times as high as in 1950. By Maddison’s reckonings, moreover, Mexico by 2008 had reached the same level of per capita income that Finland achieved in the late 1960s (1967). According to the UN Population Division, Mexico’s overall life expectancy at birth these days (2005/2010) is a little over 76 years—a level fully two decades higher than half a century earlier: a level, furthermore that Sweden and the Netherlands, leaders in global health progress, did not themselves reach until the 1980s. Does this really count as “muddling along at stubbornly high or medium poverty rates”? Poverty may always, perhaps, be in the eye of the beholder. But such changes speak empirically to a tremendous and indisputable long-term improvement in material well-being for ordinary people in Mexico—improvements that may well be highly meaningful to the populations in question. (The same general points, incidentally, could be made about other countries Bill mentions.)
2) Bill takes me to task for being altogether too optimistic about the potentialities of “state-building” in the poorest and most chaotic reaches of the planet. I am mystified by such a reading of my essay. He chides me for “excus[ing] particular state-building failures as the result of ‘bungling,’” which would work if only “done right.” But in point of fact, I describe the U.S. intervention in Iraq (in part an effort at state-building) as “in many ways bungled”—no excuses proffered—and never once talk about how internationally promoted state-building initiatives might be “done right.”
The reason I did not offer any such suggestions is because I, like Bill, regard the task of externally abetted state-building as an extraordinarily difficult and demanding proposition—especially under currently accepted international norms for such engagement, and in the contemporary settings (Afghanistan and Democratic Republic of the Congo, among many others) where a functioning and legitimate state will be a precondition for any hope of sustained long-term economic development.
As the experience of early modern Western Europe attests, state-building can be a prolonged historical affair, replete with setbacks—and it is not always pretty to watch, frequently entailing mass bloodshed as the emerging state establishes its monopoly on violence. Like Bill, I take great stock in Hayek’s spontaneously emerging market institutions—but the performance of those institutions, even in Hayek’s and von Mises’s recounting, depends upon the existence of at least a “night-watchman state.” Such capacities are very largely absent today in most of the regions of the world that have suffered from long-term economic stagnation or retrogression—and for now, alas, there seems to be little evidence that a successful wave of state-building for these distressed societies is generally in the offing.
3) On the subtle and highly complex question of the interplay between culture and economic performance, Bill suggests that I slight the importance of “individual rights and freedoms” while overemphasizing such factors as “hard work and thrift.” Bill asks, “After all, why save and work hard when your rights against theft or expropriation are not respected?”
I urge Bill to take another look at my essay—because I address and attempt to answer that very question. In discussing the interplay between politics and culture, I specifically underscore “the crucial role of governance—which is shaped by, and in turn independently shapes, local attitudes, expectations, and motivations. Throughout the reaches of the world characterized by long-term economic failure…violent political instability and predatory, arbitrary, or plainly destructive state practices have shaken, or sometimes altogether destroyed, the institutions and legal rules upon which purposeful individual and collective efforts for individual betterment depend.” It looks to me as if we are in violent agreement here.
Beyond these particulars, I thank Bill for his generous comments about the substance of my essay and look forward to comparing notes with him again in the future.