"What must we do to end world poverty?" William Easterly asked his audience in the Chapel on April 23. After all, such widespread destitution "is unacceptable in a world with so much affluence." Easterly is professor of economics at New York University and co-director of NYU's Development Research Institute.
Easterly began his lecture by deconstructing the original question. "Who is this we?" he asked. Does this pronoun refer to people with unchecked political power? To experts in developmental economics? This approach to the dilemma of global poverty is flawed in three major ways, Easterly explained. First, this attitude in authoritarian – that is, "we" require absolute control and total obedience in order to solve the problem. Second, this attitude is paternalistic, since ultimately we are imparting our solution onto someone else's problem. And third, this attitude is hubristic. Never mind how we go about implementing the solution to global poverty; do we even have the capacity to find the right answer?
The solution to global poverty cannot be designed from the top down, Easterly stated emphatically. Rather, it must grow from the bottom up, with institutions accommodating it. And so the original question ("What must we do to end world poverty?") is technically unanswerable; such an approach can never end poverty.
Although we no longer unabashedly endorse the notion of central planning – the direct regulation of a country's economy by some sort of authority (usually government) – the idea was once widely accepted. Nevertheless central planning exists even today: Angelina Jolie is a good example. Her approach to ending global poverty is perhaps the most direct of all. She goes straight to foreign countries in order to adopt the children. No doubt a paternalistic endeavor, Easterly joked.
The authoritarian-paternalistic-hubristic (APH) approach to solving poverty harkens back to colonial times, when the poor were thought to be unable to solve their own problems. Early economic "experts" deemed that despotism was a legit form of government for those "backwards societies still in their infancy." Central planning would be a necessity in order for economic growth, they thought. And yet colonial America had still managed to develop before development economists, Easterly explained. Since 1776 per capita income has increased, on average, 35 times its original amount.
That leads to the admission that economic growth occurs even though we can't figure out how to deliberately implement it. "It's hard to know how the economy will respond to a policy," Easterly said. Poverty has fallen by two-thirds in the developed world, and there has been more economic growth in the last fifty years than ever before. Yet there is no economic growth in most countries with top-down planning.
"Success often happens without anyone designing it," Easterly stated. Economic development depends on "a few big hits," wherein specialized products circulate in specialized markets and independent entrepreneurs try to find out what will work where. Oftentimes examples of economic success seem arbitrary: Fiji exports women's cotton suits (dominating 42% of that market), and Egypt prospers partially by exporting household ceramics (toilet seats) to Italy. To further illustrate his point, Easterly explained that most movie studies make money from a few big successes. But, as Samuel Goldwyn (of MGM) once responded to a question about predicting which movies become popular, "nobody knows anything."
"Success is inherently an innovation, which cannot be predicted," Easterly explained. "To plan or organize progress is a contradiction. . . What works is individualism." The individual has more localized knowledge and more motivation for economic growth than does centralized direction. And the individual producer will gain the profits and bear the costs – a prime example of the "invisible hand." Ultimately, the individuals should take care of themselves; economic prosperity, like democracy, emerges from below.
APH approaches to ending global poverty are popular because plans are more attractive than gradual (and often unexplained) progress. Nevertheless, political and economic liberty is spreading, while poverty is decreasing – even though economists can't pinpoint why. Concluded Easterly: "Poverty ends by surprise."
This presentation was made possible through support from the Arthur Coleman Tuggle Lecture Fund.
-- by Alex Pure '12
