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Friedman and Sowell Dialogue on Bauer

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The latest issue of the Cato Journal features a transcript from a chat Milton Friedman and Thomas Sowell had about the late great Peter Bauer. Highlights:

Sowell: One of the things that [Bauer] mentioned in one of his later books was that people were saying things like: “We took all the rubber from Malaysia”; “We took all the tea from India.” And he pointed out that this was the direct opposite of the truth. The British brought the rubber tree to Malaysia; they brought the tea to India—and the Indians and Malaysians benefited.


Friedman: Many of these approaches [to economic development in the Third World] took on the characteristics of religion, which is believed without investigation. But yet, they must have been plausible. Large numbers of able people believed them. Those views were very deeply entrenched. So, it sounds simple to come along and say, “Look, obviously, if the vicious cycle of poverty were true, no country could have ever developed.” But, it wasn’t obvious at all and it took a good deal of courage and stubbornness to resist that trend.

Sowell: Because Peter Bauer wrote in such a very plain way, and because the things that he said now seem obvious, I fear that at some point in the future people will be looking back and say, “What was the big deal? All of this is just stuff anybody should have known.” But, it’s almost like saying, “So, the man traveled 10 miles in a day—what is that?” Until you say, “Well no, he traveled 10 miles hacking his way through a jungle,” and that’s essentially what Peter Bauer did. He had a whole jungle of preconceptions and dogmas out there.

Peter Bauer lived long enough to see cutting-edge development economists like Jeffrey Sachs endorse his main views. Unfortunately, he did not live long enough to criticize Sachs and company for their statist relapse.

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COMMENTS (6 to date)
daveg writes:

Jeffrey Sachs advocated very rapid adaptation of free market economics in Russia. It led to mass corruption. He was a bad "doctor".

There is a very long path from discovering rocket fuel and making a rocket. And there are lots of explosions along the way.

Theoretical economists don't seem to understand this, and need to get their own Hippocratic oath - first do no harm.

Roger M writes:

Peter Bauer influenced my thinking a great deal and I'm grateful for his writings. Sachs, I believe, was on the right track in Russia. His ideas succeeded fairly well in Poland. What he didn't realize was the abscense of institutions in Russia that Poland enjoyed.

Daniel writes:

I think Poland enjoyed neither rapid econimic growth nor high employment in post-communist times (18% unemployment to-day). Economic progression came only via the European Union, i.e. sharply increased foreign investments because of long-term political stability as EU-member and because of heavy subsidies from Brussels.

The Polish electorate has recently chosen a ultra-conservative president and a conservative government. First thing the new government is doing - they bolster the social net, protect the agricultural sector further and shut down the border for low-wage workers from Ukraine or Slovakia.

I think the reason for retracting from economic liberalization in Europe is due to the loose-loose - situation for a large part of the electorate in most european countries. The recent election in Germany is further evidence.

Roger M writes:

Well, if the PBS Series, Commanding Heights, was correct, Poland enjoyed a huge boost immediately after the reforms, but stagnated shortly afterwards. According to Sachs, stores in Poland had no food on the shelves just before reforms.

sauvik chakraverti writes:

peter bauer should also go down as a hero, because he opposed a huge big international rent-seeking bureaucracy and intelligentsia, from the foreign aid types to the world bank loan-wallahs. he pointed out that beggars in india are not a proof of poverty. rather, they proliferate because the main communities believe that giving alms to the poor earns them spiritual merit. there are no sikh, jain or parsi beggars in india because these communities practice self-help. bauer pointed out that overcrowded cities are not on account of the 'population problem' but caused by transport bottlenecks. with better transport, there would be satellite towns and suburbs, and no overcrowding. he advocated cash crops for farmers. his life and thoughts are a great inspiration for people like me. my only regret: i never got to meet him!

English Professor writes:

Bauer's work is extraordinarily compelling; he strips away all the nice-nice chatter that has allowed corrupt politicians to siphon off billions of dollars in aid.

As for Sachs's work with Russia and Poland--yes, there have been terrible problems, but once again we have to ask the economist's favorite question: compared to what? The corruption in Russia is clear in hindsight--the nation lacked all of the necessary institutions for civil society and rule of law. But what alternative type of reform was going to bring about those institutions? Sachs was overly optimistic, and Russia may never turn into a modern liberal state; but if that is the goal, his prescriptions seem more likely than any sort of "socialist" reform of producing that result. The real world is certainly more complex than any theory of development, but all of the alternatives to Sachs's recommendations (read Bauer to find out what they are) have failed even more miserably.

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