Arnold Kling  

From Poverty to Prosperity Watch

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Moral Hazard and Bank Policy... Olympanomics...

Bill Easterly interviews Paul Romer. Romer says,


To understand how to alleviate poverty, we must understand growth and progress. Progress comes from new and better ideas. Ideas come in two flavors, technologies and rules. To foster growth and development, the world's poorest residents need an opportunity to copy existing technologies and existing rules that are known to work well.

These ideas are stressed in our forthcoming From Poverty to Prosperity, which features separate interviews with both Easterly and Romer.

I will say that from a Tyler Cowen Masonomics perspective, Romer's idea for charter cities seems a bit naive. Cowen stresses the importance of cultural thickening. Cultures differ, and culture matters. Just as you don't turn Iraq into a functioning democracy simply by giving the country a constitution and elections, I do not think that you can create a functioning charter city simply on the basis of its formal rules. The informal norms followed by the inhabitants of the city will be much more important.

If the charter city is in fact governed by the rule-makers, and they undertake effort to ensure that informal behavior is consistent with formal rules, then the results are more likely to conform to Romer's hopes and expectations. However, that brings the charter city concept closer to the notion of colonialism.


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COMMENTS (9 to date)
The Sheep Nazi writes:

However, that brings the charter city concept closer to the notion of colonialism.

Moldbug got there first, I believe.

bgc writes:

There is the idea that national average IQ sets constraints on development

http://en.wikipedia.org/wiki/IQ_and_the_Wealth_of_Nations

(This thesis has since been tested and replicated on other data sets)

plus that national personality is also significant

http://www.econ.ucdavis.edu/faculty/gclark/a_farewell_to_alms.html

Add in that both personality and IQ are substantially hereditary - and it may be that things are even more intractable than implied by cultural explanations. For example, democracy may only be possible in societies with certain average psychological characteristics (not to mention that democracy may only be temporarily successful, as the ruling group learn how effectively to corrupt and rig the democratic system).

fundamentalist writes:

Latin America tried the formal rules without the informal behavior following and it has been disastrous. Informal behavior wins out every time.

Steve Waldman writes:

i like the phrase (and idea behind) "cultural thickening" very much.

the only references i can find to Tyler C using the expression are in Arnold K's blog posts (this one, and an earlier one about a talk he gave). does he discuss this in one of his books? anyone know which one? (scholargoogling gives some very PoMo references to the expression, none by TC.)

fundamentalist writes:

bgc, Concerning IQ, there is the chicken and egg problem. Does IQ drive development, or does development improve IQ? I think the truth is that one reinforces the other. But the simple truth about development is that all that is required is security of property. Most poor people in the poorest countries live from agriculture, but their productivity is very, very low. Most farming is done with short-handled hoes. Advancing farming technology to the use of oxen would improve productivity dramatically and enrich those farmers dramatically. And that would advance their agricultural technology to the level of Abraham in the Bible.

So why don't poor farmers use oxen? They're afraid their neighbors would steal and eat them!

Jessi Stewart writes:

I think it was brilliant to involve our former presidents blunders in your article about poverty. First of all if you're going to start degrading countries based on a prior infraction with another country try blundering the United States of America first. We have never been perfect nor will we ever be, but we try to spread democracy to places that are being degraded. I will admit however that we have been lacking on the entire continent of Africa.

And to the statement 'The informal norms followed by the inhabitants of the city will be much more important:' isn't this the point of the government? The government has the 'inhabitants' best interest in mind, and if that's getting themselves in or out of poverty should the government do something to help in either case?

Charlie writes:

Arnold,

It seems like there are lots of counter examples: Hong Kong vs. China, South Korea vs. North Korea, West Germany vs. East Germany. What about China's free enterprise zones?

Charlie

Bo Zimmerman writes:

RE: Jessi Stewart: isn't this the point of the government?

Responding to this question compels me, but such a project involves such fundamental views of human nature, one hardly knows where to start. Therefore, I will just say flatly: No, governments do not, nor have ever, had their people's interests at heart, except when they accidently correspond with their own; Ever; Anywhere. And no, even if government officials should someday develop such a motivation, it is not disireable to see their guns used to correct our souls.

Patri Friedman writes:

Charlie - perhaps culture is necessary but not sufficient. In all of those cases, the right culture was present (or the right genes, for those who believe in them), but the wrong rules still hampered people in China, N. Korea, and East Germany.

This is consistent with the points others made about good rules failing in places w/ bad culture, like Latin America.

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