The answer to development ignorance: more complicated advice by experts or more freedom for entrepreneurs?

Alan Beattie’s new book False Economy accurately reflects the collapse in self-confidence among economists on our ability to usefully recommend how “developing” countries can rapidly develop. And he’s right about the reasons for this: both success and failure have often caught us by “surprise”, the key word in the book’s subtitle: A Surprising Economic History of the World.

Beattie’s supremely entertaining and informative book is a great reminder that the details of success are often impossible to predict or prescribe: no one can work out how to achieve each component. The best response is not to have increasingly convoluted advice by experts, but to let individuals with local knowledge roam free by trial and error to find their own successes.

So in the end, the economics profession does have more sensible things to say about achieving long-run success than Beattie allows: (relatively) free individuals, free markets, free trade, free thinking, and institutions that support all of the above.

Originally published at Aid Watch and reproduced here with the author’s permission.

2 Responses to "The answer to development ignorance: more complicated advice by experts or more freedom for entrepreneurs?"

  1. Guest   April 14, 2009 at 9:25 am

    Distributed control, especially within a stable macroeconomic environment, tends to produce higher growth rates. Centralized control, on the other hand, can lead to e.g. – supply chain inefficiencies.One might argue further that a system of purely distributed control ultimately teaches microeconomic agents to factor macroeconomic volatility into their decision making. Perhaps if the Fed had refused to allow real interest rates to fall below a certain bound from 1990 onwards, for example, deeper recessions then would have prevented the imbalances the world is facing today.

  2. Anonymous   April 14, 2009 at 10:25 am

    Beattie is an advocate of Nobel laureate Milton Friedman’s ideas. Friedman’s work with economists in Indonesia and several Latin American countries is also being applied in the U.S. now.