Friday, February 17, 2006

The Man Without a Plan

In times of crisis, hysterical people are want to cry out "Somebody do something!" There is a feeling that action must be taken and that it must be taken decisively. This is the perspective that Amartya Sen offers in his scathing review of William Easterly newest book, The White Man's Burden (yet to be released).

Sen's perspective on development economics differs widely with Easterly's. On the one hand, Sen recognizes that Easterly has brought up important issues:

"[he] is also right to note that the failure of many grand schemes results from their disregard for the complexity of institutions and incentive systems and their neglect of individual initiative, which must be societally encouraged rather than bureaucratically stifled."

Greater attention to the formal and informal institutions is critical when considering aid to developing countries. If a blind eye is turned to theses, incentives are easily distorted and result in tragedy. The first half of Easterly's first book, The Elusive Quest for Growth, is an ample source of examples of such.

On the other hand, Sen feels that Easterly is overly exuberant in his castigation of planners and insufficient in argument. Sen believes that Easterly's greatest oversight is his failure to understand the distinctions between different types of economic problems. Sen argues that there is a fundamental differences between the market for Harry Potter books and the products that are needed to save the lives of poor populations. Easterly allegedly eschews this distinction in favor of supporting an entrepreneurial driven market solution.

In short, Easterly believes that property rights and markets will allows "searchers", i.e. entrepreneurs, to bring prosperity to countries that are mired in penury. Sen interprets this "hands off" approach as actually being no plan at all. He suggests that minor tweaking of current organizations and projects will in fact deliver the desired results.


Matt E. Ryan said...

Do you know Sen's take on The Elusive Quest for Growth?

David said...

I can't find anything on Sen's CV indicating he has written on The Elusive Quest for Growth.