1. The World Bank (WB), along with the Asian Development Bank (ADB), IMF, OECD, UN, etc. are government clubs and associations, NOT clubs of corporations (big or small) or NGOs or other civil society organizations. Its funding come from governments, its leadership is nominated and approved by governments, its programs and lending are for governments. Thus, words like "government", "state", "tax", "regulation" are expected to dominate its literatures. It should not be a surprising finding.
2. Sethaput's observation here is spot on, bulls-eye. The UN, WB, all other multilaterals are institutions of global central planning. People and officials there think they know a lot, they have lots of numbers, they can plan and control things. I think the top officials there have messianic and megalomaniac views of themselves.
"... international experts to be experts in any country they work on, armed with examples of “international best practice” and able to ignore local history and conditions. Unfortunately this problem is by no means limited to the World Bank. Probably the most egregious example of the technocratic illusion of supply-driven solutions to poverty is the United Nations Millennium Development Goals or MDGs. Soviet-style central planning may be dead even in Russia today, but its ethos still lives on in the international development community."
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ECONOMIC FREEDOM AND POVERTY: REFRAMING THE DEBATE
Wednesday, 9 December 2015
Sethaput Suthiwart-Narueput, Thailand Future
Foundation[1]
In the 352 pages and over 250,000 words in its flagship
2001 World Development Report (WDR), Attacking Poverty, the World Bank mentions
the word “freedom” 12 times. By contrast, the words “government” and “state”
are mentioned about 450 and 350 times, respectively. Such an omission and
imbalance is particularly surprising in light of some of the Bank’s own
findings. Stating at the outset that “the poor are the true poverty experts,”
the Bank conducted many interviews of the poor as background for the WDR and
found that the poor repeatedly described their well-being in terms of five
related dimensions, one of which was “freedom of choice and action.”[2]
Why isn’t economic freedom–or its core elements of
personal choice; security of person and property; voluntary exchange; freedom
to enter markets and compete–at center stage in policy discussions given its
critical and empirically documented role in fostering growth and reducing
poverty? Why isn’t it given greater attention in policy discussions by
governments, international organizations, and even civil society at large?
While the omission by governments is understandable but
regrettable, the omission by international organizations tasked with poverty
reduction such as the World Bank is less so. In his thought-provoking book The
Tyranny of Experts, Bill Easterly states that
The conventional approach to economic development, to
making poor countries rich, is based on a technocratic illusion: the belief
that poverty is a purely technical problem amenable to such technical solutions
as fertilizers, antibiotics, or nutritional supplements…The technocratic
illusion is that poverty results from a shortage of expertise, whereas poverty
is really about a shortage of rights. The technical problems of the poor…are a
symptom of poverty, not a cause of poverty…[the] cause of poverty is the
absence of political and economic rights, the absence of a free political and
economic system that would find technical solutions to the poor’s problems.[3]
Having previously worked at the World Bank myself for
close to a decade, I can readily testify to the enormous appeal that such a
technocratic illusion has for a large international bureaucracy. It allows for
vast amounts of resources to be deployed towards producing more outputs which
can be centrally monitored and verified (e.g., more schools and hospitals
regardless of whether they are wanted or really result in improved educational
and health outcomes). It allows for international experts to be experts in any
country they work on, armed with examples of “international best practice” and
able to ignore local history and conditions. Unfortunately this problem is by
no means limited to the World Bank. Probably the most egregious example of the
technocratic illusion of supply-driven solutions to poverty is the United
Nations Millennium Development Goals or MDGs. Soviet-style central planning may
be dead even in Russia today, but its ethos still lives on in the international
development community.
More puzzling is why discussions of economic freedom
aren’t more center stage for civil society and the public at large. Or to put
it more starkly and specifically, why is there such a distrust of free markets
in Asia even though they have delivered such prosperity to the region?
One reason may be “guilt by association.” For many in the
region, “free markets” and “capitalism” are associated with big, rich, powerful
and well-connected business tycoons. In many countries in Asia, for example,
the Forbes list of billionaires are overwhelmingly dominated by business
families in such non-tradable and highly regulated sectors as alcohol and
tobacco, telecommunications, banking, and property. In the US, by contrast, the
names that come to mind when thinking of the rich probably include names like
Bill Gates, Warren Buffett, and other Silicon Valley types. Innovative,
skilled, first-generation wealth rather than connected, powerful, inherited
family wealth. The unfortunate irony is that the public faces associated with
“free markets” in the region are from markets which are not really that free.
Another likely reason are government handouts. With the bulk of the populace
still in agriculture, governments are seen as a source of largesse and succor
to help offset the vagaries of price cycles and crop failures.
Given the above, how then do we bring economic freedom
back to the central position it should occupy in public and policy debate in
the region? We need to reframe the debate in such a way that the key elements
of economic freedom resonate better and get greater traction with the public.
At least three things come to mind.
First, lose or change the jargon. “Freedom to enter
markets and compete” sounds too abstract while “free markets” suffers from
negative associations as discussed above. Focusing instead on a “level playing
field” and “fairness” may be a better way to communicate and introduce some of
the same ideas in a way that resonates better. Only the cronies like crony
capitalism. Similarly, railing against “size of government” in a context where
the government is often seen as a source of largesse is also likely to be
self-defeating. Better instead to focus on quality of governance issues like
“anti-corruption” and “equal treatment.”
Second, promote new “poster children” associated with
economic freedom. The public face of free markets and capitalism needs to be
changed from the typical connected, powerful family of a business tycoon to
innovative, new, smaller scale entrepreneurs. We need to find the future Steve
Jobs and Jack Mas of the region. If hedge fund billionaires and Wall Street
were the only things people associated with free markets and capitalism in the
US, such ideas would probably not resonate as well with the general public as
they do.
Third, be more strategic and selective. Not all of the
elements of the economic freedom agenda will resonate in each country. Better
to prioritize those few concepts which are most likely to gain traction in
light of local circumstances. Together with the Atlas Network and the Friedrich
Naumann Foundation, for example, we recently did a Thai edition of Gwartney et.
al.’s Common Sense Economics book which included local case studies on various
subsidy schemes (rice mortgage; LPG; first car buyer) which were topical.
Let me end on a positive note. While there may be some
additional hurdles in the region preventing the ideas of economic freedom from
resonating more widely, history and experience will reduce these hurdles.
Economic freedom has been and will continue to be instrumental in promoting
growth and reducing poverty throughout the region. In doing so, it will
generate greater buy-in to these ideas. In a 2014 Pew Research Center survey of
support for the free market system, respondents were asked whether they agreed
with the statement “most people are better off in a free market economy even
though some people are rich and some are poor.” The countries where people
agreed most with this statement were Vietnam (95%); Bangladesh (80%); Korea
(78%); and China (76%), higher than in the US (70%). The challenge for us is to
help sustain this support more broadly and reduce the risk of undermining the
very engine which has driven much of the region’s prosperity.
[1] World Bank (2001), What the Poor Say. The other
dimensions were material and physical well-being; security; and good social
relations.
[2] Easterly (2013), The Tyranny of Experts, p. 6-7
[3] These remarks represent the views of the author, and
not necessarily those of the Foundation. He can be reached at sethaput@thailandff.org. The
Foundation website is www.thailandff.org
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See also:
EFN Asia 50, New network member, Center for Indonesian Policy Studies, September 25, 2015
EFN Asia 51, Draft program, Day 1 of Conference 2015, November 05, 2015
EFN Asia 52, The 5 fishbowls of economic freedom in Asia, November 20, 2015
EFN Asia 53, Successful Conference 2015 has ended, November 25, 2015
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