The Economist's Cookbook

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  • "The curious task of economics is to demonstrate to men how little they know about what they imagine they can design."

    - F.A. Hayek

We Can't Develop People...

Posted by The_Chef On 3:46 PM 0 comments

... they have to do it for themselves. More appropriately, I should say that things like the World Bank and Government handouts to poor countries do little or nothing to foment productive economic growth. Now by productive economic growth I mean wealth creation, wealth being things of subjective value to individuals.

This is a great article from Mary Anastasia O'Grady about some of the problems with the idea that we can create an economically stable country by simply throwing money at it. It's just like throwing more and more money at the US public school system ... Yup ... look how well that has turned out.

Here are the first few paragraphs of her article.

Are the world's impoverished masses destined to live lives of permanent misery unless rich countries transfer wealth for spending on education and infrastructure?

You might think so if your gurus on development economics earn their bread and butter "lending" at the World Bank. Education and infrastructure "investment" are two of the Bank's favorite development themes.

Yet the evidence is piling up that neither government nor multilateral spending on education and infrastructure are key to development. To move out of poverty, countries instead need fast growth; and to get that they need to unleash the animal spirits of entrepreneurs.

ENTREPRENEURS!?! NO! They exploit people. Oh wait... that's right, free exchange isn't a zero-sum game. Free-exchange combined with strong property rights, NOT CHARITY, lead to growth and wealth. So maybe we should turn the markets loose and stop proping up weak and corrupt states, even if they do say they like us...


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