Astronomers Before Telescopes

That’s my metaphor for describing economic growth theory.

So what’s the problem? Not enough reliable data.

Let’s say there are millions of interdependent variables that contribute to the economic growth (and measurement of even these is often royally screwed up).  But you have only hundreds of observations in which to evaluate whether a particular combination of circumstances worked. Is that science? No way.

And yet, all this whining is no substitute for plausible answers is it. We want to know how to grow!

So bring on the smorgasboard of cognitive bias.

Easterly and Roberts focus on a few of these biases, for instance leadership bias (ie looking for heroes bias), which is one I particularly dislike. They link this to the technocrat’s fantasy: “imagine you were the sole adviser of an absolute dictator. What good you could do with that power!”

The bottom line from E&R’s discussion is that autocracies produce a greater variance of growth outcomes. One interesting observation was that variance is not just between leadership regimes, but within the same regime. So yesterday’s stars are tomorrow’s dogs when the growth ‘miracle’ inevitably falters.

And it’s not really a surprise: what does a dictator care about most? Staying in power (the minute he leaves he’s either going to the Hague or the hangman). Is economic growth the best way of doing this? No, doing favors for the military is the best way of doing this.

Anyway, the entire field is a technocratic aphrodisiac. You can tell how exciting the prospect of having “the answer” is when the titans of policy commentary get super upset with their lack of influence.

But limiting an individuals’ influence is the whole point. If you’ve really invented a telescope, everyone will start using it on their own.

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