From Aid to Equality
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The Financial Times reports on how the Drummers of Burundi performing at a music performance in Abu Dhabi avoided breaking the law against exposing (even male) nipples with some strategic tape.
UPDATE 2, 4/30 4:58pm see end of post for Response to "Glen Beck" comment et al. UPDATE 4/30 4:09PM: see end of post for a GREAT comment on this post from a very knowledgeable person
Most kinds of racism are now thankfully no longer tolerated. However, this doesn’t change the part of human nature that enjoys racism – it allows you to blame all your problems on some despised ethnic minority. So racism may have just gone underground to pop up in unexpected places. The old templates are still around -- an ethnic minority that has sinister intentions to harm everyone else, complete with conspiracy theories of hidden plots to consolidate their own secret control of society.
One example is virulent prejudice against a group I will call “the X’s”. There is a website with a game called “Shoot the X’s”. The X’s are trying to “suck the last bits of meat from the carcass” of society, but they are “running out of things to steal.” The X’s rig everything in their own interest: they “simply cannot lose.” Their “barefaced greed” simply “beggars belief.” They commit “blasphemy” that is “worthy of the 7th circle of hell.”
“Power is concentrated in the hands of a few key” X’s, the group of which “has also proved itself brilliantly capable of enlisting the power of the state to help along the process of concentrating economic might.” At a meeting “never announced publicly,” which “included virtually everyone who was anyone” among the X’s, they achieved a further “monstrous consolidation of financial and political power.” The “burglar” X’s ethnic group “now rules the national economy.”
It is now time to strike back: “put the greedy X’s in stocks.” "If you pressed a rifle into the hand of the man in the street,” he would surely choose to shoot the X’s.
Who are the X’s? If the X’s were Jews, this would all sound like quotes from the Protocols of the Elders of Zion. In fact these quotes seem uncannily similar in general to the virulent anti-Semitism that flourished in Europe before World War II (and still flourishes in some places around the world).
Some of you have probably already guessed the identity of the X’s. The X’s in the above quotes are the "race" of financiers/bankers. You can feel prejudice against an occupationally-defined race just as much as against an ethnically-defined race (and the two often overlap because some ethnic minorities are overrepresented in some occupations). Let’s call this form of racism “bankism.” As the previous post pointed out, bankism has a long and not very attractive history.
(The original sources for the above quotes are articles in Rolling Stone, Mother Jones, the Telegraph (UK), and the Times (UK) -- the lastquoting others, not the author speaking . The web site is "Shoot the Banker").
No, I am not predicting genocide against bankers any time soon (although a joke wishing for such genocide would probably get an appreciative laugh). Bankism is destructive for many other reasons. Like other forms of racism, bankism feeds hatred towards the whole group because of the misdeeds of a few of its members. We are seeing the equivalent of Willie Horton ads to feed bankism. Most financiers are honest individuals performing socially useful services; promoting hatred of them is not a good thing.
Politically, bankism creates a distorted narrative where an economic disaster is blamed on the malevolence of a few specific individuals, rather than defects in the systemic incentives in which myriads of individuals interact. This fuels political responses that are irrationally punitive, rather than a rational attempt to correct perverse incentives. So crisis prevention will be unsuccessful, the next crisis will feed bankism further, and where will it all end?
Better to face up to the latest form of racism now, and stigmatize it just as much as the old forms of racism.
UPDATE 4/30 4:09pm
Great comment from a very knowledgeable finance professional:
The “shoot the bankers” strategy is a diversionary tactic that avoids dealing with who allowed this to happen … the FED and SEC, who are being given MORE power and MORE discretion and LESS oversight, and Congress … who were bought off by bankers and the GSEs. If I were a banker, I would say fine … have a good shout, satisfy the public, but don’t really change the rules that allow me to make lots of money while gambling with other people’s money and while enjoying a government guarantee.
UPDATE 2 4/30, 4:59pm. Wow, today I seemed to have a Gordon Brown moment in this post. Kind of bewildered and surprised to have set off so many land mines and wind up next to Glenn Beck.
Me the cloistered intellectual reading my history of economic and political thought books can unintentionally mumble some code words that cause immediate classification into some extreme ideological box that I didn't even know existed.
I had actually never watched Glenn Beck before being called a Glenn Beck. I went and checked out a few video clips and saw that he apparently likes to call lots of people racists and Nazis and so on. Sorry, didn't know that.
The point of this post and in the previous post was the historical continuity over many centuries in demonizing the group of financiers as malevolent individuals, and the parallels and sometime overlap with racist speech.
Apparently this came across as really insensitive and unfair to two groups: (1) the victims of racism, and (2) people who have a genuine beef with a screwed up financial system (which is basically all of us). Sorry for being insensitive -- I am not implying bankers are the equivalent of lynching victims or Holocaust victims, and I am not implying that all critics of finance are the equivalent of racists.
On (2), I tried already to say, but let me try again to say, that antipathy to finance is a mixture of irrational and rational anger, and I am just trying to point out the historically venerable and important irrational component.
Another part of the problem is my weakness for provocative titles and Tweets, and then people react only to those and not to the nuances in the actual post.
So, sorry, Aid Watchers, I didn't get it quite right today, and I appreciate the feedback. Be sure to check out the Seinfeld "anti-dentite" clip in one of the comments.
Congress showed a lot of rage at Wall Street this week, for good reason. Some of the most eloquent senators spoke from their hearts. Senator A denounced those who devoted their financial “expertise” to “taking from others.” Senator B seconded the motion that Wall Street’s “illicit gains” were only possible through “the loss and ruin of others.” Senator C said his constituents had implored him to expose “financial misdoings” to save them from the “jaws of avarice.”Senators A, B, and C do not usually show up for hearings. A is Aristotle, B is St. Jerome, and C is Martin Luther. One big step on the Five Stages of Recovery from Grief and Loss is to realize that rage against finance has been around for a long time, and not always in a good way. In fact, comrades A, B, and C succeeded in preventing any financial system from operating much at all for many long centuries of poverty. It was only after we got over undiscriminating rage against all financiers, among other things, that we got an Industrial Revolution and the escape from global poverty.
So just like the good old email rule that you should not hit the send button when you’re angry, lawmakers might want to do a little introspection before passing the biggest financial reform since the Great Depression, which will influence policies towards Finance around the developing world.
Don’t get me wrong, part of – maybe most of -- the anger is rational and justified after the catastrophe of 2008. But I also think part is an irrational aversion to finance that has a long and inglorious history. As Jerry Z. Muller puts it in his great book, The Mind and the Market (from which I took the above references), for most of history people thought “economic gain not derived from physical labor” was illegitimate. There was “a failure to recognize the role of knowledge and the evaluation of risk in economic life.”
Part of the problem that fuels Financeaphobia is that many financial deals are indeed zero-sum after the fact. If one side bets housing prices are going up and the other side bets down, one side’s gain is going to be the other side’s loss. Yet finance is NOT zero-sum before you KNOW the outcome. Shorting housing markets is socially useful for a conservative money-manager hedging to protect the savings of widows and orphans. Going long was a socially useful high-risk, high-reward way to deliver financing for housing before the bubble developed.
One of the many signs of irrationality in the current climate is that Wall Street was first pilloried for not anticipating the fall in housing markets, and then the next illogical step was to identify those who DID correctly anticipate the fall as the biggest villains of all.
Again, again, don’t get me wrong – many financiers were deceptive, dishonest, or dumb, or all three. To differing degrees, so were regulators, so were borrowers. The system did go badly askew, and it must be put back inskew. But maybe you should let tempers cool a bit and make sure you do it right.
NOTE: above cartoon is from Rolling Stone magazine.
The New York Times had a front pager today on a story that this blog (twice: Dec 22, 2009 and Dec 12, 2009 ) and other blogs has been all over for months -- the use of nonsensical Powerpoint slides to guide the US military in Afghanistan. The NYT reproduced the infamous Afghan nation-building spaghetti chart over most of the front page:
“PowerPoint makes us stupid,” Gen. James N. Mattis of the Marine Corps, the Joint Forces commander, said this month at a military conference in North Carolina. (He spoke without PowerPoint.) Brig. Gen. H. R. McMaster, who banned PowerPoint presentations when he led the successful effort to secure the northern Iraqi city of Tal Afar in 2005, followed up at the same conference by likening PowerPoint to an internal threat.
“It’s dangerous because it can create the illusion of understanding and the illusion of control,” General McMaster said in a telephone interview afterward. “Some problems in the world are not bullet-izable.”
It gets worse:
Last year when a military Web site, Company Command, asked an Army platoon leader in Iraq, Lt. Sam Nuxoll, how he spent most of his time, he responded, “Making PowerPoint slides.” When pressed, he said he was serious.
...it ties up junior officers — referred to as PowerPoint Rangers — in the daily preparation of slides, be it for a Joint Staff meeting in Washington or for a platoon leader’s pre-mission combat briefing in a remote pocket of Afghanistan.
What's bizarre about this is that there are so many high-ranking military critics and yet war-by-Powerpoint continues. This blog's criticism got a friendly response from high-ranking military also. Yet none of this was enough to stop a practice that would get the military held up to ridicule today in the New York Times.
Indulging in sheer speculation here, is it because Powerpoint is indispensable to make the military's assigned task appear feasible when it is inherently infeasible -- to achieve development, democracy, and peace by military means?
According to the Washington Post:
Goldman admits it had reduced its exposure to the overheated U.S. property market and had sought to limit possible losses through a strategy that would make money if home prices fell. It says such "hedging" is a routine part of its business and is intended to moderate risk to the firm, an especially vital function when markets shift violently, as they did in 2008.
The Post puts "hedging" in quotes like it is some fatuous excuse by Goldman. Let's see: Goldman is accused of betting against the housing market (that housing prices would fall). It also had other bets that housing prices would rise. It is prudent to not bet the whole firm one way or the other on something so uncertain as housing prices. Having bets on both sides is called "hedging" and is Finance 101. Goldman Sachs is on the hook for a lot of possible sins, of which it may be indeed guilty. Hedging is not one of them. That the media and politicians can't even understand hedging is not reassuring when the largest financial reform in a generation is underway.
Anti-immigration hysteria becomes law in Arizona.
I was accused of link baiting in the Skip Gates piece below. I guess "link bait" is the new word for "headline". Well, at least I would NEVER stoop to the level of the Atlantic magazine: Did Porn Cause the Financial Crisis?
well, maybe, even this could lead to something good. One of my female friends commented:
priests, cardinals, philandering metro sexual politicians, SEC staffers: what do they have in common. they are MEN ! IF ONLY TO GET MORE DONE, we should have at least 50% women everywhere, the world badly needs some adult supervision and above the belt priorities and thinking.
...90 percent of those shipped to the New World were enslaved by Africans and then sold to European traders. The sad truth is that without complex business partnerships between African elites and European traders and commercial agents, the slave trade to the New World would have been impossible, at least on the scale it occurred.Advocates of reparations for the descendants of those slaves generally ignore this untidy problem of the significant role that Africans played in the trade...
The following post was written by Alanna Shaikh. Alanna is a global health professional who blogs at UN Dispatch and Blood and Milk. There is a fight brewing over Plumpy’nut, a fortified peanut butter product used to treat malnutrition in children. The company that invented Plumpy’nut has a patent on the product. Two American NGOs want to make their own version, but rather than pay a royalty fee, they are trying to break the patent. They have two main points. First, that Plumpy’nut as a product is too simple to be patentable, and second, that the patent is limiting access to the product.
Plumpy’nut is a bona fide miracle product. It’s easy for health care providers to administer, and it’s easy for patients to consume. Vacuum packed and shelf stable, it’s easier to store and transport than the fortified formulas that are otherwise used to treat malnutrition. It doesn’t require access to clean water like the formula powders do. And children love it and can eat it on their own, without parental help. Using Plumpy’nut instead of traditional F100 or F75 formulas increases cure rates to levels that have never consistently been seen before. It’s not surprising, therefore, that its patent has caused a lot of resentment.
Nutriset, the French company that invented Plumpy’nut, argues that the patent is not about profit. They claim that it is needed to protect the quality of the peanut paste. They were quoted in the Associated Press as saying “The limits let the company maintain quality while licensing production in the developing world - helping alleviate hunger and create jobs…” Their commitment, they state, is to “nutritional autonomy.” Letting products flood the global market would keep countries from being able to establish their own production. And it’s true that their field operation has helped several countries set up factories to produce Plumpy’nut. Lastly, Nutriset states that according to UNICEF, worldwide production capacity for Plumpy’nut is already double the existing demand.
It’s too easy to frame this as business versus humanitarianism. The Plumpy’nut patent is not global, and Nutriset actively encourages the production of Plumpy’nut in the developing world. Flooding the market with cheap American-made products would discourage countries from developing their own production; it would also help malnourished children by improving access to peanut paste.
The media coverage seems to missing the third side of this story: the economic view of the lawsuit. From that perspective, both sides have some major flaws in their arguments. Where is the incentive to develop products for poor people if there is no profit in it? We want the private sector to work to meet the needs of the poor. If products that do that can’t be patented for humanitarian reasons, who will bother to develop them? And why exactly do we care if countries can produce their own Plumpy’nut? What is the value of “nutritional autonomy,” anyway?
That makes me wonder if there is a solution to be found by economists. Could we have advance market commitments for peanut butter?
UPDATE 4/15, 4pm EDT: see end of post. The NYT lead story today (as well as other media) reports a new study with some very good news:
For the first time in decades, researchers are reporting a significant drop worldwide in the number of women dying each year from pregnancy and childbirth, to about 342,900 in 2008 from 526,300 in 1980.
So happy about success! Alas, the universal rule with media reports of development statistics is that they are mishandled so badly that they raise more questions than answers, such as:
(1) why is this reported as an absolute number rather than a maternal mortality rate (usually per 100,000 live births), which is the usual thing of interest, and would show even better news because of the large population increase since 1980?
(2) why attempt to estimate it for the whole world rather than only for those countries that have the most solid data?
(3) it's well known that maternal mortality numbers over the years have been mostly made up, a problem that has only recently been (partially) corrected (i.e. sometime since 2000). The 1980 and 1990 numbers are worthless, so the headline-grabbing sentence above is the wrong way to present the findings. Indeed the NYT story notes:
the new study was based on more and better data, and more sophisticated statistical methods than were used in a previous analysis by a different research team that estimated more deaths, 535,900 in 2005.
The story cannot simultaneously report "more and better data" and report a trend "drop," since the new numbers will not be comparable to the old "less and inferior" data. We can't know from this story what part of the change is due to change in methods, and which is real.
The most clear and interesting thing to emerge from this story is this:
But some advocates for women’s health tried to pressure The Lancet into delaying publication of the new findings, fearing that good news would detract from the urgency of their cause, Dr. Horton said in a telephone interview.
“I think this is one of those instances when science and advocacy can conflict,” he said.
Dr. Horton said the advocates, whom he declined to name, wanted the new information held and released only after certain meetings about maternal and child health had already taken place.
He said the meetings included one at the United Nations this week, and another to be held in Washington in June, where advocates hope to win support for more foreign aid for maternal health from Secretary of State Hillary Rodham Clinton. Other meetings of concern to the advocates are the Pacific Health Summit in June, and the United Nations General Assembly meeting in December.
People have long accused aid officials and advocates of being afraid of putting themselves out of business by success, but it's rare that such an episode is documented so clearly. Sad, very sad.
But there does seem to be some good news on maternal mortality in here somewhere, so let all non-self-interested people celebrate!
UPDATE: Columbia Journalism Review on 4/14 posted a story on the massive confusion caused by the press on both aspects of the story discussed here.
The blog of Laurence Haddad, director of the UK-based Institute of Development Studies, pointed us towards the just-released manifestos of Britain’s Conservative and Labour parties. Both manifestos declare their intention to codify into law the development target of 0.7 percent of national income allocated to aid. From the Tories:
A new Conservative government will be fully committed to achieving, by 2013, the UN target of spending 0.7 per cent of national income as aid…We will legislate in the first session of a new Parliament to lock in this level of spending for every year from 2013.
We remain committed to spending 0.7 per cent of national income on aid from 2013, and we will enshrine this commitment in law early in the next Parliament.
While such a bipartisan commitment to ensure consistency of development funding is something the US could only aspire to, perhaps it is time for a word of caution on the origins and relevance of that target for our friends across the Atlantic, courtesy of Michael Clemens and Todd Moss:
First, the 0.7% target was calculated using a series of assumptions that are no longer true, and justified by a model that is no longer considered credible…. Second, we document the fact that, despite frequent misinterpretation of UN documents, no government ever agreed in a UN forum to actually reach 0.7%—though many pledged to move toward it. Third, we argue that aid as a fraction of rich country income does not constitute a meaningful metric for the adequacy of aid flows. It would be far better to estimate aid needs by starting on the recipient side with a meaningful model of how aid affects development.
The 2007 paper, Ghost of 0.7%: Origins and Relevance of the International Aid Target (ungated version here), gives a fascinating historical look into the machinery of global development cooperation, showing how the target came to be, and how promoting such a nonsensical target could be harmful. Their summary concludes:
The 0.7% target began life as a lobbying tool, and stretching it to become a functional target for real aid budgets across all donors is to exalt it beyond reason. That no longer makes any sense, if it ever did.
The links in our post Another blog criticizes a video by a certain famous economist have gone dead, and the critical post on the other blog site has been deleted. They made this statement in direct communication:
The original post author has deleted the post, finding his words a bit too harsh and annoyance misplaced.
The original Sachs video, which was produced as part of a series by Ericsson, is here.
Certainly one would expect Dani Rodrik on his blog to have some inside knowledge on the confusing "military coup plot" trials in Turkey -- who are the good guys and who are the bad guys? But he has even more inside knowledge than you think: as he reveals in Foreign Policy, one of the generals arrested is his father-in-law.
Condolences to Dani and his family, and here's hoping justice and democracy prevail.
The New York Times has this wonderful interactive feature today, where you can see where most cab pickups and dropoffs happen at any time of day on any day. It confirms a puzzling feature that I had already observed: getting a cab is hopeless at one corner, but if you move just one block over you are sure to get one. The map shows the number of cab pickups around NYU at 5pm on a Friday, the legendary time when it is most difficult to get a cab.
Most of the immediate NYU area (around Elmer Holmes Bobst Library) is a taxi desert, so you have to walk either west to Sixth Avenue (a well known hot spot along most of its length downtown), or east to Lafayette (for example, Astor Place). One thing that has always puzzled me is that it's always very hard to get a cab on Broadway, running parallel to Lafayette just one block west.
Here's one amateur theory: the less obvious hot spots (excluding train stations etc.) can emerge out of nothing. Over time taxi customers expect to get a cab on one street corner. Then taxis are more likely to cruise that street corner because that's where the customers are. Both customers and taxis keep going to that street corner more and more as both sides come to expect the other to behave that way. And bang, you have now gotten the 1,425,674th example of spontaneous order.
This is a good metaphor for development because....
see UPDATE at end of this post
Thomas Friedman had a good NYT column about Karzai yesterday. {{1}} His column cleared up the puzzlement created by a Dallas News editorial and other very similar stories about how Obama’s visit to Afghanistan to get Karzai to clean up corruption was great for “seizing Karzai’s attention.” Now we know why there’s corruption in Afghanistan: Hamid Karzai just FORGOT to deal with it. Could one of our army doctors give him A.D.D. medication?
Friedman is more realistic about a phenomenon that has been long known in donor-government /recipient-government relationships: the recipient is the one who runs the donor government’s policies towards the recipient government. The same happens in multilateral aid agencies. We saw this all the time at the World Bank, where the corrupt autocrats receiving our loans would let us know what conditions we should put on the loans to them.
Friedman has a pithy rule that donors routinely break:
Never want it more than they do.
Of course, when the donors want something more than the recipient, and the donors know they MUST continue the aid relationship, the recipient is in a strong bargaining position to ignore that something, and no amount of attention-seizing is going to work. As Friedman says:
If we want good governance in Afghanistan more than Karzai, he will sell us that carpet over and over. How many U.S. officials have flown to Kabul — the latest being President Obama himself — to lecture Karzai on the need to root out corruption in his administration? …. he believes he has us over a barrel and, in the end, he can and will do whatever serves his personal power needs because he believes that we believe that he is indispensable for confronting Al Qaeda…
Even in less fraught situations than Afghanistan, the donors have an extremely poor record enforcing conditions on recipients. Not only do they break the Friedman Rule, but the department for Country X in the aid agency MUST disburse its budget for Country X this fiscal year (or else it won’t get any budget next year). The recipient knows this and so can ignore the conditions. (For a more careful and technical development of this argument, see the classic paper on why aid conditions don’t work by Jakob Svensson).
The solution to the problem is as logically simple as it is politically difficult: give aid only to country governments who want IT more than we do.
UPDATE (4/1, 12:14PM): Karzai says to luncheon guests that America is an obstacle to peace in Afghanistan. Well, THAT would really simplify the problem -- just remove the obstacle!
[[1]]Just for the record, I usually think that whatever Friedman writes about economics is nonsense while what he writes about Middle Eastern/Central Asian politics is good. This may be because I know something about the former and nothing about the latter.[[1]]
What do Lockheed Martin Corp, Northrop Grumman Corp, and L-3 Communications Inc. have in common? Yes, all are top 10 Pentagon contractors. But they are also increasingly winning lucrative government contracts to implement “smart power” or “nation-building” programs—like educating peacekeeping troops in human-rights law, sending anthropologists to Afghanistan to understand local culture, mentoring Liberian prosecutors to combat corruption and crime, and rebuilding airports and government ministries.
Hillary Clinton and others in the administration have helped pave the way for this shift by calling for a “smart power” approach in which the 3Ds—defense, diplomacy and development—are mutually reinforcing (which we respectfully acknowledged by giving the 3Ds idea our Grand Prize for Worst in Aid).
From yesterday’s Wall Street Journal (subscription required):
Defense firms are eager to oblige. "The definition of global security is changing," says Lockheed's Chairman and Chief Executive Robert Stevens. He wants the maker of the Air Force's most advanced fighters to become a central player in the U.S. campaign to use economic and political means to align countries with American strategic interests
Last year, Lockheed had two of its highest profile programs, the F-22 Raptor fighter and a fleet of presidential helicopters, ended by the Obama administration. Now, Lockheed is one of several defense firms expected to bid for a new State Department contract to support "criminal justice sector development programs world-wide," that could be worth up to $30 billion over five years.
Africa won’t be overlooked:
Africa—where few U.S. troops are stationed—is a major focus. Many countries on this continent already are, or risk becoming, failed states. While they previously hadn't been considered a threat to the U.S., that view is changing. Somalia's nexus of terrorism and piracy is one example of how destabilized countries can become a redoubt for al Qaeda or other terrorist groups.
The U.S. military is already overstretched between Iraq and Afghanistan. So the Pentagon is eager to send defense firms to fill the gaps, in the hope that investing millions in training or advisory programs today may stave off a regional calamity that could cost billions in the future.
"Africa certainly is an area of interest to our U.S. government customers, and what's important to our customers is important to us," said Lockheed's Mr. Stevens.
UPDATE: Vijaya Ramachandran reminded us on Twitter that she had a related post "Blurring the Line Between Defense and Development" on the CGD Blog:
In a little-noticed move in January, private military contractor DynCorp bought 100% of the shares of international development contractor Casals & Associates ....The .. merger suggests a blurring of the line between development and defense in the private sector, as well.
...what happens when unarmed development project managers and heavily armed private security providers work under the same company brand? How will local people respond to a company employed by both USAID and the U.S. military?
On the other hand, there are some clear advantages to the new approach....
Sir Nicholas Winterton ... a Conservative member of Parliament for the last 39 years... decided to share his thoughts on why legislators should be allowed to travel first class to avoid exposure to the common man.Read More & Discuss“They are a totally different type of people,” Sir Nicholas declared in a radio interview, speaking about the relative ghastliness of people in standard-class train cars.
...[I]t was a reminder yet again of how difficult it has been for the Tories to shake off a past that a fair number of them still seem to embrace.
[Popular image of Tories is as] a stuffy bastion of the elite, the mean-spirited, the entitled and the clueless.
An empirical analysis by a retired top US Marine General and former NATO Commander. From the always dependable Amanda Taub at the indispensable blog Wronging Rights., which usually wins the weirdest story award in this corner of the blogosphere.
Tim Harford column in today's FT (VERY strong endorsement of RCTs)
Justin Wolfers has an amusing Freakonomics piece describing how anti-government conservatives are trying to use state intervention to get the anti-statist Friedrich Hayek taught in high school economics classes. Wolfers is completely right that this episode exposes the hypocrisy of these intellectual censors.
(My favorite Mark Twain quote: “In the first place God made idiots. This was for practice. Then he made School Boards.”)
But after that Wolfers goes astray, piling on Hayek as just intellectually unworthy in general. Wolfers uses shaky exercises like number of citations in electronic academic journal archives. He says Larry Summers has as many citations as Hayek, so why not teach Larry Summers to high-schoolers? (not such a bad idea, actually).
Young Wolfers may not know the history of censorship of Hayek in the other direction. When I was in graduate school in The Middle Ages, Hayek was seen as so Far Right that you would be considered a nut to read him.
Since then, many more economists have realized that was extremely unfair to Hayek, including guess who, Larry Summers:
What's the single most important thing to learn from an economics course today? What I tried to leave my students with is the view that the invisible hand is more powerful than the [un]hidden hand. Things will happen in well-organized efforts without direction, controls, plans. That's the consensus among economists. That's the Hayek legacy.{{1}}
Hayek, who once wrote an essay called “Why I am not a conservative” was prescient in appreciating something that is much more trendy today, the idea of “spontaneous order” (Silicon Valley geeks write about a book a week on some aspect of the Internet being a spontaneous order.) My favorite Hayek quote gives a lot of insight into why development has been so hard to engineer from the top down:
It is because every individual knows so little and… because we rarely know which of us knows best that we trust the independent and competitive efforts of many to induce the emergence of what we shall want when we see it.
This reliance on individual spontaneity and creativity (and here we could include political entrepreneurs who achieve new and better ways to deliver public goods) is threatening to two very specific political factions:
Hayek knew that the Right was hypocritical about individual rights as much as the Left. The latter dictates what you can’t do in the market, the former wants to dictate almost everything else.
Although Wolfers doesn’t do this, many readers of his blog will fall for that classic trick, the Reverse Ideological Rejection: because ideologues like Hayek, therefore I should (ideologically) reject Hayek. This is in the same class as “Hitler liked Wagner’s Ring, therefore I should hate Wagner’s Ring.”
It’s sad that Hayek has been the victim of so many violations of the intellectual freedom for which he was one of the most eloquent and courageous spokesmen ever.
[[1]]quoted in The Commanding Heights: The Battle Between Government and the Marketplace that Is Remaking the Modern World, by Daniel Yergin and Joseph Stanislaw. New York: Simon & Schuster. 1998, pp. 150–151. (Thank you Wikipedia!)[[1]]
UPDATE: my hometown newspaper The Village Voice has a blog post on how the Texas school board caused the "right-wing blogosphere" to light up. (HT to HayekCenter.org) It includes the Hayek controversy:
{The blog response} bodes well for conservative attempts to keep libertarians on board: Apparently all you have to do is give props to their favorite economists, and they'll go along with anything you want.
I am deservedly too obscure to be quoted in this story, but I guess the Voice hasn't heard about the whole "Hayek: I am not a conservative" thing. Also I'm not sure anyone at the Voice has never met a real libertarian, a group that is NOT disposed to "going along with anything you want."
UPDATE 2: Jacob T. Levy's blog takes on Wolfers on measuring Hayek's citation count versus other economists. To make a long story short, there was a problem counting Hayek's because of the many variations on his first name(s), and once you correct for this he is in the same league as Milton Friedman and beyond Larry Summers.
