Zoo Station

The last few posts have been on the broad theme of economic development. What better time then to link to this very interesting discussion between Milton Friedman and Thomas Sowell on the legacy of Peter Bauer. Some excerpts...

The initial dictum that Peter fought against was the vicious cycle of poverty—the idea that was widespread and essentially conventional wisdom in the study of lesser developed countries: that they were poor, and because they were poor they couldn’t generate capital, and because they couldn’t generate capital they couldn’t develop, and that kept them poor. And that the only way they could get out of it was if capital was brought in from outside.
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It’s only the fact that you have to ask the question: if that’s true, how did any other rich countries ever become rich, because they all started out poor?
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Peter argued against foreign aid. He objected to the term “foreign aid.” He said [that such aid was really] intergovernment subsidies, and by calling them foreign aid you begged the question. The word “aid” means it must be helping, and in fact in most cases so-called foreign aid did harm. Because it was aid not to the individuals who needed it, but always it was a subsidy granted to government. So, foreign aid made government stronger, and the problem in many of these underdeveloped countries was that government was too strong and essentially dictatorial.
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I think of the terrible influence of Harold Laski on people who later on became Third World leaders. I was thinking, what if those people had studied under Peter Bauer instead of Harold Laski?
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And yet another reason why the whole notion of a theory of history is so skewed—that Harold Laski happened to be there at a time when so many people from Third World countries were studying, who would later on become leaders of those countries and then use their own people as guinea pigs for these wholly untested ideas that Harold Laski was throwing around in Britain.

It is a fascinating and controversial discussion, so read it in full. This discussion is taken from a recent issue of the Cato Journal devoted to Peter Bauer and is one of many fascinating pieces in there. Yes, you can read the Cato Journal even if you don't have libertarian leanings. At the very least, it's consistently provocative and provides serious food for thought.