Sunday, 24 April 2011

David Friedman On "Sustainability"

As a general rule, I don't like overly lengthy quotations, but I do see or hear things worthy of an exception to this rule from time to time. What follows is one of these - it is an extended quote I transcribed from David Friedman's recent talk delivered at his own University in California, in which he argues against "sustainability" as either empty rhetoric or a bad idea:
"One of the things that people have somehow managed to not pay enough attention to is that over the last twenty years, what people used to regard as the one great problem of the world, and made great efforts with no success at all to solve, has been solving itself - and that problem is the poverty of the third world... If you look at the history of India and China ... roughly from the end of world war two on, the Indian government accepted the advice of western economists, economic development people, which was that if you want to make yourself into a modern country you need central planning, five year plans; in order to develop your industry you've got to put big tariffs against foreign autos and build autos in India at a cost of $15,000 instead of buying second-hand autos in America at a cost of $500... and India basically followed that policy, the people in government were pretty happy with it because it put lots of power in their hands and it meant that while they were explaining that they were doing all this for the good of India, they were doing it in luxury, air-conditioned hotels in Delhi. And nothing happend, India stayed poor... during the same period China got its advice from the other direction, "advice" insofar as it wasn't their own ideas, it was basically coming from Stalin's Russia and they followed a roughly similar policy and they stayed poor.... Then about twenty or thirty years ago, for various reasons, the views in those countries shifted, and both countries moved a considerable difference but not nearly as far as I think they should have towards something more like a market society with private means of production, private buying and selling and so forth, and since then they've started getting ... well "rich" would exaggerate it but getting less poor - that instead of worrying about China as "how will they feed themselves or India, we're worried about China as a competitor to America. Isn't that terrible? We might have somebody else as rich as we are, how can we stand that? And economic development takes power. If we were somehow able, and fortunately we're not, but if we were somehow able to get the people of India and China to do what our position on global warming says they have to do, that would mean ending the most successful war on poverty since free immigration to the U.S.... because it would mean slowing or reversing economic development because it would mean one of the major inputs to doing stuff would have suddenly become much more expensive and much less available... Getting two to three billion people out of poverty is a lot more important in my view than keeping the world's temperature from going up two or three degrees centigrade."
Good stuff. It puts me in mind of a letter I wrote to the Taipei Times back in November 2009 on the subject of global warming and the Climategate scandal in which I wrote this:
"...what is at stake here, politically, is whether an increasing apparatus of state control over society, globally networked, is the right way to deal with any problematic climate change, or whether, on the other hand, a rapid dismantling of state apparatus both internationally and domestically would spur the necessary economic development to make technological solutions affordable on a global scale."
They didn't publish it.


  1. So you're leaving your apriori haven.

    Friedman is simply wrong. Nearly all successful economies have started by raising tariffs, and instead of importing technologically advanced goods, developing their own. America, Korea, Taiwan, Japan, etc. etc. Why didn't this work for India? Who knows. In essence, they need to develop and produce (manufacture) to become apart of a market-system, and they cannot do this if they are importing all advanced goods.

    Western economists have done the opposite of what Friedman states--they push for more "free" markets, not more protectionism. Friedman has it backwards.

    This piece if a mess.


  2. "Friedman is simply wrong."

    No he isn't - Friedman wasn't talking about the cases of America, Taiwan Korea or Japan, he was talking about India and China, two countries with comparatively much larger populations than any of the others you mention, and in which grinding poverty was (and is) therefore a quantitatively much larger phenomenon.

    Is it, or is it not a fact that the Indian and Chinese governments after WW2 implemented high tarrifs to protect domestic manufacturing? And is it, or is it not a fact that poverty was not reduced in either country during this period?

    "Western economists have done the opposite of what Friedman states--they push for more "free" markets, not more protectionism."

    I'm sure some of them did - Friedman's own father was one of them. But is it, or is it not a fact that some western economists did argue in favour of protectionism for developing countries post WW2? They would be your "developmental economists".

    "This piece if a mess."

    Or perhaps your reading of it is a mess?

  3. India and China are two very distinct cases, considering the Civil War and Cultural Revolution in China, India's history, and both countries massive populations. I don't think you can use these two cases as examples of how "development economists" got it wrong, which is what the author is trying to do.


  4. Actually, what Friedman is trying to do is make a broader argument against the value of the "sustainability" rhetoric, and in this narrow instance, pointing to the possible costs of "sustainability" policies vis-a-vis energy, economic development and poverty in the two countries with very large proportions of the world's poor. The argument as to the effectiveness of various developmental policies is an ancillary to that end.

    And as you know, I do think protectionism is wrong anyway - not just on moral grounds, but consequentially. Empirical evidence has its place, but it's not the entire story; Friedman's example here is marginally relevant to that broader argument which you are interested in - but that's not why I quoted him.

    Framing the question in brute empirical terms as just whether protectionist or more "trade-friendly" policies result in X,Y or Z outcomes ignores enormous differences in time, the nature of particular industries and other contextual factors such as State interventions, geography etc and is therefore not a sufficiently sophisticated approach. Ha Joon Chang would have to concede this were it put to him.

  5. Also...

    "India and China are two very distinct cases, considering the Civil War and Cultural Revolution in China, India's history..."

    ... but isn't every country a "distinct case"? How many poor countries have not been ravaged by wars and revolutions and so forth? Latin America, South-East Asia, Africa... so many of the countries in these regions have had such a terrible recent history - I could close my eyes, throw a dart and hit any one of them with a terrible history.

    I'm not saying that you can extrapolate directly from what happens in China or India to what happens elsewhere, but the facts Friedman is pointing to need to be explained, not dismissed.

  6. In response to your first post, I understand his main argument--but he drops it in at the end after seemingly blaming developmental economists for economic failure--by citing India and China during distinct periods.

    I agree with your second post entirely, that's why I didn't like this piece by Friedman. Many others have a terrible recent history, yet have achieved some level of economic growth--most of them through developmental economic policies.

  7. "...blaming developmental economists for economic failure..."

    Well why shouldn't he? They and the governments presuming they could run entire economies like goddamn toy train sets had some nerve.

    Look you can point to some governments that put up protectionist barriers which nevertheless witnessed enough economic growth to render the people living there less poor. Friedman is pointing to two very important countries whose governments put up the same policies and yet... basically nothing happened.

    What do either of those two facts mean? On their own - not very much, since they are nothing more than simple correlational data between very large aggregate measures.

    The question therefore of which policy - a protectionist policy or a more trade friendly policy - would enable more economic growth in any particular case in space and time, is not a question that can be resolved on simple empirical grounds alone: evidence can be cited both for and against - sometimes even within the same country. Therefore, the question must be thought through in a-priori terms - theoretical understanding is required to answer it. And on these grounds (a-priori, consequentialist) I think the free trade argument usually wins. Its' also, I think, the morally correct argument.


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