Indonesia | Economics

Sunday, October 05, 2008

Easterly on the wrong lessons from the US crisis

William Easterly on what not to learn from the crisis, ie., "that development flows from all-knowing states rather than creative individuals". His last two paragraphs:
How much poverty has endured because individual entrepreneurs were shunned in favor of the likes of the $5 billion state-owned Ajaokuta Steel Mill in Nigeria, which never produced a bar of steel? Or because African governments spend their time preparing World Bank-required national Poverty Reduction Strategy Reports instead of freeing space for innovators?

We will never know. But we do know that the free market has a long-run track record of creating prosperity -- even with the occasional crash. The Depression's deceptive intellectual legacy is that development flows from all-knowing states rather than creative individuals. Here's hoping that the backlash to today's crash will not spawn another round of bad economics for the poor.

HT: Marginal Revolution

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  • Free market which Americans believe and hold is not a bad system indeed. Americans believe that there is an invicible hand who will rectify any distortion in the market.

    However, when the distortion is too big, and the invicible hand (in this case should be the either one of the macroeconomic players) regards that an invicible hand will come and everybody just pray at home until the day it will come, then it will not be rectified since the invisible hand will never come as all the players never take any action. Well, government should intervene in any distrubance which threaten the economic to a downturn.

    It is a free managed economic though.

    By Anonymous dave, at 10/24/2008 06:57:00 pm  

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