Paul Romer: commitment

Transcript context

…If culture’s what really matters and the quality or the beliefs of the people you have, that seems like a lot of hard work. Your theory of growth — there’s something nonrival that, in principle, can be spread rather readily. Does this run counter to your theory of growth that it’s all hard work actually? The way I think about it is, as economists, you can divide the world into inside the head and outside the head. Outside there’s things like the transistor and penicillin and all these things to discover, and formulas, and so forth. Inside the head we have these very complicated motivations. The usual economic model of inside the head is complex conscious reasoning but very simple preferences or emotions or motivations. In fact, the motivations are at least as complex as our ability to reason in a conscious sense. Actually, at one point, I wrote a paper called “Thinking and Feeling” that was really my first venture into trying to say, “We have some sense of why growth is possible and what could determine the long sweep of history. Let’s now look more carefully inside of the head at what motivates people, these feelings. Because it’s there that a lot of the action is.” So to answer your question, to have a rich enough theory of development to explain the variety of outcomes we see in different countries, and to offer useful advice in different contexts, we need to understand a lot more about culture. As you were saying, culture doesn’t spread as quickly, and it doesn’t change as quickly. That can be a plus and a minus. If you think about cultures that support institutions, you might want your institutions to be relatively durable and not just collapse and change as they did in Maryland when there was trouble in England. Persistent norms are not necessarily a bad thing, but you do need to think about what if you get stuck in a situation where the norms in a population are inefficient and really holding you back? Then you have to ask, what are the mechanisms where a group can change its norms? And this idea of letting a nonrepresentative subgroup go off and be the founding population in a new place. Then as people go in at a moderate rate from the old population to the new one, they can get socialized into the predominant culture in the new place. With that mechanism, you can actually change the whole distribution of norms in a population in a way that might be more feasible than if you’re trying to change those norms in place in the population. These are the questions we should be asking about how to resolve some of the deepest challenges we face in development. Under what conditions would you get involved again in another charter city project? ROMER To drive this point home, let me just give you an illustration of what’s at stake. Imagine you wanted to try and get New Yorkers to have the same norms about pedestrian behavior that people in Zurich have. Or California.…

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