Jeffrey Sachs: evaluation

Transcript context

…Let me now ask you a question to challenge the audience, and we’re going to turn to Paul Rosenstein-Rodan, who’s somewhat of a forgotten figure. But I think still an important figure at George Mason, and maybe for you too. As you know, Rosenstein-Rodan was a development economist. He was one of the pioneers of the notion of the big push of an extended move forward on many fronts, all at the same time. But when you look at the early years of his thought, he studied with Mises. He worked with Hayek. He was an Austrian. He was a subjectivist, methodological individualist, and he made some kind of theoretical shift in his mind. What is it that you think that Paul Rosenstein-Rodan saw, and presumably you think you see it as well, that the people today who are still Austrians at the theoretical level, what is it that Rosenstein-Rodan saw that allowed him to make that shift or induced him to make that shift at the most basic conceptual level? He was writing during and at the end of World War II, when he was saying, “How are we going to get out of this mess? There are so many pieces that have to be put together. We have to get infrastructure built again. We have to get basic markets operating. There are a lot of interconnected pieces, and so we’re going to have to move on a lot of fronts.” He was facing a historical situation. I would say that his idea — I’d go back even . . . actually, it’s not back. It was almost contemporaneous with him. Alexander Gerschenkron, who was a very clever economic historian at Harvard. I came as a student just as he was retiring. He was a great mid-century, mid-20th century economic historian. He observed that what countries do for development depends on how they stand in relation to the leader, and this is a point I was making earlier, which is that catching up is a fundamental phenomenon in development. There’s a difference of growth, which we study as an economy, how does it grow? From the question of catching up, which is a question for a country that is situated with weak technology, weak infrastructure, weak training, and so forth. In the face of advanced economies, what should they do? Now that’s been a question that’s been asked for at least 224 years, since Alexander Hamilton sent his letter to the congress on manufacturing in the United States. Because he said we have to catch up with Britain. Then Friedrich List said, “We have to catch up with Britain.” Economic reformers from basically Hamilton on in countries that were lagging behind the lead said, “What do we do to catch up? ” Now you can carry this too far because the insane version of this, and the unbelievably destructive version of this, was Lenin and Stalin. We have to do anything at no matter what cost of life to catch up, or Mao in the Great Leap Forward, which is insanity and cruelty. But, on the other hand, the idea that you do different things to catch up by accelerating the process or by making the big push in a variety of ways has been shown time and again to have a lot of merit. It’s a balance, once more. The first countries to develop, Britain and the United States . . . Take the US. We’ve achieved almost continuous 1.8 percent per year per capita growth for the last 200 years. Not bad, if you do it for 200 years. But if you’re an impoverished country today and you say, “What’s our aim? 1.8 percent growth?” No, our aim is 10 percent growth, because we really need to catch up. It turned out, because of that catching-up phenomenon, you can make a very, very rapid advance in a way unthinkable for a country in front. But how do you make that advance? Through pure government just stepping back and letting things happen? No. Through a concerted policy to close gaps. That’s the difference. I’ve been reviewing your work, including these books, and a stack of papers here, which is a small fraction of what you’ve written. I believe they all have your name on them. What I try to do with thinkers sometimes is boil down what they’ve been writing to the smallest number of dimensions possible. If you’ll bear with me for a moment, I’m going to try to do that with you, and then you tell me where I’m off, or what you would add to that. Reviewing all the things you’ve written . . .…

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