This is my testimony to the Joint Economic Committee of Congress in 2003 making recommendations after the U.S. conquered Iraq and had to figure out what to do. Today, it can be read as a negative-blueprint since the U.S. seems to have done just the opposite on every count.
As pointed out by Lenore Ealy in her recent blog, there is an interesting connection between a couple of articles in the July 10, 2012 issue of The Freeman. One article by Peter Lewin was a critique of Keynesian stimulus/job creation programs from the viewpoint of Austrian capital theory. The creation of capital and enterprises is a roundabout time-consuming process, and cannot be a quick response to a government stimulus program. The other article by Sandy Ikeda makes a similar point with respect to the bourgeois paternalism of government programs to remake troubled communities since “no government can create what can only emerge spontaneously. That includes genuine communities, warts and all, instead of unsustainable projects and ‘Disneyland neighborhoods.’”
The continuing financial collapse of 2008, which caused trillions of dollars of damages to most everyone but the Wall Street elites, will perhaps lead to some hesitation in the reflex to evoke the Wall Street model—if not to some more fundamental rethinking of the issues. Perhaps the Occupy Wall Street movements around the world are the beginning of such a rethinking. In any case, our purpose here is such a rethinking by going back to some of the basic principles that are supposed to be exemplified in a market economy.
The cooperative game analysis of the development efforts in a developing country sheds a different light on the well-meaning development experts (in advanced countries) who promote policies that will facilitate defections and thus will tend to break down the cooperative solution to a developing country’s development efforts.
This post is an update of a previous post on The Charter Cities Debate and Democratic Theory. A new twist on Paul Romer’s idea of charter cities has come to my attention. It is promoted under the name of “free cities.” The home base seems to be the Free Cities Institute headquartered at the Francisco Marroquin University, a right-wing university in Guatemala.
Frank Fukuyama’s recent review of Hayek’s Constitution of Liberty in the NYTimes has raised a ruckus in Hayekian circles. I review an older critique of Hayek by Ralf Dahrendorf and then lament the absence of the Hayekians in the great debate of the 1990s about socially engineering the transition from socialism to capitalism. Apparently the Hayekian strictures against utopian social engineering only applied to the transition in the opposite direction.
So many development commentators over the decades have demonstrated their incomprehension of the subtleties of development aid by modeling it on the idea of “vaccinating children” that this example has become a punch-line for jokes about development naïveté. But today I see in the New York Times the breathless new idea of “cash-on-delivery aid” to pay developing countries so much cash for each child vaccinated!
The charter cities debate is great for helping to bring out these non-democratic aspects of classical liberalism and conventional economic theory not to mention right-wing libertarianism.