How India's Caste System has Endured for 1900 Years

As a person with interest in social stratification in modern society, I have been particularly alert to explanations for the rise and persistence of the the caste system in India and other societies. In blog posts such as this and this, I have shown interest in understanding both the backward justifications and the visible and indirect economic and social consequences of India's enduring caste system. Predictably, my view has been that the value of the caste system in India is that it leads to some inefficiencies and also unjustly denies a large population of Indians of true dignity and opportunity for achievement. In essence, to my libertarian mind, caste systems, like other discriminatory structures exist to support aristocracies and justify the existence of inherently flawed hierarchies.

A legitimate question is to ask under what circumstances the caste system of India developed and why it has endured. Joshua Keating's piece in Slate Magazine summarizes  a recent article in the American Journal of Human Genetics which reports results of a genetic study to determine when various groups of people diverged from one another. The theory is that this divergence would be a marker for the commencement of the caste system and is dated at 1900 years. While I am not fully qualified to debate the exactness of this date, i am surprised that the article seems to suggest that the systematic social stratification based on arbitrary considerations has a "short history".

I disagree with this characterization of discrimination and enforced poverty because two millennia of systematic discrimination and prejudice proves that the biases were self-reinforcing and created the stability in that system. bear in mind that leading democracies in the world and related political institutions have existed for less than three centuries. Stratification based on castes has endured for too long and its effects will maintain for longer still. the length of this injustice, similar to slavery and other forms of discrimination should not be downplayed. 

Amartya Sen's Take on the Race of the Asian Giants

Due to my declared libertarian inclination, I have weighed in with arguments on this blog about the longer-term prospects of India and China. In summary, my consistent contention has been that India may be a bungling democracy but will continue to make steady steps and eventually catch up and outrace China into sustained development. All this is because of my belief that the advantages of a sustained democratic order for more than half a century are not only unique but will be enduring. Despite the steady leadership of China's political party and the surface calmness, its political institutions are not comparatively advanced. This unequalled strength of the Chinese Communist party is perhaps its achilles heel too because of the absence of competing ideas in the political market.

Amartya Sen has written a timely and very incisive article in the NYT here, not only noting the difference between the two Asian neighbors but also seeking to explain why one leads the other. In spite of his being an Indian citizen, he makes the profound statement that India has trailed for so long that it may not be able to catch up with China at all. In this Nobel laureate's view, the gap in development outcomes between india and China is explained by the weakness of the India's public sector and the poor provision of public services.

Of particular concern is that india has failed to internalize the lessons of the Asian miracle which placed a huge premium on provision of good healthcare and education.  The stark comparison is real and reveals India's contradictions and great differences in the capability of citizens. In india's case, the world's largest producer of generic medicine also has appallingly underdeveloped public health systems. To sum it all, India's best industries can compete internationally but the large differences between its best and least educated undermines a longer and sustained growth path. While Amartya sen does not mention it, I am led to ask myself why the seeming comfort with vast inequalities in access and outcomes of health and education services in india is an enduring legacy of the social stratification engendered by the caste system.

Whatever the answer may be, I am aware that the odds of my bet that India will outrace China have shortened substantially. Sen's summary leads me to wonder how badly india would be doing if it did not have the single engine of democracy to begin with.  

Farmers Must Sell Quinoa

I am always amazed at the one-sided analysis that some journalists adopt in the discussion of trade in goods and especially in agricultural and food items. Joanna Blythman of the Guardian wrote a story on the fact that the global demand for a Peruvian crop known as quinoa is raising prices for the product worldwide. A a supporter of enterprise and trade, I think that this is an unequivocally good thing. However,  the journalist, without stating any other numbers, simply states that the price of quinoa has led to a threefold increase in its price and thereby affected its affordability for Peru's poor people. She attributes the rise in price to the expansion in demand in Europe among health conscious people.

That some households may face difficulty and hunger because the prices of quinoa have risen is not to be taken lightly. However, it is clear that other farmers have gained substantially due to the rise in demand for this crop. Any analysis that fails to account for both the effect on sellers and buyers tells on a part of the story and looks suspiciously reductionist. This blogger would state without equivocation that a big part of the solution in world hunger is not about who consumes what but rather that poorer farmers are affected by inadequate demand for the products that they produce. Peru's quinoa farmers should not have to accept the perverse option of low prices just so that everybody can afford that grain. Indeed, the conclusion fro Joanna that the solution to undernourishment is for all food to be grown a home has little connection to the solution for hunger. Do not blame vegetarians for higher preference for quinoa.

Is Africa Really Taking Off?

I am a keen student of economic development and transformation and therefore tries to figure out time and again where the growth of regions and nations will come from. Four years ago, it became clear that the world economy could not run entirely on US and European strength as the economic crisis devastated large firms. This also led to unemployment that has hardly been wound down in the US and a majority of European countries. This episode led analysts to look elsewhere and the rise of the BRICs became even more salient. Apart from that, it is clear that the new economic story is that sub-Saharan African nations have been leading in growth with six nations being among the top 10 fastest growing economies in the world in the last decade.

The business and economics press has understandably been stating that a continent once considered completely hopeless seems to have found its feet with impressive GDP growth rates ranging from 5-10% annually for most of these countries in Africa. Writing in Slate Magazine here, Francis Njubi Nesbitt  reiterates the story of emerging Africa and isolates a select number of countries that have done dine very well over the period being reviewed. It is no doubt that everyone is glad to applaud the progress made and to consider that Africa seems to be confounding the pundits. To my mind, it is at such moments that scholars and analysts should be cautious and circumspect.I state four main reasons below.

First, it is clear that the nations of the continent have benefited substantially from the commodities export boom that coincided with this period. It is clear that this is not the exclusive factor alone that has not driven the growth but it is worth stating that the momentum from higher commodity prices has been helpful. For that reason, there is need to be cautious because commodity booms do not last and increased expansion of prospecting for natural resources or expanded acreage in agriculture will reduce returns over the medium term. Except for the countries with a broad economic base (few in Africa have attained this), this growth momentum is still at risk.

Secondly, looking at the historical record, many African nations have had spurts of growth of this nature before. The main problem is that only Mauritius and Botswana have managed medium growth rates for more than one decade. As the report by the Commission on Growth and Development confirms, attaining high rates of growth on its own is difficult though momentarily possible but keeping high growth rates for a long period is historically rare throughout the world. It is not clear to me that the growth for many of these countries has a sufficiently diverse base to ensure that transformation will continue to occur. Credit to the economic managers of sub-Saharan Africa for getting growth up but I see no fundamental reasons that it will endures for throughout the entire set of individual nations.

The third factor straddles the nature of governments and how these will affect the required reforms in African nations. Bearing in mind that many sub-Saharan countries are not fully developed as democracies, there remains a big risk that their full development will continue. This is a critical factor because Ghana and South Africa are exceptions as structured democracies while most of Africa remains in a that half-way place between democracy and autocratic regimes. tThe nature of government remains a big political risk for most of these nations and the stability of regimes is not a given yet.

Finally, my assessment is that the growth that has taken place in sub-Saharan Africa proves that economic reforms undertaken in the mid-1990s and early part of this century were needed. A second phase of deregulation and economic reform to generate efficiency is required to keep the growth momentum going. tThis means that the benefits generated by reforms of one decade ago will be exhausted and will need to be buttressed by a set of reforms including trade liberalization, reduction of tariffs, competition policy enforcement,  increased transparency and public sector reforms. Given the nature of politicians that rule the continent today and the fact that growth has happened, it probably will take another crisis for the second gear of reforms to be engaged. For a continent led by populist leaders, making these bold and politically risky refroms will cause significant discomfort.

Looking at these four reasons, one urges a more incisive diagnosis of sub-Saharan Africa. It is too early to make the claim that the nations of this continent have emerged as future powers. oOf concern to me is the hubris of the leadership, disdain for different views and the talking up of the whole continent by both international and local press. The continent is not out of the woods yet and is certainly not at the same level as Asia. There's more work for its people to do. pPerhaps the savvy leaders should start with some reading of the Growth Commission's Report.    

A Journalist Compares US and European Incomes

Reading this article by Remi Adekoya of the Guardian newspaper reminds me of two things that many people take for granted about comparing income across countries. The author is right that notwithstanding the focus on its problems and the unyielding crisis, the European continent still provides the highest standards to living that can be found on the planet today. To be clear, I am less convinced that this is proof that the welfare state as understood in the continent is the only reason for this. Instead, it is more defensible for me to state that this high standard of life for its citizens is underpinned by the fact that by a correspondingly large number of businesses and productive workers. Indeed, the allusion to competitiveness shows that European countries provide opportunity for enterprises to grow and their ranking in the various leagues confirms that.   

In comparing the income of Europeans to that of the United States, it is clear that the United States has chosen a different way of organizing economic activity and its government is less directly involved in large welfare programmes comparable to those in Europe. Comparing incomes by alluding to the average is troublesome but it is not right to therefore dismiss higher incomes in the United States by alluding to the fact that extremely wealthy people such as Warren Buffet raise the average substantially. This article shows the difficulty of comparing incomes across nations with different economic and political structures but does not erase the fact that on the whole, total income is a very potent measure of human well being. In that respect, the United States is still a special nation.

Rwanda's Fund of Dignity

A couple of weeks ago, an experts group of the United Nations published a very detailed indictment of Rwanda's government with uncharacteristically blunt allegations that this government supported M-23 rebels who have committed unbelievable atrocities in the Democratic Republic of Congo. Predictably, the Rwanda's government issued a rebuttal covered here, that questioned the objectivity and standards of proof required to sustain those allegations. The United States and the British Government subsequently communicated that some financial support could be withdrawn due to the gravity of those allegations.

This episode revealed the fact that a country that relies on foreign assistance for a substantial portion of its expenditure runs the risk of pressure for political purposes. Apart from the predictable denials and assertion of sovereignty favoured by many countries on that continent, Rwanda's government went further. At a public meeting, President Kagame inaugurated the establishment of a Development Fund intended to cover the country against the risk of financial assistance being turned into a political tool. New of Rwanda reports here that the the Agaciro Fund was formally established and is a call for ensuring independence from foreign assistance.

To my mind, African countries almost always exhibit this degree of nationalism as a response to a challenge from other areas. I am therefore not impressed by this move and consider it a diversionary technique that fails to respond to the issue at hand. It need not have taken the threats of suspension of financial assistance for a country to respond to that risk. This is mere symbolism which is another matter in which African governments excel. My free advise is that governments that spend substantially more than they can collect in revenues should either expand revenues or cut down expenditure. A development fund as an manifestation of national pride is acceptable to me but does not respond to the need to clarify the allegations that are made. Whereas public sectors officials are falling over one another to make pledges and contributions in public, I am not convinced that these contributions do any more than divert money that would have been saved.
  

Mitt Mixes His Facts and Numbers

There have been predictable reactions to Mitt Romney's claim that the difference between Israel and its neighbors is because the former has a better culture. Jared Diamond, who wrote the book Guns, Germs and Steel, dissects the claim in this NYT piece. That piece aside, many people asked about whether it was appropriate to make that claim given the different circumstances in which the two nations live. Still, this matter is worthy of consideration because there are differences between Israel and Egypt, Syria or other closer countries that do not live under the same political constraints of Palestine.

My view is that Mitt Romney may really believe in the argument that culture is a determinant of economic success. More surprising to me is that he and his team make quotes and attribute certain findings to Jared Diamond and other authors when these are not correct. Its clear that as the article by Jared Diamond states, this candidate for the presidency has most probably not read the book that he quotes liberally from and seems to be less concerned with differences between these countries. In spite of his support for "superior cultures", one would expect him to note that an income per capita of US$ 10,000 that he attributes to Palestine would still make it a mid-income country. An undeniably good business head should not show such ignorance about the economy. Its a plain fail for the campaign research team.   

A Survey of Rio+20

The Rio+20 Conference ended over the last weekend and many reports suggest that this meeting achieved nothing partly because the expectations were too high, views so far apart and the real expectations not clearly spelt out. In this piece, Jagdish Bhagwati states that he is unsurprised because of many reasons starting with the emptiness of the phrase "sustainable development". Not only has this term of reference become cliche' but it also illustrates why those who insist on it as a precondition for development are oblivious of the real tradeoffs that poor people need. In the short essay, he also states how matters unconnected to the environment are allowed onto the agenda and become part of the declarations in a way that shows the inability to focus on small and smart solutions.

Unlike Jagdish, I have no problem with any self-appointed group of activists trying to hoist their pet policy solutions on the rest of us. I would rather that they understood much better that multilateral institutions that take on every agenda are the best candidates for failure on all of them. And as a person who attends smaller conferences on select trade and regulatory matters, I think that a conference dedicated to global growth would be far more useful than Rio+40. The environment is certainly important but all who come for the conference must recall that this was about the environment and that the train can only pull in so much. The framing of global problems is one of the skills that today's society lacks.  

India: The Bungling Democracy

I have argued on this blog here and other posts that India and China represent a natural experiment that will help to answer the question about the place of democracy and authoritarianism in longer term development. In short, my claim has been that in spite of a slower rate of growth and a smaller economy, India is bound to catch up soon and will over time become a large economy owing to its more open political system. In sum, the argument is that democracy is not necessarily a hindrance to India's long term growth and that China will of necessity have to go through bumps that may derail it substantially.

In spite of my being bullish about India, reading stories such as this in the NYT makes me really frustrated at India's political leadership. Granted that the Congress party has to navigate in order to keep its coalition in place, I cannot avoid the argument that India's growth is slowing and that it does not show any signs of catching up with China at all. Indeed, in spite of China's own domestic political and economic difficulties, India's leaders still have an inferior record of economic management. In many respects, the benefits that India gained from the bold economic reforms initiated under Manmohan Singh two decades ago are exhausted now and he lacks either the courage or the ability to make another long-overdue round of reforms to open up the economy. 

Given the state of affairs, it is just possible that India's catch up period will be unduly extended because of the delays in cutting back red tape and substantial regulatory and tax reforms. On the political side, India's bungling, in spite of the fact that it has an indubitably bright man as prime minister will embolden those who consider democracy as a liability for fast growth. Please get up and sprint!

 

A Review of Ruchir Sharma's Breakout Nations

Breakout Nations: In Pursuit of the Next Economic Miracles by Ruchir Sharma
My rating: 5 of 5 stars

What is much better than a book that sensibly cautions against taking the conventional wisdom without regular review?. Ruchir Sharma has taken on the assumption that the BRICs are guaranteed to dominate world affairs (economic and political) for the medium term. That the BRICs have grown at an unprecedented scale is not in dispute but perhaps some caution should be taken in the assumption that the four have an easy and guaranteed path to the attainment of high income levels that would eventually dwarf the US and European economies.

History alone suggests that high growth as maintained by these countries tends to be episodic and is often difficult to maintain. Forecasts and claims that the BRICs story growth story of the early years of the millennium is bound to continue should be carried with more caution than analysts acknowledge. The primary claim is that all the BRICs benefited from a surfeit of cheap money from the more developed economies and may be unable to repeat their performance in the future.

More interesting is the author's finding that there are other countries whose prospects are far better than individual members of the BRICs group. Granted, not all of these Breakout Nations have large populations or huge internal markets but they have the basics right. In this group are Turkey, South Korea, Taiwan and Indonesia.

Among other profound conclusions, the author sensibly advises that it is more prudent to analyze the prospects of individual countries without relational on bogus quantification and indices that aggregate different countries.    

Poverty and Entrepreneurship

"The enterprises of the poor often seem more a way to buy a job when a more conventional employment opportunity is not available than a reflection of a particular entrepreneurial urge." Abhijit V. Banerjee and Esther Duflo in, Poor Economics. Page 226

General Uhm's Five Star Lecture on Development

The one area in which I concede to state involvement is the provision of security within institution run by constitution. I have noted with amazement the fact that in the US in particular, military leaders often find lucrative positions in directorships in corporations ostensibly to provide strategic views and insights. Today, I have just watched the clip by Peter Von Uhm, the Chief of Defense of The Netherlands and confirmed my view that some military leaders are indeed deep thinkers with an understanding of what their contribution to stability and peace is.

In the very incisive presentation, he alludes to his family's history as the motivation for his choice for military life and how the gun, while seen as a simple instrument of violence and conflict, qualifies as a peace builder when used in a controlled and legally regulated manner. He walks his listeners through historical data on conflicts and human suffering and how the world has become increasingly safe over the last few centuries and attributes this to democratic control of military and violence through states. As if that were not enough, he ties the story together with growth and development by stating the empirical fact that stability and trade beget further peace because trade and exchange make conflict unduly expensive. In this way, trade and peace are self-reinforcing. This would be fantastic teaching aid for a class on economics and development. 

Five star presentation from a five star general.   

Truth About Japanese Economy

Judging from the surfeit of press and other commentary on Japan, one would get the erroneous impression that following the joint collapse of Japanese financial institutions and property markets in the late 1990's, that economy has remained perpetually in limbo.  In this article, Eamon Fingleton provides proper perspective to the issue through reminders that perception is starkly different from reality. While I have never visited Japan, most of what I watch shows that the citizens of that country enjoy a very high standard of living.

While it is true that Japanese corporations that dominated financial and technology markets ceded their position to other corporations, the economic adjustment within Japan did not cause a collapse. True, the rate of growth has not been high, but Japanese incomes have kept an upward creep and in some areas, the quality of technology and other services available within Japan are the enviable standards. While being cautious about Eamon's claims, it is still relevant to mention that Japan's early growth was sufficiently sound to ensure that the painful adjustments due to the property and bank crashes did not devastate its citizens. in short, Japan may not have caught up with the United States but its standards of living are still high and other fast growing countries would accomplish a lot by just getting to where Japan is. 

I am less sanguine about the argument that the citizens took a conscious decision to keep very low population growth. It is clear that the demographic position as it exists would soon have adverse effects on the growth of that country. It may well be that its economic policies were mostly sound but the desire to maintain strict racial homogeneity may be attractive social and cultural policy but is surely disastrous economic policy. Its time for Japan to review that because this is perhaps its most pressing policy failure today.     

Contrasting Income Growth for Africa and Asia

Keen observers of the growth trajectories of countries cannot help noticing that apart from the larger economies in Asia, sub-saharan africa has registered unprecedented growth levels in the last decade. The argument is relevant because one of the major problems that the latter region has had is the inability to hold on to an upward growth momentum for meaningful periods of time. Instead, Africa's example has been fluctuations of growth rates that coincide with commodity price changes. The summary of this experience from the mid-1970s is that dependence of petroleum and agriculture-based commodities is not a reliable path to growth and improvement of welfare. 

And that's why the contention is that it is yet not possible to state with confidence that sub-saharan Africa has overcome the mix of economic and political problems that it faces. That brings me to this fascinating article in the East African which makes the credible and well-based claim that the countries in the eastern region of africa will be leaders in overall growth in the coming two decades. It is an article worthy of reading because it is based on a complicated but sensible method for assessment of the complexity of an economy and concludes that the countries of the region under reference have economies that are more complex and diverse in production than is warranted by the incomes today. 

The author of the article concentrates on a list of manufacturing firms to illustrate the claim derived from the index of complexity. it is less clear to me that all these firms confer a comparative advantage to the region because it is unlikely that all are able to compete internationally. My view is that given the fact that manufacturing industry is a smaller proportion of the overall GDP of these countries, there is scope for growth but not necessarily for all existing firms. A final point that is worthy of note is that in spite of the prediction that the region will lead in GDP growth, it will still fall behind India and China in respect of per capita income growth. I think the reason is that this region has a large and youthful population and is expected to maintain strong moderately population growth for a few more decades.  

Ode to Christopher Hitchens

While 2011 may have been a year of confusion and economic difficulty in Europe, nothing beats the very interesting outcomes for a number of despots. I am certain that nobody would have guessed that Muammar Gaddafi, Zine Abidine Ben Ali and Hosni Mubarak are no longer leaders and some barely alive. And one would think that the troubles facing Syria's Bashar Assad and Khalifa's of Bahrain would be enough for the year and yet another strong arm leader, Kim Jong Il,  with no respect for life and political opinions has passed on in North Korea.

And yet to be philosophical about it, the latter passed on on the same date as Christopher Hitchens, an unapologetic advocate for reason and vociferous defender of the right to free expression. There is no better way to tie all this together than to refer to this fantastic piece by Hitchens on life in North Korea. In there, he talks about his visit to North Korea and the experience with the effects of aggressive ideology and the use of conflict to organize all society. Most interesting is the fact that the separation of the Koreas and the racist nationalism of the North exists side by side with the fact that the average citizen of this totalitarian regime is six inches shorter than those of south Korea. I agree as well with the statement that nothing is more totalitarian that "racist nationalism". 

Polemics of Demography and Fear

I stated in this last blog post  that I would not put up a link to all those lamentations that the world is overcrowded o account of unverified claim that the there are now 7 billion living souls. One must accept that in the same world where the costs of circulating ideas has fallen much more than the population has risen, people are bound to find all sorts of preposterous connections and cause alarm. Reading this piece in the NYT, I had to renege on my light promise not to link to these pieces. 

Taking without question that the human population has reached a new record, a number of institutions are trying to tie their neo-Malthusian argument to environmental conservation. Among the arguments is that the levels of greenhouse gases being produced on a per person are so high that every new birth adds to the warming of the planet and therefore to almost certain environmental catastrophe.   

Such campaigns may be well-timed but that does not imply that the claims are sensible. As contrarian voices quoted in the piece mention, family size reduction cannot be the solution to global warming and environmental conservation.fertility rates are higher among poorer populations in South Asia and sub-Saharan Africa but it is these populations that also generate the lowest levels of carbon pollution per person.So yes, I want spotted owls and polar bears to survive but it makes no sense to me to claim that birthing families are responsible for my never seeing a live one. That is not the real trade-off. 

Is China Really As Powerful as the US?

Judging from the immense trouble that president Obama of the United States is having in getting politicians to work behind a coherent and mutually agreeable plan, one can safely assume that the country is bound to delay recovery and have its preeminence in the world eroded. This state of political discord has not only led to concern about the functional health of that political system but that this undermines the nation's ability to deal with big problems related to large deficits and long-term problems in financial undertakings.

In spite of the undoubted disfunction in the political process and its effects on the economy, I maintain that the US still has some time before any economy, china included, can get to surpass it in factors of material economic and military dominance. Simon Johnson, writes in this article that a book that is due for publication later in the fall suggests that China may have already surpassed the United States in world dominance. To be clear, the author of that book, Arvind Subramaniam, is a vey competent academic and his views ought to be given serious reflections before reply. That notwithstanding, I still applaud China's very successful development experiment over three decades but it is unlikely that it has surpassed the United States yet.

Looking at the World Bank's latest data on Gross National Income (GNI) on  a per capita basis still leaves China at one tenth of US equivalents in nominal terms. to my mind, given the extreme importance of total income in determining dominance in scientific, commercial and cultural affairs, I think that China's dominance may be real but it is not yet close to the United States today. I will read the book after its publication and comment on the claims and data deployed to support the claim.  

Yasheng Huang Tells The India Vs China Story

Many comparisons of the development experiment between China and India and pitch conveniently on the side that commentators favour. As a result, there is very little clarity of thought about why China has indubitably raced ahead of India in economic growth, notwithstanding the absence of liberalization on the political affairs in China. Many people therefore readily assume that India's main problem seems to be its extremely open political system which makes it a disadvantage in terms of quick execution of development plans. Yasheng Huang's presentation to explain the differences is a tour de force in the TED talk below on that subject in which confusion and cliche's have endured.

 

As Huang maintains, it is a fact that India has not done so poorly but has been compared with a ver successful China. It is equally instructive that the slow reform in social policy that would register achievements for India's women is a critical barrier to its ability to compete.  

Rodrik's View on Extrapolation of Growth Data

To my mind, Dani Rodrik is without doubt one of the foremost Development Economists and one to whom I take time to read even when I do not agree or understand his points about the government's role in development. Among his consistent and lucid ideas is the view that industrial policy does have arole to lay in the growth and ultimate development of a country. Having seen the vast number of failed attempts at driving the economy through government's choice of growth sectors, I find this view to be more nuanced than either his detractors or others who approve government action do admit.

That notwithstanding, I am always in Rodrik's corner with regard to assessments about the longer term prospects of selected economies. His article on Project Syndicate demonstrates that nuance again by carefully asking for a review of the conventional opinion that emerging countries and developing countries generally are bound to contribute in a large way to growth in the world economy in the future. As he argues, the US and European nations are faced with both systemic and structural problems that require deft management while most of the rest of the world has had comparatively impressive growth over the last decade.

Dani Rodrik asks the important question about whether developing countries can drive forward the world economy. Judging from his well-argued piece, it is possible that hope on the part of commentators appears to triumph over reality and the empirics of the historical record. many of the forecasts about the world transformation away from the west is based on extrapolation of impressive growth in leading countries and even smaller economies of Africa. It is rather naive to expect all these countries to maintain these rates of growth indefinitely. It will be a very difficult task that requires structural reconfiguration of these economies in an way that is not only historically unprecedented but lead to uncomfortable political relations. Irrespective of one's views about the conclusions, the argument is that extrapolation of today's growth rates one way or the other as a substitute of broader analysis is unwise.      

The Age of Benevolent Dictators

A few months ago, I found myself in a discussion with an acquaintance who had visited the Libyan city of Tripoli in the last year. It is to be recalled that at the time, Egypt was in political turmoil due to unrelenting pressure by the citizens for resignation by the president and the leadership. As is common, there were various ideas about how far the series of protests would go throughout the nations of the Middle East and the north of Africa. The discussion started with arguments about what the trajectory of protests would take and which country would next be under pressure. My interlocutor stated firmly that Libya's government would have no reason at all for worry because of the better quality of life that it accorded its citizens. In his view, many people would willingly trade off political freedom for economic prosperity and that was it. While I do not recall exactly the words uttered, the libertarian bone in me was  disturbed by the assertion that benevolent dictators are going to be more safe and better for development outcomes.

Today, I got a copy of this piece by the Centre for International Private Enterprise (CIPE) that places a dispassionate argument dispelling the myth of the stability and prosperity of states under the rule of "benevolent dictators". Admitting that there are a number of seemingly prosperous states that have had authoritarian governments, the article makes the important point that this is no reason to conclude that democracy should be secondary to strong economies. And yet, the clear evidence that democratic systems have endured into prosperous economies does not seem to correlate with preference for the former. At the same time, it is clear that democratic systems may be difficult to work under but these governments are more likely to be interested in achievements that go beyond keeping the chairman and his comrades in power.  

For all its conciseness and clarity, this article is unlikely to convince everyone that democratic freedom is also most stable avenue towards economic prosperity. One need not only look at Intrade's main board on the chances of Gaddafi's survival to understand that this quest for benevolent dictatorships is ill-informed. We now know that among the governments in the neighbourhood of the Middle east, it is the Libyan government that has the toughest choices ahead of it now. It is also less likely that the regime will survive intact as there are some irreversible changes already afoot.