A few years ago, Greg Cochran pointed out that western economists had been very wrong about the economic condition of the Soviet bloc countries. Paul Krugman had claimed that the East German economy was 80% of the West German economy. When the wall fell, what was revealed was a backward economy with environmental devastation and low-quality consumer goods. All of this was obvious from the outside. All you had to do was take a look at the cars, which were a joke compared to the cheapest western cars.
The reason western economists were so laughably wrong about the Soviet economy is that it was worth their while to be wrong. The Left side of the ruling class wanted to believe the commies were doing well. They owned the media and the academy, so it is not hard to figure out the rest. That, of course, calls into question the integrity of the field, but in reality, they just believed what was convenient. Even PhD’s can delude themselves if it has social value. You see that in this post by celebrity economist Tyler Cowen.
Will Ethiopia become “the China of Africa”? The question often comes up in an economic context: Ethiopia’s growth rate is expected to be 8.5 percent this year, topping China’s projected 6.5 percent. Over the past decade, Ethiopia has averaged about 10 percent growth. Behind those flashy numbers, however, is an undervalued common feature: Both countries feel secure about their pasts and have a definite vision for their futures. Both countries believe that they are destined to be great.
Consider China first. The nation-state, as we know it today, has existed for several thousand years with some form of basic continuity. Most Chinese identify with the historical kingdoms and dynasties they study in school, and the tomb of Confucius in Qufu is a leading tourist attraction. Visitors go there to pay homage to a founder of the China they know.
This early history meant China was well-positioned to quickly build a modern and effective nation-state once the introduction of post-Mao reforms boosted gross domestic product. That led to rapid gains in infrastructure and education and paved the way for China to become one of the world’s two biggest economies. Along the way, the Chinese held to a strong vision that it deserved to be a great nation once again.
My visit to Ethiopia keeps reminding me of this basic picture. Ethiopia also had a relatively mature nation-state quite early, with the Aksumite Kingdom dating from the first century A.D. Subsequent regimes, through medieval times and beyond, exercised a fair amount of power. Most important, today’s Ethiopians see their country as a direct extension of these earlier political units. Some influential Ethiopians will claim to trace their lineage all the way to King Solomon of biblical times.
Cowen is either trying hard to please the Ethiopian economic and cultural ministers or he has spent too much time in the sun. The reason Ethiopia has seen growth rates tick up is the Chinese, and to a lesser degree India, have been investing. The reason they are investing is both are competing for control of the Indian Ocean. In fact, the Chinese have invested in other East African countries, including a naval base in Djibouti. That is why China and Indian are investing in East Africa. It is a modern form of colonialism.
Further, comparing China and Ethiopia, at the civilization level, is a bit ridiculous. China is basically one people, the Han, with minority populations around the fringes. This has been true for a long time. Ethiopia is a combination of pastoral and settled people, who see one another as rivals. The country is experiencing civil unrest, bordering on civil war, in response to the ruling Oromo minority. China has never had this issue. China also has an average IQ over one hundred, while Ethiopia is one of the lowest on earth, estimated below 70.
Now, economists are easy targets, because the profession has evolved into something similar to the celebrity chef racket. There is not a lot of money in making good food and running a quality restaurant. There’s big money in being an entertaining chef with a TV show on cable television. Something similar has happened to economics. You do not actually have to be particularly good at economics to get a spot in the commentariat. You just have to sing the praises of the managerial class and play the professorial role well.
Even so, it takes special talent to be this wrong about observable reality. Cowen’s trick, like most celebrity experts, is to couch his obsequiousness and nutty ideas in the form of a question. “Is Ethiopia the next China?” This way, when called on it, he can pretend it was just an intellectual exercise, a thought experiment. Meanwhile, he appears to be lending his authority to the rather ridiculous notion that Ethiopia is poised to be the next boom town. It is no wonder that so many in the managerial class are so vapid and silly.
It is tempting to dismiss this, but the proliferation of celebrity experts says something about the nature of managerialism. It has evolved a class of people that are luxury goods. They have no utility other than to make the people inside feel special. The TED Talk is a great example. Cloud People pay to be told by a celebrity expert that their lives have purpose, and they are on the side of angels. It is not explicit, but the point of the expert is always to confirm the beliefs of the audience, rather than broaden their understanding.
If the celebrity expert were just the current version of the court jester, it would probably be harmless, but that is not the case. The people making public policy have risen through the system, never having been told a discouraging word. They end up having opinions about the world that border on lunacy. The people running the Bush foreign policy really believed they could democratize the Middle East. They still believe this, and they probably think East Africa is the next economic boom town. That is what the experts tell them.
There is an argument that the proliferation of lawyers is responsible for the proliferation of laws. The extra lawyers, looking for a way to make a living, inevitably started to pervert the law to create opportunities for themselves. This results in more cases in court, which means more courts, more judges and then more laws to address the crazy outcomes. It is a bit of chicken and egg theory, but there is no question that having a lawyer for every conceivable case has changed the nature of the law, as well as the volume of laws.
Something similar seems to be happening in the other parts of the managerial class. The excess of middling strivers means an excess of mediocre men pitching themselves as experts. Since being an expert is hard, the more fruitful course is to tell the audience what they want to hear. As a result, in the public policy arena, the people charged with actually knowing stuff are surrounded by an amen chorus that cheers their every move. Instead of rule by experts, as some imagine, we have rule by people who never faced adversity.