Friday, October 20, 2006

Grounds for Agreement on Policy

I agree with quite a bit of the economic assessments of some Austrian economists (though I seem to have problems with’s interpretations, and sometime outright errors, of the work of Adam Smith). A typical case of agreement is shown in an posting by Peter Boetteke of Austrian Economists:

I am thrilled for Yunus and hope this will bring renewed attention to the plight of the underdeveloped world and the policy options needed to address the issue of extreme poverty. I do hope that the media attention will not use the occasion to endorse the grand plans that have been proposed by Jeff Sachs and others to "end world poverty" just because they sound good and obviously are well-intentioned. Sachs has a lofty goal no doubt, but one that will cause great misery if not pursued with humility and respect for local conditions. So rather than allow the attention brought by this prize to Yunus's great innovation to help the worlds poor to embolden the social planners and would-be saviours of the world to pursue their grand designs, the work of thinkers such as P.T. Bauer and William Easterly should be remembered. The path to development, as Yunus's micro-lending demonstrates, starts with small scale trading and indigenous entrepreneurship” (Sorry: some typos and US spelling modified).

Read Peter Boeteke at:

The last sentence is pure Smithian (i.e., Lectures in Jurisprudence and Wealth of Nations). Smith primarily was about origins – the ‘nature and causes’, etc., - and less about how an economy operates in the equilibrium conditions on neo-classical-type economics, and an age away from the central theorem of Chicago economics with its emphasis on individual self-interest (indeed, the ‘granite’!, according to George Stigler).

On how commercial economies develop (historically and today in the poorest parts of the world) we have clear agreement.


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