Are benevolent autocrats good for economic development?

  1. are "benevolent autocrats" good for economic development?

    As for example, Tom Friedman states:

    One-party autocracy certainly has its drawbacks. But when it is led by a reasonably enlightened
    group of people, as China is today, it can also have great advantages. That one party can just
    impose the politically difficult but critically important policies needed to move a society forward
    in the 21st century.


    William Easterly attacks the idea here

    http://williameasterly.files.wordpress.com/2011/05/benevolent-autocrats-easterly-2nd-draft.pdf

    he outlines the common cognitive biases that lend people to this conclusion, which is interesting as it touches upon basic epistemological issues in regards to any discussion of economic policies

    a) reversing conditional probabilities - the fact that several growth success stories had autocratic leadership (South Korea, Singapore, China, etc) misses the fact that while 90% of the growth success stories were autocracies, only 10% of all the autocracies were growth success stories

    b) availablilty heuristic - big success is greatly over-reported relative to big failures

    c) leadership attribution bias - "A large literature on the “fundamental attribution error” finds that test subjects tend to attribute an outcome too much to individual personality, intentions, and skill and not enough to situational factors." The exaggerated importance of US Presidents, Corporate CEOs and athletic coaches is another example

    d) "hot hand" fallacy - attributing a random streak to some sort of special skill

    e) law of small numbers - too small a sample size to draw meaningful conclusions

    f) action bias - "technocratic views of development give action-oriented experts much more of an active role.
    However, if experts already know the answer, then there is not much room left for democratic
    determination of economic policy. Hence, anyone who considers themselves as an expert advisor may
    have a bias towards autocrats. As James Buchanan said, policy-oriented economists and other public
    intellectuals may prefer to be “proffering policy advice as if they were employed by a benevolent despot.”"

    Easterly concludes:

    "This paper has suggested a number of cautions about jumping too quickly to benevolent autocrat
    explanations of growth successes. Formal theory and evidence provides little or no basis on which to
    believe the benevolent autocrat story. The benevolent autocrat story has been around for a long time and
    has proved very adaptable to many different political motivations. The interaction between well-known
    cognitive biases and stylized facts would predict beliefs in benevolent autocrats even if they did not exist.
    This paper has repeatedly cautioned that these arguments do not automatically disprove the benevolent
    autocrat story. People who have certain political motivations and cognitive biases are likely to believe in
    benevolent autocrats. It does not follow that people who believe in benevolent autocrats have political
    motivations and cognitive biases. (Equating the two is itself the reversing conditional probabilities
    cognitive bias.)
    The benevolent autocrat story for any ONE autocrat and growth outcome is ultimately non-falsifiable:
    there is just one observation and many possible stories. Those with strong priors in favor of benevolent
    autocrats are still likely to go with that story.
    The point of this paper is that such strong priors exist for many bad reasons as well as good ones, and that
    economists should retain their traditional skepticism for stories that have little good theory or empirics to
    support them."
     
    Last edited: Aug 8, 2011
  2. jcsd
  3. Re: are "benevolent autocrats" good for economic development?

    Is this applicable in places like Somalia or Haiti?
     
  4. Re: are "benevolent autocrats" good for economic development?

    On several levels. Both countries have suffered from bad autocratic regimes in the past. Most importantly though would be gaining a proper level of skepticism over any top down plan, no matter how well intentioned, to fix these countries
     
  5. Re: are "benevolent autocrats" good for economic development?

    What better way to demonstrate the value of a benevolent vs a bad autocratic system?
     
  6. Re: are "benevolent autocrats" good for economic development?

    the point is how do you define benevolent? Its easy to define a "less bad" autocracy - i.e. one where the leader does not use the public purse as his personal ATM and put opponents in concentration camps. But the point of the paper is while we know some policies are destructive (Maoist communism, Mobutu-style kleptocracy) we know very little about what positive actions will result in future economic growth.
     
  7. Re: are "benevolent autocrats" good for economic development?

    Again, the only way to measure the results of a "less bad" example would be in comparison to the specific "bad" model. The only valid place to study the problem is at a place where the prior results of a "bad" model are known - then changed and measured.
     
  8. Re: are "benevolent autocrats" good for economic development?

    but the problem with these analysis is that you cannot control for the dozens of extraneous variables - maybe the bad example had rich oil reserved discovered, for example
     
  9. Re: are "benevolent autocrats" good for economic development?

    I brought up Somalia and Haiti because they are poor countries. An oil rich country has a far different set of variables.
     
  10. Re: are "benevolent autocrats" good for economic development?

    but the point is there are too many different factors - their social and economic histories (Somalia is tribal while Haiti is not for example), neighboring countries (the US vs. Kenya) the fact that Haiti is experiencing a Malthusian trap related to deforestation and population density while Somalia is not densly populated (both countries have roughly 9 million people but Somalia has over 20x the land area) Haiti has a large expatriate population sending money home, while Somalia does not. Foreign aid is 40% of Haiti's budget while Somalia does not have a central government. You can make up ad hoc post-ante stories why so and so factor is relevant or not, but you cannot really separate all of these from an abstract concept like how "good" a leader is
     
  11. Re: are "benevolent autocrats" good for economic development?

    My point is that you need to pick a single sample to study - you wouldn't try to combine several chemistry experiments into one - would you? You need to consider the specific variables of each sample.
     
  12. Re: are "benevolent autocrats" good for economic development?

    but thats the whole point of economics - you cannot do controlled experiments on whole economies. You cannot separate these variables other than by resorting to very crude statistical tools
     
  13. Re: are "benevolent autocrats" good for economic development?

    Well, no, currently, I would say that benevolent dictators aren't good for economic development - but that's just because there currently aren't any benevolent dictators (IMO). Could there be benevolent dictators? In theory, yes, though to be clear, we would need to identify thopse things that classify someone as a benevolent dictator first.
     
  14. Re: are "benevolent autocrats" good for economic development?

    Back to Haiti - didn't Baby Doc indicate he would get it right this time?:rolleyes:
     
  15. Re: are "benevolent autocrats" good for economic development?

    Maybe he meant he would get :!!) right this time.
     
  16. Re: are "benevolent autocrats" good for economic development?

    Not that I agree, but here is a commonly cited example - South Korea, during a period that largely coincided with the rule of Park Chung-hee, went from a per capita income below that of Haiti to one that was converging on Western standards. Park was an autocrat and suppressed political dissent, but did not tolerate corruption and encouraged economic liberalization.
     
  17. Re: are "benevolent autocrats" good for economic development?

    Unlike Haiti (for example) Park Chung-hee choose Economic reform and expansion over dependence on foreign aid.
    http://www.geocities.ws/mortuzakhaled/park.pdf

    "Amidst this crucial economic situation Park Chung-hee took over the charge of
    the President of Korea and throughout the whole tenure of his regime it was
    backed by military administration. Park Chung-hee like prior ruler did not pay
    much emphasis on the unification of Korea; rather he declared that economic
    4
    progress of Korea was his primary goal.7"
     
  18. Re: are "benevolent autocrats" good for economic development?

    Nice find there! Very interesting reading.
     
  19. Pyrrhus

    Pyrrhus 2,276
    Homework Helper

    Re: are "benevolent autocrats" good for economic development?

    I am not sure about the value of Dictators connections with Economic development, but so far the examples given in this thread are related more to failure. An example of a Success is Chile with the famous "Chicago boys" and Augusto Pinochet story.

    I bolded this part as I am not sure what you mean by "very crude"? Econometrics has become very sophisticated and flexible. Its methods are used in many other areas such as finance, marketing, medical sciences, and others. Furthermore, you don't seem to understand that the omitted variables have different effects on the estimates. Economists typically control for the variables that are more relevant, and thus try to reduce the bias on the estimates. It is possible that there are variables omitted that will bias the estimates, but what is actually important is the magnitude of the bias. "Small" bias is not a problem.
     
  20. Re: are "benevolent autocrats" good for economic development?

    I do not think that multilinear regressions are particulary sophisticated tools and of course they are always flexible enough to serve the biases of whoever is using them. Page 22 of Easterly's paper discusses the well recognized problems with partial correlations of equally plausible variables along with bivariate and multivariate regressions on several factors. I think he would agree that that part is hardly the centerpiece of the paper as some economist with a contrary view could construct a different model that fit their biases. You cannot control for every variable, nor even suppose that all the important ones are measurable. Can you name one important controversy in economics that has been resolved through the use of econometric methods? I am not aware of any.
     
    Last edited: Aug 11, 2011
  21. Pyrrhus

    Pyrrhus 2,276
    Homework Helper

    Re: are "benevolent autocrats" good for economic development?

    "Classical" Regression models are only a type of method used in econometrics, that's of course without mention the different extensions done by econometricians to handle different types of data (cross sectional, time series, repeated observations...). Other econometric advancements include Mixture logit, Cointegration, Tobit, GARCH, hybrid choice and others. Regardless of the mathematical sophistication, and its flexibility to handle different types of data generating processes such as random parameters, or corner solutions. The philosophy in statistical modeling is always parsimony. This of course can be tested for nested and nonnested models as well. Thus, I do take offend of you calling years of advancements in statistical theory... crude statistical tools.

    Of course, Econometric modeling without an underlying theory is futile, and it requires validation with the data, and thus data must be available to cross-validate such estimates. However, models based on economic theory have solid grounds as the assumptions may be corroborated, as well as the expectations of the researchers with regards to the direction of the effects of the variables. This does not mean that such models do not undergo cross-validation, and thus new data is acquired were the predictions of the model can be tested vs. observed choices.

    You mention that a problem with the econometric modeling is the omitted variables bias. This is but one problem (others include state dependence, feedback, endogenous sample design, heteroskedasticity...), yes. However, there are MANY methods developed that may reduce the bias that range from econometric "patches" such as instrumental variables, proxy variables to experimental designs like those advocated by experimental economics. Furthermore, again the importance is the magnitude of the bias how much effect does the variable inclusion has on the estimates and that the results will be spurious at best.

    Finally, I don't think is useful to call econometric development gibberish, and just write it off as well as its results. This is not only pedantic, but it undermines years of theoretical and empirical research on economics. You need to understand that a lot of the development on econometrics has been done to deal with such types of problems, and with many proving successful to warrant significant consideration. Thus, once the econometric advancement is done, it disseminates and new papers will incorporate the changes and test on previous data to reverify previous results already published (a requirement of many economic journals is that the authors provide data, and any statistical routine they programmed because it might not be available along with the paper), and also use on new data to offer more flexibility in the model.
     
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