Are benevolent autocrats good for economic development?

[BWV]

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

“Benevolent autocrat” is a perpetually popular concept in development policy discussions. This paper suggests this popularity is not solely explained by academic theory and evidence. The history of the concept shows the role of political motivations for embracing the concept. The literature on cognitive biases shows multiple biases that would lead to beliefs in benevolent autocrats even if they did not exist, especially as these interact with stylized facts about autocracy and growth. Neither political motivations nor cognitive biases imply disproof of the concept, but they do suggest the need for even more rigorous scrutiny. The theory implied by a benevolent autocrat story is naïve relative to modern theories of autocracy, and it presumes an implausible level of knowledge by autocrats. The evidence underlying “benevolent autocrat” interpretations has equally plausible – or more plausible -- alternative explanations. The well-known “leaders matter” results of Jones and Olken (2005, 2009) do not demonstrate that intentions and actions of individual autocrats affect growth. Since democratic rights are an end in themselves, the burden of proof is on autocrats to show that they provide material payoffs that offer a trade-off with such rights. This paper argues they fail to meet that burden of proof.

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."

 

[WhoWee]

Is this applicable in places like Somalia or Haiti?

 

[BWV]

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

 

[WhoWee]

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

What better way to demonstrate the value of a benevolent vs a bad autocratic system?

 

[BWV]

What better way to demonstrate the value of a benevolent vs a bad autocratic system?

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.

 

[WhoWee]

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.

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.

 

[BWV]

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.

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

 

[WhoWee]

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

I brought up Somalia and Haiti because they are poor countries. An oil rich country has a far different set of variables.

 

[BWV]

I brought up Somalia and Haiti because they are poor countries. An oil rich country has a far different set of variables.

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

 

[WhoWee]

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

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.

 

[BWV]

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.

but that's 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

 

[daveb]

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.

 

[WhoWee]

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.

Back to Haiti - didn't Baby Doc indicate he would get it right this time?

 

[daveb]

Maybe he meant he would get :!) right this time.

 

[BWV]

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.

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.

 

[WhoWee]

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.

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"

 

[daveb]

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

Nice find there! Very interesting reading.

 

[Pyrrhus]

but that's 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

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.

 

[BWV]

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.

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.

 

[Pyrrhus]

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.

"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.

 

[Pyrrhus]

Two cases the come to mind are deregulation of electric utilities and airlines in the USA. It is just a matter of searching for the many estimates supporting such economic policies. A classic paper is Nerlove 1963 for electric utilities.

 

[WhoWee]

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

Again, you can't expect to compare Somalia to Haiti to South Korea (or anywhere else) - until you have analyzed each of them separately, (understand them separately), and have included (and weighed) all variables.

 

[BWV]

Again, you can't expect to compare Somalia to Haiti to South Korea (or anywhere else) - until you have analyzed each of them separately, (understand them separately), and have included (and weighed) all variables.

but the point is you can't do that - the methodology does not exist other than creating seemingly plausible "just so" stories

 

[BWV]

Two cases the come to mind are deregulation of electric utilities and airlines in the USA. It is just a matter of searching for the many estimates supporting such economic policies. A classic paper is Nerlove 1963 for electric utilities.

getting off track here, started another thread on the issue of the reliability of econometric methods
https://www.physicsforums.com/showthread.php?p=3446768#post3446768

 

[WhoWee]

but the point is you can't do that - the methodology does not exist other than creating seemingly plausible "just so" stories

I honestly did not realize there is no methodology available to study the history, economy and variables of a single country.

 

[BWV]

I honestly did not realize there is no methodology available to study the history, economy and variables of a single country.

You can do so qualitatively and support your conclusions with data - that is what historians do all the time - but others with differing views can often construct equally compelling counter-stories. Its a mistake to think, however, that there is some pure, quantitative, quasi-scientific truth that can be gained from available data

 

[WhoWee]

You can do so qualitatively and support your conclusions with data - that is what historians do all the time - but others with differing views can often construct equally compelling counter-stories. Its a mistake to think, however, that there is some pure, quantitative, quasi-scientific truth that can be gained from available data

I guess what you're really saying is the paper cited in the OP - by William Easterly - should be dismissed as just another conclusion that's easy to challenge?

 

[BWV]

I guess what you're really saying is the paper cited in the OP - by William Easterly - should be dismissed as just another conclusion that's easy to challenge?

No, because its this skepticism that Easterly himself raises as the reason to doubt narratives of great top-down economic leadership

 

[WhoWee]

No, because its this skepticism that Easterly himself raises as the reason to doubt narratives of great top-down economic leadership

Then he's your example of someone "with differing views can often construct equally compelling counter-stories"?

 

[BWV]

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.
.

Easterly mentions Pinochet

It is common practice to declare a country a “growth miracle” after a few years of high growth. For example, Chile under Pinochet was declared a “growth miracle” twice: first from 1977-1981, and again from 1984-89 (in between the two was a severe financial crisis and recession), with about 6 percent per capita growth in both periods.

Interestingly GDP growth was significantly higher in the 90s after Pinochet was deposed

 

[russ_watters]

The OP contains neither a question nor a thesis statement that I can see, so the discussion seems to me to be floundering. BWV, could you please provide them so we know what the point is.

 

[BWV]

The OP contains neither a question nor a thesis statement that I can see, so the discussion seems to me to be floundering. BWV, could you please provide them so we know what the point is.

It contains both

A) question - do benevolent autocrats exist that, despite their flaws, are responsible for periods of high economic growth?

B) thesis - proof of this is lacking due to the reasons listed by Easterly

 

[russ_watters]

It contains both

A) question - do benevolent autocrats exist that, despite their flaws, are responsible for periods of high economic growth?

B) thesis - proof of this is lacking due to the reasons listed by Easterly

No, neither of those appear in the OP and the question is somewhat different from the question in the title of the thread (the OP itself contains no questions) -- and your thesis statement does not answer the question. Though you may have thought you implied it, you didn't. For future reference, please be explicit about what your point is...however, there's still a problem:

For the points themselves:
The question in the title is actually worded as assuming they do exist (though it could imply a theoretical assumption), which is generally not a good way to word a question. The question above is much better as a problem statement.

Your Friedman quote implied to me a thesis that China is an example, answering the question affirmatively (Q: Do benevolent dictatorships exist? A: Yes, and here's an example). The Easterly quote doesn't actually attempt to answer the question or refute the affirmative answer given, but rather is a discussion of an assumed psychosis that is behind an affirmative answer. In other words, it takes as an assumption that the affirmative answer is flawed, then lists hypothetical flaws and biases that may be responsible -- without actually examining any examples or making an effort to prove the case.

The point is, if you want to answer the question "Do benevolent autocrats exist...?" you must actually examine the examples given, not talk about hypothetical flaws that may or may not apply.

 

[BWV]

No, neither of those appear in the OP and the question is somewhat different from the question in the title of the thread (the OP itself contains no questions) -- and your thesis statement does not answer the question. Though you may have thought you implied it, you didn't. For future reference, please be explicit about what your point is...however, there's still a problem:

For the points themselves:
The question in the title is actually worded as assuming they do exist (though it could imply a theoretical assumption), which is generally not a good way to word a question. The question above is much better as a problem statement.

Your Friedman quote implied to me a thesis that China is an example, answering the question affirmatively (Q: Do benevolent dictatorships exist? A: Yes, and here's an example). The Easterly quote doesn't actually attempt to answer the question or refute the affirmative answer given, but rather is a discussion of an assumed psychosis that is behind an affirmative answer. In other words, it takes as an assumption that the affirmative answer is flawed, then lists hypothetical flaws and biases that may be responsible -- without actually examining any examples or making an effort to prove the case.

The point is, if you want to answer the question "Do benevolent autocrats exist...?" you must actually examine the examples given, not talk about hypothetical flaws that may or may not apply.

That is ridiculous, I quoted in the OP the whole abstract of Easterly's paper which clearly stated the problem and the thesis:

Benevolent autocrat” is a perpetually popular concept in development policy discussions. This paper suggests this popularity is not solely explained by academic theory and evidence. The history of the concept shows the role of political motivations for embracing the concept. The literature on cognitive biases shows multiple biases that would lead to beliefs in benevolent autocrats even if they did not exist, especially as these interact with stylized facts about autocracy and growth. Neither political motivations nor cognitive biases imply disproof of the concept, but they do suggest the need for even more rigorous scrutiny. The theory implied by a benevolent autocrat story is naïve relative to modern theories of autocracy, and it presumes an implausible level of knowledge by autocrats. The evidence underlying “benevolent autocrat” interpretations has equally plausible – or more plausible -- alternative explanations. The well-known “leaders matter” results of Jones and Olken (2005, 2009) do not demonstrate that intentions and actions of individual autocrats affect growth. Since democratic rights are an end in themselves, the burden of proof is on autocrats to show that they provide material payoffs that offer a trade-off with such rights. This paper argues they fail to meet that burden of proof.

As Easterly states, the burden of proof rests on those who would allege that there have been benevolent autocrats who are responsible for periods of high economic growth. Just like a skeptic does not have to refute each and every instance of a reported UFO sighting and can state that the overall methodology and evidence offered by UFO proponents is lacking and suggest cognitive errors that may explain the phenomena of UFO sightings, Easterly is perfectly justified in outlining a position that states that current economic methods are insufficient to establish a casual link between strong autocratic leaders and economic growth. If you are familiar with economics, you will know that arguments are couched in the framework of a statistical null hypothesis rather than attempting to ascertain some existential truth.

 

[noobilly]

The way I see it is like this:

When a country is in a pretty undeveloped state economically, the steps to take towards prosperity are quite clear: raise the agricultural productivity by introducing modern agricultural techniques, attract foreign investment and use it to build factories and roads, then export cheap goods to advanced nations. A benevolent dictator will make sure that these steps are taken, while a non-benevolent dictator will (by definition) squeeze the masses for his own benefit. A democratically elected leader may ensure that these steps are taken, but he could also give empty promises while doing nothing beneficial for the nation.

However once a country is more developed, the road to improvement is much less clearly mapped out, so the ingenuity of the people is key in finding roads to increased prosperity. For that ingenuity to flourish, you need democracy.