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Sunday, February 02, 2003

Personal History

Thanks to Stephen Karlson for his comments on, and link to, my post on heterodox economics. I don't (yet) have an about page, so let me introduce myself. My name is Damien Smith, and I am currently doing a part-time Postgraduate Diploma in Economics at Birkbeck, University of London; I hope to continue next year and complete the full MSc. I have a BA in history from the University of the West Indies, and last year I completed a Postgraduate Certificate in Economics, also at Birkbeck. I have a full-time day job as a library assistant. This work, which does not pay very much for this city, not only ensures my survival, but pays for my course as well.

At this time two years ago I was head librarian at CCN TV6, the most popular televsion station in the twin-island republic that is Trinidad and Tobago. It was my fourth job there, having been hired as an intern back in 1996 and working my way up. My previous job was as a production assistant in TV6's newsroom, where for almost three years I worked on producing the international news--recording it, selecting stories for the news editor, editing the video and writing the script. I also assisted on other news assignments; I have three awards for journalism for this story (top item), including two from the Pan American Health Organisation. I did not enjoy the work terribly, though--it became pretty routine after a while, to be honest, except for the occasional outside broadcast--but it was comfortable, and I made a decent living, especially in a country that has a low cost of living. I gave all of that up to come to London to work my way through grad school in a city with a high cost of living. Phrasing it this was makes it sound a little noble; it's not. I don't have to be studying economics this this way. I could have done a second bachelor's degree, or I could have tried going to the US. (I am an American citizen, having been born in New Jersey, though I have not lived there since I was six.) I'm here because I want to be here, and, while I have made some mistakes, I don't regret it.

Why economics, though? Like some young idealists, it began with a visit to the United Nations in New York. I made my first visit there when I was 15, and, strange as I was (and am) I then bought the World Bank's World Development Report 1990, which focused on poverty. I was too young to understand it (I didn't actually read the report until I was 21) but the deprivation described in its first chapter was compelling. I thought then that reducing poverty in developing countries was what I wanted to do with my life, and I desperately wanted to do a degree in development studies. Times change, and people change; I eventually plumped for history as an undergrad. Still, the goal was to understand how things came to be the way they are, in a view to making people's lives better.

I realised at university that sociology (in which I took a few electives) was not the answer. One course was called Social Change and Development, which turned out to be mostly a descriptive course in the history of development economics. There were several paradigm shifts, from "modernisation theory" (otherwise known as Fordism, but basically the development economcs of the 1950s) to "dependency theory" (late 1960-early 1970s) the oil-shocks 1980s debt crisis, structural adjustment and, now, post-modernism. Post-modernism? (I'll actually ignore that--it's too easy a target.)

Why did all of these development "paradigms" fail? The post-modernists had the idea that different people had different ideas about what mattered in development, and that all that came before was a bit mechanistic. My problem with the course was with discussing what is, in large part, an economic situation using non-economic analysis. To discuss the 1970s oil shock without saying that developing countries borrowed irresponsibly and unsustainably during it struck me as disingenuous, as did the 1980s campaign for debt relief. I am not saying that debt relief was not necessary, only that it would have helped if those countries showed a little humility, acknowledging that they were responsible for getting themselves into their dire situation and that they needed to adjust. No such luck. Other explanations, like the deterioration in world commodity prices and a rise in real interest rates, had to be to blame. A recent Economist article on Zimbabwe notes:

It may seem harsh, when faced with the misery of an Ethiopian coffee farmer, to argue that it would be more efficient to let the price mechanism deliver its message (“Grow something else”) unmuffled. But greater efficiency leads to greater wealth, and vice versa, as Zimbabwe so harrowingly shows.

The early discussion of "modernisation" echoed this. Much of the literature on this was written by Nobel prizewinners (Gunnar Myrdal and W. Arthur Lewis, for example), and things like W.W. Rostow's "Stages of Growth" seemed plausible. Why did they fail? Paul Krugman, in a somewhat presumptious 1994 essay titled "The Fall and Rise of Development Economics", asserts that the problem was methodological:

It is common for those who haven't tried the exercise of making a model to assert that underdevelopment traps must necessarily result from some complicated set of factors -- irrationality or short-sightedness on the part of investors, cultural barriers to change, inadequate capital markets, problems of information and learning, and so on. Perhaps these factors play a role, perhaps they don't: what [some models now show] is that a low-level trap can arise with rational entrpreneurs, without so much as a whiff of cultural influences, in a model without capital, and with everyone fully informed . . . In particular, verbal expositions of [Paul Rosenstein-Rodan's theoretical] Big Push story make it seem like something that must be true. In this model we see that it is something that might be true. A model like this makes one want to go out and start measuring, to see whether it looks at all likely in practice, whereas a merely rhetorical presentation gives one a false feeling of security in one's understanding.

Krugman concludes that "Non-economists tended to think that Big Push stories necessarily involved some rich interdisciplinary stew of effects, missing the simple core." The verbal exposition and interdisciplinary nature of these theories is what makes the material good content for sociology courses, even if it is to debunk them. (I say Krugman is somewhat presumptious in that he has not actually looked at the history of development economics as it was practised--for example, by reading Gerald Meier's 1983 book Pioneers of Development--but assumes a lot of the history. This does not, of itself, make him wrong, but it does seem a bit smug in his conclusions.)

Other courses I did were like this. I loved doing economic history, for instance, but my undergrad courses were very descriptive, and without data it was very easy to find an agreeable source to support one side or another. (Which, to some extent, explains the ongoing debate over Eric Williams's book Capitalism and Slavery.) The way of discussing development up to that point was dissatisfying to me; all theories had some measure of plausibility, but none seem to have had any real-world effect, nor have their solutions been durable. It all seemed so impersonal: modernisation theorists extolled the virtues of planning, for instance, while dependency theorists stressed the role of power structures in the world economy. As I wrote earlier, an analysis of the debt crisis has to examine the responsibility of the developing countries for their own situation; over time I realised that a good analysis of all development issues has to be considered from such a perspective. Those countries, and the people that live within them, have the most to gain from success, and they suffer most the consequensces of failure. As so many people have written over the years, people respond to incentives.

When I finished my BA I initially intended to do economic history, partly because it was less mathematical, and I was terrible at algebra. There are actually few pure economic history MSc programmes in the world, bur more than that my interest in economics broadened from the consideration of development. From my citations of Krugman in this and other posts, it should be clear by now that I am a great consumer of popular economic writing. (This, paradooxically, is the reason why I don't read his New York Times columns regularly anymore; he's a political columnist now. I don't have a problem with that per se--it is his choice, after all--but the world is a bit poorer for it all then same.) By the time I was promoted to the post of librarian (I was a production assistant before, and continued to freelance as one on outside broadcasts) I made up my mind to do an MSc in straight, neoclassical economics.

At some point in another post I'll probably explain my thoughts on London and Birkbeck (in short, it's relatively cheap if you can do it part-time). I also don't know if I still want to work in the field of development, as my interests have broadened into other areas. The problems of developing countries, though, remains a huge concern of mine.