In a series of articles I used large data set and advanced statistical techniques to analyze the dynamics of economic growth in the emerging economies. This work focuses on the way in which severe shocks affect the deviation of economic growth from its long-term trend. My research indicates that a 10 percent improvement in terms of trade translates to approximately 1 percent acceleration in the rate of economic growth above its long-term trend. This means that all of Venezuela’s growth during the Chávez administration may be attributed to higher oil prices. Indeed, the data suggests that if it weren’t for the oil boom, Venezuela would have experienced a negative growth in income per capita during the years of the Bolivarian revolution.
Some have argued that there is a trade-off between encouraging economic growth and pursuing greater equality. According to this view, countries that want to improve social conditions for the poor and reduce inequality will grow more slowly than countries who economic policies focus exclusively on growth and ignore social goals. It is possible, then, that Venezuela’s mediocre record of growth could be justified by great improvements in the well-being of the poor. Unfortunately, there is little evidence that conditions for the poor have improved greatly. In an article published in Foreign Affairs, economist Francisco Rodríguez has argued that Chávez’s social policies record is mediocre — indeed, that it is arguably worse than the country’s economic growth record. Rodríguez’s article is noteworthy because he has not been particularly enthusiastic about the Washington Consensus; quite the contrary, for years he was an articulate critic of globalization. Using official statistics Rodríguez concluded: “Most health and human development indicators have shown no significant improvement beyond that which is normal in the midst of an oil boom. Indeed, some have deteriorated worryingly, and official estimates indicate that income inequality has increased. The ‘Chavez is good for the poor’ hypothesis is inconsistent with the facts.”
— Sebastian Edwards, Left Behind: Latin America and the False Promise of Populism (Chicago: University of Chicago Press, 2010), pp. 200–201.
N.B.: “Terms of trade” refers to a ratio between a price index for exports over a price index for import. An increase in the terms of trade, therefore, means that for each good exported, on average, you can purchase more imports.
Self-organizing social systems economize on the knowledge people need to pursue their goals successfully. Science, the market, and democracy are so complex that no human being can grasp them except by using a theory divorced from concrete details. Such a theory, however, can provide little or no guidance in making specific decisions within such an order. Few economists are successful entrepreneurs, few political scientists win public office, and few philosophers of science do valuable scientific research. The skills required to succeed within a spontaneous order are little connected to the skills needed to understand it.
— Gus diZerega, “Market Non-Neutrality: Systemic Bias in Spontaneous Orders,” Critical Review 11, 1 (1997), p. 123.
[I]t is not true that private action is inherently parasitic or dependent upon collective action. The existence of the black market proves that property rights and contracts are possible without government approval. That is why one drug dealer can meaningfully tell another, “You stole my crack” or, “We had a deal.” Indeed, the black market shows not only that property and contract can persist without the government’s support, but that they can survive in the face of its determined resistance.
— Bryan Caplan, The Myth of the Rational Voter (Princeton: Princeton University Press, 2007), p. 194.
One big objection to this argument, that I can think of, is that enforcement of property rights in black markets tend to be sub par. The reason is because it’s difficult to build long lasting institutions when you operate in a sector where these institutions can be dissolved by the state. But, the point remains that the black market does not offer a lot of evidence of efficient, non-state property rights protection. Another thing is that we don’t necessarily need to see the emergence of property rights as a function of government benevolence. Rather, maybe early societies developed early governments expressly for the purpose of rule enforcement — that is, maybe the existence of government is due precisely to the lack of other, better alternatives for the provision of order (in early society).
Such dichotomies, between the licit and illicit, between a universal human rights regime and local cultures, are simple abstractions with little relationship to actual ethico-political negotiations on the ground. Instead of a rigid division between zones of humanity and zones of inhumanity, I propose that the space for problematizing the human is a milieu that is constituted by a nexus of multiple ethical regimes. A situated constellation of citizenship regimes, moral systems, and NGO interventions defines the space within which the translation and transmission of human rights discourse proceeds. Because the site of problematization is shaped by diverse systems of value, it cannot be claimed that only the human rights regime creates a moral vernacular, as if situated ethics have nothing moral to say in the matter of labor and life.
— Aihwa Ong, “A Bio-Cartography: Maids, Neo-Slavery, and NGOs,” in Seyla Benhabib and Judith Resnik (eds.), Migrations and Mobilities: Citizenship, Borders, and Gender (New York: New York University Press, 2009), pp. 159–160.
…[U]ncertainty is not an unusual condition; it has been the underlying condition responsible for the evolving structure of human organization throughout history and pre-history.
— Douglass C. North, Understanding the Process of Economic Change (Princeton: Princeton University Press, 2005), p. 14.
There is … point in [Evan F.M.] Durbin’s answer to those who emphasize the problems involved in economic planning that the same problems involved in economic planning that the same problems have to be solved by business men in the competitive system. The important difference between these two cases is that economic planning is imposed on industry, while firms arise voluntarily because they represent a more efficient method of organizing production. In a competitive system, there is an “optimum” amount of planning!
— R.H. Coase, “The Nature of the Firm,” in The Firm, the Market, and the Law (Chicago: University of Chicago Press, 1988), p. 37.
N.B.: Out of context, it’s easy to interpret the above as a Hayekian argument, where the scope of decision making is limited to the area in which the agent has local knowledge. In ways it is, but while Hayek had in mind the limitation of choice as a means of improving the information reflected in prices, Coase’s argument is set in the context of firms operating outside the pricing process, and so is somewhat different.
The confusion between the objective facts of the situation and the character of the human responses to it tends to conceal from us the important fact that competition is the more important the more complex or “imperfect” are the objective conditions in which it has to operate. Indeed, far from competition being beneficial only when it is “perfect,” I am inclined to argue that the need for competition is nowhere greater than in fields in which the nature of the commodities or services makes it impossible that it ever should create a perfect market in the theoretical sense. The inevitable actual imperfections of competition are as little an argument against competition as the difficulties of achieving a perfect solution of any other task are an argument against attempting to solve it at all, or as little as imperfect health is an argument against health.
— Friedrich A. Hayek, “The Meaning of Competition,” Individualism and Economic Order (Auburn: Ludwig von Mises Institute, 2009 ), pp. 103–104.