It's been a particularly hectic week here at the LSE lecture circuit. On Tuesday, Nouriel Roubini came along, presented, and signed copies of his new book (you can listen to a podcast of his presentation here). On Wednesday, William Easterly then paid a visit and talked about the intriguingly titled "We Don't Know How to Solve Global Poverty and That's a Good Thing." While his presentation hearkened back a lot to his 2006 book The White Man's Burden, he added a few wrinkles--some perhaps unexpectedly for those of us who've grown somewhat tired of his lines of argument. First, contrary to the title of his presentation, he clearly advocated democracy as the ideal complement to market economics. This, of course, was somewhat expected given his Hayekian sympathies and his admission that there is no conclusive empirical evidence linking democracy with development.However, the second thing I noticed was his still-unexamined criticism of "planning." In my own way, I've inadvertently gauged the success of this blog by me Googling terms and previous posts of the IPE Zone coming up. For instance, I typed "easterly gosplan" and voila, the top result is mine. However, let me bring your attention to my intended search result--which isn't as tedious as me quoting myself! In the wake of the Haitian disaster, Easterly repeated a criticism of planning we've heard time and again from him and which he mentioned yet again on Wednesday night:
You announce a plan. The characteristic feature of the top-down approach is a plan, a grand plan to solve everything all at once. Of course, these plans work about as well as the five-year plans did in the Soviet Union. You have a bunch of bureaucrats trying to run a whole complex society and economy without any knowledge of what is going on at the bottom, and it doesn’t work, and that’s why the Soviet Union collapsed. In aid that model is still being followed. They are still following the Gosplan model, the top-down model [my emphasis].From listening to Easterly, you would get the impression that five-year plans are a Soviet-era laughingstock. The truth, however, is more complicated. China and India are often held as exemplars of today's developmental successes. There is not much debate about this observation unless you're a raving left-wing extremist. However, a simple inspection of these countries' policies reveals, yes, continuing adherence to publishing five-year plans long after the Cold War ended. But don't take my word for it; take a look for yourselves. China has had eleven of these plans, with the last coming in 2006-10 (we are due for a newer one). India has had eleven of them as well, the most recent being in 2007-12.
Unfortunately, I was unable to ask Easterly about what he makes of these Chinese and Indian policy documents. In my conversations with Chinese and Indian colleagues, they still tell me to read five-year plans carefully to glean the finer points of government policy. So, if Easterly is justified in mocking five-year plans, he would need to demonstrate at least one of the following:
- Chinese and Indian five-year plans are meaningless documents with little or no policy implications; or
- China and India have been able to succeed despite government efforts to implement five-year plans
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