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Kristof's Misplaced Praise for Economists

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Thursday, 19 May 2011 04:15

NYT columnist Nicholas Kristof does not have a very good track record in identifying effective ways to help poor people in the developing world. (He was a big promoter of Greg Mortenson, the best-selling author of Three Cups of Tea, whose aid project now appears to be largely a fraud.) His column today indicates that his track record is not about to improve.

He urges people who want to help the world's poor to study economics and points to useful results that economists have uncovered. While the results he mentions are intriguing, Kristof somehow manages to ignore all the harm that economists have done in the developing world.

For example, the economists at the International Monetary Fund had routinely imposed structural adjustment programs that required that parents pay fees for their children to attend primary school. These agreement also often required fees for the provision of basic health services. This practice kept millions of children out of school and denied them basic preventive health care, since even small fees were unaffordable to many poor parents.   

The practice was not changed voluntarily by the economists at the IMF. Rather it was a change that was forced on the institution by activists who were able to use their influence in Congress to require that the IMF stop making these fees a condition of getting loans. 

At present, virtually all economists are making a point of not noticing the efforts of the United States and other wealthy countries to raise the price of medicine to people in the developing world by imposing patent protection. All the "free-trade" agreements that the United States has negotiated with developing countries have imposed stronger patent protection or other monopolistic restrictions (e.g. data exclusivity for tests used to get drugs approved) that typically raise the price of drugs by several thousand percent above their free market price. The TRIPS provisions of the WTO (which were drafted by the U.S. pharmaceutical industry) also were intended to have this effect.

While any economist (and most non-economists) should possess the ability to recognize the potential harm that these provisions can imply for the world's poor, very few have tried to call attention to these protectionist measures. It is worth noting that very powerful forces, most notably the pharmaceutical industry and the Gates Foundation, stand behind these sorts of measures. That could explain the reluctance of economists to apply economics to these issues.

Contrary to what Mr. Kristof suggests, the biggest obstacle to improving the lot of the poor in the developing world is probably not a lack of knowledge of economics, but rather the efforts of the powerful from preventing the teachings from economics from being applied in situations where it would hurt their interests.

Comments (8)Add Comment
If Everyone Gets a Subsidy then Everyone Loses
written by izzatzo, May 19, 2011 6:26
Kristof understands that the moral hazard of underpricing essentials like medicine and education for the poor will just make them poorer as they undermine these resources by overconsuming them as free goods.

The poor must have some skin in the game the same way everyone else does, especially investors, lenders and benefactors like Bill Gates who gallantly take the risk of improving the lot of the poor in developing countries.

Economic education is nothing if not founded on the principles of no-free-lunch, no-free-medicine, no-free-education, etc.

Even the poor must be rationed by price lest they be even worse off.
...
written by Kate, May 19, 2011 7:07
"Over consumption of medicine and education", are you joking?

Someone has been overdosing on something, but isn't the poor, and it isn't on education or medicine. Two questions:

What are you smoking?
Where can I get some?
Take Pity, Not Action
written by Union Member, May 19, 2011 8:08
Kristof's Role at the Times is to play the solo violin for the world's poor and opressed. He'll write up one sad story after another to put an op-ed face of humanity on the NYT.
Sadly for us all it is a mask for Friedman and Brooks.
The world's poor (or America's unemployed) don't need pity anyway.
...
written by liberal, May 19, 2011 8:16
quote]He urges people who want to help the world's poor to study economics and points to useful results that economists have uncovered.

They should study economics: namely, the writings of Henry George, who figured out the cause of poverty, and its solution, over 100 years ago. (Based on theoretical work by Ricardo.)

Unfortunately, modern-day economists, even Dean, don't understand (or refuse to understand) the political economy of rent.
...
written by PeonInChief, May 19, 2011 9:35
It might actually be better to ban the study of economics, instead concentrating on subjects like ecology that would promote a more expansive world view. Many years ago a study divided randomly selected students into two groups. One group took an anthropology class, the other an economics course. Before taking their classes students were tested on their views on social programs, values and the like. On being retested, it was found that students who took the economics class were less compassionate, more selfish, and less tolerant of others. The anthropology students were the opposite.
...
written by Jeff Z, May 19, 2011 10:34
That is part of the problem. Let's assume that the economists that Kristof mentions have done good work. Because of the ineptitude or the attitude of many economists, these kinds of results will likely not get the attention they deserve.

The Kenya study on AIDS is interesting, but the logic of that kind of intervention has been discussed by Steven E. Landsburg in "More Sex is Safer Sex." And while de-worming kids will get them to attend school more often, the schools must exist in the first place for them to attend. In other words, they have found a specific instance of the idea that better health and better educational outcomes are intertwined.

This is not just economics. It is also public health and epidemiology. They often have more of an impact on the health and well being of a population, but few Nobel Prizes are awarded for this.

But it leaves larger structural issues in place. Will governments actually fund these kinds of programs? Will NGOs? Will governments allow NGOs to do this? What will the IMF do? What will local leaders do?
...
written by ano, May 19, 2011 11:43
Why snipe at the Gates Foundation? Cite something ?
...
written by Calgacus, May 19, 2011 4:30
PeonInChief, I'd wager that after enough exposure to modern mainstream economics, people would come out worse on tests of cognition, common sense and logical reasoning, not just touchy-feely compassion.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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