False Economy - Alan Beattie [154]
This book is not a detailed instruction manual on economic policy. There are dozens of those already in existence. In any case, giving finely tuned advice on precisely what should be done with import tariffs, tax rates, or anything else is impossible. That way lie mistakes like the micro-management of the Indonesian clove marketing board by the International Monetary Fund. I don't know what the exact answers are, and anyone who claims she does should not be trusted. In general, the more that development economists have looked at the questions, the less precise or doctrinaire their advice becomes.
But certain basic ideas command wide acceptance. Don't cut yourself off from the rest of the world. Plan ahead for cities, but don't force them, and don't give them more power than they warrant. Try to let your economy do what it is best at, and support it where possible without trying to force it down a predetermined path. Don't obsess about religious belief, but watch for elites using it to further their own temporal ends. Stop overweening governments from ignoring property rights and the rule of law. Learn from the examples of those who managed to keep oil and diamond money from poisoning their economy and their politics. Call the bluff of small interest groups who say they have the welfare of the whole country at heart. For very poor nations, worry less about trade policy and more about customs procedures. Concentrate on rooting out the forms of bribery that will do the most damage, and worry less about corruption that is moderate and predictable. Be aware when your country is getting stuck on the wrong path and be alert for opportunities to shift it.
So what is it that sends countries down the wrong route? There are genuine differences of opinion (among outside observers as much as within the country concerned) as to what the right choices are. A policy like import substitution, which we encountered in the first chapter, continued to be followed for decades in Africa and Latin America even after it appeared not to be producing results. Some people still argue in favor of it as a development strategy.
Many countries, of course, are run by individuals who aren't especially bothered about whether their people get better off as a whole, or how widely the gains are spread, so long as they get to stay in charge. For reasons we have seen, natural-resource economies are especially susceptible to this. There is not much that people outside can do about this except try to keep their own companies and banks that are operating in a given country from making it worse.
Even if politicians within the country do see the need for change, they often find that making the right decision is politically too difficult or goes against the grain of how things have always been done. You can stand for election in India promising to end the entire system of caste preferences in jobs and education, and to promote a more equitable system of public services for all. But you will have to struggle mightily to overcome what is now an established system of politics oriented around handing out favors to specific electoral blocs.
Following prescriptions like those listed above is not easy, or everyone would have done it. Often it can be exhaustingly difficult. Nor is it something that can automatically be done by presidential or prime ministerial decree. Achieving sustainable change in policy means bringing public opinion with you—even, often,