Naked Economics: Undressing the Dismal Science pdfdrive com

Democracy. Does making the trains run on time matter more to the economic
growth of poor countries than niceties like freedom of expression and political
representation? Perhaps. China has experienced extraordinary growth without
democratic governance. On the other hand, democracy is a check against the
most egregious economic policies, such as outright expropriation of wealth and
property. Amartya Sen, a professor of economics and philosophy at Harvard,
was awarded the Nobel Prize in Economics in 1998 for several strands of work
related to poverty and welfare, one of which is his study of famines. Mr. Sen’s
major finding is striking: The world’s worst famines are not caused by crop
failure; they are caused by faulty political systems that prevent the market from
correcting itself. Relatively minor agricultural disturbances become catastrophes
because imports are not allowed, or prices are not allowed to rise, or farmers are
not allowed to grow alternative crops, or politics in some other way interferes
with the market’s normal ability to correct itself. He writes, “[Famines] have
never materialized in any country that is independent, that goes to elections
regularly, that has opposition parties to voice criticisms and that permits
newspapers to report freely and question the wisdom of government policies
without extensive censorship.”
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China had the largest recorded famine in
history; thirty million people died as the result of the failed Great Leap Forward
in 1958–1961. India has not had a famine since independence in 1947.
Economist Robert Barro’s seminal study of economic growth in some one
hundred countries over many decades found that basic democracy is associated
with higher economic growth. More advanced democracies, however, suffer
slightly lower rates of growth. Such a finding is consistent with our
understanding of how interest groups can promote policies that are not always
good for the economy as a whole.
China looms large with regard to this question, especially at a time when
democracy is under assault around the globe. It is hard to ignore the fact that the
single most impressive economic development story in our lifetimes has
occurred in a country that has become less democratic over that period, not
more. Meanwhile, Singapore has become one of the richest countries in the
world with a government that Freedom House rates as “partly free.” I have had
many conversations with policymakers in India, a country that is impressively
democratic, who have great respect for democracy but also envy the Chinese
government’s ability to get things done. Do you need to clear out a village of

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government’s ability to get things done. Do you need to clear out a village of
10,000 people to make way for a new airport? In India, that might be a multi-
decade process, as it winds through the political and judicial processes. In China,
it can happen in twenty minutes if the leadership in Beijing gives the order. I am
sufficiently intrigued by the relationship between democracy and economic
development that I will return to this question in the Epilogue.