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? No; the opposite is true. 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.