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Nobel Prize Winner Offers Valuable Insight on Development

When the initial reports came in saying that a professor at Princeton’s Woodrow Wilson School of Public and International Affairs won the Nobel Prize for Economics, I was not surprised. Wilson is of course known for a trend which is now reflected broadly in the field of public and international management: one of increasing governmental intervention in the economy.

In the first couple of days after the announcement that Angus Deaton had won the Nobel Prize, the common news story focused on the fact that he was the first to put forth the idea that income inequality could measure economic health. Since talking about income equality and how to solve is sexy these days, I regarded Deaton as a conventional and politically-correct decision.

While that may be true, at least in part, I was surprised to learn that there is a lot more to Deaton than his association with an institution named after Woodrow Wilson. In fact, I found that he had even published a book review in “The Review of Austrian Economics.”

In this book review, Deaton looks at famed anti-status quo development economist William Easterly’s recent book, “Tyranny of the Experts.” Deaton agrees with Easterly’s argument: “The technocratic illusion is never far away in an economics that is centered around optimization.” By trying to ‘scientify’ peoples’ lives, we lose the organic growth that develops out of individuals using God-given talent.

Oddly enough, a week later, a thought-provoking article focusing on Deaton was published on The Washington Post’s Wonkblog. In it, Deaton elucidates why foreign aid changes the equation for government-citizen relationships. He comes back to principles outlined in the book review: “The trouble is that ‘what works’ is a highly contingent concept. If it works in the highlands of Kenya, there’s no reason to believe it will work in India, or that it will work in Princeton, New Jersey.”

Deaton writes about Easterly’s perspective that  certain issues, like health, require Western intervention. Instead, Deaton takes a more Tocquevillian approach, looking for the roots of societal and institutional change: “I would invoke a longer term perspective; we (the experts, the developers, the Humanitarian International) can save lives now, but only at the expense of losing lives later. Aid, including health aid, undermines democracy, makes leaders less democratic and will hurt health in the end.”

While this is controversial, it gets at the core of Deaton’s entrepreneurial and bottom-up approach to development: “Outside developers are no more responsive to the needs and rights of the poor than are the local non-democratic leaders.”

As we look to assist the poorer members of our world, our nation, or our city, we must also consider what place we have in their spheres of influence. Do we know how corruption really works in that village? Which leaders can be trusted in that county? Will people take ownership over that project? Did they have any desire for it before I arrived on the scene? These are questions without easy answers, but according to this year’s Nobel Prize winner, they are worth asking.

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