Bauer on right track concerning society

By Tibor Machan: Freedom Newspapers

The late Peter “Lord” Bauer devoted much of his life to championing the political economy of classical liberalism for developing societies. This is what would bring them out of their wretched states, not a bunch of foreign aid and intervention by the World Bank, the International Monetary Fund or the United Nations.

His friend and sometime critic, Amartya Sen, a Nobel Laureate who teaches at Harvard, had a serious disagreement with Bauer. Sen had been defending what he has dubbed the capabilities approach whereby the people in underdeveloped, Third World countries must be helped not only by removing all the terrible obstacles placed before them by politicians and bureaucrats but also by providing them with some initial aid and with making it possible for them to influence their governments.
Such influence, of course, would direct public policies to garner resources via taxation and then handing out subsidies and others forms of support to special interest groups that had helped vote in these measures.

Sen’s basic idea is that once this opportunity for making an impact on politics has been exploited, development would commence, and most often private individuals and firms would start embarking on various productive enterprises.

But, argues Sen, first they need a little help from government and various international groups.

Bauer’s and Sen’s conflicting approaches may best be accounted for by reference to what seems to be their respective views of human nature as well as of governments. Bauer would seem to have been confident that free men and women will do well by themselves, provided the legal authorities uphold the regime of private property rights and the integrity of contracts.

This is the limited government idea, one favored by the American Founders in the Declaration of Independence. This is the idea that comes from John Locke, who held that government is but a way to secure our rights and there is no other serious business for it to carry out for us. And this view rests on the idea that humans are able to fend for themselves, in voluntary cooperation, because they are inventive and creative and productive once the threat of criminal and foreign invasion is dealt with in their societies.

Sure, there will be some who lag behind, maybe because they suffer from certain maladies or unusual natural impediments, but to help them it is enough for their to be neighbors and relatives and philanthropist to give them support. Governments should stay the course and secure individual rights, period.

Another matter Sen appears to overlook is what public choice theorists have taught us, namely that when government gets involved in helping various groups in need, those in government pretty much manage to divert this help to projects they themselves prefer.

Bureaucrats and politicians have their own agenda, and when they gain power so as to help out, it is their idea of what needs to be helped they will follow, not that of those who reached out to them. Given that politicians and bureaucrats lack budgetary constrains like normal businesses and families do, they are also likely to overspend and deplete the resources of their treasuries.

Of course, those who are eager for the unfortunate and those left behind to get on their feet must also accept an uncomfortable fact — not everyone is eager to go along with this objective even among those who are in the worst shape.

It is utopian to believe that any kind of method for development will be universally effective. When one does hold that view, one is only likely to throw good money after bad and perpetrate serious wastefulness. Some measure of poverty, for example, as well as devastation from natural disasters will have to be accepted.

Humans aren’t perfect and to fail to realize this leads to what Voltaire called the perfect being the enemy of the good. This applies to efforts to facilitate development across the globe.

It seems to me that Bauer had it right, even though from his perspective one must also accept that some underdevelopment will remain in place here and there across the globe. But the kind of efforts urged on us by Sen and, especially, by the likes of Jeffrey Sachs and Bono — massive transfers of wealth from developing to underdeveloped countries — will only lead to disappointment and frustration.