I wouldn’t describe myself as an economic illiterate, but my 2:2 in economics is a bit long in the tooth for me to consider myself fluent in the dismal science. Certainly, there are a hell of a lot of people out there who know far more about the subject than I ever will.
But the term “economic illiterate” is something I am getting heartily sick of reading in blogs and elsewhere. It suggests a degree of arrogance and smugness on the part of the writer who uses the term, a certainty that their view of the world is correct and that to disagree cannot be a difference of opinion, but due to a lack of knowledge on the other person’s part. Strange, since economics is a discipline famed for inspiring a wide range of conflicting views and opinions.
Theoretically you would imagine anyone could throw about the charge of “economic illiteracy”; anyone who reads an economic viewpoint different to their own and feels this view has been arrived at through ignorance. In practice the term is almost always used by free-marketeers to dismiss anyone who suggests something less than an entirely laissez faire model. Why this should be I don’t know. Perhaps those of a libertarian bent really do know more about economics than others; or perhaps they view economics more as a science, so that dissent from pure free market solutions is like dissent from the laws of nature. I have less faith that free markets can always provide us all with what we want, I don’t think that economics can be directly compared to the natural sciences, and I feel there are times when state intervention can be desirable, even if it may result in some economic inefficiencies.
A recent hot topic is of course the whole question of aid and the Make Poverty History campaign. Here the charge of economic illiteracy has been widely used to attack what are seen as its well meaning but naive proposals. The suggestion to double aid is often derided as just simplistic and woolly thinking, that it ignores economic realities and the situation existing in Africa. Funny then that many critics of Make Poverty History and Live 8 themselves seem to betray an extremely simplistic world view; that aid can never be effective; that it is just throwing money at the problem and will only find its way into the Swiss bank accounts of corrupt African regimes; that only trade and better governance can help the poor in Africa.
But there is no suggestion that aid should be thrown at corrupt regimes; the intention is for it to be targeted at specific problems, such as combating malaria, and often channeled through NGOs. Moreover, aid forms just a small part of the current campaign, alongside debt relief and trade reform (although we can argue over whether free trade or fair trade is the best way to go, everyone seems agreed that trade is a vital part of the long term solution). To characterise all African governments as corrupt is probably the most telling assumption of those who oppose Make Poverty History and its related campaigns; it is crass and ignorant to lump together the governments of Zimbabwe and, say, Ghana.
If those calling for greater aid are a group of economic illiterates, it is interesting to see that their ranks appear to have been swelled by none other than The Economist newspaper. The current edition includes a leader entitled “Helping Africa help itself” (subscription/registration required), which says,
The aid sceptics, some of them veterans of the industry, their palms calloused from many previous bouts of hand-wringing over Africa, have all the best lines in the debate. Everything has been seen before, they say, nothing has worked. But what do they mean precisely? Do they mean that the World Health Organisation should abandon its efforts to put 3m HIV-carriers on anti-retroviral therapies? Perhaps those already on the drugs should hand them back, lest they succumb to “dependency”. Should Merck stop donating its drug, ivermectin, to potential victims of riverblindness? Let Togo reinvent the drug itself! Perhaps, in the name of self-reliance, Tanzania’s government should stop giving pregnant women vouchers to buy mosquito nets. Get sewing, ladies!
No one should be naive about aid. It cannot make poverty history, and it can do harm. But to say that nothing works is wrong. Cynicism is only the most common form of naivety.
I couldn’t possibly put it better myself. I may not be fluent in economics – indeed I may leave myself open to the charge of being an economic illiterate – but to me The Economist is just talking plain old common sense.