#
A story I really like is the story of a drunk man searching for something under the street
#
He sees this drunk guy is bending under the street light looking for something so he goes
#
up to him and he says, what's up?
#
What are you looking for?
#
The drunk guy says, yes, please.
#
The cop says, no worries.
#
We will find your keys.
#
He also bends and starts looking.
#
After a couple of minutes, when he can't find anything, he turns to the drunk guy and says,
#
you know, I can't see anything here.
#
Where did you drop your keys?
#
The drunk guy points into the dark bushes 50 meters away.
#
I dropped it there, he says, in those bushes.
#
The cop now says, what the fuck, man, why are you looking here then?
#
And the drunk guy says, well, it's too dark there.
#
I can't see anything there.
#
So I thought I'll look where the light is.
#
Now after recording this episode, it struck me that this is the state of development economics
#
We are searching for prosperity.
#
This is a difficult field, and it's easier for some people to walk away from the problem
#
to a streetlight below which they can see, so that they get kudos for their clear eyesight.
#
But the hard, wicked problem remains, and a large chunk of humanity remains in poverty.
#
My guest today is a legend in this field, a man who is not scared of asking the big
#
questions and who will continue to look for the secrets of human prosperity and economic
#
growth in all the right places.
#
There is a lesson in this for all of us, whether or not we are development economists or drunk
#
The lesson is to keep searching for the truth and not take the easy way out.
#
Welcome to the Scene and the Unseen.
#
My guest today is a legendary Lant Pritchett, a man so eminent that I've hesitated to call
#
him on the show for years, because I felt he's just too big a guy.
#
And was I even worthy of speaking with him?
#
Lant's papers, specifically his paper on India as a flailing state, have been part of my
#
show notes for many, many episodes.
#
Lant is a development economist obsessed with fighting poverty, with helping countries and
#
societies move towards prosperity.
#
He worked for the World Bank for a couple of decades, has written many seminal papers,
#
has mentored many great thinkers, and is outspoken about the current trend in development
#
The trend of turning away from big questions because answers are hard, and instead asking
#
ridiculously small questions simply because they can be answered, even if they make no
#
difference to the world.
#
In my last episode, Rohit Lamba and I ranted a bit about RCTs, but no one has made a more
#
lucid and principled case against them than Lant has.
#
They are a scam that diverts great minds and a lot of money from tackling truly important
#
I'd urge you to listen to this full episode for more, and I've linked many of Lant's great
#
papers and books from the show notes.
#
Lant is one of the most important thinkers I've ever had on the show, which is why I
#
feel kind of upset that I messed up the sound for this episode.
#
I had to go to my friend Ajay Shah's office to do the conversation there while Lant was
#
visiting India on a packed schedule, and I packed my boom arms, I packed my XLR cables,
#
I packed my audio interface, and I forgot to pack my bloody microphones.
#
So the sound is, Jogaru, I'm sorry for that, but the content is amazing.
#
So do listen, but before you'll begin listening to this conversation, let's take a quick commercial
#
Hey, the music started and this sounds like a commercial, but it isn't.
#
It's a plea from me to check out my latest Labour of Love, a YouTube show I am co-hosting
#
with my good friend, the brilliant Ajay Shah.
#
We've called it Everything is Everything.
#
Every week, we'll speak for about an hour on things we care about.
#
From the profound to the profane, from the exalted to the everyday, we range widely across
#
subjects and we bring multiple frames with which we try to understand the world.
#
Please join us on our journey and please support us by subscribing to our YouTube channel at
#
youtube.com slash Amit Verma, A-M-I-T-V-A-R-M-A.
#
The show is called Everything is Everything.
#
Please do check it out.
#
Lant, welcome to the scene in The Unseen.
#
Let me start by asking you a question you may not be expecting.
#
If you look back on yourself 50 years ago, how would you describe the 15-year-old Lant
#
as if it's a tall person?
#
I think the 15-year-old Lant was reckless and irresponsible and, uh, and, uh, and, uh,
#
I don't know how to put it, uh, knew that eventually I would get around to being a mature
#
human being but was in no hurry to get there.
#
What do you see in him that can tell you that he would turn into you?
#
What do you have in common with him?
#
What seeds did he have that became who you are?
#
I think one of the things that I think has been really helpful in my career is a tremendous
#
capacity for doubt, um, both doubting what others told me and, uh, doubting that I myself
#
had any special superior insights.
#
And so I think I sort of early on, uh, would listen to what people, like teachers in school
#
and et cetera would say and think, eh, that doesn't sound right, that doesn't sound at
#
Uh, probably took that to excess in some ways.
#
And second, I think an interesting feature that has proved not unhopeful strangely in
#
the world of being a development expert is a sense of alienation.
#
I was, I always felt alienated from whatever social or other situation I was in and so
#
it was slightly distanced from it.
#
And I think that actually helps because you're always seeing things from a more doubtful,
#
more other possibilities exist point of view.
#
So I think those were already there when I was 15 years old.
#
15 is 50 years from 65.
#
So I think those were there.
#
I think lots of other irritating features were there as well that hopefully I've grown
#
So what was your childhood like?
#
You've mentioned somewhere that it was a non-elite kind of childhood in terms of background.
#
It was pretty different from all of the people who may be your colleagues today.
#
What were you doing in your younger years?
#
Well, I guess it was, um, you know, standard middle America in 1950s, 1960s.
#
Both of my grandfathers were blue collar workers.
#
My father's father had become successful later in life by starting his own construction company.
#
But he was definitely a blue collar worker.
#
He started off as a cement finisher and spent years, you know, as a cement finisher building
#
the interstate across Utah.
#
So he said that he'd seen, he really knew Utah well because he crawled across it backwards.
#
My other grandfather was a kind of carpenter, builder.
#
And then my father was first generation to really get a college education, became a lawyer,
#
struggled, I think, to be as successful as he wanted to be.
#
So we were kind of aspirational upper middle class, but not quite there.
#
So I always felt like we were, you know, wanted, my father was, you know, wanted his kids to
#
play tennis, but we couldn't afford to be members of a tennis club.
#
So it wasn't like I had a hard background, but I definitely had this sense that we had,
#
that my father had come from, you know, working class roots and always at odds with, I think,
#
himself in that he wanted to both be part of the elite and be part of the working class
#
So my mother made the decision to stay home and raise kids.
#
So it was a kind of 1960s father, very ambitious mother, you know, devoted to staying home
#
and raising the five kids.
#
And I grew up in a small town of, you know, I was born in Salt Lake City and then grew
#
up from eight to 18 in Boise, Idaho, which at the time was 100,000 people, kind of very
#
What kind of values did you grow up with?
#
Do you think there's a difference in the kind of values one grows up with when one has that
#
sort of a background as opposed to, you know, you could, you know, be born in a different
#
Your parents could both be professors, you could already be part of the elite, you know,
#
it almost then seems part of your destiny that, oh, he's going to go to Harvard and
#
he's going to do these things and all of that.
#
And that's really not the case with you, it's much more open.
#
So you know, what were the values around you?
#
So one thing is my, all of my family was Mormon and Mormonism is this very odd Christian
#
denomination in the sense that it's not standard Protestant denomination.
#
It was founded by a young boy who claimed to see God and was persecuted and then the
#
Mormons, after Joseph Smith was assassinated, fled to Utah.
#
So in many ways, I think of myself as a weird sort of first generation immigrant because
#
it was really my, the Mormons had basically retreated into Utah in the hopes that no one
#
would come and bother them and so became an enclave culture and then only really with
#
my father's generation or more so my generation, you know, we re-emerge into an engagement
#
And so we had a lot of chip on our shoulder, a lot of we needed to prove ourself, it wasn't
#
any assumption that, you know, mainstream America had very much and decisively rejected
#
Mormonism as an accepted alternative.
#
And so I grew up with very religious values, we went to church every Sunday, we were, and
#
I still go to church every Sunday.
#
So that's been a, so that that's one set of values.
#
And then, again, my father was, like I said, conflicted because he very much wanted to
#
make it into the elite, but just couldn't make the jump from his background.
#
And so drove us very hard as children, and it was gendered in a way we can get back to,
#
but drove especially his boys very hard that, you know, you should go out into the world
#
and prove you're just as good as anybody out there, but from the position that you weren't.
#
So it wasn't that you started from, you know, you're from this background that proves that
#
you're part of the elite or you expect to be part of the elite.
#
It was more the elite hate you.
#
So you have to be better than them to prove your worth.
#
And so very, you know, hard driving kind of ambition as vengeance almost.
#
It was this odd sort of, we were driven to be very ambitious, but not because we shared
#
the values of achieving the money or the fame.
#
It was more to prove that we were just as good as anybody else.
#
It was, like I say, I think almost as a first generation immigrant background, you know,
#
the same thing that drove and drives Indians to be very successful in America.
#
How do you think that outsiders view sort of, you know, shapes the way you look at everything
#
you do subsequently in life?
#
Because I, you know, in all the things that I've done in my own life, I felt like I'm
#
on the kind of on the fringes and the outside looking in.
#
And even if I'm on the inside, it's like, you know, I don't quite gel with the conventional
#
And that can play out in various ways.
#
It can play out perhaps in a sort of bitterness that a lot of people who you don't agree with
#
or are wrong, they are successful.
#
You've got to fight from the bottom and so on and so forth.
#
Or it could just result in a kind of apathy where you turn away from the system and you
#
say, like, fuck this, I don't want to deal with this.
#
So or you just put your head down and you work harder and say, listen, if they're wrong
#
and I'm right, that's my competitive advantage and I'm just going to keep on doing what I'm
#
So and I guess especially when you're young, that can be a bit of a factor because there
#
is the anxiety of wanting to fit in.
#
You want to fit in with this crowd, but at the same time, you know, you might resent
#
So what was your mental landscape of dealing with this?
#
I guess my mental landscape was I felt a bit I felt alienated enough from my own background
#
that I knew I just didn't want to stay and be an integral part of that.
#
At the same time, I didn't want to shift.
#
So I think of myself as optimally alienated in the sense that I can fit in with anybody.
#
You know, I come to India, I can fit in in India.
#
I can fit in in Indonesia.
#
At the same time, you know, I guess I was inculcated with the belief that if you worked
#
hard and did a good job, the American system would reward that.
#
And so it was possible for a kid from, you know, a Mormon kid from Boise, Idaho, to achieve
#
anything they wanted if they just like worked hard.
#
At the same time, like I say, that culture of alienation and doubt, I never, you know,
#
I was at Harvard off and on for 17 years, and I still refer to it as them.
#
I never felt I was really part of that in a I never, you know, it's always hard for
#
me to be to see myself as deeply part of the elite, even when I was in some ways functionally
#
So at the same time, I didn't feel like I was excluded.
#
It's like you could always, you know, fit in enough that I could be there, but I never
#
wanted to be in some sense, one of them.
#
So I wanted to be accepted, but accepted on my own terms, never wanted it doesn't want
#
I wasn't I wanted I was wanted to leave my old club and join a new club.
#
It was I was going to be equally alienated in both, but at the same time, wanted to be
#
Is it a sort of a what I've seen, especially in India, is I've done tons of episodes with
#
people of various backgrounds, and I find that those who are of a similar background
#
to mine, that is, you know, English speaking elites grew up in a big city.
#
There's always a layer they miss, whereas when I speak to people who have had a more
#
sort of vernacular education, who probably grown up reading Hindi and Hindi newspapers
#
or any language really, like Suyash Rai of Carnegie, who I believe, you know, as well
#
he's a good friend of mine.
#
I find that they have an extra layer of perception and they take less things for granted.
#
And they've just got a wider vision because they are coming in a sense from the outside.
#
And it's almost a dual thing that one is that, you know, they're not taking the same things
#
So they see a little bit more.
#
And the other also is that there is a slightly greater hunger for truth and knowledge because,
#
you know, they're not complacent in any way, they have to make their place in the world.
#
Was there some of that for you?
#
And would that observation hold that if you are too much a part of the system, you can
#
get complacent and stop thinking independently?
#
Yeah, I think I was certainly never complacent.
#
And although I was, it took me a long time to realize that nobody really had the answers
#
in the sense that, you know, if you grew up in a small town like Boise, Idaho,
#
I mean, Boise, Idaho itself in American parlance is a joke of a place and Boise is a joke of a town.
#
You know, if you want to make a joke about somebody for him by the time he'll say they're
#
from Boise, I embedded some of that thinking, yeah, a mayor of Boise, he's an idiot.
#
But, you know, somewhere there were this cabal of elites who really knew and made decisions on the
#
basis of superior wisdom. And it took me a long time to get to very near the top of academia to
#
realize, no, no, no, everybody's just kind of bluffing along. And some of it's just going
#
along. And some of it's having slightly better insight. But so I was never complacent that
#
I was complacent. I was never complacent that I thought I had some superior access to truth.
#
My, you know, my high school education was a public high school that we, you know, football
#
was the main, you know, American football was the main activity of the high school with everything
#
else being secondary. Terrible, you know, so mediocre high school education. So I knew that
#
I didn't have the truth. But at the same time, I was pretty confident nobody else did either.
#
But willing to look and see what other people would say, but always with a very
#
doubting, skeptical, immediately critical viewpoint. So what was your self image? Like,
#
what did you dream about? What did you want to be? You know, how did that evolve over a period of
#
time? So strangely enough, probably by the time I was 15 years old, I wanted to be a professor of
#
economics. So I'm one of those people that, you know, they say, oh, everybody's career takes a
#
different path. Well, turns out my father was a lawyer, worked very hard, traveled a lot, had to
#
wear a suit to work. And my uncle, my father's brother, was a professor of economics at Brigham
#
Young University, the local Mormon University. And I went to visit him one time when I was a teenager,
#
and he had this nice office full of books, and he wasn't wearing a tie. And he had this green
#
Nagahide reclining chair in his office that he would sit and read. And I was like,
#
what do you do for a living? And he said, well, I teach. And it's like, well, you're not teaching
#
now. Well, I teach about nine hours a week. This is the job for me. So my wife sometimes teases me
#
that for a guy whose ambition was to have an office full of books and a Nagahide chair, you've
#
been a lot more driven than you'll let on to be. So I think I always, from a very young age,
#
I had the idea that I wanted to be an economist because my uncle was an economist. I read some
#
books about economics. It just immediately appealed to me as a way of thinking about the world where
#
you could see with analytical structures things that weren't obvious and seen by others. You know,
#
I think the title of your podcast, The Seen and the Unseen, economics always has this sense that
#
you're revealing reasons why the world is turning out the way it is that are, you know, emergent
#
outcomes that aren't obvious to the uninitiated. So it had that to it. So yeah, I wanted to be a
#
professor of economics at BYU and have a green Nagahide reclining chair in my office, which I
#
still have never accomplished. So you don't have a chair like that. Hopefully one of the listeners
#
can organize it. Come on, this is the least you can do. Never quite achieve that ambition.
#
So, you know, I'm not an economist, obviously, but I love economics for the same reason that
#
it is not some arcane, dismal science, but it's a study of human behavior. And I absolutely
#
love how it reveals things about everything. But the thing is, I think I stumbled upon that
#
realization kind of fortuitously. And there aren't really so many books out there that help you
#
get that. So I'm really interested in, you know, what were the books you were reading? Who were
#
the thinkers you were interested that actually, you know, like for me, it was a light bulb moment
#
to realize that this frame that I am learning of scarcity and incentives and so on actually
#
explains everything. Right. So what was that journey for you? I think as a youth, I was,
#
you know, 15, 16, I was very clever, but not very intellectual. There was no real possibility of
#
being that I didn't even probably didn't even know what that looked like. And unfortunately,
#
I wasn't good at sports, so I wasn't there was really no path to success in high school. So I
#
always saw being a professor is something I would do later. That said, I did read this book by Henry
#
Haslett, A-J-Z-L-I-T-T called Economics in One Lesson, Economics in One Lesson. And I read it
#
probably when I was 15. And it just light bulbs just every chapter. It's like, yeah, that's why
#
it turns out like that. Yeah, that's a good way of thinking about that. Only just a few years ago,
#
I came across that that apparently was pathway into economics for so many people that this is,
#
I didn't even realize, I don't even know how it came to be on my shelf at my family's household.
#
I didn't go out and buy it. But I realized it was a gateway drug. Apparently, this book
#
started lots of people on to thinking about economics. But I would say that was probably
#
one of the few kind of intellectual books I read about economics. I think I read Heilbroner's
#
Worldly Philosophers, a few other things, but much more interested in wine, women and song at 15
#
than than I was not a precocious intellectual having read everything at 15 in the original
#
languages. So I gotta tell you that Hazlitt's Economics in One Lesson was based on an essay
#
by Frederick Bassey called That Which Is Seen and That Which Is Not Seen, where I get the title of
#
this show from. Oh, my word. Great connection. They have kind of the same origin story.
#
And Bassey was an early economist as well, I think.
#
Yeah, 1840s. But definitely the sense that here was a structure of thinking that both was
#
thinking about human behavior, but then also realization that social outcomes
#
weren't exclusively teleological driven. That when you put a whole bunch of human beings together
#
and they interacted in ways that were structured by rules or laws or various things they could
#
and couldn't do, what emerged from that was often determined at a deeper level than the
#
will of any given individual. I sometimes, now much later, I sometimes give my students this
#
thing that nearly all human beings live in two kinds of stuff. They live in baby ontology
#
in the sense that even a baby understands that there's agents in the world and if you
#
want to explain the behavior of agents, it's what they want. Why did the cat do this? Well,
#
he wanted this. And why does my mother do this? Well, she has wants. She's an agent.
#
And then there's stuff. There's tables and chairs and they don't have a will. They do
#
what their properties. And again, for me, the most amazing intellectually engaging thing about
#
economics is we recognize there's this third ontology. There's how stuff interacts, determines
#
outcomes that can't be reduced to the will of an individual. There's not like, and I think
#
it's how our mentality is so dominated by this two kinds of stuff in the world, ontology,
#
that we obviously master. And most human beings can live in a two, you know, you can be a successful
#
human being and never realize there's a third level of ontology of systems that determines
#
outcomes that we still anthropomorphize it. So even Adam Smith say, oh, yeah, the invisible hand.
#
It's like, no, no, precisely not the invisible hand because the invisible hand would involve
#
there being an agent with a hand, right? And of course, Adam Smith says as if by,
#
but what people take away is, oh, yes, I've now understood this in the ontology I understand.
#
And James Carville, this American political advisor, had this joke that when he came back
#
in another life, he wanted to be the bond market because it was so powerful, which is again,
#
a joke about ontology, right? The bond market isn't an agent. That's its whole point, right?
#
The bond market is the outcome of the operation and interactions of thousands of agents. And so
#
thinking of the bond market as something you could come back as, again, is a reduction to,
#
you know, the two, you know, stuff and agents kind of reductionist of the world. So
#
all of that is just started with, I think, the scene in the end scene.
#
You know, most people just don't see the forces at operation that actually determine outcome,
#
or they want to reduce them to this heroic individual wanted this and therefore,
#
that explains outcomes. Whereas I think, you know, the deeper social sciences,
#
this history of historians, sociologists, economists are looking for, well, yeah, yeah,
#
yeah, we know they're human beings and human beings operate in a human behavior way,
#
but their behaviors are structured through laws, ways in which people are allowed to interact in
#
ways that produce outcomes we could have never imagined. I mean, another of my sort of great
#
light bulb moments was understanding spontaneous order, the third ontology, as it were, you know,
#
reading high excuse of knowledge and society and kind of figuring all that out. And it is both,
#
I think, for any human being, it could be either beautiful or scary. It is beautiful because there
#
is so much elegance in what is happening. But it is also scary because it destroys the illusion of
#
human control that, you know, 95% of what happens in our lives, we don't really control,
#
right? We just control the 5% and that's all we do.
#
Yeah, that is a very, very deep point. Because, you know, if you are scared by the fact that,
#
you know, what happens to you is often controlled by whether or not China opened itself to the world
#
economy and became the manufacturer of preference, manufacturer location and preference,
#
and that affects, you know, your job in America. It is much easier to then blame individuals that
#
there are evil individuals who wanted this to happen to you or who didn't care about you or
#
did care about you. If everything is the result of the wills and wishes of agents, then bad things
#
are happening to you. There must be people who wanted that to happen to you and that leads to
#
very desirable things. Or, and again, I'm still a religious person, but I think there is an element
#
of the religious impulse that it's attractive because you believe that, well, there's this
#
spontaneous order. But above that, there's another level of agent that wants the best for the world.
#
And again, I'm a religious person, but having been raised religious
#
made me specialize in doubt of my own religion. And therefore, when people come to me with new
#
fads and new things that I'm supposed to believe, I sometimes think to myself,
#
if I could not believe my own religion, I can easily not believe yours.
#
Yeah. And you know, one point I make, like I'm an atheist and one point I make is that all religious
#
people are actually atheists of all the other religions that you don't believe in. Right? So
#
I'm just adding one to that list of hundreds of thousands. I think that is always the most
#
powerful argument against any particular religion is you have to, you know, to be a monotheist,
#
you have to be an atheist against all the other theisms out there. And it's like,
#
like, you know, I have been the odds, you know, the odds that I just happened to have been born
#
into the one true religious tradition in the entire world. I'm enough of an empiricist and
#
intellectual. Well, that would be odd if that were true. On the other hand, it is mine and
#
I've embraced it and I continue to embrace it and continue to practice it on the premise that
#
it's that's what I've always practiced. So here's a question about the frailty of human nature
#
taking off from the point about spontaneous order. Like one of the laments I often have is that many
#
of the things we know to be true about the world are actually unintuitive ideas. Like spontaneous
#
order is unintuitive because the intuitive thing is, you know, that it's top down, it's controlled,
#
people do something, agents want something, they do it. You know, the idea of the positive someness
#
of the world. What is intuitive is a zero sum view of the world that if I want that, dear,
#
I have to snatch it away from you because our instincts, of course, evolved in prehistoric
#
times. And this means a couple of things. One thing that it means is that these battles that
#
we fight for liberty on the basis of these ideas about the truths of the world have to essentially
#
be fought a new every generation because they don't percolate down the culture as easily as all
#
the unintuitive and bad ideas. You know, the follow up from there is that the world is deeply
#
complex. We have to make sense of it by telling stories about the world that are necessarily
#
simpler than the world itself. And there is a danger that because of cognitive laziness, you will
#
often, you know, stop short at a story that is too simple, that seems to make sense,
#
that could be fashionable, that everyone else believes. And I feel it's this combination of
#
intuition and intellectual laziness, which is also rational because why spend too much energy
#
thinking about complex stuff that leads people to hold bad ideas and not push far enough.
#
It's like, what are your thoughts on that?
#
This idea of what's intuitive, I think, is very powerful because, I mean, as you point out,
#
it's a very power people's beliefs are often based on these unexamined intuitions about what
#
ought to be the case. And like you say, you know, zero-sum-ness is just much more intuitive
#
in some sense. And I think if you go back and, you know, what's the single insight of economics,
#
right, is I think nearly all people, if you said, I'm going to just organize people so that there's
#
no controlling order other than you can't coerce other people and you can't, you know,
#
use violence against other people and we're just going to let everybody do whatever they want,
#
the reaction is that's chaos. That's got to be chaos. Nothing good can come of that.
#
And so when economists come along and say, actually, an idealized description of that
#
leads to actually good outcomes because if everyone can just trade voluntarily with everyone else,
#
they can achieve outcomes that emerge as if by an invisible hand that are actually better.
#
The idea of spontaneous order is deeply, deeply counterintuitive in the way that, you know,
#
evolution was, you know, for centuries seen as wildly counterintuitive relative to just
#
so stories or everything was created as exactly it is now. And it does lead to, like, dangerous
#
narratives that, you know, if you really deeply believe intuitively that allowing human beings
#
their liberty would result in chaos, then the narrative appeal that we need an order and order
#
is going to emerge. If it can't emerge from spontaneous, you know, emergent and spontaneous
#
order of interaction with people with liberty, the alternative is, you know, top down control
#
by a single agent, you know, the idea that there's either an agent or society somehow exists as an
#
agent that compels others to and that's what necessary to preserve. That's a very, that has
#
proven a very, very dangerous idea. But, you know, that is an idea that not only has to be
#
contested in the public discourse, but even among economists who really should know better.
#
Right. Like I had an economist acquaintance of mine tweet out a few months ago that I wish less
#
people learned economics from Henry Hazlitt's book. And I was like, what the fuck are you talking
#
about? I wish more people learned from that. Right. You know, you're starting in Hazlitt is
#
a great starting point, but as you go deeper into the journey in economics, what is that like?
#
Because I imagine when you're young, you're a teenager and you're going to college to begin
#
with, you know, you went to Brigham University. So like, what did you study there? How were you
#
developing your frames of looking at the world? So my undergraduate experience was much different
#
than most others because one of the things we do as Mormons is at 19 years old, all of the males,
#
especially, are expected to serve a two-year mission. And so I did just my freshman year of
#
undergraduate and then went and lived in Northwest Argentina for two years. And I think I would easily
#
describe myself as at best a callow youth before I did that. And sort of not so intellectually
#
curious about the world, but being in a different culture that wasn't mine, being in a historical
#
circumstance in which I interacted with people who had been tortured by the existing military
#
government in 1978 of Argentina. I saw the consequences in hyperinflation on people's lives
#
of just badly misguided economic policies, which in some sense later I realized were elements of an
#
unresolved social conflict itself. But by the time I returned to my sophomore year of college,
#
I was not a 20-year-old. I was a 21-year-old who had lived on my own in a foreign country
#
for two years and I think therefore had a view that understanding the world was important,
#
that really terrible things could happen in the world, especially to the powerless from
#
uncontrolled authoritarian governments. And I had sort of had a vague idea I wanted to be an
#
economist, but came back thinking the economics that matters is the economics of people where
#
people don't have much money. I've never been particularly interested in the economy of the
#
United States because the economy of the United States is an economy of prosperity since the time
#
I was an adult at least. Whereas I had, as a proselyting missionary for the Mormon church,
#
you don't interact with the elite much. You interact with people who are interested in
#
religion and most people who are interested in changing the religion aren't people who are doing
#
well in life. Very few people look around at their life and thinking, everything's going well for me.
#
Let me join some weird American cult. So we interacted with a lot of people who were having
#
very problematic lives economically and otherwise. And so I had seen what it was like for people to
#
deal with hyperinflation, for people to deal with not having stable work. So I think I came back
#
incredibly more deeply curious about how things produce these terrible outcomes and wanting to
#
think about how could you play some small role in leading things to go in a better way. And hence,
#
my entire future study of economics was geared to just preparing myself to be a
#
development economist. And I wonder how one sort of develops a sense of purpose through life.
#
When you're young, you can do what you do for different reasons. One reason is you love
#
something passionately and that's a good enough reason to do it. Another reason could be that
#
you're actually good at it and you don't mind doing it and that's a good reason to do it.
#
And then there can be this sort of sense that, hey, what do I broadly want to do? I broadly want
#
to make the world a better place and here's a subject I love and this can help. So what was
#
it like for you? Because it's very easy in hindsight, I know, to just put a narrative onto
#
that and say, yeah, this is what I felt at the time. Whereas when we are young, a lot of the time
#
we are just stumbling into things. But what was it like for you? Was there a sort of sense of purpose
#
that came about then itself or is that something that evolves and shifts over a period of time?
#
I think, again, all the time I read things about, oh, the idea that you have this
#
common career that is what you wanted when your youth never happens. Well, it did happen to me.
#
I'm 65 years old and I'm driven by roughly the same ideals and curious and use roughly the same
#
tools I was trying to acquire at 21. I was convinced that economics helps you understand
#
both human behavior and outcomes at the aggregate level of societies and countries better than
#
and other tools I was amenable to. And I thought, you know, I don't want to get into like any
#
Peter Parker with great powers come great responsibility. But I also felt like I had
#
had a privileged upbringing. I was insulated from the economic uncertainties that I definitely saw
#
in Argentina at the time. And so I thought, you know, here's something that I'm reasonably
#
adept at, reasonably clever intellectually, and which I came to have a belief that being
#
a better reasoned, better evidenced, more thought out ways of going about things could
#
lead to better outcomes than worse ones. It's hard to study Argentina and not just see that you can
#
make mistakes in the way you manage your macro economy that have horrific consequences. So,
#
yeah, I think I did come off with a sense of purpose that has roughly driven me for, you know,
#
I think, in some ways, you know, amazing continuity in the sense of questions that drive me and the
#
approach that I take to things. That said, it's spanned over a whole variety of things, you know,
#
within the realm of development economics, I'm seen as way too broad in some ways that we can
#
talk about if you want. But that said, I've never done, you know, I've never done anything but
#
prepare myself and do development economics since I was 21 years old, professionally.
#
What percentage of your fellow economists that you encountered through your life have that sense of
#
purpose? I was quite surprised. So I studied at Brigham Young University, which is a decent
#
but not terrific undergraduate experience. In part, it's a good undergraduate experience
#
for training in economics because Brigham Young University is an undergraduate only
#
university. So all the professors actually teach undergraduates as opposed to, you know,
#
intermediating it with grad students and stuff. So I got a good economics training and then I made it
#
to MIT. And it was a shock to come to MIT because I had always, you know, I had always been, it had
#
always been easy for me to be the best student in the class in economics. And I was probably only at
#
MIT for maybe a few weeks before I realized I was not even in the top half in terms of underlying
#
intellectual capabilities of the type that make you adept at being an economist. I wasn't even
#
in the top half. And neither was I in the top half of a sense of ambition versus a sense of purpose.
#
I had a much greater sense of purpose than I had of ambition. And so I think it was,
#
and then this gets to the more particular answer. At 65, I think I have turned out to be a much more
#
successful economist than anyone would have predicted among my cohort because I have stayed
#
in love with the process of doing economics and doing research. And I have stayed in the purpose
#
of doing the economics I like to do, whereas lots of my colleagues who were clearly greater
#
intellectual capability have kind of wandered away from doing what I regard as economic endeavor,
#
as an intellectual endeavor for a variety of reasons. So that was a way of wandering around
#
saying I think I both was clearly more dedicated to the science and art of economics as an endeavor
#
and more dedicated to that having some higher purpose than just career success than most of
#
my colleagues. That's actually a really good framing of an almost binary of ambition and
#
purpose because if I just reflect on my own journey, I think I was not as lucky as you to
#
have purpose from the start. But I feel that I'm lucky to have made that switch from ambition to
#
purpose at some point. And many people just don't make that. And I think that's a trap because then
#
you can just get trapped in shallow waters all your life. And I think without purpose, not only
#
is true success impossible, but happiness is impossible as well. Ambition alone doesn't
#
lead you anywhere. Would you broadly agree? Yeah, I think ambition is a very dangerous
#
thing because no matter what you do, someone will be better than you. If your ambition is
#
to be the best, you are bound to fail. If your ambition is to be the richest, to be the brightest,
#
to be the… Whereas I think if you take purpose seriously, you realize that you're a relatively
#
small cog in what you want to make happen in the world. And it's not going to be because of you
#
doing anything necessarily particularly heroic, but just you feel part of something.
#
And other people who share your purpose, you can feel part of it and celebrate their success
#
as well. So I think it's much easier to live a life and be happy and fulfilled in a life of
#
purpose than a life of ambition. A life of ambition sooner or later, if it was an ambitious without
#
purpose, will fill hollow and shallow and either you'll be continually driven again for more,
#
more, more, more, but someone will always have more than you by a lot.
#
Whereas with a sense of purpose, you can… I was just part of this large research project
#
and at one point my comms team and my team that were meant to try to achieve this change in ideas
#
in the world, I bought them all a wood print of this Japanese artist that is called The Wave
#
and it's a very famous print. And I just said, look, if you're not part of a wave,
#
you're just a drop in the ocean. But if you're part of a wave,
#
you can be very powerful. So you should think of yourself as you're not the wave.
#
A wave is just a collection of things that happen to be moving the same direction,
#
but it can also, you know, swamp everything. So I think, you know, by having a sense of purpose,
#
you can feel good in a collective action, much more than ambition where it's always about you
#
versus something else. I mean, to take that metaphor perhaps too far that, you know,
#
even ambition can lead you into the wrong waves. And by that I think of, you know, fads of the day
#
or fashions or trends like RCTs, which we can speak about later. But then you join a wave for
#
rational reasons because you're ambitious, you know, that's how you get funding. That's how you
#
rise in the profession. Maybe that's how you get a Nobel Prize. And, you know, you continue down
#
that line and that harms the field, that harms the people. Ambition without purpose is a very
#
dangerous thing. You know, before we talk about, you know, finishing the PhD at MIT and joining
#
the World Bank and all that, tell me a little bit outside of economics, like what else were
#
you doing in college? What kind of music did you listen to? What kind of person were you?
#
I'm afraid that outside of economics, I'm just not an interesting person. I don't know that.
#
Everybody's interesting. I mean,
#
I mean, at one point I had my bio that said, you know, I got married, I raised my family and
#
I was a reasonably good economist and nothing else. You know, I think in most ways I was very
#
average. I think I kind of enjoyed the average kind of music. I like movies a lot. I, you know,
#
watch TV. I feel like it would be selfish of me to both like to have more dimensions of maybe
#
interesting than just one. And then another thing that is related to Mormonism and other things is
#
within a year after I was back from my Mormon mission, I kind of wrote, man, I got married.
#
So I showed up, you know, to graduate school already married for a year.
#
So again, I think in terms of being a reasonably good husband, it's a pretty time consuming thing.
#
So if you ask what other interests I was interested in being, a good father, a good husband.
#
And let me just, one, speaking of MIT is
#
like my first year at MIT, one of my fellow students, when it came up that I'd taken two
#
years and been on a Mormon mission, he said to me, don't you ever feel bad that you wasted two
#
years of your life? And I said, really? Because tell me what you did as a sophomore and junior
#
at your school. I'll bet you drank a lot of beer. I'll bet you went to some football games.
#
And you think me actually serving and attempting to bring other people a message that they had the
#
choice to accept or not, but concerned about, you know, reaching out to other people and improving
#
their lives. You think I was wasting my life? And that's when I realized I just had a very
#
different experience as a youth than I couldn't ever get into, like the idea that I was behind
#
in my study of economics. And therefore I had wasted my time where I felt I was coming into
#
the study of economics with a much different approach to what I was doing and why I was doing
#
it and what kinds of things I wanted to understand. So yeah, I don't think most of my fellow graduate
#
students understood what it was like to be, you know, not just married as a graduate student, but
#
we had our first child after our first year of
#
being graduate students. My wife was also in a PhD program at the time, so we were both graduate
#
students. Nobody could understand what the heck we were thinking having a child in graduate school.
#
One of my friends and recent guests on the show, Deepak Vyas, said something that I found profound
#
and it had me thinking for a while. He said, how you do the small things is how you do the big things.
#
And I've been thinking about that and I think that is so true and I try to embody that as well,
#
that the little small things that I do, the mindfulness I bring to that, the care with which
#
I do that will percolate into everything I do because at the end of the day, that's part of
#
your character is who you are. And when you said that, you know, I was focusing on being a good
#
husband and a good father and all of that, I'll ask you to double click on that and talk about what
#
it means to be a good husband, what it means to be a good father, like when, what is the kind of
#
intentionality that you bring into it? What are the small things you do within those domains and
#
outside those domains that you think affect everything, including your economics?
#
So one thing and start with, you know, as an undergraduate, I had sort of said, well,
#
I'm going to work and study hard enough to be the best student in my economics classes. And then I
#
got to MIT and I realized I could study 20 hours a day and not be the best student in all of my
#
classes, much less any of the classes. And so one thing, you know, I decided was, I was studying to
#
be an economist, but I was going to be the best economist I could be, working hard, eight hours
#
a day, that it was a job, that I was a grad student, that was my career. And I realized that
#
many people in academia, especially, they get caught up in thinking, I'll work super hard and
#
postpone other components of normal human existence in order that I can get a good job coming out of
#
graduate school. And then they get a good job coming out of graduate school. And once they get
#
tenure, and I made exactly the opposite decision. I said I was going to be, you know, home from my
#
graduate and have dinner with my wife every night. Every night we would have dinner together,
#
that I was not going to, in the jargon of economists, I was not going to make my hours endogenous
#
to achieve a given level of performance. I was going to make my hours exogenous and achieve what
#
performance as an economist I could. So I think one thing is just time allocation. I just made
#
a commitment that I was going to have, you know, dinner with my wife. And when I was,
#
now, I did make a choice to be a development economist when I traveled more, so I can't,
#
I'm not going to like brag about. But, you know, when I was working at the World Bank,
#
I was home for dinner every night. And I think those are the small things, you know, you can't,
#
that's a very profound thing is the way we do the small things is the way we do the big things,
#
because it's hard to tell what's the small thing and what's the big thing, right?
#
In the day to day. So I think one thing is I just made a time commitment that I wasn't going to let,
#
you know, you can always do more, you can always do more. And even in the periods
#
when I was working at the World Bank or working in academia where I had more work, I would,
#
I would stop, I would go home, I would be there for dinner with my wife and family at the time,
#
because, you know, kids can restructure their day around your work. And then if I needed to work
#
more, I would go back to work. So sometimes early in my career, at 10 o'clock at night,
#
nine o'clock at night, I would go back to the office. This was the days before laptops and,
#
and work another three hours and come home at one in the morning. But I, I structured my time so
#
that what was, you know, you know, what was regular was time, you know, time from dinner
#
time to bedtime was always just time that I made available and that I was going to do the best job
#
I could have by working the hours I was going to work, but I wasn't going to work the hours I had
#
to work just because to maximize in some sense how good I could be at my job.
#
Tell me a little bit about the texture of your work, because even eight hours a day seems a
#
little daunting to me. But I think that, you know, whenever I'm engaged in some deep work,
#
that initial getting into it is difficult. But once I'm in the flow, I really love it.
#
It doesn't feel like work. I mean, in a sense as an element of play to it, I'm just doing what I
#
enjoy. And at other times it's drudgery. It's just so what, what was work like for you? Like,
#
what did you do your PhD on? What were the things that you worked on? What intrigued you?
#
And, you know, what methods in those days before laptops and all that, how do you do your knowledge
#
management? How do you find new information? What is your approach to what books to read? How do
#
you read them? Give me a sense of, you know, how the texture of those work days would go by.
#
So I think how I would characterize myself is I'm a middle brow econometrician
#
with a broad array of interests. And that has exactly, in some sense, the pattern you describe,
#
which is most of my workday is structured by either a question that's occurred to me
#
or I've come on a new data set that I think has interesting aspects to it. Or when I was at the
#
bank, I was assigned to answer certain questions. But by being very empirically minded, I was always
#
driven by the question, you know, by trying to make the interface between an interesting question
#
and the empirical methods to address that question combined. And once I was in that flow,
#
it was always, I don't know. I mean, at times it was tedious, but I don't know that it was ever
#
drudgery. And often when I was in the flow, you know, I could work extended periods just trying
#
to make sure that I really understood what the data had to tell me about the question at hand.
#
And I think I had, you know, by being a development person, both time happens, so new stuff happens,
#
countries happen, I work on different topics, you know, different topics happen.
#
And I've never felt any drudgery that I had somehow played out the range of things that I
#
could know about the topic I wanted to know about. And one of the things that
#
is I've never had research assistance. So I still at 65 years old, spent a lot of my day
#
programming in a programming language that I used to analyze and data and produce graphs and
#
results. And I still, I mean, I walked, we're in the offices of XKRD, XKDR, and the little curly
#
cube brackets around X. I was like, oh, that X can be substituted into that expression. And
#
Susan Thomas said, well, you're the first person that just immediately grasps that. And says, look,
#
I spent a lot of my time typing curly cube brackets around things in programming languages.
#
So I think for me, I benefited from the fact that what some people might call the drudgery of work
#
was actually a part I enjoy a lot, because it's a lot. It's just a puzzle. It's like,
#
I know this data. I always go into it thinking, I hope this data can tell me something interesting
#
about the question I'm posing to it. And I want to make sure that I'm hearing what it has to say,
#
but not overhearing what does that say. I'm not looking for a particular result and then ignoring
#
everything else. So just an amazing amount of my work life has been sitting in front of a computer
#
and begging data to tell me stuff. So when you say that, you know, you have to be careful
#
of not looking for a particular result. And I think the problem with many people is that at some
#
point in their lives, they start doing exactly that, start getting the data to tell them what
#
they want to hear. And I want to ask about that part of the journey where you're forming your
#
frames of looking at the world, because too often what happens is that we chance upon a frame,
#
it seems to explain the whole world. And then we adopt it and we are rigid and we are dogmatic.
#
And our curiosity ends and everything goes to hell. So what was that sort of period of finding
#
your intellectual anchor like for you? Like, obviously, I'm guessing that the values would
#
have come early, the values of liberty and freedom and everything that you would have got from Haslick.
#
But how does one then, you know, because there is also a danger when you like there is a balance
#
between the rigor of going in really deep and getting granular with the data, with the coding,
#
doing all of that and losing sight of the big picture. But there is also a side that you get
#
too attached to one particular view of the big picture. And then you don't show the same kind
#
of rigor that you showed. Yeah, I think I think it's no fun. I mean, it's funner, actually,
#
if you allow the data to surprise you, right? In the sense that, you know, I think I have always
#
been driven by a sense that human liberty is a good thing, I think. And, you know, if you said,
#
do I believe that markets are powerful? Yeah, I believe markets are super, super powerful.
#
That said, one can combine the belief that markets are super, super powerful, that if misdirected,
#
markets can produce really terrible outcomes as well. So I don't think, you know, being often
#
the left and the right agree that markets are powerful and just disagree whether markets are
#
structured to produce, you know, benign and desirable outcomes. So I just think, you know,
#
you know, the thrill is in many ways in the chase. And if you knew exactly what you were chasing
#
and would only be satisfied if you captured exactly that, it's not really that interesting.
#
So I think I worry that some people that have an ideological edge,
#
even when they're working with data, they're slanting it to reconfirm their prejudices
#
rather than maybe challenge them. Whereas, you know, I went into certain things
#
and was quite surprised by the results. Some things, you know, the replication crisis that's
#
affected a lot of social science, including economics, in part stems from your, you know,
#
your unwillingness to ask, is this result robust enough that I should put reliance on it? So
#
I sometimes think you got to be some combination of data mining and data undermining.
#
Like, what would, you know, what would count against this hypothesis?
#
I one time did this interview with the New York Times and a very interesting reporter who's written
#
some couple of very interesting books. Matter of fact, when he first called and wanted to interview
#
me, I went and looked and had written this very good book about welfare reform in America, in
#
which he had sort of embedded and followed, you know, three welfare mothers in a very poor city
#
in America, I forget whether it was Milwaukee, and one of them was a, you know, drug addict.
#
And she came off as a very fully developed and sympathetic almost character. And so I called
#
him back and I said, well, pretty sure that if you can make a heroin addict, welfare mother,
#
a sympathetic character, you can make an economist seem like that character too. But one day,
#
but he was interviewing me and he said, now, you know, you have this friend, William Easterly,
#
who was another famous development economist, and you wrote this book saying that, you know,
#
foreign aid had positive policies, but only in these, you know, good policy environments.
#
And then he came along and wrote this paper that showed that that wasn't true. Weren't you angry
#
with it? And I was like, what do you mean? Why would I be angry with it? Well, because,
#
you know, it contradicted what you had argued. And I was like, you know, that's how science works.
#
And you know that his paper was with new data, more years, more countries, different methods.
#
And he was just showing that in this larger, expanded, newly available data, the result that
#
had been found and that we'd talked about in our data didn't exist, but he didn't accuse us of
#
fraud. He didn't accuse us of, you know, manipulating the data that we had. He just pointed out that
#
in this, you know, different, broader set up, when he did the same analysis, he didn't find
#
a different result. I can't be angry about that. And he was just like, you're, you know, you're
#
kidding. You're being, you're not telling me the truth. And I was like, it had never occurred to me
#
to be angry with one of my fellow colleagues for having an empirical finding that differed from
#
mine. That would just like, that would be dumb. So I think, I think I've wandered off the point.
#
But like I say, part of the point is not, you know, look, if I had made the argument that X was
#
true on the basis of what I took to be the best reasonable, encompassing interpretation, the
#
evidence, and somebody produced the evidence that contradicts it, you have to go with what the best
#
evidence says at the time. So. Can you remember the time when the evidence surprised you and made
#
you reconsider your projects? Yeah. So I wrote a paper one time called Where is All the Education
#
Gone? And, you know, one of the canards, wildly held, widely held, if not wildly as well, held
#
beliefs was that, you know, expanding education and expanding schooling was going to be super
#
good for economic growth. And I had the feeling that this wasn't as true as people were saying.
#
But once I actually assembled the data and, and did the analysis, it was telling me that the
#
impact of additional years of schooling on economic growth was exactly zero. Not smaller
#
than we thought, but much smaller than we thought. And I spent a year, you know, just saying this is
#
very surprising, right, because this is, this does not follow the conventional wisdom at all.
#
And it wasn't a conventional was, you know, there are other papers that I went into strongly
#
believing the conventional wisdom was wrong, and that I had an empirical technique that would show
#
that to be the case persuasively. But in this case, I was very much surprised by how robust
#
and how precise and accurate the zero was. It was the data was saying really zero, I really mean it.
#
It's not just small, it's really zero. And so, yeah, I think that surprised me, I kind of had
#
the sense that it was smaller than people thought. I had no idea it would be zero. And it took me a
#
long time, again, to see if I could date or undermine the result and understand how could
#
that be so good. By the way, the macro finding was going up against a lot of a huge, I mean,
#
maybe the best documented fact in all of economics, if not all of social science, is that people with
#
more education make more money. So people with more education make more money. How can it be that if
#
entire society gets more education, its overall productivity doesn't go up? Anyway, so yeah,
#
I think I was very surprised by that. I was also, I wrote an early paper on social capital.
#
Robert Putnam had written a very famous book about Italy arguing and showing pretty persuasively,
#
I thought, that features of the society led the government, even though it was a bureau,
#
formerly a bureaucratic government, that the government worked better in places in Italy that
#
had deeper what could be called social capital. And so I had this data set opportunity come where
#
somebody had generated data that really allowed us to sharply distinguish between whether social
#
capital was a personal effect. Like, to some people, you might call it social capital if you
#
had a rich uncle, or if you had lots of network connections, your well-being would be higher.
#
But what we were interested in is were collective outcomes better. And it turns out this colleague
#
of mine on this paper had generated a data set where we measured in the same villages
#
in Tanzania outcomes for one set of people, and then measures of associational life and
#
social capital for another group of people. So we could see, did these people, did these peoples of
#
associational life and social capital affect the well-being of other people in the same village
#
with them, which was, again, a very powerful test because it wasn't, if you go to church,
#
are you better? It's, if you go to church, am I better off? And I was very surprised by the data
#
because the data came back with just implausibly large impacts. So if there was more association
#
life, other people in the villages were better off by just what, you know, I very much
#
try and translate the numbers into practical things. So, you know, it's easy to build an
#
index of this and an index of that, but it was like, wow, like if people on average, you know,
#
10% more of them go to church, the impact on the income of other people in the village was
#
just enormously large. That was very surprising to me. I kind of, I have to admit, I went into it
#
thinking, yeah, I'm not really sure this is true, but it was just a very powerful result that,
#
again, I couldn't shake the fact that it was more, you know, I always start with some feeling of
#
kind of what I expect because otherwise, you know, the world's a blooming, blushing confusion.
#
It was way bigger, way stronger than I thought it would be. Is that what you're asking?
#
Yeah, these are great instances. Tell me about academia because, you know, one of the things
#
that Ajay keeps writing about and that, you know, I keep writing about as well is how, you know,
#
academia has deteriorated in terms of the original purpose of the pursuit of knowledge and truth,
#
how, you know, orthodoxies develop. There are ideological fashions that you have to follow and
#
that determines, you know, where the funding goes, et cetera, et cetera. You also then have,
#
you know, intellectual laziness. Young people tend to, you know, follow their ambition rather
#
than purpose because most people have more ambition than purpose. I mean, and for the young, that is
#
natural. And what was your journey through academia like? Were there things that disillusioned you at
#
a point in time and did it become worse? Well, I had a very big, I think I had a very big
#
advantage in the long run by not getting a good economic, not getting a good academic job coming
#
out of MIT. I mean, again, coming out of MIT, I wasn't, I don't think rated even, I was probably
#
in the bottom third of my class in terms of where my professors thought we deserved jobs. So I didn't
#
get a good academic job. And I had always wanted to work for the World Bank once I had decided I
#
wanted to develop an economist. So I didn't go back into academia until I was 40 years old. So I
#
always tell people I wasn't raised in academia. I was trained in academia and then worked in a
#
different environment. And here's a great story about the difference between working in research
#
but in a practical organization like the World Bank and working in academia because I
#
had written one of my, I'd actually worked a year at the World Bank in my,
#
after my third year of graduate school. So I worked just kind of as a research assistant in
#
the bank. And one of the, they had these macroeconomic models that they would use to like form
#
structural adjustment programs. And one of the key empirical things you needed to know in order to
#
create a macroeconomic model of how much financing was needed is you needed to know if growth was
#
going to be this big, how big would imports need to be to sustain that growth? So relationship
#
between GDP and imports was an important parameter. So I had, and this fed into models that you would
#
literally use to calculate the financing gap that the IMF and the bank would then try and fill and
#
it closed. Okay. Don't want to get, I'm sure your readers probably don't want to hear too much about
#
the exact mechanisms of what a macroeconomically closed model looks like, but we had to find this
#
this number. It was a number, right? And it was just the elasticity. And I spent, you know,
#
a year and a half, you know, running regressions and estimating and had applied state-of-the-art
#
econometric techniques and done it, you know, estimated this number for 60 different countries
#
and done that. So then I presented at my new unit in the World Bank and I started in,
#
you know, with what I now call the mystery novel or the police procedural
#
report of research. I did this, then I did this. And I'm like five minutes, maybe seven minutes in
#
and Mike Finger this at the time, 55 year old, old handset. No, no, no. What's the number?
#
And I was like, well, you know, before we get to the number, and I wanted to go back and like,
#
show off and how all this sophisticated new econometrics and
#
started to talk. Well, you know, before we get the number, we need to think about the
#
specification tests and the stability of that. And he said, son, son, son, son,
#
what's the goddamn number? And I said, 1.25. Thank you. Now tell us how you got to 1.25 and
#
why we should be persuaded. And it was a very deep lesson because they actually needed a number.
#
They didn't care about method. They didn't care about the exact way I'd arrived at it.
#
They wanted to first know the numbers and then they wanted to know the method. How did you come
#
at that number in a way that I should give credence and credibility and reliability to
#
this number that we, you know, we have to have some number in the model and why should we use yours?
#
And so that was what it was like to grow out outside of academia is you didn't nothing about
#
method. It's like, what's the goddamn number? It's like, okay, oh, 1.25. Okay, that makes sense
#
as a number. So I didn't grow up in academia and I think it was very good for me because,
#
you know, people actually needed answers to questions. I remember one time, you know,
#
I'm on a World Bank mission and we can get back to the fact that I went on a Mormon mission and
#
then spent my life with the World Bank going on missions and that different religions,
#
different religions exactly occurred to me way more than once. Best possible interpretation
#
and development agency. They are driven by purpose, but anyway, anyway, so I, you know, I'd gone
#
to Paraguay and part of some broader education study of Paraguay, but at one point the Minister
#
of Education said, look, I really, you know, teacher wages have tripled and since the end of
#
the Stroessner authoritarian government, teachers had been persecuted and so in the New Democracy,
#
their wages had tripled and I want you to, you know, we have to negotiate like how much we're
#
going to pay teachers and it's a huge decision for our budget. You know, I want you to, you know,
#
teachers in Paraguay now overpaid or underpaid. Okay, you know, there's no, I want you to,
#
you know, do the fanciest possible thing. I actually need a concrete answer to that question
#
because I need to know a factual basis and some ability to negotiate with the teachers union over
#
the next month, right? And I need to know what's the range of, I think, being confronted with
#
concrete problems that required solutions was a very different approach to research
#
and what one was doing than, you know, thinking what's the next greatest,
#
best, greatest economics paper that could be written without thinking through why,
#
why would that be important to anyone? You know, because disciplines do acquire their own internal
#
logics and the amount of research that's driven by, you know, questions about the economy versus
#
the amount of research that's driven by questions about economics is kind of embarrassing. A lot of
#
economics is about economics. You know, if I tweak this assumption or if I do this estimator versus
#
that estimator, do I get different results without any sense of, is this a question that's
#
interesting? Is this a question somebody wants the answer to? Is this a question? So not being
#
raised in academia, I end up in some weird way, maybe a little less cynical about academia than
#
others because it didn't didn't blight my life. I didn't have to, you know, devote my years from,
#
you know, 29 when I finished my PhD to 40, you know, chasing a good secure 10 year job. So
#
on the plane, I just read a paper that, you know, a junior academic had sent me and
#
I really want to send them, you ask for comments. And I was like, my first comment is what's the
#
goddamn number? Like you've got, you know, you have to organize for me what's important here.
#
Really tell me upfront, what's the goddamn number? I think it's a good, it was the best comment I've
#
ever got. No, and it's a great comment that also, you know, illustrates how, you know, that there is
#
an instrumentality to that kind of research that it has to relate to the real world and have an
#
outcome there. And my sense about a lot of academia is that it's unrelated to the real world. It is
#
just, you know, it is, I call it just a big circle joke. It's academics talking to other academics
#
and there's no relation. I just did an episode with, you know, Shashi Verma, who runs Transport
#
for London. And he tells me that a lot of the papers that come out about transportation or
#
urban planning or whatever are just bizarre because they are in some fantasy universe with made up
#
rules and have, you know, again, no, no, no relation to reality. So here's another question
#
you mentioned earlier that some people criticize you for being too broad. What about that is,
#
and I often think about the sort of the trade off between breadth and depth. In the sense, one of
#
the sort of criticisms of academics is that you tend to get into silos and you get hyper specialized
#
and there is an incentive for novelty. So that drives you further into hyper specialization,
#
et cetera, et cetera. But even otherwise, even outside of that particular game,
#
just as anyone who wants to pursue knowledge, like I faced a trade off myself, no matter what I do,
#
that at one level you want to be broad, you want to be multidisciplinary, you want to build a lot
#
of frames onto bear at something and you want to be able to see the big picture and see the broad
#
foundational principles. But at the same time, the worry is that then you get too shallow in each of
#
the detailed things and you also want some depth of knowledge so that you don't make basic mistakes
#
when it comes to a particular area. And my sense is that even within economics,
#
academic fashions have taken a lot of the field into really narrow areas and lost a big picture
#
completely. So what was your view towards the kind of work that you wanted to do? You know,
#
what were the kind of questions that excited you when you were young and the kind of questions that
#
you then came to define as the ones you would pursue all your life?
#
So I think there's like three different strands to my answer to that. And if I could preface that
#
with a follow up on the Paraguay. So it turns out, so I did this research, I used four different
#
ways of analyzing teacher wages. And I had concluded that teacher wages in Paraguay were
#
already at the upper end of what we just would need to be to attract, you know, a competent and
#
quality teacher labor force. And hence, they probably didn't need further dramatic increases
#
in wages. Wrote all this up into this little 12 page memo. And on the last day of the World
#
Make Mission, gave it to the minister of Paraguay. And he, you know, read through it. And we talked
#
a little about what I was arguing until he understood it. He said, what time is your plane?
#
You know, it's the last day. Well, it's not late. It leaves at 11pm. He says, well, you know,
#
you've been really helpful to me and I like you. I'm not going to leak this to the teachers union
#
until your plane leaves the country. Well, that goes to show I've written something that,
#
you know, is going to contribute to a hot debate. This is actually adding the evidence base to
#
something that's high stakes and constant. People wanted to know the answer. And he was a very,
#
he was a savvy politician. Later ran, I think, for president of Paraguay.
#
You know, he realized that he was going to use me as the bad guy. But he was going to do me the
#
favor of waiting until I was out of the country before he said, you know, evil World Bank economist
#
says no to teachers, which put him in a reasonable thing. So, hey, I think this is part of,
#
you know, you want to feel part here, part of a live and active debate outside of the world of
#
just academia. Second thing that drove me is, again, this is a sense of alienation and doubt.
#
I believe that people just sometimes had wandered into like, beliefs that turned out to be false.
#
So the belief that, you know, just expanding education was having this important
#
empirically important impact on growth turns out to be just false. And until we recognize that,
#
it was, in fact, isn't the causation the other way around? You get economic growth,
#
and then you expand education. Exactly. Exactly. And by the way, it's worse than that. And this is
#
an aside. But what's actually happened is that, and here's an amazing statistic. Well, two amazing
#
specific and then a general version of the same statistic. Right now, Haiti has the average adult
#
in Haiti has much more schooling than the average adult in France had in 1970. Whoa. Wow. Yeah. So,
#
in fact, at any given level of GDP levels of schooling have gone way up. So it's gone.
#
If you think, yes, naturally, as you get richer, you move along this schedule of having more
#
education. But in fact, the whole levels of education have shifted up. About half of the
#
increase in years of schooling in the population has been increases for countries at the same
#
level of GDP. Even if your GDP is constant, your level of schooling, which is the general
#
fact of the Haiti-France comparison, is that in 1960, a country with six years of schooling had
#
GDP of $10,000. Now a country with six years of schooling has $3,000 GDP per capita. So the amount
#
of GDP being produced with the same amount of schooling is actually much less. And those are
#
just obviously the flip sides of the same thing. So yes, a lot of the causation goes from just
#
getting richer to more education. In addition, for a variety of reasons, we've gotten a lot more
#
years of schooling even at the same levels of GDP, which means conversely,
#
every country in the world is producing much less output per unit of schooling than they used to,
#
a lot less, which is a big deep puzzle that I still don't fully understand and hack away at
#
every now and again. But second point about research is I was often motivated by saying,
#
where are people largely wrong? And I worked early after I'd been at the bank,
#
after I'd been at the World Bank a couple of years, Larry Summers came to the World Bank
#
and he brought me into his front office in a quirky kind of way. And Larry Summers,
#
you might have heard of before, is a person who has strong opinions and doesn't always
#
hear the orthodoxy. So one of the things he sent me to working on was, you know, at the time there
#
was this belief that expansion of contraception was going to lead to much lower fertility rates,
#
which would lead to less population growth and population growth was a danger. So
#
this would be a good thing. And it just didn't seem to make any sense to me that, you know,
#
people have known how babies are made for thousands of years and kids are really a
#
huge decision and a lot of investment. It just didn't strike me as that plausible that just the
#
availability or not of contraception was going to lead to big, big differences in fertility rates.
#
And so I actually wrote a paper arguing that, and quite persuasively, that once you take into
#
account the number of people that women say they want, the availability of contraception had almost
#
no impact on the total realized fertility rates. So, and this was a, you know, the claim that
#
expansion of contraception access was going to be a big deal in reducing fertility rates was a hugely,
#
you know, I mean, entire advocacy organizations and NGOs were built on that belief and it was
#
just false. They had just gotten causation completely backwards. So I would say the second
#
thing is, like, I've often been driven by looking around and thinking, where do we just hold,
#
where is the conventional wisdom just completely conventional and not at all wise and just wrong?
#
And is there a way of marshaling evidence and data in a way that will persuade people to change
#
their minds about this? So that's the second thing. And the third thing is, I've always
#
thought that a lot of the big questions are just about economic growth, because
#
economic growth that's reasonably broad-based, meaning not massively, not that it goes to
#
billionaires, but reason goes to, in general, the population, just endows people with more
#
resources to spend on things that are important to them. And one of the things about being poor is
#
you're spending money on, you know, necessities and basics and things that are important. So
#
I think oftentimes, my research has circled around this big question of what really leads
#
countries to be successful in having sustained expansions of productivity and higher standards
#
of living measured by economic things. So I've circled around that question, which has kept me
#
kind of on a set of big picture questions and away from delving too much into the micro.
#
Yeah. And I've just, I mean, there's an economist named James Heckman
#
at University of Chicago, who is the paradigm pinnacle of knowing everything about
#
wages and their determination in the United States. He's just worked with all of the available,
#
you know, wage data sets in America. I just stand in awe of the guy in terms of his depth of
#
knowledge. So completely specialized, hasn't written about anything else ever. So I have a
#
ton of respect for that, but I'm just not predisposed to do that. I'm too, you know,
#
distracted by, and in part, part of the distraction is, you know, like I said,
#
by not growing up in academia, I didn't have complete control. So I ended up moving to
#
Indonesia in the midst of an economic crisis that had caused all kinds of unexpected shocks.
#
And I was assigned the task of helping the Indonesian government construct and finance
#
social protection programs. So I ended up, while I was doing that, becoming interested
#
in working on those questions. So, you know, partly which was just driven by,
#
you know, I really want to do a good job of this. And while I'm doing a good job of this,
#
I probably should be both understanding what I'm doing and building the data to kind of reflect
#
what I'm doing. So I ended up writing a series of papers on social protection and safety net
#
programs that probably wouldn't have written had I not just pitched up at a certain time and place
#
and been given a certain career assignment. So, and very rarely have I been handed a question
#
that it seemed like the conventional wisdom completely exhausted the wisdom to be had.
#
A bunch of things to double click on. And one of them is, you know, you said that one of the
#
things you enjoyed doing was figuring out where people were wrong and, you know, working on that
#
and looking at the data. Are there types of wrong? Like are there typical categories of errors
#
that, you know, people would make? Like one category that I imagine would happen is that
#
especially if you're in a place like the World Bank where you're actually doing stuff as opposed
#
to just doing research is that you could be looking, you could be over emphasizing what is
#
measurable as an intervention rather than making interventions that are more nebulous and long term.
#
So that's like one category that I'm just thinking aloud comes to mind.
#
So are there categories of mistakes that you've seen people making?
#
Well, I think one category of mistake is underestimating long run impacts by looking
#
too exclusively at short run impacts. So early in my, you know, my PhD was mainly on trade issues.
#
And one of the big debates in development has always been sort of pessimism about prices driving
#
the imports and exports. And I've always just thought, you know, that, well, wait a second,
#
it won't, you know, if we change the exchange rate or exchange the relative price of imports,
#
it won't change imports because all our imports are necessities anyway. So there's no flexibility
#
in it or all our exports are, you know, minerals or crops. And so if we change the, you know,
#
rewards to exporting, we're just going to transfer money to people who are already exporting.
#
So not seeing though that there are long run consequences that yes, it's not going to change
#
a lot over the next six months or the next year, but, you know, over the next five years,
#
you're going to have radically changes that you're not going to necessarily predict exactly where
#
or how, but are likely to occur. So I think, you know, one of the things is people are often
#
trapped in the locals. And if you say, oh, relative, you know, relative prices are going
#
to make a difference in outcomes. They're like, no, outcomes are kind of fixed. And there's no
#
other way to, there's, you know, changing input prices won't change, you know, what producers do
#
because there's only one way to produce this. And it's like, no, you've just, you're just looking
#
at an equilibrium that has emerged in a range of relative prices. But if relative prices
#
changed a lot, you would see radically different adaptations. I remember, you know, I was thinking
#
about this issue of responsive to relative prices. And as I was leaving on a mission to Malawi,
#
Africa, I drove out the highway to Dulles Airport, which has, like many highways in America,
#
has a grass median strip in the middle that was being mowed by tractors, you know, huge tractors,
#
you know. Okay. And then just by chance, I land in Malawi and I'm taking the taxi in from the
#
airport in Malawi. And there's a median grass strip in the highway. And just one guy is cutting
#
the grass with a bent piece of angle iron that was sharpened. And I was like, if you think people
#
don't substitute labor for capital, you just haven't seen really big differences in labor
#
and capital. You're just, you're localized. You've only seen one kind of organic stable equilibrium
#
emerge, then most of your life has been spent in that very slowly changing equilibrium.
#
But if you changed relative prices a lot, yeah, things would be radically different.
#
People would cut grass with angle iron, as opposed to a hundred thousand dollar, you know,
#
20 foot to multiple blade tractor. So I think underestimating the long run effects of consequences
#
of, you know, commitments to long run change relative prices is something that, you know,
#
I remember reading early in my career, P.T. Bauer arguing against this export pessimism by saying,
#
you know, you realize there was no rubber in Malaysia, right? And then rubber became an
#
industry and all of Malaysia's economy became structured for a period around the production
#
of rubber. So it's like, how, how you say that relative prices don't affect outcomes in a major
#
way. You just haven't, you know, again, you haven't seen big enough, long term enough
#
changes. So, but, and other than, and, you know, I think in general, just, I have a bias that people
#
radically underestimate how assiduous people are at pursuing their interests and that
#
the assumption that people can be made a lot better off by forcing them to do something
#
they're not now doing, I just have seen repeated again and again and again. And it, you know,
#
it just more often turns out that you just care really, you know, you just care more strongly
#
about this than other people do. Not that other people are making systematic mistakes. You know,
#
I always for years and years and years, I would go to the barber and the barber would say,
#
your hair would be so much more vibrant and healthy if you use this product.
#
And I would say, you care more about my hair than I do. I'm not using the product. It's,
#
I don't care that. I mean, yes, I have heard you, I have understood and I believe you
#
that my hair would be more, would be superior hair if I use this product, but I'm not,
#
not using the product because I don't believe that as I just, you've obviously self-selected
#
into hair care. You care more about hair and including my hair than I do, but that doesn't
#
make me wrong about my hair. So again, I think the desire to believe that-
#
Can you think of an example of this?
#
Oh my gosh. Cook stoves. So, and this is a good example because an Indian woman actually working
#
with Devesh Kapoor, who's one of my favorite people in the world and I hope you've interviewed
#
him sometime. Not yet, but I should.
#
You should. One of my favorite scholars. Anyway, PhD student of his just wrote an article about
#
cook stoves. So indoor air pollution is a big problem. When you burn wood in an
#
inadequately ventilated space, it causes, you know, health problems. There's no question about that.
#
And there's been three waves of people coming in with improved cook stoves that were solar or use
#
some other fuel or you had some different ventilation mechanism. And every time there's
#
this huge enthusiasm that people just don't know the advantages of improved cook stoves.
#
And it turns out the product never really meets all of the needs for which people use
#
a cook stove, including like the flavor of food, how fast you can cook the food.
#
You know, life is complex. Everybody's life is complex. Every task is complex and has multiple
#
purposes. And yet, and so, you know, she documents these, you know, irrational exuberance and
#
development was the title of her dissertation of, you know, three different times people
#
would come in with these new improved cook stoves. It would attract a lot of attention
#
because, you know, it dealt with women's health and dealt with other interests. They would promote
#
it. And then it would just die because people wouldn't do it. People just didn't like what you
#
had. And kind of at the end of each of these fads, economists would come along and say,
#
this is just a market. If your cook stove were really a superior product, why can't you just
#
sell it to people? Why do we need special subsidies? Why do we need special campaigns?
#
And then 10 years would pass and the generation that had had the disappointment of it not working
#
would disappear into other fields. And then the fad would pick up again because it just,
#
it's an attractive fad. So, yeah, I think that the human tendency to believe that
#
they have come up with a solution to other people's problems that
#
just is in part a confusion and failure to fully understand other people's problems.
#
So I think cook stoves, improved cook stoves, at least three different rounds of enthusiasm
#
on this. And I was at the Kennedy School 10 years ago, and one of my colleagues said they
#
were going to write a paper on improved cook stoves. And I was like, I'm old. So I remember
#
not just one, but two rounds of this enthusiasm. Same thing, by the way, just huge amounts of this
#
in agriculture in Africa. When the white settlers would get that go, well, why aren't you doing this
#
and why aren't you doing that? And the improved way to do it, meaning the way we do it in our
#
circumstances, in our climate, is this. And then it would take several tragedies for people to
#
realize that often the African practices had superior robustness to climate, to weather change,
#
or intercropping. The crops actually had big advantages in terms of weeding times.
#
Especially in the field of development, just time after time after time of
#
believing that you knew better than other people about how to improve their lives. It's just
#
endemic. I gotta tell you that one day an improved cook stove will take over the market,
#
but it will come naturally from the bottom up as a response to demand from some crafty young
#
entrepreneur and not be paternalistically imposed. So here's a question. Is that kind of
#
paternalistic thinking that we can figure out what's good for people and tell them the solution and
#
make it happen? Is that also sort of perhaps ingrained in the mission of the World Bank itself?
#
Like what was the World Bank like? Like was there sort of like a journalist will often speak of
#
a publication's house style, like the economist has a house style, NYT will have a house style.
#
So was there a house? In journalism, it indicates a particular style of writing,
#
but what I mean it is in terms of perhaps ideology or philosophy or way of thinking
#
or however you put it. Was there like a house belief in that sense, whether of doing things
#
or looking at the world? The World Bank, particularly rhetoric over the World Bank
#
is about has radically shifted over my lifetime. The World Bank was set up in the post-World War
#
II era to help recently to low decolonialized countries deal with their economic situation,
#
which was at the time the belief was they needed a lot more foreign exchange and
#
they needed a lot more capital. And so I don't think that and, you know, it wasn't the mission
#
of the World Bank was about helping countries develop. It wasn't about helping poor people.
#
So I actually think a lot of the more recent stuff about nudges and behavior and, you know,
#
poor people making bad decisions under stress, that's incredibly more micropraternalistic
#
than the World Bank ever was. The World Bank was a macro institution about country level
#
development and it might have had etiologies, but it wasn't necessarily a micro interventionist
#
cookstovish, you know, you know, we're going to. And I mean, I just wrote a paper, you know,
#
about, you know, poverty reduction efforts that has like the most amazing insulting thing.
#
Like they did a paper where they had some cash transfer program in Niger.
#
So Niger, one of the worst countries by any country development in the world,
#
and they did an experiment that had two treatment arms in the current jargon. One was adding to the
#
cash transfer a capital grant and one was what they called a psychosocial intervention.
#
And they showed that this psychosocial intervention was massively cost effective
#
because it had a demonstrable, but small effect on incomes and was super cheap.
#
And I just thought, first of all, people who are poor in Niger are poor because they're in Niger
#
and they're poor because of the choices they have, not because of the choices you make.
#
And this article, which had 11 economists as coauthors, including several of the highest
#
profile Western author development economists in the world, the idea that you're focusing on
#
reducing poverty in Niger by psychosocial interventions with the poor in Niger is obscene.
#
It's just obscene to think that people in Niger are poor because they have some
#
pathological decision-making as opposed to they're in rural Niger, for God's sake.
#
How are you going to fix that? And if you don't have any useful advice on that, and maybe you don't,
#
but what are you doing? So I think this micropaternalism is much more a fad of having
#
shifted towards imagining that you're going to help individual poor people versus countries.
#
A. B. I, again, didn't grow up in academia. I worked in the World Bank and then went to Harvard.
#
Compared to the Kennedy School of Government, the World Bank is the most intellectually diverse,
#
open debate place, 10 times more. So yes, the World Bank had some help, but it was
#
yes, the World Bank had some house style, but it was hardly dominant in the sense that,
#
A, the reality of the projects the bank did and what it actually lent government money,
#
government's money to do, which was its core line of business, and what it said was often very huge.
#
So yes, like The Economist magazine has a house style, a very interesting and engaging house style.
#
The World Bank in its public rhetoric had a house style, but the diverse, but first of all,
#
the gap between the rhetoric of the bank and the actions of the World Bank was often huge.
#
So it wasn't often even following its own advice. And then second, the range of views and the
#
quality of the debate about the range of those views inside the World Bank,
#
I was impressed by before and way more impressed by once I went into American academia, where
#
the range of views was actually incredibly narrow. I mean, you know, by being a global
#
organization, the World Bank has people that have grown up in India, people that have grown
#
up in Pakistan, people that have grown up in Africa, people that have grown up, and hence
#
came with radically different education, radically different life experiences, radically
#
different value systems. And so, you know, I think the World Bank from the outside is often
#
perceived as very homogeneous, you know, thinking organization, but inside it didn't look like that
#
at all to me. Let's take a quick commercial break and continue on the other side.
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Welcome back to The Scene in the Unseen. I'm still chatting with Lant Pritchett. And what I'm going
#
to do in the second half of this podcast is I'm going to ask you a bunch of questions from a
#
position of extreme dumbness, where I will ask you to assume I know nothing about the subject at all
#
and ask you to explain it to me like I'm a second grader, which of course is possible with your
#
lucidity. And the first of my questions is this, that what is development economics? And take me
#
through the journey of how it has evolved through the decade, including that moment in time where
#
you really come into it in the late 80s, you study it in MIT, you join the World Bank, and then how
#
it evolves in that period afterwards. And just take as much time as you want, but give me a sense
#
given that in this conversation, we've used the word ontology already, it's a very fancy word,
#
but sometimes useful. I think part of the arc of development, and I'll start with development
#
more broadly than just economics, which is a subset of development, I think, unfortunately,
#
in a large part of academia, there's been an ontological shift. So what is the
#
ontological shift? So what I take development to be is the ontological unit of what develops
#
is a country. You know, if you think of development, it has this sense of dynamic of something becoming
#
more like the ideal of it. So a tadpole becomes a frog without any change in this ontological
#
nature. The development of a tadpole is to be a frog. And I think the ideas early of development
#
were that these newly colonialized countries, although lots of developing countries weren't,
#
you know, colonialized like Latin America, I mean, weren't colonized at the time,
#
but the early ideals of development was that these newly colonialized countries should become
#
developed countries. And I think that was conceptualized as, maybe this is exposed and
#
this is my version, as a fourfold transformation. A country was going to get a more productive
#
economy so that it, you know, at higher and higher levels of an output, it was going to
#
make a political shift to where the people who controlled politically the country were more
#
responsive to the needs and wishes, sort of a transition from subjects to citizens.
#
It was going to make an administrative transition so the government would become more capable and
#
more able of implementing and carrying out and effectively what things a government need to
#
carry out. And one could have a huge debate about what one wants the government to do.
#
But there are certain functions that we all agree they should do and they should do them better
#
than worse. And that requires organizational capabilities. And the third was there was going
#
to be a social transformation in which more citizens were treated equally by rule of law.
#
There was going to be less kind of affiliation with kith and clan and personalistic differentiation
#
and more equal treatment of citizens. And if not exactly equal, the idea that all citizens were
#
something and shared something like a national identity over smaller identities is another
#
big transition of a developed country. Developed country had citizens who expected equal treatment.
#
So that was the so if I said what was development about and what in particularly what did the
#
political leaders of the newly developed countries, what did Nehru think development was,
#
right? What did Nkrumah in Ghana think development was? They had something like this conception in
#
mind. It was about their country becoming an equal player in the sphere of countries.
#
India's ambition was to be on an equal plane and sphere in all dimensions with the U.S. and with
#
U.K. and with Germany. So that was and then a subset therefore of development was development
#
economics, which was how do we make this country more productive? And by the way, if you look at
#
the Articles of Agreement of the World Bank, it says that really explicitly. Its objective was to
#
make, you know, countries more productive. So and then, you know, then one can debate
#
was development right or wrong about the particular modalities? Was the development
#
thinking too dogmatic about modalities by which these things would be
#
achieved? Was it had ever wrong theory of change? I'm not saying development was perfect,
#
but it was clear what it was about, right? Then I think somewhere in the late 80s going into 2000,
#
there was this big shift towards the idea that development was about
#
poverty. And it was about raising the lowest levels of human well-being towards certain and very low
#
bar targets. And I think the Millennium Development Goals enshrine a radically, radically different
#
vision of what development was. So suddenly, development was just about motivating Western
#
countries to continue to give foreign aid. And the best way to do that was to give foreign aid
#
and the best way to choose that was to choose a very small, limited, low bar set of targets
#
directly on human well-being, independently of the ontologically country centered process of
#
development. So, you know, the MDGs were, you know, dollar a day poverty, universal enrollment in
#
primary school, just primary school. And that shift in some ways led to a shift of development
#
economics about thinking of how do we accomplish these specific targets as if, you know, with the
#
limited amount of foreign aid available or how do we achieve these specific targets with, you know,
#
you can imagine at least of these things you could make progress on in a programmatic way.
#
We could have an anti-poverty program. And all of a sudden, efficacy at that vision of development
#
could be bracketed from the broader fourfold transformation of countries. And I think
#
that has come and is mostly, well, I don't know. That vision of what development economics was
#
about, as you can see, is radically, it's ontologically different. It's starting to say
#
the goal of economics is to figure out how these individuals are going to be made better by this
#
better or worse program, which to me was always charity work. That was always coping with the
#
consequences of a lack of development. Because if you had a fully developed state, it would do all
#
of those things as the natural endogenous spontaneous order of the fourfold transformation
#
of development, you would achieve high levels of human well-being. Does that make sense?
#
Absolutely. There's this old saying that, you know, you give a man a fish, you feed him for a
#
day, you teach him how to fish, you feed him for a lifetime. And I wonder if there is that kind of
#
change happening here, like in one of your pieces, you use the term defining development down.
#
And you've spoken about the difference between national development and kinky development. And
#
I'll ask you much more about national development after this. But what do you mean by kinky
#
development? Unfortunately, dear listeners, as you listen to this, it is not what you think it is to
#
calm down. But what do you tell me a little bit about kinky development? And does all of this
#
partly come from that urge that I alluded to earlier, that it is it would be the natural
#
tendency of me if I have this sense of purpose that I must solve poverty. You know, it's an
#
incredibly difficult and complex and wicked problem. But one way of making it easier for myself
#
is by defining it down and saying, oh, one dollar a day. And then looking at charitable
#
interventions that may do something about that in the extreme short term, completely ignoring
#
the fact that between one dollars a day and 10, 20 dollars a day, whatever it is, that is also
#
poverty. And that's still a problem you've got to solve. Right. So tell me a little bit about
#
kinky development and perhaps, you know, about kind of each of these a dollar a day. Why is
#
that wrong? Just putting kids in schools and thinking of inputs. Why is that wrong? So one
#
by one, we can talk about all of those. But this trend of kinky development and the damage it has
#
done. Tell me a bit about that. So and again, I think unfortunately for the listeners and their
#
piqued of the interest, kinky development is if you just think of a normal distribution or a
#
Gaussian distribution or any distribution, it's kind of people differ in continuous ways. People
#
are slightly richer. Some people are slightly poor or people are richer or poorer. People have
#
more education, less education on any measure of human well-being. It's a smooth distribution.
#
It's not separated into lines that discreetly differentiate. But if you take that smooth
#
distribution and focus only on people of being at or above a certain line, everybody should have
#
primary education. What you would do to the distribution is you would cause a kink,
#
meaning everyone would come up to that line. And then at that line, there would be a kink,
#
no one below. And then so the distribution would stop looking like this smooth thing and you'd
#
push everybody up just to this low bar. And at that low bar, there would be a kink. So that's
#
kind of why I call it kinky development because you've replaced some broad ambition on human
#
well-being and some notion that national development is effectively instrumental to
#
achieving that human being with our goal is just to get people up to some certain arbitrary
#
threshold. And like I say, this creates the possibility of engaging in a programmatic
#
approach. And I think you hit on one of the reasons the programmatic approach is popular
#
is it's attributable. I can say I took some fraction of my billionaire wealth
#
and I devoted it to this specific program. And this specific woman or this specific child
#
is better off because of this specific program that I did. And as we were talking before,
#
the ontology of spontaneous orders doesn't allow attributability. If we say, and right now,
#
I did a calculation and from the growth acceleration, I had a whole methodology
#
with some co-authors of identifying growth accelerations. India's GDP since the reforms
#
in 2002 up to about sometime in the mid-2010s was two trillion dollars cumulatively higher than
#
it would have been without the acceleration. Great. To who do we attribute that acceleration?
#
There had to be a general social change in ideas about development. There had to be a
#
political process that allowed those to be realized. It was a wave. It was
#
and no one person can point and say, I did that. And yet two trillion dollars in additional income
#
accruing to Indians. That's one of the biggest, you know, I mean, your neighbor to the north has
#
had an equally big transition, but that's one of the most dramatic improvements in human well-being
#
in the history of mankind. And yet you can't take credit for it. So I think the kinky development
#
led to a programmatic approach. I think the programmatic approach was
#
of interest to philanthropists. The programmatic approach was interested
#
to bilateral donors who, you know, were under increasing pressure to justify to north and west,
#
you know, the western taxpayers why they should do this. But it just lost the big picture because,
#
you know, nothing about. And in the end, it's just empirically wrong. I have a paper where
#
if you look at the median income of the and you ask what's the correlation between the median
#
income of a country in a certain time and its measured World Bank headcount poverty rate,
#
the correlations exactly one, exactly one. Like, it's not really one, it's 0.988.
#
You know, 0.988 means there is nothing that's being done that causes poverty to be much lower
#
or higher than it would have been had we just known the median. So kind of advancing the income
#
of the typical individual in the media, not the mean for technical reasons, but, you know,
#
really brings about poverty reduction and nothing else does. It's a necessary and sufficient
#
condition. And, you know, the danger with the programmatic approach is you underappreciated
#
and therefore ignored the broader transformation. So if your goal was, you know, some of the MDGs
#
were just goals about specific diseases, you were no longer even thinking, I have to improve
#
the operation of the entire complex system of the ways in which people promote and prevent and
#
engage in curative health care. You stopped worrying about the health system and started
#
worrying about a disease. You know, the idea that just having sat in a school during the years in
#
which your country called primary was the fulfillment of the goals of the right to education
#
was surreal. It was surreal. It was too little. It was too low. It wasn't related to learning.
#
It didn't allow people to develop their fullest human potential. It was an incredibly radically
#
shrinking of the development, even relative to, you know, the Declaration on Human Rights that
#
talks about, you know, every person, you know, access to higher education should be based on
#
opportunity. So it ignored, it assumed away what are really the deep determinants of all of
#
these elements of well-being. And it turns out empirically, we old timers were exactly right.
#
Empirically, when I, you know, I just did a paper on this a little while ago, but if you just ask,
#
take this aggregate measure of all the nice things we would want for human well-being in
#
physical objective terms like schooling and health and lower crime, and ask, you know,
#
here's this group constructed a social progress index because they thought development had
#
over-sized economics. And so no economic statistics in measuring human well-being.
#
And then ask how much of the variation across countries in that is associated with national
#
development. The answer is nearly all of it. Nearly all of it. Nearly all of the differences
#
across countries in human well-being are whether or not you're a more developed country on the
#
standard four-fold transformation measures. And that's not surprisingly because, you know, after
#
all, seeking out and adopting and implementing effective things to make your citizens better off
#
is what that spontaneous order of a more productive economy, more responsive polity,
#
and more capable state do. They endogenously seek out and solve problems. So it's a machinery for
#
solving problems. So the better it works and the more resources it has to work, the better it's
#
going to be. So I think the kinky approach just, it destroyed development economics because it
#
stopped thinking in the way that economics are true comparative advantages, thinking about
#
spontaneous orders of the way in which human beings interact, not about the specifics of
#
programmatic design. I mean, kudos to Esther DeFlo, she's a genius, all that. But we're not
#
plumbers. We're architects. Because if economists are plumbers, who's the architect? Who's designed
#
the piping and where the toilet should go? It's a weird metaphor. And so I think it's just reduced
#
the scope of development economics. It's reduced the ambition of development economics. It's
#
ignored the key insights that Hayek and other, you know, greatest of all time economists had about
#
how we think about human beings operating with liberty and interacting in better and worse ways
#
are able to produce, you know, collective outcomes that are non-teleological. Like I say, it just
#
changed the nature to be, you know, the handmaiden of charity work, as opposed to really
#
social science, ambitious questions about how do countries come to be developed or not.
#
A metaphor I learned about from one of your papers, which I absolutely love,
#
and which just speaks to the unattributable nature of spontaneous order, is pebbles in an
#
avalanche. You point out that, you know, there's an avalanche, there are many pebbles. You can't
#
say this pebble caused it or that pebble caused it, but there's an avalanche and it's all these
#
pebbles together. I'm going to give you another metaphor and I must tell you it's a metaphor,
#
so don't take it literally and don't be alarmed because I'm fine. But let us assume for a moment
#
that I am my country, right? I am an economy. And here's the thing. I'm deeply overweight.
#
I have type 2 diabetes. One of my lungs has collapsed. The other lung is about to collapse.
#
I have terrible heart disease. There are all kinds of possible local cancers brewing over me.
#
And this economist from a fancy place with a fancy label comes and says,
#
I want to do an RCT on you. I want to develop your right bicep. And I want to see whether lifting
#
of higher weights with fewer reps works better than lifting a lower weight with more reps.
#
And then the RCT is carried out and the verdict is given to me. And 20 years later,
#
Lance Pritchett comes along and says that, wait a minute, the empirical evidence shows
#
that there was zero impact of the right bicep development on Amit's life expectancy,
#
you know, zero impact. And everybody just laughs him out of the room because it's unfashionable,
#
right? And then they're like, oh, you're too broad. Oh, you don't get it. And you've
#
described RCTs as a symptom of the disease. And at the same time, that symptom is everywhere.
#
And you know, from an outside perspective, and initially, when I see some of the papers that
#
come out, my initial reaction is that, hey, I'm not an economist, maybe I'm stupid, maybe I'm
#
missing something. But when I see papers that are studying whether treated mosquito nets help stop
#
malaria, I'm like, do you fucking need a study for that? And there are so many examples of that.
#
I mean, it's like you can't parody some of that stuff, you know, and there is a crowding out
#
effect on good ideas, isn't there? So three things. First, you don't know, can't know,
#
how incredibly accurate your metaphor was. In 2006, there was a meeting at the Brookings
#
institutions, kind of randomistas versus non-randomistas, right? And it was the last
#
time, by the way, they've participated in such a thing, because they have so much money, why the
#
hell would they even talk to us anymore? In which Paul Romer, who was a growth economist,
#
said to Abhijit Banerjee, who was there, he said, look, what it sounds like you guys are saying
#
is a doctor is going to be presenting, literally, this is the metaphor he used. He says a doctor
#
is presented with a cancer, a patient who has cancer, and who is having some skin rashes.
#
And the doctor says, well, cancer is this really complex process. I don't really know exactly what
#
to recommend. But for your skin rash, since your skin is large, I can divide it into squares,
#
and I can apply various allergens, and I can result in exactly what you're allergic to,
#
and we can treat the allergy with precision and science and ignore the cancer. And Abhijit Banerjee,
#
who backed into a corner with this very provocative metaphor, said, you're exactly
#
right. We are going to do only those things that we can do with science. And if the rest of you guys
#
want to talk in sloppy, non-rigorous ways about economic growth, go do it, but don't pretend it's
#
scientifically based. And we're only going to do that for which we can do science. And if it's
#
the tiny, you know, implicitly conceding that if what we can do science about is tiny and irrelevant,
#
that's still what we're going to do. It was amazing. It was amazing. So he embraced your
#
metaphor publicly and said, yes, he didn't like, yes, that's what we're going to do. We're going
#
to work on the bicep because we can do an experiment. We can do right arm, left arm treatment
#
control. It was just stunning. It was stunning. And again, it was the last time I've ever seen
#
them engage in public debate. They will not debate, engage in reasonable amounts of academic debate.
#
My friend Bill Easterly tried to arrange a debate between Angus Deaton, who's won a Nobel Prize,
#
and Abhijit Banerjee. Angus Deaton gets up, engages. Abhijit Banerjee stands up and says,
#
I don't really believe in debate. Let me tell you about some research we've done and proceeded to
#
talk about experiments they were doing. Didn't debate the topic because they're flooded with
#
money. Like, who cares what the rest of us think? They've got all the money. They've got all the
#
prestige. The press just loves them. That's the first thing. Your metaphor has been raised
#
publicly and they've just embraced it. Yes, we're going to work on the bicep. It was amazing.
#
The second thing is, though, is I do think it's important to separate out symptom
#
and disease. RCTs are a symptom of the kinky development approach. Meaning, had we not made
#
the shift from national development to kinky development, we never would have imagined that
#
programmatic was important relative to structural. Had we not started to believe programmatic was
#
important, we couldn't have ever believed evidence about the programmatic was important.
#
So again, we do see RCTs everywhere, but I do think attacking the RCT doesn't go to the root
#
of the problem. So I've just finished a paper last month about we need to eradicate the notion
#
of dollar a day poverty. We need to get rid of that and we need to say, let's talk about
#
poverty being done when people are actually prosperous. So the opposite of poverty should
#
be prosperity. Even if you drive the poverty rate up by a moderate amount, it immediately becomes
#
obvious that non-systemic, non-transformational things to the country just don't make any
#
difference. You can't programmatically solve problems in poverty in a share. The third thing
#
was, I'm not sure your bed nets is the best example because the real issue was not whether
#
bed nets, treated bed nets, if they were used would work, which is pretty obvious, but whether
#
or not people paid for bed nets versus didn't pay for bed nets would have similar usage rates,
#
which wasn't so obvious and which might count as one of their more stronger results. But
#
I did write a blog and talk about there was a paper published by the very highly prestigious
#
journal that Esther DeFlo edits where they did an experiment in one region of Afghanistan
#
that had no schools, essentially, and they put community-based schools in 13 of the villages and
#
not schools and concluded that children were likely to attend school when there was a school
#
in their village that knocked. So first of all, that really is obvious, right? And second,
#
not only is it obvious, it's completely widely believed. Every country has run their educational
#
policies for the last hundred years on the premise of building out schools so that there
#
was a school accessible to every child. So again, who were you arguing against? Who didn't believe
#
that? Who didn't? And third, in their review of the literature, they had two citations.
#
So of all the thousands of studies that had documented kids were more likely to go to school
#
when there was a school nearby, they just dismissed all of those because they didn't follow their
#
preferred faddish method. Just literally no review of the literature, no sense that there
#
was a literature. I call this the strategy of feigning ignorance. I'll pretend,
#
A, that nobody in the world knows anything about this because they don't know it by the method that
#
I think they should know it. And again, this was published in the top journal, right? And then
#
fourth, now I'm thinking of more, you know, I was just talking with Ajay Shah, our common friend.
#
And, you know, part of the problem in my mind with the RCT turn is that the leaders of this movement
#
are geniuses. Michael Kramer is an unbelievable genius. I knew him when he was a grad student,
#
and he blew me away. And Esther Duflo, I helped a bit with her, you know, getting the data she
#
needed for her dissertation. She's a genius. She's unbelievable. He's a genius. So, you know,
#
if these were students in PhDs in public health at Kansas State University,
#
fine. Like, you should probably do an RCT relative to what you could have otherwise done.
#
But if you think of, Michael Kramer wrote this paper called The O-Rings Theory of Development
#
that was just genius, just genius. It's probably one of the, you know, one of my top three,
#
four favorite papers in development of all time. And then he, you know, got involved in
#
experiments about deworming. Like, maybe deworming is cost effective, maybe deworming isn't cost
#
effective, but no part of the development of India or Nepal or Kenya or Ghana is going to hinge on
#
what protocol you have for deworming. And then, you know, you get caught up in these,
#
there's this thing, you know, they call it the worm wars of this methodological dispute about
#
whether deworming is a cost effective intervention. And the idea that someone capable
#
of writing the O-Rings paper is engaged in something so ultimately unimportant as the
#
worm wars, it really does have huge high opportunity costs. I mean, had those three
#
developed their just enormously impressive intellectual and other capabilities to thinking
#
hard about problems of state capability, problems of the transitions in politics, problems of,
#
you know, economic growth, who knows what could have happened.
#
The O-Ring Theory of Development, in fact, is stunning. It's one of my favorites. When they
#
won the Nobel Prize, I wrote a column about how, you know, it explained the importance of clusterings
#
of talent, you know, Ajay and I did an episode of our show on that as well. And I couldn't agree
#
with you more. And even some of Abhijit Banerjee's early work before he got into all this is
#
remarkable. You know, and there's a thing. Can I tell you my favorite story, though, which is
#
Michael Kramer actually came after a second year of graduate school and ended up working as a
#
summer intern with my friend Billy Sterling. And my friend Bill asked me to talk with Michael
#
Kramer and because we were doing this joint product and get his help as a summer intern.
#
So we came and we talked and he said, Oh, I have this paper, you know, my I've written this paper
#
and, you know, would you like to read it? And I was like, Oh, that's so cute, you know, like,
#
like a toddler. Oh, show me your artwork. I'll put it up on the fridge. Right. So took his paper,
#
which was the early draft of the O-Rings paper. I rode home and read it on the 35 minute subway
#
ride I took from the World Bank out to the suburb where I lived. And I walked in the door of my
#
house and I said, you know, Diane, my wife, I said that movie Amadeus, I had always cast myself as
#
Mozart to other people being Salieri and my empathetic and imaginative living of that tale.
#
I'm Salieri. I've met Mozart now. This kid is so much, you know, I thought of myself as a prominent
#
development economist. I'm Salieri compared to this guy. So, you know, so nothing I ever say
#
about RCDs. I mean, one of the like I say, one of the worst things I feel about the RCT fat is it's
#
dragged geniuses with just unlimited potential into a minor, you know, first of all, they're not
#
making any contributions on methodology. Meaning they often say, oh, they developed RCTs. That's
#
complete bullshit. Like RCTs on for evaluating social policies were like when I graduated from
#
PhD in 1988. There were four organizations in America routinely doing RCTs of social policy.
#
And no one from a good school ever went to work for those because RCTs were boring.
#
So it wasn't like they invented the method of RCTs or they invented methods of applying RCTs to
#
policy questions. That was all completely routine and well known. They haven't made any technical
#
contributions at all. So, you know, literally when I was in the Kennedy School, we wrote, we
#
did these things called executive education, where people would pay us, you know,
#
X thousand dollars to come and get a week. And we had designed in cooperation with the World Bank,
#
you know, cutting edge of development, which was a week long course for mid career professionals
#
at the World Bank to refresh. And in the early versions, you know, of the course,
#
it was Danny Rodrik, big name, big, big star, Ricardo Hausman, big name, creative guys, big star,
#
myself. And then we wanted to give them half that and half of the RCT is kind of cutting
#
edges of where, you know, development economics was. And they did it, I think maybe one year.
#
And again, by the second year, and we were having as part of the designing of this course,
#
we were having debates about the relative role of RCTs. And it was kind of interesting. And,
#
you know, I was talking to Esther Duflo, but we never stopped talking to them. They just
#
stopped talking to us. They just were like so flooded with money. Like, why would you
#
like bother teaching a course with Danny Rodrik? They just stopped. They just stopped talking to
#
people. They stopped and they had their own, you know, it was a faith based movement. They had their
#
own faith based movement to run that had all the resources and all of the everything. So they just
#
stopped listening. I mean, like I say, when Abhijit Banerjee won't engage in public debate
#
with Angus Deaton, you know, who would, you know, he's obviously not going to debate with
#
anyone if he won't debate with Angus. So, I mean, I'm probably a minor, minor irritant in the
#
roinment, but because again, they have all the money, they have all of the enthusiasm. MIT has
#
allowed them to create brand new training programs, given them carte blanche, essentially. So why
#
would you debate with anyone when? You know, when I first heard about RCTs, I wasn't skeptical then.
#
Like I thought that, yeah, it's very minor, it's very micro, but maybe it will make a difference
#
in the margins, no harm done, et cetera, et cetera. And over time, I began to see it for what it was.
#
But what really makes it most clear how utterly insignificant a role they play in development is
#
this wonderful piece you wrote, which I'll link from the show notes about your four-part smell
#
test. So I'd like you to talk a bit about what is a four-part smell test. Well, the opening
#
anecdote of the four-part smell test is I was living, I lived from 2004, 2007 in India, in Delhi,
#
working with the World Bank. And one of the things, given what I was asked to work on, one of the early
#
things was the World Bank was supporting various block grant programs that supported a variety
#
of different livelihoods approaches that involved on giving money, some to women's self-help groups.
#
So I went to West Bengal and I was in a meeting with women from these women's self-help groups,
#
and we were trying to do a compared and contrast of different designs of
#
these livelihoods programs. And at the end of the meeting,
#
you know, I was, it was a World Bank team. So there was me and there was a woman from Germany,
#
and there was a woman from Canada, and there was, you know, and we'd asked them a bunch of
#
questions, and there were probably 50 women in the room. And at the end, I said, well, you've
#
been very gracious to answer our questions. Do you have any questions for us? You know,
#
we're visitors to your village, we come from different places, anything you're curious about.
#
And so the first question was a woman raised her hand and says, well, you're all from rich,
#
developed countries. The women's self-help groups in your countries must really work
#
fantastically well. Tell us about them. And I was like, completely frozen.
#
I'm a man. So I said, Oh, well, Marina, what about Marina? You're from Germany.
#
And none of us from any of the rich countries could even name the equivalent. I mean, obviously
#
there's been lots of things with women's rights and women generally, but women's self-help groups
#
is a specific mechanism and leading role. So I think that was a motivating thing to then say,
#
okay, look, if something is really associated with, you know, the economic development part
#
of becoming a more productive economy, you probably should see more of it in rich countries than poor
#
countries. So the fact that all these rich countries didn't have women's self-help groups,
#
and they did exist in India, suggested it certainly wasn't a necessary condition for
#
development at the very least. Second, you know, countries that are growing fast should probably
#
have a lot more of it than countries that are growing slow. Countries that are rich today
#
probably should have a lot more of it today than they had in the past. And when you had a rapid
#
change in this thing, you probably should have seen more rapid economic progress after than before.
#
So kind of just saying, there are lots of ways of looking at the rate of growth and the level
#
of prosperity, and anything that doesn't pass even one of these things probably is slightly
#
dubious. And the obvious thing is a really important necessary and sufficient condition
#
for economic development probably should pass all four, meaning when you get more of it within a
#
country, it should accelerate progress. Countries with rapid growth should have more of it. Countries
#
that are richer now than they were a long time ago should have more of it now than they did.
#
Countries that are rich should have more than countries that are poor. And there are lots of
#
candidates for things like that. This isn't, I'm not naming some singleton, like rule of law probably
#
passes all of those things, and urbanization passes all of those things. So that's the kind
#
of four-part smell test. And then, you know, if you look at reviews of the literature of RCTs,
#
there's not, I would claim, you know, it's hard to point to a single RCT that speaks importantly,
#
that passes any one of the four-part smell tests on any, not just on economic growth,
#
but even on state capability, or politics, because again, and in part it's because,
#
and again, I feel silly using the word ontology so often,
#
but if you think about doing an RCT, part of the problem is you need to have adequate statistical
#
power. I need to have enough treatment cases and control cases that I can compare the average of
#
treatment and average and control with enough, small enough variance that I can have a statistically
#
significant distance. This is called powering up your study. What's the statistical power that
#
would allow you to differentiate the hypothesis of difference between treatment and control?
#
Well, if you start thinking about that, it's impossible to power up
#
randomized controlled treatment at the country level, because that'd have to be.
#
That's a lot of mosquito hacks.
#
Yeah. Yeah. So what that takes you towards are individualized treatments,
#
right? But we kind of know for sure that individualized treatments aren't the key
#
to development because development is ontologically a social process, and so
#
if we're dealing with processes of politics, processes of organizations, processes of economies,
#
they're super aggregate outcomes of how thousands and millions of individuals interact,
#
not individual treatments. So it's a method that's ill-adapted to answering any of the
#
big questions. So when you, again, look at the reviews of the literature, none of them pass the
#
Yeah. In fact, in your paper itself, you had a table listing out a bunch of the interventions
#
and there's nothing that meets. We've spoken a lot about this direction that development
#
economics took, kinky developments and its symptoms, RCTs and the kind of thinking that
#
goes into it, which frankly is something that I think helps a person making the intervention
#
feel good about themselves that I am doing something measurable that makes a difference,
#
but it's all an illusion and a lie they're telling themselves. But let's now talk about
#
what you're for. What do you believe? What do you stand for? I alluded earlier to kinky
#
development versus your baby, national development. Tell me a little bit more about that. What do you
#
stand for? What is national development? Break it down.
#
Let me talk about, and I just wrote a blog like this, what I'm for, right? Because I sometimes
#
get accused by my wife and others of writing too much that's negative about RCTs and not about
#
what I'm for. So let me start with one thing. It's recently from eight years up until just
#
March of 2023. So a year ago, I was head of a project on education. Now that might seem
#
a little odd for the where is all the education gone author, but more importantly, I think
#
the world's had enormous success at getting kids into school and incredibly less success
#
at making sure those kids once in school are learning well. And I think that's important,
#
even if it's not instrumentally important for economic growth, which I think, by the way,
#
one of the solutions to the puzzle of where is all the education gone as I was measuring
#
schooling and not really learning. And I think there's new evidence that schooling
#
learning does matter. But even if we don't not concerned with instrumentally, I think that it's
#
just a massive injustice to children to make them go to school and then not provide them with the
#
schooling that provides learning. That's just a massive injustice. And so and, you know, our
#
the research program was called Research on Improving Systems of Education because we said,
#
look, this isn't an interventional solution. If systems of education are producing as the
#
endogenous outcome of the way system works, schools that don't produce learning, you have
#
to change the system. So we spent, you know, a long time, we had seven focus countries,
#
India, Pakistan, Vietnam, Indonesia, Tanzania, Ethiopia, and Nigeria, and then tried to look at,
#
you know, what do you do to turn around an education system? And in the kind of,
#
you know, wave, you know, any even a large research program is a drop in the ocean of
#
the intellectual discourse. But I think we have been part of shifting the way from schooling to
#
learning. Now, you know, all of the four made the four of the major funders of global education
#
got together and set a goal for reducing learning poverty, you know, that every child should read
#
fluently by grade three, not a goal that they would have had 10 years ago. And I think we
#
came up with some reasonably sensible advice about how you would set about improving
#
education systems, a lot of which I think has been picked up and has been implanted by various
#
states around India. So India itself has gone from a completely, if you look back at the programs
#
are being implemented when I was here in India of the DPEP and the follow ups,
#
SSA, they were very input driven, very schooling driven, and really had very little impact on
#
learning. So the whole discourse in India shifted, it shifted globally. So that's one thing I'm for,
#
is it really is an important for the future of the world and for success of long term development
#
to have schools that really teach kids to learn. So that's one thing I'm for, I've been working on
#
it. I'm trying to ease out of it because I think I've said everything that I can say.
#
So that's one thing. The second thing, and this reveals a lot about, I think the framework of
#
trying to look for things that are important under under neglect or important neglect, the
#
important neglected intractable is a criteria that altruism uses. I think one thing I'm working on
#
is, I think if you look at the demographic changes in the world,
#
there's a birth dearth all over the rich world. Their demographic pyramids, which is the
#
relationship between how many young people and how many old people are going from being
#
pyramid in shape to being inverted. The rich world just doesn't have the labor force it's
#
going to need to sustain their economy and their social transfer programs going forward.
#
And I think rotational core skill labor mobility supported by an industry of people move people is
#
the wave of the future. I think we could have 500 million, we could have hundreds of millions more
#
people moving around the world to perform needed jobs on a rotational basis. This is,
#
so this is something I've co founded an organization called Labor Mobility Partnerships.
#
I'm doing research on this about, but the research is more about not about whether or
#
not this would have massive benefits. The wage differentials of equal productivity people
#
around the world are five to one, 10 to one. So, you know, I sometimes say the world isn't full
#
of poor people, the world's people full of people in poor places. And the way to solve that is to
#
allow people to move to productive places. The constraint to that is the politics of the host
#
countries. And I think one way of dealing with the politics of host countries is to recognize
#
there's three questions, not two questions, meaning sometimes countries say,
#
who can be allowed to work in my country or either people on a path to citizenship
#
or asylum refugee and nothing else. Whereas you can easily say there's three modalities,
#
there's path to citizenship, there's here on a limited term contract, and there's asylum refugee.
#
And I think this the rotational contract has less social and political freight,
#
because you're not making long term commitments to citizenship. So it, you know, Benedict
#
Anderson's famous book about, called Imagine Communities points out the nationalities or
#
imagined communities, however imagined they are, they're powerful in the imagination of people.
#
So, you know, the resistance, I think, to mobility is mainly not driven by the negative. There's no
#
is not driven by economics, it's driven by social and political concerns. And those are much more
#
amenable to political solutions, if you can reassure people about the rotational nature
#
of the movement and that we're not, you know, immediately endowing every person who we need
#
to do elder care with an immediate path to citizenship. So we're working on that.
#
It's something that I think is going to happen in the future would provide enormous
#
literally, the upside potential of this is creating benefits to the movers of the magnitude of the
#
economy of France, it's trillions of dollars. But we have to build a responsible industry to do it
#
for to gain political legitimacy. So we have to an industry like, you know, I mean, I use the analogy
#
all the time. You know, Kitty Hawk demonstrated the feasibility of a lighter than a heavier than
#
aircraft. But to get from Kitty Hawk to billions of passenger miles a year, you had to create
#
a safe and reliable airline industry, which meant you had to invest in airports, you had to invest
#
in pilot training, you had to invest in protocols, you had to invest in standards and norms. It was
#
an enormous investment to create an enormous industry. You know, the investment it will take
#
to create a good labor mobility industry out of the patchwork that we have, I think is worth it.
#
So that's what I'm working on. So I'll, you know, double click on some of the other things you said
#
you're for also. But before that, a question about each of these. And one is, you know, a theme that
#
I've often explored in my show in different contexts, is how the mainstream is breaking down,
#
like you see that in the media, for example, where the consensus and truth is gone, mainstream media
#
is scrambling, everyone has a means of production, good sides to that bad sides to that, I mean,
#
huge net positive, you see that in the creative world as well, where, you know, the long tail has
#
really expressed itself. And I wonder if that at some level is also true of nation states,
#
where they are less sort of ossified as they once were, because even if you can't escape geography,
#
you know, technology allows you a kind of quasi mobility of a sort, where you don't actually need
#
to go to another country and do the job. And India has, of course, benefited from this for the last
#
30 years, where you get the benefit of mobility without actually physically having to go.
#
And, you know, when it comes to the kind of body shopping and the likes of Infosys, did you also
#
have that rotational mobility, you go and you come and all of that. So I wonder in all of these
#
margins, the sort of role that technology can play and a lot of lot of that is really unknown
#
unknowns into the future, we don't really know. But it's something that often gives me hope,
#
because I find that the way the world is becoming more and more insular with the rise of populist
#
politics, you know, immigration will probably grow less rather than more in the near term.
#
But I think that that can be countervoted by the effects of technology,
#
where I can today earn my income from anywhere. And you know, a service provider can provide
#
service anywhere. So is that is it too early? And I don't want to overstate it by saying it is
#
happening. But, you know, in the distant future, I feel that that could be a force that can,
#
you know, make geography a little less constricted.
#
Maybe, but I don't think so. And here are the reasons why I don't think so. A, I think
#
the progress of Moore's law, which is the tech, when most people say technology, they mean
#
information technology, don't mean technology generally. So the technology that enables
#
remote work, I think has been in place for 20 years and more. So I don't think that's I don't
#
see that as being a huge growth area. It's had enormous positive impacts, obviously,
#
on India and other places. So I think and to some extent, people have pulled back from the idea that
#
geography doesn't matter in some senses. So I see that as yes, that's part of the future.
#
I don't see that as growing necessarily. Most of the growth, I think the s curve of that growth
#
is past us rather than in front of us. Right? B, we have done some analysis of a lot of things
#
do just require physical content. So elder care. Look, if your grandma can't dress herself,
#
somebody has to touch your grandma to help her dress, right? And maybe it's you,
#
but in research that we've done, we've divided things into things we think are potentially
#
offshore. Well, and that's a lot of and if you look at the wage growth by occupation of the
#
forecast of the US Bureau of Labor, we tried to divide it into professional and what we call
#
core skills, we don't want to call it low skill, there are lots of human skills that any job like
#
elder care takes. Anyway, if you divide it into professional and core school and into non
#
unshuffrable, non offshoreable and offshoreable in the US, there's something on the order of 1.4
#
million incremental new jobs in the non offshoreable core skill category. And that's
#
particularly striking because over the same period, the labor force of youth is going to go down by
#
800,000. So you've got 1.4 million jobs that A, there's less domestic work, less native workers
#
total B, the native workers want these jobs, they want the professional jobs, they don't want the
#
core skill jobs. So and there is way more professional jobs than, again, the labor force
#
can supply. So I think even with all of the promising and all the promise of technology,
#
I think there's going to be lots of work that needs to be done that requires face to face contact.
#
And so the scope and, you know, think the scope for this, even if it's half what I say it is,
#
it's still it's 8 trillion versus $16 trillion or something. So it's still huge. And I think
#
that the populism against migration is like, I feel we're in the last days of prohibition.
#
So in prohibition in the United States, we passed a constitutional amendment
#
that didn't allow the production sale or distribution of alcohol.
#
And it turns out people wanted to drink alcohol. And the reconciliation of a law that prevented
#
people from doing something that they really wanted to do was criminality. And it pushed it
#
underground. And eventually Americans realized if we want order, we need to make alcohol legal
#
again, and then regulate it. So I think the populism against migration is the last gasp
#
of a dying system rather than the harbinger of the future. I think what has to happen will happen.
#
And for these countries, fundamental social contracts between young and old to be fulfilled,
#
you just need a lot more workers to fill out the labor force. And so I think
#
the rich countries will again, solve the complicated process of the politics of it
#
by developing new rotational mechanisms that lower the political heat. Because I think again,
#
a lot of the populist pushback, there's almost no evidence suggesting that native workers are
#
really harmed by core scale migration. I mean, the US has had clear natural experiments,
#
both positive and negative, meaning we had the Mariel Boatlift experience where all of a sudden
#
a bunch of Cubans popped up in Miami, best available evidence, no impact on natives in
#
Miami versus other cities. We've also had the negative. We used to have a rotational program
#
called the Bracero program, which was for agriculture workers from Mexico and the United States in the
#
1960s. It was ended on political grounds and zero net gain in employment of natives, zero. So
#
lots of natural experiments, but I think the nation state is here to stay.
#
I don't mean that it's going to dissipate, obviously not, but I mean the influence of it is less.
#
It's less restrictive in the sense, you know, so many of, you know, if I'm running an online
#
business, my customers can be from all over the world. That's true. But again,
#
you know, Moore's law has been Moore's law since 1962. So, you know, the days of
#
tiger industries setting up call centers and industry, that was like old news when I was
#
here 20 years ago. So, you know, the S curve of that has passed. It is globalized. But,
#
you know, there's a lot, I think there's a lot more, you know, somebody's going to cut your hair.
#
They have to touch your hair, right? If somebody's going to clean your house,
#
they have to be at your house. Maybe, you know, robotics and AI and all of that, but I
#
tend to think that's oversold. A. B, and this is a slight divergence, but, you know, one principle
#
that's widely understood in economics is that relative prices drive innovation. One of the
#
reasons to fight climate change we want carbon taxes is to make carbon more expensive so that
#
the pattern of innovation actually reflects the true cost of carbon. Okay. What's the world's
#
largest price distortion? It's the price of labor induced by controls of the border, which makes
#
labor too expensive in rich countries, which makes them invent stuff, you know, to supplement
#
something that isn't scarce. Globally, Corsica labor is overabundant. That's why it's
#
underemployed. That's why wages are low. And yet we've got the geniuses of the world invented
#
labor saving devices. That's crazy. So maybe AI could develop some robotics where somebody could
#
remote control your vacuum cleaner in your house in America. But then you have to ask,
#
why the hell are we doing that? Why are we doing that as opposed to just letting a person come
#
work in your house? And the answer is the politics and the social pressures of differences.
#
But again, I feel those can be mitigated by just saying, look, we're not entitling every
#
person who comes to clean the house with a long-term path to, you know, defining the
#
future of who is us is a very powerful thing. And I think the, you know, if you look at the
#
politics of populism, it's reaction to a field that elites are not serious about us. They're
#
not serious about there being a society in which the elites and the common man have common interests
#
and common objectives. And so push for open borders just obviously is going to create massive
#
populist pushback because it's not seen as a common endeavor. It's seen as, you know,
#
we don't really care about you more than we care about ourselves more than we care about you.
#
Whereas, you know, you could see framing rotational labor core scale mobility as
#
we need them to come help us. Sooner or later, it's going to switch from like,
#
I can imagine a billboard in the future of like migrants that just says they came to help.
#
Like, all they want to do is hold jobs that are needed. So I think we can reverse the politics.
#
But to reverse the politics, like I say, I think we have to separate the citizenship question,
#
which is hot, hot, hot button issue that's not going away. You know, you said who's going to
#
dress your grandmother. I will give you the solution to that. You will have a virtual
#
grandmother. Solves the problem entirely, you know, technology, land technology.
#
No, I listened to some people on AI and I just think, wow, you really don't care for human beings.
#
You know, I mean, you know, I mean, I just was listening to somebody the other day talking about,
#
I don't know if you know, Jonathan Haidt has been saying social media is really bad for the
#
psychology. And the person interviewing, and he was saying, look, they just don't interact.
#
And the interviewer was saying, well, we could program AI to be a virtual girlfriend.
#
And it's like, wow, the coddling of the American robo. Yeah. It's just like,
#
anyway. Okay. So that was a, that was the second thing. Education, I think. Yeah. I'll dig in a bit
#
on education. I've done plenty of episodes and written probably hundreds of columns on education
#
in India. And we sort of, I think, agree on all the main things, but I want to get a little meta
#
and ask a larger question here. And I'd love to know your thoughts on that, which is that,
#
you know, what you said earlier about education possibly not correlating with economic development,
#
because education has become just putting kids in schools and not actually teaching them anything.
#
Now, I think that is profoundly true in the sense that our education system was really designed in
#
the early 19th century, creating workers for the industrial revolution or baboos for the British
#
Empire, as it were. It is completely irrelevant. And when you add to its complete irrelevance to
#
the modern world, when you add that to the fact that our system is dysfunctional, what is happening
#
today in India is that even those who are getting educated are essentially unemployable. And there
#
is a massive issue there because, you know, I'll have friends who run companies in Bangalore will
#
tell me that, man, we just cannot fill the vacancies. We have so many vacancies and we cannot
#
fill them. And at the same time, you have so many hundreds of thousands of people who cannot find a
#
job. There is a supply and demand mismatch, you know, and ideally in any other domain,
#
one would have thought, hey, the market's going to sort it out, except here there is a crowding
#
out effect. And I don't just mean the market in terms of public schools and private schools.
#
I mean, in terms of reimagining the paradigm of education itself, is this how we structure it?
#
Kids of the same age study together. They study the same bunch of subjects. This is how they
#
specialize. This is what college looks like, etc, etc. And I just think that every startup that says
#
we will disrupt this is basically functioning within that same paradigm. No one is disrupting
#
that. And this is, I know easy answers to this, but you know, what are sort of your thoughts on
#
this? Because this is a meta issue that goes beyond all of this, that as long as our system
#
is the way it is, I believe that even if you could have, even if the state could get its act
#
together, even if it allowed markets, even if you had vouchers, even if all that shit happened,
#
it wouldn't move the needle too much because we are in the wrong paradigm.
#
So I think you're, I think you're deeply right, but pragmatically over the near term wronged
#
about India in the following sense. If you look at the advanced countries,
#
one of the striking facts about the world is that the U.S. has a series called the National
#
Assessment of Economic Progress, which is tracked what the 17 year olds know in various domains,
#
pretty consistently from 1972. And the trend line is exactly flat. So I think that, and
#
some researchers then said, geez, we can, we know the trend line in the U.S. We can chain link
#
through these other international assessments like PISA, which have been happening for a long time.
#
And other programs existed before we can chain link. And when you chain link other countries
#
relative to the U.S., you find U.S. has been completely stagnant, but hasn't been falling
#
behind relatively. I mean, it's not at the top, but it's not, you know, Japan's always been ahead
#
of the U.S. by about the same amount. So the upshot of that is there is a big problem that I
#
don't think anybody has any even remotely realistic sounding proposals about improving the average
#
amount a 17 year old knows beyond the currently roughly experienced levels from the existing
#
school systems. So if those workers are not adequately prepared for the modern world,
#
we're in deep, deep doo-doo because I don't think anybody knows. And most disruption is
#
minor relative to that problem. So yes, I'm validating that the mismatch between the
#
19th century education system of common grades, you know, sequence curriculum, et cetera,
#
it seems to have peaked. There hasn't been any improvement in the absolute level of learning
#
in the core curricular subjects in the OECD in 50 years. And that's amazing because if you think
#
of what else has happened since 1972, right, the idea, I graduated from high school in 1977,
#
the idea, and again, I went to a mediocre public school in Moiseado.
#
But the idea that a typical 17 year old is only going to have my level of
#
adeptness at mathematics is pretty shocking, right, that we haven't gotten any better at teaching and
#
learning practices in general on average, scale-wide. That's very serious. Okay. That said,
#
India's not at 500 on the, you know, the piece of scale is norm and norm. So the OECD average is
#
500. So if you think the U.S. was at 500 in 1972 and is at 500 now, that's a big problem.
#
But A, India's not at 500. India's at like 350 is a good guess, 350 to 400.
#
350 to 400 is a radically different education experience and outcome than 500.
#
You know, the Rukmini Banerjee and Madhav Chavan and Pratham, they did an assessment of Indian
#
youth versus the assessment of children, 6 to 14, they did 14 to 18. It's shocking. Even to me,
#
who's been on the rabble rousing of low quality, it was shocking how little ability to apply their
#
knowledge to practical lab. So I do think we have this massive mismatch in India. Now,
#
can India, you know, get better by four points a year and be near 500 in 20 years? I think they
#
could. So I, and that would help solve a lot of India's problems, which still needs, you know,
#
relatively isn't, you know, so India's economic progress is, I think, it's low quality of
#
low quality of competencies to not, you know, over judge the issue. The low magnitude of the
#
competencies in the range of needed skills being produced by the education system is a serious
#
problem, but it's a solvable problem because we know Vietnam's at 500 on this same scale already
#
at roughly India's economic levels. So we know it can be done. We know it can be done with roughly
#
the resources India is devoting to it. I'm optimistic and I'm always optimistic about India
#
because I think it's too big and diverse to fail completely. You know, the federalist structure
#
actually does provide a safety net of sorts that some state will stumble on to how to do it right
#
and that'll then create a model of Indian homegrown model of how to do it better. So I'm
#
reasonably optimistic that India can get much better at this.
#
Let's talk about the other things you stand for.
#
The other thing I stand for is economic growth and I think
#
in some weird way, I think it's weird that I have to say that, but I think for a variety of reasons
#
the Western kind of conception of development has moved away from that. I actually heard,
#
you know, in a public speech, the head of the United Nations Development Program saying,
#
you know, that they no longer were promoting economic growth because they had learned from
#
experience that it didn't work. I have no idea what in the world he was talking about.
#
You have a great paper on how economic growth is both necessary and sufficient
#
for human well-being and I'll link that from the show notes and all of the data,
#
you know, just back to these systems. I think for a variety of reasons. Now, I think the main,
#
you know, the argument that say Abhishek and Esther made in their Poor Economics book was that
#
even if we admit that economic growth would be really, you know, important for growth,
#
we don't know how to do it. Now, I think there's two things wrong with that argument. The
#
first thing wrong with that argument is if you admit that something's really important to human
#
well-being, but we don't know how to do it, that would seem to be a case for more research about
#
how to do it. Unless you had your best model, you know, there is no research into faster than
#
light travel, even though it would be enormously, you know, as we learn from back to the future.
#
But, you know, you'd be great at betting if you could travel to the future and back.
#
But our best available physical theories say it's impossible. But our best available theories
#
of economics don't say growth's invariant, don't say countries can't accelerate growth,
#
because we've had obvious examples where they did. So, A, saying we don't reliably know seems
#
to be a call for more research rather than less research. B, I think there was this overreaction
#
to the structural adjustment era and the failures of structural adjustment to induce growth. But
#
good heavens, that was like 1990s. Like the world of research and economic growth has moved on in
#
so many ways since then that I think we're in a position to make more contextually relevant
#
diagnostic advice about growth. So, I think promoting economic growth is in what we call,
#
what I sometimes call out of jargon, full trinity way, which is we do need to integrate what,
#
if we could do it, what could countries do that would lead to more sustained rapid growth?
#
But we need to ask what of that is politically possible in the context and what of that is
#
implementable. So, we need to sort of, and if we don't have the capability of doing it,
#
we need to build it. Like if some of the things we might come up with as binding constraints to
#
sustained rapid growth might be things that governments could do, but the political obstacles
#
political, then the question is how we alleviate that. So, I think I'm working with a variety of
#
people trying to reinvigorate research and practice of doing economic growth better.
#
And I think, as you can see from the interview, I'm an optimistic guy. I think
#
the world's night and day better than when I was born in 1959 in a lot of dimensions.
#
And so, I have a hard time understanding the pessimism of some of today's youth and others
#
that, because the world is radically better on both social and political and economic dimensions.
#
Okay. And then the fourth thing, and all of this leaves me way too busy for a retired person,
#
is on state capability, I think. You've written a great book on it,
#
which again, I'll link from the show notes. It's just fantastic.
#
Yeah. I think we think we have a much more likely to be successful approach to helping
#
public sector organizations build the capability they need. PDAA, which we invented it as a jargon
#
of four letters, because that's what development world wants to hear. It's only a cool if it's an
#
acronym, so PDAA. But I think, and we've, you know, the building state capability program at
#
Harvard's trained, I think, over 2000 people in different groups and from different organizations
#
working on. And again, the key thing of that is, I think, the key way to understand our difference
#
from the previous difference is two things. One, I think people thought that de jure policies
#
would in and of themselves lead to change practices, whereas our theory is very much
#
practices lead to good policies. Second, I think people thought that organizational capability
#
was about structures and kind of processes like how do you do procurement and how do you do HR.
#
But the way I think of it is all of those are ancillary and at the core of the circle of
#
effective organization is purpose. So we're circling back to purpose. I think if an organization
#
can't induce in all its employees and people a sense of an important and understood purpose,
#
you can do all the HR and digitalization and procurement reforms you want, but you're not
#
going to build an effective organization. I sometimes express this as, you know,
#
you don't build a real boy from Pinocchio by adding more strings. So the attempt to like
#
outside force an organization through processes into effectiveness doesn't work. And so part of
#
the problem driven is, you know, the way you're going to get an organization better is create
#
agreement and alignment within the organization on it on suit on nominating and solving important
#
problems and then working out how the organization can do that. And then embodying those practices
#
into the routine policies of the organization. So it reverses the causality on two important things.
#
You know, practices lead to good policies. Just passing a law without paying attention
#
to organizational implementation is something every country loves to do because it but it can
#
be actually negative. And then second, you know, you have to build organizational capability by
#
unleashing the potentiality of the organization from within. Those are four things that I'm
#
actively for. I think if you compare and contrast, each of them acknowledges the complexity of
#
spontaneous orders. You know, you you have, you know, fixing India's education system may involve
#
some, you know, narrow technological questions, but it's not a technical question. It's a system
#
question. You know, labor mobility is a political question, not, you know, the question isn't what
#
would be the wage gains if workers work here versus there. Those are well documented and, you know,
#
understood at every level. It's just how do you work with politics. Economic growth again is about,
#
you know, taking the spontaneous order of economic activity and making it
#
creating a, again, internal dynamic of a country in which the that is sustained into higher and
#
higher productivity. And the state capability is focused in part on the big state capability issue
#
at the national level, but we have to have an organizational strategy for getting there.
#
And one of the things we acknowledge from the get-go is this is an organizational strategy.
#
You don't build organizational capability with an exclusive focus on individual capacities,
#
because organizations combine individual capacities so that the whole is greater than
#
effective organizations are always greater than the sum of the parts. Whereas in India,
#
you have the tragic opposite sometimes if you take, you know, there's a famous paper by Kartik,
#
who I guess you've just interviewed about, you know, MBBS doctors in Madhya Pradesh.
#
The same people are the best care and the worst care, and they're the worst care when they're in
#
the public sector setting. So you've actually reduced the capabilities to less than, you know,
#
the whole is less than the sum of its parts. So again, we're taking for granted that there has to
#
be an organizational strategy to building capability. So again, all those four dimensions,
#
I think the potential upside gains are massive. You know, I don't want to think about something
#
that isn't trillions of dollars in gains. And with economic growth, we saw it in India,
#
two trillion dollars in gains. You know, when you do the calculation of,
#
let's say we can't attribute this growth episode to any one activity. Let's say you can take one
#
percent in expectation of the increment of the likelihood of a two trillion dollar gain.
#
Well, one percent of two trillion, still a huge number, right? And relative to the amounts being
#
spent on it. So here's, I'm going to double click a bit more on straight capability because your
#
book had so many insights for me. But before that, a question on growth itself, right? That
#
these days, like, you know, sometimes I think that we have made rapid progress as you point out in
#
the last few decades, but sometimes I wonder if we've made too much of a rapid progress in the
#
sense that people have become complacent and, you know, forgotten the mistakes of the past.
#
And like these days I hear rhetoric of things like degrowth. And that word makes me really angry
#
because we still have so much poverty in this country. However, you define it, whether it's
#
one dollar a day or otherwise. We still have so much poverty in this country. It's a moral
#
imperative to sort that growth is the only way forward. And, you know, still there's a certain
#
kind of socialism that is fashionable. There are still terms like degrowth and all. People will,
#
you know, use throw around words like late capitalism and neoliberal without having a
#
faintest clue of what the hell they're talking about. They're autocomplete machines, you know,
#
repeating the jargon of their chosen tribe. My question is why? Why are these obviously bad
#
ideas and harmful ideas so fashionable and so attractive? You know, like they say that if
#
you're not a communist at 18, you don't have a heart. If you're not a capitalist at 25, you
#
don't have a brain. But why am I so attracted to this shit at 18 and actually really much beyond
#
it? Let me slightly duck that question because I do think, you know, because one of the things
#
in the papers I've been writing is I've been emphasizing if you want to talk about degrowth
#
for New Zealand, you know, New Zealand under its previous prime minister who just resigned, but,
#
you know, adopted an explicit governmental strategy that GDP per capita was not its
#
growth that had these others. Okay. If you want to adopt degrowth at an average of $40,000 per
#
capita, feel free. I, as an economist, kind of, I am a little iffy about it, but let's not kid
#
ourselves that the difference between $45,000 and $47,000 or $48,000 is make or break. But
#
the problem with the West is it's retrojecting degrowth. It creates a global kind of intellectual
#
imperialism where ideas of degrowth that might make some sense in New Zealand get
#
retrojected into India. And I think that does make me very angry because, again, the curve,
#
the relationship with economic activity and people fulfilling their basic human needs or people
#
achieving high human well-being is just overwhelmingly powerful and completely intuitive.
#
And the idea that you can solve, you know, I think Ethiopia, I did this calculation of some
#
country, I think it was Ethiopia, like the total per person government revenue in Ethiopia is $300.
#
Like if whatever deity you believe in descended from whatever realm they thought they existed in
#
and managed $300, there's only so much they can do without having, you know, again,
#
if you've got $40,000, you have 20% tax rate, you're spending, you know, enormous amounts
#
per person across a range of public purposes. So, you know, degrowth also means degrowth of
#
the public sector. So it's just crazy. It's crazy. And I think it's Western driven. And I think
#
if everybody's honest with themselves, there's a certain fraction of Westerners that are more
#
worried about climate change than any other issue. And they've concluded
#
mitigating climate change is incompatible with India achieving GDP per capita levels
#
equivalent to those now in the West. And that therefore we have got to convince ourselves
#
and Indians that they don't need that growth. And I think that's just deeply immoral. I think
#
Kantian golden rule, any kind of ethical says,
#
you should want for everybody what you have for yourself. And none of the degrowth people
#
are talking about living on India. So I don't want to, you know, I sort of am trying to find a way
#
to not pick a fight with degrowth in Denmark. Like, you know, you go to Denmark, you think,
#
okay, maybe people could live like this forever and material well-being is, you know, fine.
#
If again, if Danes politically choose that for themselves, but to turn the
#
aid agencies of the West loose on promoting degrowth in the non-West is obscene morally
#
in every other way. There's a term for these kind of beliefs that came across recently,
#
which I really like, which is luxury beliefs. It's okay for you to sit in the first world and
#
have these grand theories and yet all of them are so deeply damaging and you don't really care
#
about that because you can feel nice and virtuous where you are. Yeah. No, I mean,
#
the idea that you could signal to yourself and others virtue by being against poor people in
#
the world having higher material standards of living is just surreal to me. Let's talk about
#
state capability and obviously in India, that's like a live and burning issue at all times.
#
Tell me about the capability trap or what you call the big stock.
#
So I think there's two levels to that. One, it's literally just a descriptive term. When
#
we tried to look at the available cross national indicators of state capability, which is roughly
#
boils down to sort of rule of law, bureaucratic effectiveness, we spent, as I was saying before,
#
I love to spend time with data and programming and making sure, you know, I did a lot of
#
calculations to be sure what I was calling the big stock was a robustly documented phenomenon,
#
no matter what indicators I chose. Anyway, roughly we see very, very little. The average
#
improvement in state capability is roughly zero. That appears to not be a temporary trans story
#
thing, but a kind of very slow growth over very long periods in the average organizational
#
capability of organizations to do things like control corruption, maintain rule of law,
#
have effective bureaucracies. In many countries, things are getting worse,
#
sometimes dramatically worse, like Venezuela, sometimes just general deterioration.
#
Now, then the second thing about big stock is we wrote a paper called Techniques of Successful
#
Failure, which is how do you use the public sector and its organizations maintain legitimacy
#
and revenue from its citizens while not getting any better at things. And I think
#
there, I think there are, you know, there are a couple of problems. And one of these problems is,
#
you know, just having a wrong theory of change of how you get to capability and
#
thinking capability is a process thing like better HR policy. But two of the other things
#
we discuss are isomorphic mimicry, where, you know, in a world that has rich countries and
#
poor countries and high capabilities and low capability states, the low capability states
#
are tempted to adopt the legitimacy of the high capability states by looking like them rather than
#
being like them. Rather than having a true locally homegrown organic process of improving
#
capability, you just adopt the latest fad or the latest global standard. So at one point,
#
you know, Uganda was listed as the country in the world with best anti-corruption policies.
#
Well, yeah, because they didn't enforce any of their policies. So why not adopt gold plated,
#
you know, good looking anti-corruption policies. So isomorphic mimicry is a big problem. And you
#
have these vectors of isomorphism, like consultants and people from organizations that don't really
#
understand development, trying to transplant things. And I think that's led to a way in which,
#
you know, you can persist in low capability without there being real pressure to improve.
#
And the other is, this is more, I'll go back and forth whether we could have come up with a better
#
phrase for this, but I call it premature load bearing, which is de jure policies create
#
potential pressure on the organizations, particularly about things that you're imposing
#
obligations like taxes and environmental regulation and labor regulation. And if you
#
adopt these regulations that are far beyond your organizational capability to implement,
#
you can actually create a negative dynamic for your organization where you destroy what
#
capability you have because you've just created an unachievable standard. And then, you know,
#
once you break the normative link that I should be expected to reach this level of performance,
#
you know, so if, you know, if my doctor said, you know, you should lose 20 pounds and you
#
probably should be able to run a 12 minute mile, that might motivate me. But if my doctor says,
#
you know, you should run a four minute mile. No, that's just stupid. I would hurt myself,
#
you know, it's not going to happen. So I think, again, the vectors of comparison often lead
#
countries to, again, assume that policies create practices and policies in somehow
#
policies plus some organizational shifts plus whatever create effective organizations and
#
it's just not true. And in fact, the opposite can be true. You could have, I have a, you know,
#
paper that, you know, good laws, good laws and crappy outcomes is a chronic feature of India
#
and many other countries where, you know, it's easy to adopt state of the art environmental
#
regulation and environmental regulation. But in the absence of, you know, any serious commitment
#
to implementation, it can be worse, not better. I mean, it can lead you into this big stock where
#
there's, it's a very, it's a very hard place to get out of. You have this really good looking,
#
widely admired law, but you can't implement it. Who wants to fix that? Right. It's a hard problem.
#
You know, in your first chapter, you talk about the sort of the implications of the whole problem
#
and the first of them, you say state capability were coming to the party, it would be here by now.
#
And you point out how that, you know, it, there was an assumption made in the early literature
#
about modernization that, you know, there is a naturalness in the process of development,
#
just as a baby goes from one stage to another, to another, to another state capability is going to
#
grow as a country grows. And you point out that's not true. And my question to you is that,
#
that maybe the natural course of things is for states to turn away from state capability,
#
not towards, because once you have a state and a bureaucracy, power has its own imperatives and
#
its own incentives, which have nothing to do with what your national development goals,
#
maybe it is a beast of its own. And so what is sort of your sense of that? Because my cynical
#
view of states is that A, power corrupts always and B, those in power will always try to maximize
#
their power, which implies reducing the freedoms of the people. And eventually that core reason
#
for every state, you know, dissipates and it just becomes a sort of default we have in India,
#
where essentially we are not citizens, we are subjects and the state rules our citizen service.
#
I'm generally an optimist. However, I'm also sympathetic to, I think the phrase,
#
if we're coming to the party, it would be here by now is a little facetious, but it's true. It's
#
like, look, if the natural dynamic of India, India has been independent since 1948. So,
#
you know, it's maybe been embedded in a global system of blah, blah, blah. But
#
fundamentally, its internal dynamic of stateness and organizations has been free to get better.
#
And so the fact that we're, you know, a long time, not a short time into India's history,
#
and it's not better, suggests the problem's deep and perhaps intractable. So, you know, now.
#
My question is actually not just about India, but about this issue in all states. For example,
#
even America, which was founded with such optimism, you know, has become less and less free.
#
You know, even in Regenstein, the state expanded massively.
#
Yeah. Now, I do think one key difference between developing and the historical experience of the
#
West. And Daniel Carpenter has a great book about how, you know, it's a case study, among other
#
things, of the post office. And you would think you can't write an interesting book about the post
#
office for having sex, but he did. It's a very interesting book about. And one of the things is
#
that, as over the historical, in the historical process, the consolidation of state power into
#
the existing kind of civil service organizations we now know, it had to struggle its, it had to
#
struggle its way into legitimacy. So people did things in other ways before the state had power.
#
So before there were municipal police forces, there was rule of law of different types. And
#
before there was, you know, before there were modern schools that were informal in community
#
and a whole variety of other schools. And so, you know, and before the modern US post office,
#
there was patronage postmasters, which was a Jacksonian, Andrew Jackson, early populist
#
president. There was a Jacksonian patronage model. But my point is, historically,
#
the modern post office had to achieve its status by being better. There was no
#
legitimacy of a civil service post office per se. It actually had to be better in order to win
#
from the population, the acceptance of these new modern forms. Whereas part of the problem
#
with modernization, and you notice with my fourfold transformation, I've very cleverly
#
avoided the word modernization. The problem with the modernization is it, and in its context of
#
development, is it granted legitimacy to bureaucratic forms that have seized elsewhere
#
without them succeeding in place. So all of a sudden, the entire apparatus of the
#
Indian state gains legitimacy as a legitimate way to rule and administer the country without it
#
ever organically having to struggle its way into existence against a true bottom-up alternative.
#
I think that's a deep problem. And again, it's historical rather than modern. So, you know,
#
when I was working in India with the World Bank, we were thinking about, can we make, say,
#
decentralization to panchayat Raj institutions as a way to dismantle the very hierarchical
#
and bureaucratic state apparatus you have and recreate some true performance-based political
#
engagement dynamics at the local level. All of this, I admit, even to myself doesn't sound
#
super persuasive that I'm super optimistic, and I'm now going to say something even worse.
#
I do think there is a problem that when the state has a lot of
#
gold-plated de jure laws that require unrealistic levels of capability, it means some form of
#
deviation from rule of law becomes the norm. And when that interacts with a democratic politics,
#
it creates a temptation for the democratically elected government to use the weakness of the
#
apparatus of state to reward its friends and punish its enemies, and that undermines state
#
capability. So again, you know, you can end up in a historical process in which,
#
you know, one thing everybody wants to have, which is electoral democracy, actually isn't
#
a positive factor in creating pressure to put check on the authority of the under-normed and
#
under-performance organizations precisely because it gives the political apparatus discretionary
#
control to punish its enemies in arbitrary ways, which is a very, very dangerous, very dangerous
#
thing, because again, you know, you have this ideal law, but which can't be enforced, which
#
means it has to be differentially enforced. There's this famous saying, for my friends, anything,
#
for my enemies, the law. And so if you have a law that really isn't compatible with
#
freedom and liberty and doing business at reasonable costs, all you have to do to punish
#
your enemies is insist that they live by the law and give differential kind of forbearance
#
to your friends. And that undermines the sense of institutional or organizational integrity that
#
organizations need to have to succeed. And you don't even have to insist that it's by the law,
#
if the law is completely in your hands, because you can set the law after them anyway, and the
#
process is a punishment. I mean, that's a perfect description of India. And when you spoke about
#
the problem may be deep and intractable, my sense is that a lot of the reason it's deep and
#
impractical, intractable goes down to the birth of the republic itself, that because of circumstances
#
at the time that partition has happened, the nation is falling apart, you know, the lines of
#
the map aren't what they are yet all the princely states are still out there, you know, and the
#
constitution is being drafted in Delhi, while there are riots across the country. It's a natural
#
tendency to centralize power. I mean, you earlier said we are federalized, not nearly anywhere as
#
much as we should be, or we seem to be on paper. Power is deeply centralized, the state is incredibly
#
powerful. You know, it's essentially the colonial state, the same apparatus, which is meant to rule,
#
which is meant to subjugate the people instead of being accountable and serving them. And once
#
you put that structure in place, there is a part dependence and the part dependence, you know,
#
changes not just the economy, but shape society in terms of it shapes culture, it shapes the way
#
people relate towards each other in zero sum ways and rent seeking that goes beyond just
#
what happens in the state. And anyway, you're an optimist, so we'll figure this shit out.
#
Well, I'm both an optimist and a visitor in your country. As I hear you saying things,
#
I probably agree. I've always been coming to India. You know, I've lived in India
#
two different occasions. I've been coming to India pretty consistently since 1991.
#
But ultimately, I'm still a visitor. And, you know, there is a certain amount of, you know,
#
I did write a paper about India being a flailing state. That said, you know, we do need to
#
accomplish, you know, I try in the flailing state to emphasize it. You know, India does
#
succeed in doing amazing things. It holds free and fair elections at the election process,
#
at the least. It, you know, sent a rocket ship to Mars. You know, it does do amazing things and
#
is not a failed state. I mean, you know, if we compare my concerns about India to my concerns
#
about Pakistan, night and day in terms of the potential negative downsides.
#
Thank you for that, Lobar.
#
What? And again, relatively, Lobar, I didn't insult you by comparing you to Nepal or anything.
#
Anyway, but I'm just saying, and relative, I mean, in Kartik's thick book that happens to
#
be sitting right in front of us both, Kartik Mahodaran, he does also point out that, I think
#
he points out that relative to expectations on 1948, and again, as you, it was born in duress,
#
it was born in violence, you know, that it has successfully maintained itself without
#
centrifugal pressures is itself an accomplishment. So anyway, I think as a guest to India,
#
I can listen to sympathy with complaints by Indians about the evolution of their state,
#
but I don't necessarily want to pile in on that.
#
You know, for the first time, I'm going to push back and I'm going to object strongly to that,
#
that you describe yourself as a visitor and a guest and so on. And I just want to say that,
#
look, boss, I've learned a lot about this country by reading your work. You know, in every episode,
#
I give detailed show notes of everything that is mentioned in your paper on the flailing state has
#
come up at least 10 or 15 times. And maybe this is another area where the outsiders gaze
#
are super useful where, you know, many things are normalized to us and you bring a lot more
#
to bear in there. Let's sort of go back to talking about dead capacity and I'll quote a passage from
#
your book about the three P's as it were, where you write, many engaged in development, elected
#
and appointed politicians, government officials, NGOs, professionals of the UN, OECD, development
#
banks and bilateral aid agencies, researchers, academics and advocates, spend vast amounts of
#
time and effort debating and acting on three P's, policies, programs and projects. But what if they
#
don't really matter? What if the policy is officially adopted, the program is approved
#
and budgeted or the project design is agreed upon and actually of secondary importance?
#
If whether a policy program or project produces a desired outcome hinges on how well it is
#
implemented, then the new determinant of performance is not the three P's, but capability
#
for implementation. And as you go on to point out, the orthodox view towards how to fix this
#
is deeply flawed. The orthodox view is that you build the institutions and the governance will
#
happen. You put the form in place, the function will happen. What I found sort of radical and
#
deeply unintuitive about, you know, your suggestions is what you were talking about a little earlier,
#
that it is the other way around, that, you know, it is out of function that you discover a form.
#
It is by solving problems that you create institutions that can solve other problems.
#
This is super counterintuitive to me because in other domains, it's actually not true. In
#
other domain, function can follow form and so on and so forth. I mean, water doesn't flow uphill.
#
Exactly. The engineering knowledge has to proceed this solution. And this is so radical and it was
#
like a light bulb moment for me to, you know, read about it in detail and I'd ask all the listeners
#
to just go and read your book for that. But nevertheless, if you can, you know, give a sort
#
of, again, assume I'm a second grade student and give an explanation for why is this the other way
#
around, that how do you get an institution from solving an individual problem? How do you figure
#
out form? You know, because the natural tendency would be that you actually take best practices
#
from elsewhere and you transplant that and you aren't reinventing the wheel, you know,
#
you accelerate the process, et cetera, et cetera. Many munch jargon can be useful of this.
#
You've pointed out beautifully that no, all of it is rubbish. It doesn't work. That's been tried.
#
It's failed. You know, when you do the same thing again and again and it doesn't work,
#
try something different. Yeah. I mean, the definition of crazy is doing the same thing
#
and expecting different results. And by that standard, a lot of the public administration
#
advice about strength and capability has to now qualify as crazy because we've been doing it and
#
for a long time. B, you know, it's striking how powerful metaphors are, which is, and pithy
#
sayings I have in PowerPoint presentations I give about state capability because I have heard the
#
phrase, why reinvent the wheel so many times. So I have a PowerPoint presentation with dozens
#
images of wheels from the tiny, tiny little gear that goes inside a watch to a giant construction
#
wheel that's, you know, 12 feet in diameter to, you know, so no one's talking about reinventing
#
the principle of a wheel, but no one by the same token, no one would assume that the same wheel
#
is useful on all devices. Every wheel is tailored to fit to its context and purpose. So again,
#
I think, you know, the idea that there's a best practice, ideal wheel has to be relative to
#
everything else that exists. And even the best practice bicycle wheel in Denmark looks very
#
different because you've got paved roads everywhere and you don't have to worry about
#
the same structural issues and punctures and et cetera. So our strategy is let's adapt the
#
wheel to its actual purpose and context. And expressed in that way, that doesn't sound too
#
stupid or radical. No one's talking about reinventing the idea that something round can serve a variety
#
of purposes, but, you know, no one by the same token, let's adapt the wheel. Second, they do think
#
it's just so much funner for smart people like us to talk about policies, programs and projects
#
than to talk about practices, because practices are nitty gritty, practices require experience,
#
practices require wisdom, practice, you know, all of things which, you know, academics and
#
wonks have no particular comparative advantage in. But I do think in the end, outcomes are going to
#
be important by what you can actually implement in practice, which is important. Now, I think the
#
reason I think, and I'm glad you point out that it seems counterintuitive, because it seems like,
#
you know, it seems like form has to proceed function, because how can you have any function
#
without any form, right? But I think the way to make that seem more effective is to take one step
#
back and to the PDE, the problem driven. And the problem driven and over time, even since writing
#
this book, become more convinced of the importance of shared purpose. You know, if a group of
#
individuals have shared purpose about achieving some reason reasonably well defined common goal,
#
a variety of forms can be made to work, I think. And if they don't, a variety of forms can fail.
#
So I think the creation and sustaining of shared purpose is a core thing. And I think that has to
#
precede everything. And once you see purpose preceding everything, then you realize that
#
a lot of, you know, the formal processes and structures really exist and are brought in to
#
facilitate the more effective realization of purpose after the fact, rather than, you know,
#
I sometimes refer to organizations, you know, some of the organizations, you know,
#
many public sector organizations are zombies, in the sense that a living organization has purpose
#
and practices at its core, it has a shared common purpose and has a shared of shared beliefs about
#
the practices that will accomplish those purpose. And from that radiates out everything else.
#
And yet, you know, the difference between the public sector and one big of the difference
#
between the public sector and the private sector is you don't get that many zombies in the public
#
sector because eventually they die, they cease to be able to attract workers and capital and
#
then, you know, some more strongly purpose driven organization displaces them.
#
Whereas in the public sector, you can't get rid of the police.
#
Every city has a police force and no matter how corrupt it gets, it's still the police force.
#
And so you can get these zombies. But like I say, the only way to fix a zombie is from the inside
#
out, you have to resubstitute some amount of purposes and practices. So, and again, that's
#
hard, because that also has to involve, you know, we talk in the book, and we've developed over from
#
the what we call the three A's of, you know, you have to say, what is it that this organization
#
is going to be allowed to get better at? And it's not everything. And it's not necessarily even the
#
most important thing. But, you know, you do need authorization from the politicians, you do need
#
acceptance from the existing employees, and you need some amount of ability. And so, but I guess
#
our point is, you got to search over the, you know, you have to create all this dynamic
#
before doing the thing. Whereas again, too much organizational reform efforts are
#
focused on form or reorganization of the structure or reimbursing of these external processes
#
that are present in functional organizations. No one's denying that functional organizations
#
don't have HR policies. But they don't become functional by better HR policies, they're
#
facilitating factors. You know, in every episode of mine, I look for a t-shirt line, and you've
#
just given me a t-shirt line, fix the zombie from the inside out. That would have a good image too.
#
I love a great image, you know. This is the land of the walking dead. So thank you for,
#
you know. No, and because one of the things that really struck me, and it goes both across my
#
education work and the state capability work, is zombie organizations have denormed individuals,
#
meaning, you know, in some states of India, when they do these like surprise, I mean,
#
Kartik, I think, was part of this early research as well. He's benefiting from having his books
#
sit right in front of me. And I'm glad it's sitting in front of me and not on my toe,
#
because it would hurt. But anyway, some of the early absence work, the absence rates were like,
#
in some of the states were like 50%. Now, the thing about a 50% absence rate is
#
individuals are not feeling guilty about missing work. They have somehow the norm that you,
#
you know, as Mark Twain said, 90% of the panel is just showing up. Once you have denormed an
#
organization sufficiently that they don't feel an internal sense of guilt or badness or something
#
about not showing up for work, you really have, like, you can't imagine that you're going to do
#
anything else to make that organization unless you can reinvigorate norms around that. And the
#
way to reinvigorate norms is purpose. So I just think, you know, fix the zombie from within is
#
like, look, if it's a zombie, you're not going to discipline, you know, this because who inside the
#
organization is still sufficiently committed to purpose. And the other problem with zombies is
#
they, you know, they stay alive. And the people who come into the zombie become zombified themselves
#
because they quickly realize that the de facto norms of performance in this organization
#
are radically different than what you would have in a high performance organization.
#
You know, what you said earlier in the episode, you had spoken about how we should think of poor
#
people as people in poor countries. And similarly, what you have there is you can think of bad
#
or dead from the inside people as people in bad organizations. Yeah. You know, it's the organization
#
like this. So of course you will get denombed and zombified and all of that. You see, I thought it's
#
going to be, you know, a serious discussion about economics, but we already, you know,
#
talking zombies and fixing zombies from the inside and all of that. You know, if we're combating
#
met with metaphors, we got to combat it with other metaphors. If people say don't reinvent the wheel,
#
uh, it was like, look, that's you really, I mean, I want to say to people, you realize it's not a
#
like substantive argument, right? You realize that's just an appeal to some metaphor and I,
#
I want to counter it with some equally persuasive metaphor, like adapt the wheel. And I think anyway,
#
So you know, you mentioned zombies and I'm going to ask you to bring something alive for me,
#
which is, you know, this whole approach of problem driven iterative adaptation of PDA and yeah,
#
acronym goes, bring it alive with an example of where, you know, problem solving led to an
#
institution or a function led to a form. Give me a sense of how that process has played out in your
#
experience. I'll give you an experience, um, in which, and this is a great example, because,
#
uh, I went to Indonesia where I had lived and worked, but I went to Indonesia and there was
#
an organization that was promoting PDAA, uh, that was sufficiently distanced from us.
#
So I went to a meeting where people were getting together to talk about their PDA experiences. Um,
#
and, uh, and there was a woman who was a civil servant who ran like a sub district health center
#
and you know, she had, and so she gave a testimonial of her own that they had been
#
having a problem with maternal mortality and that, you know, she, uh, had discovered PDAA.
#
And then she had said, okay, of the problems we face in this center, we're, we're focused on a
#
bunch of processes, but let's actually focus on the outcome. So first of all, we're actually
#
going to focus on the outcome. Second, they created a track. They, they, then the first
#
step they did is they said, let's take every incidence of maternal mortality and do a case.
#
So we understood all of the steps that ultimately led in this tragic outcome.
#
And then third, let's design the design space. Where could have an effective intervention
#
have been made? And ultimately, and I don't remember because I'm not a health expert,
#
but ultimately they identified in several of the cases that they had traced through looking for
#
what is, is that, you know, some early information about this risk. And they therefore
#
designed that a response, it was a responsibility of the health center that the minute they were
#
aware that a woman was pregnant from any provider in the area, that at a certain stage, they
#
proactively reach out and mourn women of this risk rather than waiting for it. Cause they realized
#
that by the time in the timeline that this problem emerged, it was often too late to intervene. So
#
that's the kind of example where, and then it just created a practice of, okay, it's somebody's job
#
in my sub center to track and at the time in which this might be an identifiable risk
#
to encourage the women to come and do the appropriate diagnostic test to see if they
#
were at a risk so that then again, they could add as the pregnancy came to term,
#
they could already identify this woman at high risk, put them in a higher care facility. Now,
#
the beauty of this is this woman had no idea who she, who I was, which is, I have to say,
#
of all the joys of being an intellectual, it's having someone explain your ideas to you
#
in a way that they're exactly right. And it's like, they have completely internalized this
#
and they're not telling me cause they think they're pleasing me. She had no idea.
#
And like, so in this meeting, she was like turning to me and explaining what she'd done. And she was
#
very proud of having, you know, thought of this, having gone through this process and come to the
#
successful outcome. So I think now, and we have, and back and forth, I think we now at this stage
#
have literally hundreds of good organizational specific examples like this where people can take
#
these kinds of principles and create successes. We have maybe fewer examples where this creates
#
the positive dynamic, we hope, but you could see in this woman's entire demeanor that the difference
#
to her post-PDAA success and pre-PDAA success and how she approached her job and her role in this
#
organization was nine day different because it very much encouraged and empowered, so to speak.
#
It's a word I kind of mostly avoid, but you know, so I think now coming back, you know, the real
#
question is we want PDAA to be what we call a strategic incrementalism where this can unleash
#
larger dynamics in, you know, more individuals can feel who they can also undertake processes
#
like that for challenges they face. The extent to which we have demonstrated success at the
#
organization-wide level is less, and we'll admit that, but I think we, again, we're committed to,
#
you know, we want strategically the entire health organization to get better, but we think, again,
#
given the long track record, making incremental progress with a strategy for the organization
#
like that works better. So, you know, you can see that that example is very dear to my heart because
#
just hearing someone, you know, describe back to you exactly what you had hoped your intellectual
#
work would lead to was very reassuring, and like I say, this we do have at this level of have a
#
set of individuals within an organization undertaking this process and gotten better
#
and solved problems. We have hundreds and hundreds of examples. The question is can,
#
maybe we need to think harder about how these accumulate and spread. I think that part of it
#
we're relatively weak on, which means I'm not, as you can see, actively contesting your macro
#
pessimism yet. No, what I love about this story is not just the chain you describe from
#
solving a problem leading to an institutional practice, but also that, you know, knock-on effect
#
of the attitude of the person solving the problem changing, where I feel that if you can turn people
#
into serial problem solvers, where they are not just ticking boxes, but saving lives by solving
#
problems, I think that's mind blowing. And also, you know, your joy, I can totally imagine it's like
#
Hyatt being told by someone, have you heard of this thing called prices?
#
Did you know the prices convey information that isn't centralized and allows decentralized? Yeah,
#
wow, what an idea. And I want to ask you about the power of ideas. So in the past,
#
you've quoted Keynes famously saying, quote, practical men who believe themselves to be quite
#
exempt from any intellectual influence are actually the slave of some defunct economist,
#
stop quote. And in this case, the lady in question was not the slave of your influence,
#
and you are not defunct by any means. But, you know, the power of ideas is something that
#
is quite the opposite of, you know, funders and donors and people who do our city seek,
#
in the sense that it is completely intangible. You cannot measure it. You have no idea there is
#
no attributable attributable, you know, it's like a pebble in an avalanche, as you have so memorably
#
said. And how do you therefore view your role as an economist? Because I think at some level,
#
like at the very basic level, one could say that the job of an economist is to pursue the truth
#
in what of whatever question they are asking. But at another level in the world that we are in,
#
it does go beyond that where it is not just about the pursuit of truth. But that pursuit of truth
#
can change lives can have a humanitarian consequence, you know, not to be too grand
#
about it. But I sincerely believe that. And therefore, I think it is a duty of everyone
#
who believes that ideas matter to also put those ideas out there. So is that also how you think
#
about it? Yeah, very much so. I think, you know, I have used that quote to say, yeah, my difference
#
is me is I want it to happen before I'm defunct. And but at the same time, I think,
#
you know, I have a blog post called Let's All Play for Team Development. And the point of that is,
#
you know, you can't both be concerned with having your impact by ideas and be too concerned
#
that with attributability, because again, when I was trying to change the kind of global discourse
#
about the importance of learning, you know, my funders kept wanting me to give examples of
#
the direct impact of what we were doing. And I kept saying, No, I'm not going to do that. Because
#
the minute you start saying that these actors in the world did it because of what we did,
#
we're taking away the credit they take for adopting the idea. A and B, you know, most practical men
#
are going to say everybody knows. Everybody knows that learning is, you know, I mean,
#
I have more than once created phrases that I see come back to me,
#
you know, not attributed. So, you know, I the title of subtitle of my early book on education
#
was schooling ain't learning. I have now seen that phrase dozens of times, right schooling it and
#
they usually take out the ain't and school is not because they can't bring themselves to use the
#
word ain't. But so again, you know, you the old the old saw that you there's no end to what you
#
can do in the world if you don't care who gets credit has a lot of truth to it, especially in
#
the domain of ideas, where you have to create the environment where people feel they had the idea
#
that they own the idea that they went through a process of coming to that, rather than I was
#
told that X, therefore, I believe that X. So, but I do think, you know, I think interests are
#
overrated. I think, you know, you there are, you know, I was being interviewed the other day,
#
and people say, Why are you such an optimist? I was like, Well, because I was born in 1959.
#
And in 1959, African Americans in America suffered from explicit legal segregating
#
legislation, and now they don't. And 1959 pollution in Pittsburgh was such that you,
#
you know, often it was dusk at midday because the smoke was so thick. And over time, we created and
#
you know, the natural environment, at least on the brown issues in America is night and day better
#
than it was in 1959. And example, for example, and a lot of these hinged on just people construct,
#
you know, people constructing a condition into a problem, and constructing a set of acceptable
#
ways forward in a way that, again, you know, created what we call in the building capability
#
book, distributed leadership, where you create a network effect where people start to act in way
#
different ways, because they see ideas being shared and creating different alternatives
#
for action. So yeah, I think and yeah, I do think ideas are important. And, and they, you know,
#
you do have to push back in some sense, at sometimes against interests. But, you know,
#
even though I'm an economist, I think people wouldn't given the alternative of acting on
#
ideas that can be made to seem promising and plausible to improve the human condition can act
#
on those. So, you know, I've taken a lot of your time today. My penultimate question is that if
#
there are young economists listening to this, or even young policy people, what advice do you have
#
for them? And I asked this specifically because I think that, you know, a lot of bright young
#
talent is completely wasted, either they get sucked into academia and hyper specialized and
#
do irrelevant stuff that has no connection to the real world, or it becomes very hard to find
#
whatever is the prevailing current of the day, whether it is RCTs or something else. And it
#
becomes very difficult to ignore all of those incentives and think for yourself, like one of
#
my favorite quotes, and I forget by whom it is, is the opposite of courage is not cowardice,
#
it is conformity. Right. And, and so it's, it's, it's, you know, so I can imagine a young person
#
listening to this and thinking, yeah, I'd love to be like land, but then thinking, hey, no, man,
#
I got to get into my Ivy League, I got to, you know, get funding for what I'm doing, etc, etc.
#
What advice would you give to someone who's 20, who is at this moment idealistic, and they want to,
#
you know, they have both ambition and a glimmer of purpose, perhaps?
#
I think the first thing I really encourage people to do is take the long view. And when I,
#
part of taking the long view is try and go be part of doing something in practice at scale
#
in a country first. And then that experience will provide you an incredibly more deep
#
ability to learn and even the academic side. Because, you know, the problem with economics
#
is it can be seen as a branch of applied math. And, you know, just adeptness with manipulating
#
formal models is, you know, the important skill. Whereas, you know, so and there's no
#
substitute for some on the ground experience. You know, one of the most interesting papers
#
of any junior person we hired at the Kennedy School while I was there was he had been living
#
in Ghana and living in Ghana and shopping in Ghana, he had noticed that there was this,
#
you know, that there was this sales tax, but that there were these informal stores and informal
#
stores. And just that insight led him to think, well, wait a second, what's the true tax incidents
#
when poor people don't actually shop at tax inclusive prices? That became, you know, that
#
and some other insights became a great basis to start to think through research ideas. So I think
#
economics is the study of societies and human behavior. And the more you're exposed to that
#
before you start into your formal training, it's better. So if you were 20, I would say,
#
you know, before you go do a PhD, make sure you've tried to do something in a in a developing country
#
and probably not inside a cocooned NGO, but you know, something at scale. Because, you know,
#
my friend Larry Summers advice is write papers about the economy, not papers about economics.
#
And I think the way to write papers about development is to actually live and work in
#
a developing context, trying to get something done. And maybe you'll decide it's just not
#
for you because development isn't for everybody because there's some super hard things about the
#
life and lifestyle. And but I think that that's the important thing I would say is the most
#
the scholars. But I think really, in the long run, I was friends with Judith Tendler, who wrote.
#
And, you know, the thing about Judith Tendler was the phrase I one time said described her.
#
That she was very flattered by was she was a keen observer of the world.
#
And I think to come back to the scene and the unseen, a keen, you know, nearly everyone sees
#
the scene. She would go into a context and see the unseen in a way that she could then make visible
#
to others. And so it turns out she was the only student of Hirshman. So Hirshman was unable to
#
transmit his keen observations on the world except to very few people. But so anyway, so I think
#
go into contexts and try and see in while you're trying to get things done,
#
have a how would I understand the seen and unseen of this process? And, you know,
#
you know, I think so that the advice I would give is don't immediately try and launch into
#
to the academic process, conceived as the academic process, launch into the academic process with some
#
experience of your own that you're seeking to understand. And I don't mean to like
#
another dig at the RCT, but, you know, the interesting about the RCT people is none of
#
them ever did anything. It's like I was working at the World Bank and we've done thousands of
#
projects and there was a huge effort at the World Bank to learn from the success and failure of our
#
projects by people who actually did projects. And in all of that analysis of the success and failure
#
of projects, it never occurred to anyone that lack of RCTs was like the key finding constraint.
#
And so the idea that kids that had never done anything in practice had the solution to doing
#
things better in practice always seemed a little surreal to me. So anyway, my main advice is
#
in order to write interesting papers, do interesting things, interesting and hard
#
things, or at least attempt to do that for a significant period, one year, two years,
#
before you embark on, you know, live in the world before you try and embark on an academic career
#
to understand the world. And keep living in the world is some brilliant advice. And I am now going
#
to get to my final question. But a little while back, you said interests are overrated. And I
#
will say in one particular context, interests are underrated. So I'm going to ask you right at the
#
end for me and my listeners to recommend books, films, music that you absolutely love and you
#
love so much, you want to share it with the world and you want to share it with us.
#
Let me start with a movie. And this is going to seem cliche, but The Godfather. And the reason
#
I wrote The Godfather is the entire American experience is encapsulated in the first six
#
minutes of the movie. There's no other introduction to the immigrant experience better
#
than that for six minutes of The Godfather. It's just fantastic and proceeds to be a fantastic
#
movie. So I would definitely recommend The Godfather. Books, I think for a person
#
interested in working in development, I think James Scott seemed like a state, you know,
#
for an academic Marxist political scientist, for me as an economist, economist, who most people,
#
who, you know, anyone who'd use the word neoliberal would probably use it about me. But
#
when the full circle of me and James Scott see the dangers of organizational and approaches in
#
the same way, it's worth talking about. So I think maybe my single, and I remember the first
#
time I was reading it, I was thinking, wow, has he worked at the World Bank? Because, you know,
#
I started referring to the World Bank as bureaucratic high modernism central. We were the
#
centerpiece of bureaucratic high modernism. And it's being, you know, and when you talk about
#
the bank, people think the bank is a neoliberal organization, but far more than being a neoliberal
#
high ideology about markets, it's a bureaucratic high modern organization.
#
And at this point, I want to tell my listeners something that I realized during the break,
#
that you had gifted Seeing Like a State to Ajay Shah many, many years ago, and Ajay Shah did not
#
read it for five years. And when he read it, he said it changed his life and still recommends it
#
to everyone as the best book he's read. Yeah, I'm glad I don't remember doing that, but I
#
was good. And this is going to sound really weird. But my last thing, and I will both say the thing
#
and then say why I think seeing this is important, is Mark Morris is a dancer in America. And he has
#
a dance of Dido. There's a Greek myth of Dido in which he dances the female part. Okay. And it's
#
just spectacularly moving and spectacularly beautiful. And when I used to teach development,
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and I used to show my students that. And then I would say,
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how many terrible, boring dance performances of parents of potential dancers been to? How many
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completely unmoving, uninteresting dance lessons? How many recitals exist as the structure necessary
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for that beautiful thing to exist? And the reason I say this is, again, the pebble in the avalanche.
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Be proud of being the pebble. You can't create Mark Morris dancing Dido
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out of nothing. It has an entire industry structure. So when people think about working
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in development, most of your life is going to be producing really routine, really frustrating,
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not necessarily. But the only way you can ever possibly have an opportunity to do something
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brilliant and creative is if you've been slogging through. So I think from that you learn the
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wonderful possibilities of beauty. But as you reflect on the wonderful possibilities of beauty,
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you've got to acknowledge it doesn't emerge from nowhere. It emerges from
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parents going to recitals of nine-year-olds doing just boring ballet, because only by having that
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large base can you produce the spectacular. How you do the small things is how you do the big
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things. That's a brilliant phrase that I have taken from you, and I will use all the time now.
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Lan, thank you so much. It's been such a pleasure talking to you. I've learned a lot from your work
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before this for many years, and it's an honor for me. Thank you. Thanks for having me.
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It's been a very fun conversation.
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Thank you for listening.
