Not such a bad decade after all

The Roving Bandit excoriates Paul Krugman for his America-centric pessimism about the last decade:
Via The Monkey Cage, apparently Paul Krugman has been whining about the "naughties" and how nothing good happened in America. This is why I don't read Paul Krugman. He focuses too much on America.


This resonates with the interesting recent writing and forthcoming book by Charles Kenny on "The Success of Development", which argues that aside from growing income (a surprisingly intractable problem), development has succeeded admirably in the last fifty years:
This book explores the bad news and the good news about development. It lays out the evidence on growing income disparities between the global rich and the global poor that are at the heart of a narrative of crisis. And it chronicles the failed search for a silver bullet to overcome economic malaise.

But it also discusses the considerable successes of development. Not least, the evidence for any country being stuck in a Malthusian nightmare is threadbare. The book points to global progress in health, education, civil and political rights, access to infrastructure and even access to beer. This progress is historically unprecedented and has been faster in the developing world than in the developed.
Amartya Sen would of course be proud of this broader conception of what development really means.

See also Tyler Cowen on the "Fruitful Decade for Many in the World" (especially "China, India, Indonesia, Brazil, and much of Africa"), and via his MR blogging partner Alex Tabarrok, this post on and list of African successes:
In recent years, a broad swath of African countries has begun to show a remarkable dynamism. From Mozambique’s impressive growth rate (averaging 8% p.a. for more than a decade) to Kenya’s emergence as a major global supplier of cut flowers, from M-pesa’s mobile phone-based cash transfers to KickStart’s low-cost irrigation technology for small-holder farmers, and from Rwanda’s gorilla tourism to Lagos City’s Bus Rapid Transit system, Africa is seeing a dramatic transformation. This favorable trend is spurred by, among other things, stronger leadership, better governance, an improving business climate, innovation, market-based solutions, a more involved citizenry, and an increasing reliance on home-grown solutions. More and more, Africans are driving African development.


  1. I really liked this post, and would love to chat more about the intractability of income growth.

    One thought is that it's not unique to developing countries that the world is becoming a better place to live, even when traditional economic metrics are weak.

    We don't need growth to enjoy the fruits of technology, and there are multiple forces increasing the share of value that goes to consumers.

    Even in the US, economic growth might have been weak, but certainly utility functions increased over the decade.

    Would love your thoughts on France's proposal for a new metric that incorporates broader well-being to replace GDP.

  2. It's not that growing income itself is intractable, it's just that, even after decades of trying very hard, we don't have a very good idea of how to speed it up.

    I'd be interested in a more rigorous argument that "utility functions increased over the decade" in the U.S. - how would you make that case to a skeptical and analytical audience?

    I like France's proposal in theory (and Bhutan's Gross National Happiness, for that matter). The challenge is obviously that it is so much harder to measure. I look forward to seeing what France (with the help of Amartya Sen and Joseph Stiglitz?) comes up with.

  3. It's mostly a logical argument rather than a data-based argument. Also, a very important note is that I'm talking about utility, not happiness (more on that in a minute).

    For one, in the last 10 years, we've seen a wave of productivity unleashing tools without corresponding higher prices. Among other innovations both technical and commercial, people now have access to very cheap GPS, free or nearly free internet calling, and instant connectivity with everyone they know.

    There has been an explosion of very high quality, usually free information on the internet. Instead of crappy Arizona Republic journalists I was reading a decade ago, I can get my information from Tyler Cowen, Calculated Risk, and any number of other excellent sources.

    I don't need to talk about the wonders of the iPhone, gmail, and facebook, but let's not take them for granted.

    And this isn't some argument that is from the perspective of rich people. In fact, inflation has disproportionally affected the rich. Prices at WalMart are cheaper than ever. (energy would be the counterargument here, but from a historical context it's still not that expensive, and 2000 is an unfortunate baseline).

    Okay, to happiness. Happiness is a very weird variable to consider because it is poorly understand and from what we understand quite disconnected from economic indicators. People care a lot about their position relative to others in society regardless of absolute wealth. People take innovations for granted.

    I think the following summarizes my point nicely: