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27
Oct
I have been in Beirut, Lebanon the past few days, attending a conference put on by the Project on Middle East Democracy (POMED) that we partially sponsored. Although I saw very little of Beirut, I did see what rapid private sector growth without government looks like. The result is private sector development without public goods. I am writing this post from an upscale mall next to an even more upscale hotel, and both have excellent wireless internet connections. Yet due to the lack of investment in public goods commensurate to the scale of private sector development, walking down the street is treacherous. Traffic is chaotic (because no one enforces traffic laws) and there has been no appreciable investment in public infrastructure (for example, traffic lights, sidewalks, and pedestrian crosswalks) to help connect the rapidly-expanding private sector developments. What I take away from my short time in Beirut is that private sector growth without a government to supply public goods can lead to islands of development with chaos in between. It’s a pretty good example of the indispensable role the government plays in economic development.
- Published by Barak in: Blog
3 Responses to “Growth without government”
It sounds like a major US city prior to the Progressive and New Deal eras. Have you read The Jungle? Whenever I hear about development (or democratization), I’m drawn back to what I know about the American experience. Or the Italian one. You can’t have development without good governance, but it seems like there are two kinds of governance: one for wealth accumulation, and one for raising living standards. It seems like you don’t get the second until people get angry.
Whoa there! Let’s hold our horses for a minute!
You point out Beirut’s crowded and dangerous streets, and say they demonstrate a lack of public goods (traffic lights, law enforcement, etc.). That’s fine as far as it goes. But the very existence of “upscale” malls, hotels, anything, in the absence of government, only goes to show that government was not necessary to that development process. It certainly doesn’t show the opposite.
Then you finish up by talking about the “indispensable role the government plays in economic development.” But what your example really says is that government plays a role in establishing and maintaining public *order.* The “chaos” in between the “islands of development” might just as easily indicate that the development is in an early stage. The “chaos” does not necessarily indicate a need for state-led development. A nice little slight of hand.
Additionally, the perception of “chaos” might indicate that you’re an out-of-towner. And the expectation that development should be “everywhere-all-at-once” seems to come from a strongly American viewpoint.
Jack,
I like how you bring US development into this discussion. It’s a good point. I also agree that while individual self-interest may be sufficient for private accumulation, anger (or more specifically collective action) is necessary for public goods. I suspect that is why the former is so much more prevalent in developing countries than the latter.
Andrew,
I agree with you fully, I am talking about supplying order. The market is doing an excellent job in providing consumer goods, but a lousy one at providing order. My point was that both have a role in the development process as they complement one another (e.g., we are more likely to trade with each other if there is a good road connecting our businesses than if no road exists). Fair point on being an out-of-towner, by the way, but the locals I asked concurred.
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