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William Easterly

William Easterly Biography

Economist

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“A woman in Bower Bank, Jamaica, had eight children. The father was in jail in the United States, no longer sending remittances. Her fourteen-year-old daughter "get burn up from her face, breast, chest, down to her legs with boiling water February 2 1999. That night just because I never have any money earlier to cook, me go town and get a money, buy something to cook cause them never eat from morning. Me daughter bend down, to pick up something near the stove and bounce off the pot of boiling water pan herself. Me tek her to hospital and me never have the money fe register her. Me beg somebody the money and register her. Me owe the hospital $10,500 for the bill, a caan [can't] pay it. She's to go back for treatment because her hand caan stretch out or go up, but the hospital will not see her if I don't pay the bill.”

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Book:The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics
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“Some people believe labor-saving technological change is bad for the workers because it throws them out of work. This is the Luddite fallacy, one of the silliest ideas to ever come along in the long tradition of silly ideas in economics. Seeing why it's silly is a good way to illustrate further Solow's logic. The original Luddites were hosiery and lace workers in Nottingham, England, in 1811. They smashed knitting machines that embodied new labor-saving technology as a protest against unemployment (theirs), publicizing their actions in circulars mysteriously signed "King Ludd." Smashing machines was understandable protection of self-interest for the hosiery workers. They had skills specific to the old technology and knew their skills would not be worth much with the new technology. English government officials, after careful study, addressed the Luddites' concern by hanging fourteen of them in January 1813. The intellectual silliness came later, when some thinkers generalized the Luddites' plight into the Luddite fallacy: that an economy-wide technical breakthrough enabling production of the same amount of goods with fewer workers will result in an economy with - fewer workers. Somehow it never occurs to believers in Luddism that there's another alternative: produce more goods with the same number of workers. Labor-saving technology is another term for output-per-worker-increasing technology. All of the incentives of a market economy point toward increasing investment and output rather than decreasing employment; otherwise some extremely dumb factory owners are foregoing profit opportunities. With more output for the same number of workers, there is more income for each worker. Of course, there could very well be some unemployment of workers who know only the old technology - like the original Luddites - and this unemployment will be excruciating to its victims. But workers as a whole are better off with more powerful output-producing technology available to them. Luddites confuse the shift of employment from old to new technologies with an overall decline in employment. The former happens; the latter doesn't. Economies experiencing technical progress, like Germany, the United Kingdom, and the United States, do not show any long-run trend toward increasing unemployment; they do show a long-run trend toward increasing income per worker. Solow's logic had made clear that labor-saving technical advance was the only way that output per worker could keep increasing in the long run. The neo-Luddites, with unintentional irony, denigrate the only way that workers' incomes can keep increasing in the long-run: labor-saving technological progress. The Luddite fallacy is very much alive today. Just check out such a respectable document as the annual Human Development Report of the United Nations Development Program. The 1996 Human Development Report frets about "jobless growth" in many countries. The authors say "jobless growth" happens whenever the rate of employment growth is not as high as the rate of output growth, which leads to "very low incomes" for millions of workers. The 1993 Human Development Report expressed the same concern about this "problem" of jobless growth, which was especially severe in developing countries between 1960 and 1973: "GDP growth rates were fairly high, but employment growth rates were less than half this." Similarly, a study of Vietnam in 2000 lamented the slow growth of manufacturing employment relative to manufacturing output. The authors of all these reports forget that having GDP rise faster than employment is called growth of income per worker, which happens to be the only way that workers "very low incomes" can increase.”

TechnologyLudditesLabor Markets
Book:The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics
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“There was no Marshall Plan for Harry Potter, no International Financing Facility for books about underage wizards. It is heartbreaking that global society has evolved a highly efficient way to get entertainment to rich adults and children, while it can't get twelve-cent medicine to dying poor children.”

WayChildrenBookPoorRichPlansDyingAdultsMedicineInternationalEntertainmentEfficientTwelveCentsHarry PotterWizardsPottersFacilityHeartbreakingFinancingPoor ChildrenMarshall Plan
Book:The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good
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“Remember, aid cannot achieve the end of poverty. Only homegrown development base on the dynamism of individuals and firms in free markets can do that.”

EndsRememberIndividualCan DoPovertyAchieveDevelopmentAidsFirmFree MarketDynamismHomegrown
Book:The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good
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“Peter Montiel has long set the highest standard for lucid textbooks on the macroeconomics of developing countries. Now in this new edition of his superb classic Macroeconomics in Emerging Markets, he has surpassed even himself. He uniquely fills the gap between rich-country-obsessed macro- and micro-obsessed developing-country analysis. No student of the macroeconomics of development will henceforward be able to do without this book.”

LongBookCountryAbleRichStudentsDevelopmentHighestStandardsDevelopingAnalysisObsessedClassicGapsPeterEmergingTextbooksSuperbDeveloping CountriesMacroRich CountriesMacroeconomicsEmerging Markets
Author:William Easterly
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