Ernesto Sirolli began his career working for an Italian non-profit organization aiding countries in Africa. In his TED talk, “Want to Help Someone? Shut Up and Listen!” he describes his first project teaching Zambians how to grow food:
We arrived there with Italian seeds in southern Zambia in this absolutely magnificent valley going down to the Zambezi River, and we taught the local people how to grow Italian tomatoes and zucchini ... And of course the local people had absolutely no interest in doing that, so we paid them to come and work, and sometimes they would show up. And we were amazed that the local people, in such a fertile valley, would not have any agriculture. But instead of asking them how come they were not growing anything, we simply said, "Thank God we're here. Just in the nick of time to save the Zambian people from starvation."
And of course, everything in Africa grew beautifully. We had these magnificent tomatoes … And we could not believe, and we were telling the Zambians, "Look how easy agriculture is." When the tomatoes were nice and ripe and red, overnight, some 200 hippos came out from the river and they ate everything.
Sirolli’s colorful takeaway: “If you arrive in a community with arrogance, and you don't listen to the local people ... you are going to have your pride chewed off by the local hippos.”
Sirolli seems to be rare. How many of those “helping others” are willing to learn and have their “pride chewed off?” Sirolli, his organization, governments, and almost all foreign aid workers could have saved themselves some trouble if they had just read Friedrich Hayek’s classic essay “The Use of Knowledge of Society.”
The Knowledge of Time and Place
Sirolli and his organization thought all that was needed was their scientific knowledge about agriculture. Hayek teaches us that there is another type of knowledge – the knowledge of the “circumstances of time and place:”
Today it is almost heresy to suggest that scientific knowledge is not the sum of all knowledge. But a little reflection will show that there is beyond question a body of very important but unorganized knowledge which cannot possibly be called scientific in the sense of knowledge of general rules: the knowledge of the particular circumstances of time and place.
Of course, anyone claiming the right to make decisions for others bumps into the same problem – they simply don’t have the needed knowledge. Clinton, Trump, Congress, and bureaucrats know nothing of your circumstances of time and place. Lacking that knowledge, they are unable to make decisions that further your interests. All of us have a personal advantage in decision-making, and thus, centralizing decisions is against our interests. Hayek explains,
It is with respect to this that practically every individual has some advantage over all others because he possesses unique information of which beneficial use might be made, but of which use can be made only if the decisions depending on it are left to him or are made with his active cooperation.
In his book, Dumbing us Down, educational reformer John Taylor Gatto quotes novelist and environmentalist Wendell Berry. Berry echoes Hayek when he writes,
I don't think 'global thinking' is futile, I think it is impossible. You can't think about what you don't know and nobody knows this planet. Some people know a little about a few small parts of it ... The people who think globally do so by abstractly and statistically reducing the globe to quantities. Political tyrants and industrial exploiters have done this most successfully. Their concepts and their greed are abstract and their abstractions lead with terrifying directness and simplicity to acts that are invariably destructive. If you want to do good and preserving acts, you must think and act locally. The effort to do good acts gives the global game away. You can’t do a good act that is global ... a good act, to be good must be acceptable to what Alexander Pope called “the genius of the place.” This calls for local knowledge, local skills and local love that virtually none of us has and that none of us can get by thinking globally. We can get it only by a local fidelity that we would have to maintain through several lifetimes.
“Good acts” “must be acceptable” to the “genius of the place.” The use of coercion automatically means the act is not acceptable. Every day, all across America, the “genius of the place” is destroyed by politicians and bureaucrats coercing us. In the Midwest, some of the most fertile farmland in the world is being eroded away because subsidies make it profitable to plant a single crop, year after year: corn.
Life Requires Continuous Adjustment
A few weeks ago, at the end of the first quarter of a college football game between Big Ten Conference member Rutgers University and lowly Howard University, Howard was thoroughly dominating Rutgers. On their football forum, Rutgers fans were melting down, pointing fingers, and panicking.
After that first quarter, Howard was not to score again. The game ended 52-14. What happened? The Rutgers coaches made adjustments to a game plan that wasn’t working, and Rutgers’ superior talent was able to dominate the rest of the game. Part of the job of a highly paid college coach is to make adjustments in a game plan when the plan isn’t working. If they are not a good game day coach, if they are not able to make adjustments, they are unlikely to be successful.
“So long as things continue as before, or at least as they were expected to, there arise no new problems requiring a decision, no need to form a new plan.”
These adjustments are made with decentralized decision-making. The head coach has a defensive and offensive coordinator who, too, have to read what is going wrong and adjust in real time.
Some of us may prefer a world that doesn’t change much, but individuals and organizations know that life requires continuous adjustment.
In September, a department store manager steeply discounts summer clothing that didn’t sell.
A college student might begin the fall semester, still living in summer mode. He may fall behind in his course work and have to adjust his study schedule.
A family finds it is living beyond their means. They adjust their budget; they go out to eat fewer times and they cut the cord to their cable subscription.
The season begins to change; you may need to put on a coat in the morning as you leave for work.
Someone didn’t get the promotion she desired; someone else suffered through a bad divorce. We may find our approach to life no longer serves us. We reflect; we change.
The Freedom to Make Adjustments
Individuals and organizations are engaged in a continual process of adjustment. Hayek observes “that economic problems arise always and only in consequence of change.” He continues, “So long as things continue as before, or at least as they were expected to, there arise no new problems requiring a decision, no need to form a new plan.”
Government decision-makers simply do not have the knowledge of “time and place.”
Our whole economy is dependent on our freedom to make adjustments: “The continuous flow of goods and services is maintained by constant deliberate adjustments, by new dispositions made every day in the light of circumstances not known the day before, by B stepping in at once when A fails to deliver.”
Life is characterized by continuous adjustment. “The economic problem of society is thus not merely a problem of how to allocate 'given' resources...” Only each of us, as an individual, knows the “relative importance” of the ends we seek. The real economic problem “is a problem of the utilization of knowledge which is not given to anyone in its totality.”
This adjustment could happen on a small-scale or large-scale. Your favorite restaurant may shift their menu in response to changing tastes of customers. On a larger scale, Blockbuster fails to adjust to consumer preferences, and Netflix rises.
If we understand Friedrich Hayek and Wendell Berry, we understand why that even if Congress was composed of only honest individuals and if federal regulatory agencies were not captured by special interests, it would still be impossible for government to adjust to ever changing circumstances. Government decision-makers simply do not have the knowledge of “time and place.” They can’t improve the economy; they can only hamper the economy by blocking the “genius of the place."
JIM MANZI has touched off a debate on the economic dynamism of America versus that of "social democratic" Europe with an essay in National Affairs. Much of the initial response to Mr Manzi focused on his abuse and misuse of statistics in making (or failing to make) his case (you can read about the problems with his numbers here). The conversation has nonetheless moved forward. Paul Krugman wrote about the question in his column today, and other bloggers are weighing in.
I don't know that the debate is all that helpful. Northwest Europe is, for all intents and purposes, every bit as rich as America. Greg Mankiw puts up a list of European countries which have smaller GDP per capita (in PPP terms) than America, but he conveniently leaves out those (Norway, Ireland, the Netherlands, Switzerland) with per capita levels above or just under America's. Growth rates have been almost identical. Some have noted that America's figures are distorted by massive immigration of low-wage workers, which is true. On the other hand, the focus on per capita figures obscures the extent to which wealth in America is more concentrated than in Europe. Europe also manages to generate its wealth with far lower levels of energy use and carbon emissions.
Ideally, you'd want to control for a range of other factors. Hours worked and externalities are certainly two factors that should be considered. Geography may also be hugely important. While the European and American markets are of similar magnitudes, the American market is far more unified than the European market, allowing for greater interstate trade and specialisation.
And then you'd also want to think about whether it's the social democratic part of the European economic model that inhibits growth, or something else entirely. Perhaps it's not the social safety net, or higher tax rates, that constrain growth, but instead the more rigid labour markets, or industrial interventions.
It seems to me that it's difficult to impossible to conclude, based on a detailed survey of Western Europe, that social democracy is fundamentally unable to produce American levels of wealth. At the same time, it's very easy to identify policy choices made within Europe, or America, that do constrain growth and mobility. Why focus the debate on sweeping and misleading generalisations across policies, when you can take things on a policy by policy basis, and have quite a specific and effective discussion?
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