DEVELOPMENT WITHOUT AID: Growth, Poverty and Government by Melvyn B. Krauss

DEVELOPMENT WITHOUT AID: Growth, Poverty and Government

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To hear New York University economics professor Krauss tell it, all the ideologues of economic theory are on the left (by which he means the likes of Walter Heller, Nicholas Kaldor, and Paul Samuelson); but when Krauss needs to prove a point, he simply cites Milton Friedman, Arthur Laffer, and P. T. Bauer. The point, repeated at regular intervals, is that free-market economics--along with congenial government policies--is the road to economic growth in the Third World. In evidence thereof, Krauss cites the ""Gang of Four""--Hong Kong, Singapore, South Korea, and Taiwan--but without examining the specific cultural and strategic factors behind their success. (All of course emulated Japan--which Krauss ignores; for the regional surge, see Hofheinz and Calder's The Eastasia Edge, p. 533.) Chile and Brazil also figure here, despite their massive economic problems. For Krauss, they demonstrate that economic growth results in an absolute increase in incomes for all sectors of society. Thus, he claims that the percentage of Chilean families whose incomes fell below the (unspecified) poverty line declined from 20 percent to 13.6 percent between 1973 and 1979; but if the poverty measure remains constant, a decline can occur merely through inflation--enormous in Chile and unnoted by Krauss. All this is apropos of his praise for the integrative role of multinationals in the world economy. By transferring technology and jobs in their constant search for cheap labor, they are crucial to the ""transfer of prosperity,"" as against the transfer of income. The Shah of Iran fell, says Krauss, because he tried to use the government for welfare-state ends, and thereby disrupted the economy: ""Just one course on free markets and the competitive economy from Milton Friedman, and the Shah might have died in peace on the Peacock Throne."" A polemic, and a trifling one at that.

Pub Date: Nov. 1st, 1982
Publisher: McGraw-Hill