A One-Armed Economicst, Please; M. Skousen

Writing on these topics is commendable; I just wish I knew what he was saying. Sen is one of those economists that Truman com plained about. He represents everything that is wrongheaded about modern economics, which Peter Drucker has rightly described as "clever, brilliant, and bankrupt economics."2 Too Much Sen Sen has all the establishment credentials. He's taught at Harvard and Cambridge and was Mark Skousen (http://www.mskousen.com; mskousen @aol.com) is an economist at Rollins College, Depart ment ofEconomics, Winter Park, FL 32789, a Forbes columnist, and editor ofForecasts & Strategies. 52 president of the American Economic Associa tion in 1994. His mentors are Joan Robinson, Kenneth Arrow, and philosopher John Rawls. A prolific scholar, Sen has written and read everything imaginable on his favorite subjects. He cites dozens and dozens of authors. He engages in heavy mathematical modeling and game theory. He weighs the pros and cons of every nuance of high theory. And yet, when it comes to his own view,he never seems to come to a simple conclusion. For Sen, everything is complex and indeterminate.

For example, in 1985 he gave a series of lectures at Cambridge University, subsequent ly published as The Standard ofLiving (Cam bridge University Press, 1987). Is it possible to measure and compare living standards between individuals or nations? Sen is never sure. In his works on inequality, he rejects utility-based comparisons of income and even distinguishes between "well-being" and "standard of living." When you're through reading Sen, you feel like joining the pure subjectivists-relativists. In an often-cited arti cle, "Rational Fools," Sen offers a critique of utilitarianism and self-interest, saying at one point, "this approach presumes both too little and too much."3 Only in Sen's world would that be possible. The only case I know where Sen establishes a clear position is on famines, an area he knows firsthand. Liberal democracies, he says, avoid famines. "In the terrible history of famines round the world, no substantial famine has ever occurred in a democracy."4 In trying to be ultra-scholarly, Sen obfus cates more than he elucidates. As Sylvia Nasar wrote in the New York Times (October 15, 1998), Sen is "highly influential, but wide-ranging, diffuse, lacking a single killer theorem." The Chinese philosopher Lin Yutang put it best, "If one is too well-read, then one does not know right is right and wrong is wrong."5 "One-Armed" Bauer Give me a one-armed economist! Indevel opment theory, that candidate would be Lord Bauer. Whether you agree with him or not, you have no doubt where he stands. He is an ardent polemicist in defense of democratic capitalism (including private property, free trade, and limited government) in developing countries.

~ T. Bauer is a longtime dissenter in devel opment economics who has finally been vin dicated. In that sense, he follows in the foot steps of other freemarket economists including Milton Friedman, who was ultimately proven right about the efficacy of monetary policy, and Ludwig von Mises and F. A. Hayek, who accurately predicted that socialist central planning could never work. In the postwar period, Bauer waged a lone ly battle against foreign aid, comprehensive central planning, nationalization, and other anti-market schemes. He denied the then current orthodoxy, such as the vicious cycle of poverty and W. W. Rostow's stages of eco nomic growth. Today even Rostow admits, "there are, evidently, serious and correct insights in the Bauer position; for example, 53 the shrewd and quick responsiveness of farm ers to incentives and disincentives, the superi 0rity of competitive private over public trad ing systems."6 Like Sen, Bauer has extensive experience in the developing world, having spent years in Asia and Africa as a writer and consultant. He warned the Indian government repeatedly that its fiveyear plans would never achieve their lofty goals. (The only Indian economist he respected was B.R. Shenoy, a lone dissenter.) The IMF could learn a lot from reading Bauer's classic textbook, The Economics of UnderDeveloped Countries, coauthored by B.S. Yamey (Cambridge University Press, 1957). And one of the best short essays ever written is "The Lesson of Hong Kong."7 Other essays can be found in Dissent on Development (Harvard University Press, 1976) and The Development Frontier (Har vester, 1991). The Cato Institute recently pub lished a book, The Revolution in Development Economics, edited by James A. Dorn, Steve H. Hanke, and Alan S. Walters, that was ded icated to Lord Bauer and includes many of his articles. Nothing could be better, short of a Nobel Prize. D 1. Amartya K. Sen, Collective Choice and Social Welfare (San Francisco: Holden-Day, 1970), p. 200.

2. Peter F. Drucker, The Unseen Revolution (New York: Harper & Row, 1976), pp. 114-15. 3. Amartya K. Sen, "Rational Fools: A Critique of the Behavioral Foundations of Economic Theory," cited in H. Harris, ed., Scientific Models and Men (New York: Oxford University Press, 1978), pp.317-44. 4. Amartya Sen, Prospect, October 1995, cited in Chris Patten, East and West (New York: Macmillan, 1998), p. 198. 5. Lin Yutang, The Importance ofLiving (New York: John Day Company, 1937), p. viii. Yutang's profound book has recently been reprinted by William Morrow. I highly recommend it. 6. W.W. Rostow, Theorists of Economic Growth from David Hume to the Present (New York: Oxford University Press, 1990), p.386. 7. P. T. Bauer, "The Lesson of Hong Kong," Equality, the Third World and Economic Delusion (Cambridge, Mass.: Harvard Univer sity Press, 1981).