A dissenter on development

Townhall.com ^ | May 7, 2002 | Paul Craig Roberts

[Korth]

One of the chilling facts about the 20th century West is how poorly champions of individual liberty have fared in free societies. They seldom receive state honors. Rarely are they celebrated in academia or the media.

One of the 20th century's great economists, Ludwig von Mises, a refugee from Hitler, could not get a university appointment in America. Mises said that government was the problem, not the solution -- and outraged progressives, who were committed to the welfare state, ostracized him. F.A. Hayek was disparaged for many years for his warnings against big government, as was Milton Friedman.

In the 1960s, the University of Virginia had the most innovative economics department in the world. Scholars there created two new fields of economics -- public choice, and law and economics. In both cases, the innovators ended up with Nobel Prizes. But the university cut itself out of the glory. To appease liberals, who were embarrassed that members of their economics faculty were advising presidential candidate Barry Goldwater, another nonbeliever in big government, the university administration ran off the future Nobel Laureates.

It was the same in Great Britain. Just try to find Adam Smith's grave or any sign of him. It can be done, but it is a research project.

There have been no prizes for those whose work advances liberty. Neither are there Ford, Rockefeller or Carnegie Foundation grants, nor MacArthur Foundation "genius" grants. Progressive prejudice has been such that no one who advances liberty could possibly be seen as a genius. The liberal-socialist establishment has worked to shut such people up.

Seeing the void, a young successful investor, who chooses to remain unnamed, approached Cato Institute president Ed Crane with the proposal to establish a Milton Friedman Prize for Advancing Liberty. The prize, to be given every two years, brings with it a check for $500,000.

A distinguished selection committee chose Peter Bauer as the first recipient. Every adjective that makes a person fascinating and a delight to know applies to Peter Bauer.

Bauer arrived in England from Hungary in the 1930s. On ability alone, he rose to Cambridge don, London professor and peer of the realm. He is without doubt the greatest development economist of our time.

For decades, Lord Bauer stood alone in opposition to the view that only planning and foreign aid could produce economic development in poor Third World countries. He watched marketing boards destroy a flourishing peasant agriculture keyed to exports, forcing the peasants back into subsistence farming.

In theory, the marketing boards were set up to stabilize prices. In practice, the boards were used to confiscate the farmers' profits. The main result of development planning, said Bauer, was to destroy individual initiative, which is the most important factor of production.

Bauer's dissent on development was based on his realization of the importance of traders in moving an economy from subsistence to exchange. This critical activity of traders was curtailed by the regulations imposed by development planning.

With planning and aid came poverty and war. Foreign aid, Bauer noted, made control of the government a life-and-death matter, causing genocidal warfare between tribes. He did not spare his muddle-headed colleagues, who fervently believed they were doing good by socializing poor lands, when any fool could see that not even England could afford socialism.

Bauer's books on development economics are the only ones worth reading. The rest are evidence of a pathology of delusion that wrecked the lives of millions of innocent people.

Lord Bauer, 86, passed away peacefully at home in London on May 2, the eve of his departure for the United States to receive the Milton Friedman Prize. When the Cato Institute gathers to celebrate its 25th anniversary on May 9, the event will celebrate Peter Bauer, liberty's friend and the champion of the victims of development planning. His work lives on.