Pessimism and Development

As a specialist on African economies, Paul Collier has spent much of his career trying to understand why it is that some poor countries are able to extricate themselves from the shackles of poverty and crisis, while others are not. A few years ago, Collier found a wide audience for his ideas with a short, readable book called The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It (Oxford University Press, 2007). Since that book’s release, the term “bottom billion” has gained currency as a designation for that part of humanity that is crushingly poor and not getting any richer. While The Bottom Billion had its fair share of critics (especially those who lamented Collier’s faith in foreign military intervention¹), the book nevertheless won Collier the Lionel Gelber Prize for non-fiction, and has since become an important reference point for students of development. Collier’s latest publication, Wars, Guns and Votes, lacks a catchy title on par with his last work, but it deploys the same central premise: specifically, that calling certain poor countries ‘developing’ is badly misguided, because in fact, such countries are stuck. Their miserable levels of development and extreme political disfunction actually represent a sustainable equilibrium. They aren’t on a path to development—not even a long and difficult one—they’re just trapped in poverty.

Accepting Collier’s diagnosis about the existence of disfunctional equilibria means embracing one of two conclusions. The first option is to assume an attitude of deep pessimism, alleviated (perhaps) by the stern pleasure of being willing to see an intractable situation for what it is. The second option is to take a more optimistic stance, and put faith in innovative schemes for escaping the poverty traps. The latter stance is certainly more helpful, but inventing bold campaigns to save a billion souls can look rather naive.

Paul Collier thinks we have to be pessimistic about the facts on the ground, but bold and optimistic about the fixes. His style is quantitative analysis with folksy reporting; each point is underpinned by a dataset and the efforts of some graduate student (of whom we always get a name, an adjective denoting brilliance, and an anecdote, like the fact that she gave birth just after completing her research or he made it onto the Oxford rowing team with no previous experience). The case for pessimism is the more rigorous and useful part of the book. It starts with a surprising analysis of democracy. Surely the spread of democracy throughout so many of the world’s poorest countries is an accomplishment—a reason to think that these countries could be on their way to developing functional political systems? This is the prevailing wisdom, so we tend to believe it reflexively. Drill down a bit, though, and we really have two reasons as to why democracy should make governments better. First, it incentivizes performance, because governments that do badly get fired, whereas good ones are rewarded by a grateful electorate. Second, it creates legitimacy. Winners have a firm basis on which to rest their claims to rule, and losers have a way to try again later. So how does this play out in practice? At first sight, Collier’s dataset revealed no link between democracy and the incidence of political violence. That seemed very strange, so Collier tried sorting countries by income. Then two strong, opposite effects appeared. In richer countries, democracy was correlated with peace, but in poor societies, it was the other way round: democracy went with violence. The lines cross at $2,700 per capita, the point at which democracy and security show no correlation. The two effects cancel each other out, explaining why, at first sight, no link was evident.

What, then, is wrong with the theory that democracy improves governance and promotes order? One possibility is that if electoral support is frozen in voting blocs (like ethnic groups), then performance really isn’t the test of a politician; it’s the ability to assemble a winning coalition...