What do unintended consequences tell us?

I am always fascinated by unintended consequences because they remind us not to take ourselves, our feelings, opinions too seriously because we are utterly incapable of fathoming the long-run meaning and implications of what we see, hear and experience today. They are a reminder to us that excessive exuberance or despair at current events are uncalled for. We simply do not know how they would play out. Sample these two from the book, ’23 things they don’t tell you about capitalism’ by Ha-Joon Chang.

First Example 

When Korea wanted to develop a steel industry, the potential donors faced arguably the worst business proposal in human history – a state-owned company, run by a politically appointed soldier, making a product that all received economic theories said was not suitable to the country. The Korean government managed to persuade the Japanese government to channel a large chunk of the reparation payments it was paying for its colonial rule (1910-45) into the steel-mill project and to provide the machines and the technical advice necessary for the mill. By the mid-1980s, it was considered one of the most cost-efficient producers of low-grade steel in the world. By the 1990s, it was one of the world’s leading steel companies.

In the 1950s, the US government aid agency USAID had called Korea a ‘bottomless pit’!

When Japan invaded and occupied Korea, it would have been impossible to imagine that it would, one day, pave the way for Korea to become a world-leader in steel-making!

Second example:

After WW I, Soviet economy was in dire straits. Lenin had kept farming in private hands. Trotsky was opposed to it. Preobhrzhensky argued for rapid industrialisation which required transfer of farming surplus to the State.

Initially, Stalin was not in favour but upon becoming a sole dictator Stalin took Preobrazhensky’s ideas and implemented it. Of course, agricultural output collapsed. In the famine of 1932-33, millions perished.

The irony is that, without Stalin adopting Preobrazhensky’s strategy, the Soviet Union would not have been able to build the industrial base at such a speed that it was able to repel the Nazi invasion on the Eastern front in the Second World War. Without Nazi defeat on the Eastern front, Western Europe would not have been able to beat the Nazis. Thus, ironically, Western Europeans owe their freedom today to an ultra-left-wing Soviet economist called Preobrazhensky.

Policies recommended by a ultra-left wing Soviet economist and implemented by a dictator whose policies have led to the deaths of millions saved millions of lives in Western Europe and paved the way for a prosperous Western Europe since 1945!

What is your answer?

Professor Dani Rodrik, once at Harvard and now at Princeton, posed this moral dilemma in an article a while ago (in 2011!). It should be familiar to those of us who have ran into them in our personal lives and in Hindu epics. What is the answer to this dilemma? What is the guidance our scriptures give? I am very eager to know. Will be grateful for your comments.

APR 12, 2011

Saif Qaddafi and Me

CAMBRIDGE – Not long ago, a Harvard colleague wrote to me that Saif al-Islam el-Qaddafi, a son of Libya’s dictator, would be in town and wanted to meet me. He is an interesting fellow, my colleague said, with a doctorate from the London School of Economics and Political Science (LSE); I would enjoy talking to him, and I might be able to help his thinking on economic matters. The meeting, as it turned out, was a letdown. I was first briefed by a former Monitor Company employee, who gently intimated that I should not to expect too much. Saif himself held photocopies of pages from one of my books on which he had scribbled notes. He asked me several questions – about the role of international NGOs, as I recall – that seemed fairly distant from my areas of expertise. I don’t imagine he was much impressed by me; nor was I much taken by him. As the meeting ended, Saif invited me to Libya and I said – more out of politeness than anything else – that I would be happy to come. Saif never followed up; nor did I. But if a real invitation had come, would I have traveled to Libya, spent time with him, and possibly met his father and his cronies? Would I have been tempted by arguments such as: “We are trying to develop our economy, and you can really help us with your knowledge?” In other words, would I have followed in the footsteps of several of my Harvard colleagues who traveled to Libya to exchange views with and advise its dictator – and were paid for their services?

These scholars have been pilloried in the media in recent weeks for supposedly having cozied up to Qaddafi. Sir Howard Davies chose to resign as Director of the LSE, which awarded Saif his doctorate (which some allege was plagiarized) and took money for the school from the Libyan regime. There is a strong sentiment that academics and institutions that collaborated with such an odious regime – often with the encouragement of their governments, no doubt – suffered a grave lapse of judgment. Muammar el-Qaddafi’s murderous stance during the uprising has revealed his true colors, regardless of his more moderate posture in recent years. And Saif al-Islam’s recent support for his father suggests that he is not the liberal reformer many took him to be. But it is much easier to reach such judgments with hindsight. Were the moral overtones of dealing with the Qaddafis so obvious before the Arab revolutions spread to Libya? Or to pose the question more broadly, is it so clear that advisers should always steer clear of dictatorial regimes?

Universities all over the world are falling over each other trying to deepen their engagement with China. Most academics would jump at the chance to have a meeting with China’s President Hu Jintao. I haven’t heard much criticism of such contacts, which tend to be viewed as normal and unproblematic. And yet few would deny that China’s is a repressive regime that deals with its opponents harshly. Memories of Tiananmen are still fresh. Who is to say how the Chinese leadership would respond to a future pro-democracy uprising that threatened to undermine the regime? Or what about a country like Ethiopia? I have had intensive economic-policy discussions with Prime Minister Meles Zenawi in Addis Ababa. I must confess to having enjoyed these talks more than most meetings I have in Washington, DC and other democratic capitals. I have no illusions about Meles’ commitment to democracy – or lack thereof. But I also believe that he is trying to develop his economy, and I offer policy advice because I believe it may benefit ordinary Ethiopians.

The conundrum that advisers to authoritarian regimes face is akin to a long-standing problem in moral philosophy known as the dilemma of “dirty hands.” A terrorist is holding several people hostage, and he asks you to deliver water and food to them. You may choose the moral high ground and say, “I will never deal with a terrorist.” But you will have passed up an opportunity to assist the hostages. Most moral philosophers would say that helping the hostages is the right thing to do in this instance, even if doing so also helps the terrorist. But choosing an action for the greater good does not absolve us from moral culpability. Our hands do become dirty when we help a terrorist or a dictator. The philosopher Michael Walzer puts it well: “It is easy to get one’s hands dirty in politics.” He immediately adds, however, that this getting one’s hands dirty in this way is “often the right thing to do.”

In the end, an adviser to authoritarian leaders cannot escape the dilemma. Often, leaders seek the engagement only to legitimize their rule, in which case the foreign adviser should simply stay away. But when the adviser believes his work will benefit those whom the leader effectively holds hostage, he has a duty not to withhold advice. Even then, he should be aware that there is a degree of moral complicity involved. If the adviser does not come out of the interaction feeling somewhat tainted and a bit guilty, he has probably not reflected enough about the nature of the relationship.

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