Sending economic assistance from western, developed countries to poorer, developing countries has always been a virtuous and noble pursuit. But the ethics behind foreign aid can get messy. 

Bill Easterly has built an entire career analyzing the pros and cons within the field of development economics. He is a professor of economics at NYU, and also the co-director of their Development Research Institute.

Bill has written a number of books on the topic as well, including The Tyranny Of Experts, The Forgotten Rights Of The Poor, and The White Man's Burden.

Greg and Bill dive into the nuances of development in this episode, including using GDP to measure development objectively, development economics as its own discipline, and facing the colonial roots of the development field and growing from that history.

Generalized trust vs. trust within a group:

Trust within the ethnic group is better than no trust at all. But not as good as generalized trust. At least having trust within the ethnic group makes possible a lot of transactions within the ethnic group.

And that at least allows you to build trading networks and investment networks within the ethnic group, which is certainly better than nothing. But it still does prevent you from expanding your network to the whole population and choosing perfect strangers as partners, which is what becomes more possible when you have more generalized trust.

Is this work for the developers or “rules” or those who receive the aid:

The rulers are often gonna be attached to some kind of prestige measure that shows how wonderful they are as rulers.They will like the high GDP per capita numbers. They will like the prestige projects of big dams and giant interstate roads that are financed by donors that they can open with elaborate ribbon cutting ceremonies, but are often not really consulting the citizens on whether that's really what they wanted or not.

Idealism vs. Cynicism with your development economists:

I think it's more a function of the fact that we start off with a set of things that we think are sort of easy answers to development, easy answers to poverty. And then over time we realized the answers are not so easy, that's the way in which we become wise.

Guest Profile:

• William Easterly Website
• William Easterly on Twitter
• William Easterly on Linkedin
• Faculty Profile at New York University

His work:

• William Easterly on Google Scholar
• The Economics of International Development: Foreign Aid versus Freedom for the World's Poor
• The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor 
• The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good
• The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics