WEBVTT NOTE Austrian Economics and Third World Development 1 00:00:00.000 --> 00:00:12.080 Well, thank you. This is my first time over to the Mises Institute, actually, and it's probably long overdue, but it's been great to be here today to have lunch with Mark and Joe and Peter. 2 00:00:12.080 --> 00:00:18.840 You know, it's it's been a real pleasure walking through the library out there is like being a kid in a candy store. 3 00:00:18.840 --> 00:00:25.520 You know, you want to just hang out in between the rows and purchase each of the books on display, which I might do afterwards. 4 00:00:25.520 --> 00:00:26.780 we'll see. 5 00:00:26.780 --> 00:00:28.640 But it's been really nice to be here 6 00:00:28.640 --> 00:00:32.260 and I'm excited to talk about my work 7 00:00:32.260 --> 00:00:35.360 in development economics that I've been doing recently. 8 00:00:35.360 --> 00:00:38.040 This presentation will be pretty brief. 9 00:00:38.040 --> 00:00:41.820 I would like to split it up into three distinct parts. 10 00:00:41.820 --> 00:00:44.700 One part, which will be the briefest of all three 11 00:00:44.700 --> 00:00:48.140 is just an autobiographical part talking to you 12 00:00:48.140 --> 00:00:51.060 about where I'm coming from, what I've been doing, 13 00:00:51.060 --> 00:00:52.460 why I've been doing it. 14 00:00:52.460 --> 00:00:54.360 And then there'll be a methodological part 15 00:00:54.360 --> 00:00:57.320 talking about where work in development economics 16 00:00:57.320 --> 00:01:01.400 fits in more broadly with an Austrian research program. 17 00:01:01.400 --> 00:01:03.400 And then finally, I'll try to show off 18 00:01:03.400 --> 00:01:04.480 what I've been doing a little bit 19 00:01:04.480 --> 00:01:06.760 by giving you a little bit of analysis 20 00:01:06.760 --> 00:01:08.140 from some recent field work. 21 00:01:08.140 --> 00:01:11.420 So that's where I'm going with this presentation 22 00:01:11.420 --> 00:01:13.380 and hopefully there'll be plenty of time 23 00:01:13.380 --> 00:01:14.840 for some questions as well. 24 00:01:14.840 --> 00:01:17.320 Now to let you know a little bit about myself, 25 00:01:17.320 --> 00:01:19.080 I'm from George Mason University. 26 00:01:19.080 --> 00:01:21.440 I finished up last spring there, 27 00:01:21.440 --> 00:01:23.080 took a job at Mercer University. 28 00:01:23.080 --> 00:01:27.240 The last three summers prior to this one, I spent in the field. 29 00:01:27.240 --> 00:01:29.920 I spent two summers in the Czech Republic 30 00:01:29.920 --> 00:01:34.160 looking at the Czech privatization over there 31 00:01:34.160 --> 00:01:35.760 and just kind of studying 32 00:01:35.760 --> 00:01:39.960 how different Eastern European privatizations have worked out. 33 00:01:39.960 --> 00:01:42.240 And I've written on the Czech Republic 34 00:01:42.240 --> 00:01:44.240 and Eastern reform more generally. 35 00:01:44.240 --> 00:01:47.200 The last summer took me to Botswana. 36 00:01:47.200 --> 00:01:49.080 It was a chapter in my dissertation. 37 00:01:49.080 --> 00:01:52.000 And one of the things that I encountered quite often 38 00:01:52.000 --> 00:01:55.380 was you're writing about Botswana, but you've never been there. 39 00:01:55.380 --> 00:01:57.500 Do you really know what you're talking about? 40 00:01:57.500 --> 00:01:59.680 And to answer that question, 41 00:01:59.680 --> 00:02:01.940 I really felt like I needed to get there. 42 00:02:01.940 --> 00:02:02.860 I was able to get there. 43 00:02:02.860 --> 00:02:04.260 I spent a month there. 44 00:02:04.260 --> 00:02:06.020 I had two other team members 45 00:02:06.020 --> 00:02:08.220 who were there for seven weeks total. 46 00:02:08.220 --> 00:02:10.840 And it was a wonderful experience 47 00:02:10.840 --> 00:02:14.120 that I'm going to spend time talking about today. 48 00:02:15.540 --> 00:02:17.520 The reason why we were doing this 49 00:02:18.700 --> 00:02:21.780 and why I felt that field work was important 50 00:02:21.780 --> 00:02:51.780 has been really inspired by Peter Betke, who many of you probably know. Some of you might know even better than me. He was my dissertation chair and he's really kind of been pushing a research agenda that focuses much more on getting your hands dirty by going out into the field and studying problems at a local level and then using the tools of economic analysis to kind of answer a puzzle or answer a question. There are many puzzles with Botswana that I'm going to talk about and it was 51 00:02:51.780 --> 00:02:56.700 is really necessary for me to get there, talk to people, interview people on the ground 52 00:02:56.700 --> 00:03:02.540 to start to make sense and form some answers to the Botswana puzzle. 53 00:03:02.540 --> 00:03:06.200 Now methodologically, where does this fit in? 54 00:03:06.200 --> 00:03:13.700 We call it ethnography, we call it a case study approach to understanding economic development. 55 00:03:13.700 --> 00:03:16.980 If you're familiar with the literature in economics, it's moved more and more in the 56 00:03:16.980 --> 00:03:22.980 in the direction of using large cross-sectional datasets to try to explain development on a grand scale. 57 00:03:22.980 --> 00:03:25.980 You throw every country into a regression and then you say, 58 00:03:25.980 --> 00:03:30.980 this seems to be coming out significant or we can't figure out what in the world is going on here. 59 00:03:30.980 --> 00:03:33.980 You know, we can't reach any kind of definitive conclusions. 60 00:03:33.980 --> 00:03:40.980 Depending on what you read, you can get very cynical about what factors matter for economic development. 61 00:03:40.980 --> 00:03:54.980 In 1995, Gregory Mankiw wrote a paper that basically said we can't sort out what factors are responsible for development because of different econometric problems with the models. 62 00:03:54.980 --> 00:03:56.980 And there have been a number of other papers. 63 00:03:56.980 --> 00:04:04.980 Sally Martin wrote a paper saying I just ran a million regressions and he found a couple of things that do seem to matter. 64 00:04:04.980 --> 00:04:14.980 Instead of taking that approach and getting into that thorny debate, what we've tried to do, and a lot of this has been supported by the Mercatus Center at George Mason University. 65 00:04:14.980 --> 00:04:24.980 What's going on there, and there are teams out doing fieldwork this summer, there have been teams out for the last three or four summers, out trying to answer problems of economic development. 66 00:04:24.980 --> 00:04:32.980 We feel that the more appropriate approach is a local one where you go and try to explain economic development from the bottom up. 67 00:04:32.980 --> 00:04:35.620 and you could call this ethnographic. 68 00:04:35.620 --> 00:04:39.300 Professor Betke likes to call it analytical narratives. 69 00:04:39.300 --> 00:04:41.740 And what we're doing is we're going out into the field 70 00:04:41.740 --> 00:04:43.620 and trying to get our story right. 71 00:04:43.620 --> 00:04:46.860 And from this very specific case, 72 00:04:46.860 --> 00:04:49.980 we can form more generalizable conclusions. 73 00:04:49.980 --> 00:04:53.100 The analytical narrative that we're relying on 74 00:04:53.100 --> 00:04:54.320 at George Mason University, 75 00:04:54.320 --> 00:04:56.620 the fairly Austrian analytical narrative 76 00:04:56.620 --> 00:04:58.660 is quite different than two other approaches 77 00:04:58.660 --> 00:05:00.260 that you'll find. 78 00:05:00.260 --> 00:05:03.020 One approach is a new institutional approach 79 00:05:03.020 --> 00:05:06.500 that basically involves reading some history 80 00:05:06.500 --> 00:05:09.620 and then providing game theoretic explanations 81 00:05:09.620 --> 00:05:11.820 of the phenomena that they've studied. 82 00:05:11.820 --> 00:05:14.460 If you've looked at Barry Weingast's work, 83 00:05:14.460 --> 00:05:17.680 Avner Greif's work, it's very game theoretic 84 00:05:17.680 --> 00:05:19.780 and the history is kind of empty, all right? 85 00:05:19.780 --> 00:05:22.900 So this whole movement in our minds 86 00:05:22.900 --> 00:05:25.560 has been inspired in part out of a frustration 87 00:05:25.560 --> 00:05:27.920 that some of the economic historians 88 00:05:27.920 --> 00:05:30.280 aren't paying enough attention to the history. 89 00:05:30.280 --> 00:05:33.640 One other approach that has been used 90 00:05:33.640 --> 00:05:36.200 and relied on when looking at developing countries 91 00:05:36.200 --> 00:05:37.020 is survey work. 92 00:05:37.020 --> 00:05:39.360 You go out, you ask businessmen a bunch of questions. 93 00:05:39.360 --> 00:05:42.320 You say, what are the barriers to running your business? 94 00:05:42.320 --> 00:05:44.120 What are the frustrations you have? 95 00:05:44.120 --> 00:05:46.760 You take all of these surveys, you go back home 96 00:05:46.760 --> 00:05:49.880 and then you run regression analysis on the surveys. 97 00:05:49.880 --> 00:05:52.540 We don't think that's exactly the right approach either. 98 00:05:52.540 --> 00:05:54.560 Ours is a little bit different. 99 00:05:54.560 --> 00:05:57.480 If you wanted to find some people 100 00:05:57.480 --> 00:05:59.720 who were kind of path breakers in this area, 101 00:05:59.720 --> 00:06:02.560 you actually have to look to sociology. 102 00:06:02.560 --> 00:06:05.660 As a sociologist named Dan Rose wrote a book, 103 00:06:06.620 --> 00:06:08.200 I'm blanking on the title right now, 104 00:06:08.200 --> 00:06:11.460 but he's talking about living in Philadelphia on the streets, 105 00:06:11.460 --> 00:06:13.480 like in the inner city, Philadelphia, okay? 106 00:06:13.480 --> 00:06:15.140 And he lived there for like a year. 107 00:06:15.140 --> 00:06:17.720 He became a mechanic and tried to figure out 108 00:06:17.720 --> 00:06:19.160 the problems of inner city life, 109 00:06:19.160 --> 00:06:20.760 the challenges that face people 110 00:06:20.760 --> 00:06:24.060 by going there and becoming one of them, okay? 111 00:06:24.060 --> 00:06:37.260 I didn't have the money, the time, nor the patience to go to Botswana for a whole year and try to become like one of the Batswana, which is the name for citizens of Botswana, but I did my best in seven weeks. 112 00:06:37.260 --> 00:06:40.780 And I'm going to talk about some of that in just a minute here. 113 00:06:40.780 --> 00:06:49.460 So that's kind of broadly what kind of research agenda we've been pushing at George Mason University. 114 00:06:49.460 --> 00:06:51.940 and now for me at Mercer University, 115 00:06:51.940 --> 00:06:55.220 there are a lot of students that you'll encounter 116 00:06:55.220 --> 00:06:57.420 who are just getting out onto the job market 117 00:06:57.420 --> 00:06:59.100 or just getting out into the real world 118 00:06:59.100 --> 00:07:04.100 who have been involved in this field work at George Mason. 119 00:07:04.100 --> 00:07:06.740 The analysis I'm going to show you today 120 00:07:06.740 --> 00:07:10.780 as Professor Salerno noted a moment ago 121 00:07:10.780 --> 00:07:13.980 is based on this past summer's field work in Botswana. 122 00:07:13.980 --> 00:07:16.340 The title is Look Botswana, No Hands, 123 00:07:16.340 --> 00:07:21.340 Why Botswana Should Let the Economy Steer Itself. 124 00:07:22.420 --> 00:07:23.980 And I think from the title, 125 00:07:23.980 --> 00:07:27.300 you can probably guess where this is going to some extent. 126 00:07:27.300 --> 00:07:30.100 Now, a lot of you probably don't have a clue 127 00:07:30.100 --> 00:07:35.060 about, know nothing about Botswana beyond it's in Africa. 128 00:07:35.060 --> 00:07:37.260 Maybe you know that there might be some elephants there 129 00:07:37.260 --> 00:07:39.300 and that they have an AIDS problem. 130 00:07:39.300 --> 00:07:43.820 Beyond that, many of us probably don't know much about it. 131 00:07:43.820 --> 00:07:48.700 If you wanted to know where it is geographically, it's directly north of South Africa. 132 00:07:48.700 --> 00:07:51.580 Okay, so South Africa is right at the bottom of Africa. 133 00:07:51.580 --> 00:07:53.340 Just up from that is Botswana. 134 00:07:53.340 --> 00:07:58.300 It's a landlocked country, about the size of Texas, right smack in the middle of Africa. 135 00:07:58.300 --> 00:08:03.220 I should have brought a map of that, but hopefully you're able to picture where it's at. 136 00:08:03.220 --> 00:08:09.380 The reason why I became fascinated with Botswana is that for the last 30 years, give or take, 137 00:08:09.380 --> 00:08:11.540 it's been the fastest growing country in the world. 138 00:08:11.540 --> 00:08:15.780 Okay, from 1965 to 95, it definitely was. 139 00:08:15.780 --> 00:08:17.780 A couple of countries surpassed it 140 00:08:17.780 --> 00:08:19.580 in the last couple of years. 141 00:08:19.580 --> 00:08:23.140 This remarkable growth has led people to call Botswana 142 00:08:23.140 --> 00:08:27.620 the Africa's best kept secret, the African miracle. 143 00:08:27.620 --> 00:08:31.540 Two years ago, Matt Lauer from NBC went there 144 00:08:31.540 --> 00:08:35.620 and kind of really boasted about how wonderful Botswana was. 145 00:08:35.620 --> 00:08:36.860 If Matt Lauer's going there, 146 00:08:36.860 --> 00:08:39.220 it must be kind of a nice place to go. 147 00:08:39.220 --> 00:08:41.720 and in fact it is a beautiful place. 148 00:08:41.720 --> 00:08:44.560 I'm not going to talk about the beauty of Botswana so much 149 00:08:44.560 --> 00:08:47.720 as I am the economy and what was responsible 150 00:08:47.720 --> 00:08:51.100 for the development in Botswana. 151 00:08:51.100 --> 00:08:53.560 Going there, I wanted to make sure 152 00:08:53.560 --> 00:08:56.520 that the data that we were looking at in the West 153 00:08:56.520 --> 00:08:59.000 in fact was representing a true story 154 00:08:59.000 --> 00:09:00.200 or telling a true story. 155 00:09:00.200 --> 00:09:02.280 Is Botswana really the success 156 00:09:02.280 --> 00:09:03.820 that people have been making it out to be 157 00:09:03.820 --> 00:09:05.800 or is the data somewhat misleading? 158 00:09:05.800 --> 00:09:15.300 You know, is the story just like a straight story of economic development and we should continue to like bet on Botswana or does it have some problems? 159 00:09:15.300 --> 00:09:32.300 After I went there and just after a few days there I realized that it was a very complicated economy and I became over my month there quite pessimistic over time about Botswana's prospects for the future and frustrated with what they've been doing over time. 160 00:09:32.300 --> 00:09:42.300 Just to give you a little bit of background, it deserves a lot more attention, but this is a short presentation and a paper that I wanted to keep fairly short too. 161 00:09:42.300 --> 00:09:51.300 Botswana became independent in 1965. At that time, many regarded it as the poorest nation in Africa. 162 00:09:51.300 --> 00:09:58.300 The British government when they got rid of Botswana, just before they got rid of Botswana, in 1960 said, 163 00:09:58.300 --> 00:10:01.220 Botswana has dismal economic prospects 164 00:10:01.220 --> 00:10:04.780 that are based on hopes of agriculture, salt and coal, all right? 165 00:10:04.780 --> 00:10:06.020 According to the experts, 166 00:10:06.020 --> 00:10:07.860 one of two things was gonna happen. 167 00:10:07.860 --> 00:10:10.560 Botswana was gonna become a heavily indebted country 168 00:10:10.560 --> 00:10:13.380 or it was just gonna be absorbed by South Africa, okay? 169 00:10:13.380 --> 00:10:15.660 Neither looked particularly good. 170 00:10:15.660 --> 00:10:17.620 At that time, Great Britain was really excited 171 00:10:17.620 --> 00:10:19.500 to just be getting rid of it, okay? 172 00:10:19.500 --> 00:10:20.420 They had no knowledge 173 00:10:20.420 --> 00:10:23.860 that there were any natural resources there. 174 00:10:23.860 --> 00:10:25.320 They felt like it was expensive 175 00:10:25.320 --> 00:10:29.480 to even administer protection to that colony, okay? 176 00:10:29.480 --> 00:10:33.280 So in 1965, along with many other countries in Africa, 177 00:10:33.280 --> 00:10:36.320 Botswana became independent. 178 00:10:36.320 --> 00:10:40.200 In 1972, they discovered diamonds in Botswana 179 00:10:40.200 --> 00:10:43.680 and that forever changed Botswana's history. 180 00:10:43.680 --> 00:10:47.400 From 1965 to 1975, Botswana was growing 181 00:10:47.400 --> 00:10:50.460 at about 10 and a half percent per year, okay? 182 00:10:50.460 --> 00:10:52.520 Now that doesn't mean much to us 183 00:10:52.520 --> 00:10:55.160 if we don't think about that number for a minute. 184 00:10:55.160 --> 00:11:08.160 If the U.S. were to grow at 10.5% per year for a 10-year period, we would go from about $37,000 per capita income in the United States to about $90,000. 185 00:11:08.160 --> 00:11:13.160 Botswana was starting at a much lower point, so they went from like $300,000 to $1,000. 186 00:11:13.160 --> 00:11:22.660 Still a pretty remarkable move, one that we kind of discount because they're moving from such a small starting point, but still splendid in and of itself. 187 00:11:22.660 --> 00:11:27.660 From 1965 to 1995, they grew at about 7.7% from 65 to 2003, 5.1%. 188 00:11:30.820 --> 00:11:32.540 A lot of information that I'm throwing at you, 189 00:11:32.540 --> 00:11:36.260 but I just want you to know that those are remarkable. 190 00:11:36.260 --> 00:11:39.040 That's a remarkable growth performance over time. 191 00:11:39.040 --> 00:11:43.420 Anything over 5% is quite strong. 192 00:11:43.420 --> 00:11:47.560 We get excited by three to 4% growth in the United States. 193 00:11:47.560 --> 00:11:51.300 Botswana was achieving 10% for a while, 7%. 194 00:11:51.300 --> 00:11:56.120 and now 5% over a long period of time, almost 40 years now. 195 00:11:56.120 --> 00:11:57.640 What in the world was responsible 196 00:11:57.640 --> 00:11:59.300 for that economic development? 197 00:12:00.160 --> 00:12:01.560 Going there and talking to people, 198 00:12:01.560 --> 00:12:03.840 there were a number of different factors. 199 00:12:03.840 --> 00:12:06.960 Five of the big ones that I'm just going to mention 200 00:12:06.960 --> 00:12:09.980 rather briefly, Botswana adhered to something called 201 00:12:09.980 --> 00:12:12.120 National Development Plans, all right? 202 00:12:12.120 --> 00:12:15.160 These were five-year plans that specified 203 00:12:15.160 --> 00:12:18.720 what kind of spending the government could engage in. 204 00:12:18.720 --> 00:12:21.520 not like Soviet Union five-year plans 205 00:12:21.520 --> 00:12:26.520 where we're gonna tell you exactly how our country 206 00:12:26.520 --> 00:12:29.080 is going to do for the next five years or anything like that. 207 00:12:29.080 --> 00:12:32.920 It was plans that were attempting to constrain government. 208 00:12:32.920 --> 00:12:35.740 If you wanted to spend, you had to specify it. 209 00:12:35.740 --> 00:12:37.980 And after that spending was specified, 210 00:12:37.980 --> 00:12:40.360 you couldn't make any kind of amendments. 211 00:12:40.360 --> 00:12:42.280 If you wanted to amend spending, 212 00:12:42.280 --> 00:12:45.280 you had to get unanimous consent of parliament. 213 00:12:45.280 --> 00:12:47.400 Pretty tough to do when you have 27 members 214 00:12:47.400 --> 00:12:49.400 The Theory of Money and Credit 215 00:13:17.400 --> 00:13:20.800 had to pass both the economic and social feasibility test. 216 00:13:20.800 --> 00:13:23.680 If they passed one, they received some consideration. 217 00:13:23.680 --> 00:13:26.800 Now, what would it mean to pass an economic feasibility test? 218 00:13:26.800 --> 00:13:28.280 You had to show that government spending 219 00:13:28.280 --> 00:13:30.000 was going to be profitable. 220 00:13:30.000 --> 00:13:33.520 Kind of tough to do, but they tried to show 221 00:13:33.520 --> 00:13:35.900 that most government spending could produce a rate of return. 222 00:13:35.900 --> 00:13:37.720 For example, when building roads, 223 00:13:37.720 --> 00:13:38.760 they had to show that the roads 224 00:13:38.760 --> 00:13:41.560 were going to get reasonable use. 225 00:13:41.560 --> 00:13:45.800 One anecdote that I can share with you while I was there, 226 00:13:45.800 --> 00:13:49.240 Botswana citizens are very proud of the fact 227 00:13:49.240 --> 00:13:52.440 that their first president was even constrained 228 00:13:52.440 --> 00:13:53.760 by the feasibility tests. 229 00:13:53.760 --> 00:13:55.640 He was asked, do you want us to pay 230 00:13:55.640 --> 00:13:57.800 of a road to your house, all right? 231 00:13:57.800 --> 00:13:59.980 And it was like three miles of roadway, you know? 232 00:13:59.980 --> 00:14:01.940 And he otherwise would have to ride down 233 00:14:01.940 --> 00:14:03.160 like a dirt bumpy road. 234 00:14:03.160 --> 00:14:05.640 And you don't want to ride down dirty bumpy roads 235 00:14:05.640 --> 00:14:07.560 when you're the president. 236 00:14:07.560 --> 00:14:09.680 He asked them, instead of saying, oh, of course, 237 00:14:09.680 --> 00:14:11.240 I would love that, he asked them, 238 00:14:11.240 --> 00:14:12.760 does it pass the feasibility test? 239 00:14:12.760 --> 00:14:15.120 And they said, well, not exactly, sir. 240 00:14:15.120 --> 00:14:17.560 you'd be the only person riding on it. 241 00:14:17.560 --> 00:14:21.160 And he said, well, then I don't want the road. 242 00:14:21.160 --> 00:14:24.080 And for his entire time in office until 1980, 243 00:14:24.080 --> 00:14:26.960 he had no road, no paved road going to his house. 244 00:14:26.960 --> 00:14:30.480 He rode coach on the Botswana airline 245 00:14:30.480 --> 00:14:34.280 instead of like having some kind of first-class airplane 246 00:14:34.280 --> 00:14:39.280 or his own jet, which presidents in the Western world enjoy. 247 00:14:39.480 --> 00:14:41.580 Things that were helping to constrain spending then 248 00:14:41.580 --> 00:14:44.360 had to have both of those tests passed 249 00:14:44.360 --> 00:14:46.400 in order to get financing. 250 00:14:46.400 --> 00:14:49.800 Another thing that was probably helping Botswana develop 251 00:14:49.800 --> 00:14:52.520 in that early period was they were very comfortable 252 00:14:52.520 --> 00:14:55.840 keeping their expats around at the time of independence. 253 00:14:55.840 --> 00:14:57.880 They actually allowed the British 254 00:14:57.880 --> 00:15:00.400 to come to the table with them and figure out 255 00:15:00.400 --> 00:15:03.280 where in the world are we going to go now that we're free? 256 00:15:03.280 --> 00:15:04.560 What should we do? 257 00:15:04.560 --> 00:15:06.360 In most other African countries, 258 00:15:06.360 --> 00:15:08.920 the first people to go and get the heck out of the country 259 00:15:08.920 --> 00:15:10.680 were the foreigners and the expats. 260 00:15:10.680 --> 00:15:13.720 They wanted nothing to do with the new government 261 00:15:13.720 --> 00:15:16.320 and the new government wanted nothing to do with them. 262 00:15:16.320 --> 00:15:18.680 So in Botswana, there was much more 263 00:15:18.680 --> 00:15:22.360 of an attitude of cooperation as opposed to conflict 264 00:15:22.360 --> 00:15:23.920 between those two groups. 265 00:15:26.040 --> 00:15:31.040 When talking about the expats in Botswana, 266 00:15:31.760 --> 00:15:33.580 some of them would say the president would actually come 267 00:15:33.580 --> 00:15:36.300 and sit down with them and have Saturday night dinners. 268 00:15:36.300 --> 00:15:39.520 And it was just a very engaged cooperative environment, 269 00:15:39.520 --> 00:15:44.680 something that is totally a complete departure from the trend 270 00:15:44.680 --> 00:15:47.320 when you think about other African leaders. 271 00:15:47.320 --> 00:15:49.520 Throughout most of the rest of Africa, 272 00:15:49.520 --> 00:15:52.320 they were putting up statues of Marx or Lenin 273 00:15:52.320 --> 00:15:54.120 at the time of independence, 274 00:15:54.120 --> 00:15:57.200 certainly not interested in any kind of Western point of view. 275 00:15:57.200 --> 00:15:59.540 Botswana had a different path. 276 00:15:59.540 --> 00:16:02.480 The reason in part why they had such a different path 277 00:16:02.480 --> 00:16:07.320 was just their president's attitude towards Westerners. 278 00:16:07.320 --> 00:16:09.760 He was educated in Great Britain. 279 00:16:09.760 --> 00:16:11.680 He married a white English woman, 280 00:16:11.680 --> 00:16:13.740 which was very controversial, 281 00:16:13.740 --> 00:16:17.960 but it certainly helped him develop a more tolerant attitude. 282 00:16:17.960 --> 00:16:19.640 If you wanted to try to explain, 283 00:16:19.640 --> 00:16:21.240 why were they so different? 284 00:16:21.240 --> 00:16:23.640 I think that that probably had something to do with it. 285 00:16:23.640 --> 00:16:25.520 Two other things going on in Botswana 286 00:16:25.520 --> 00:16:27.760 that helped them develop in that early period. 287 00:16:27.760 --> 00:16:31.120 One of them was they had no defense, okay? 288 00:16:31.120 --> 00:16:35.240 Basically, the way that they were handling 289 00:16:35.240 --> 00:16:38.960 any kind of conflict was they had a local police force that would try to put down any 290 00:16:38.960 --> 00:16:44.400 kinds of civil uprisings, any kind of protests. It was all handled by a very small police 291 00:16:44.400 --> 00:16:50.000 force. The attitude of the early reformers, we talked to a number of the more important 292 00:16:50.000 --> 00:16:54.720 people in that early reform period, was that the best defense was no defense, okay? Now 293 00:16:54.720 --> 00:16:58.800 how in the world could the best defense be no defense? Essentially what they thought 294 00:16:58.800 --> 00:17:03.980 was if one of our neighbors, and their neighbors were complete basket cases at this time, okay? 295 00:17:03.980 --> 00:17:16.980 There's no question about that if you look at it. You have Apartheid South Africa, you have Rhodesia, you have other night beers going on in the West, which is now Namibia. 296 00:17:16.980 --> 00:17:25.980 At that time it was German West Africa. All of these countries that basically wouldn't have minded going in and invading Botswana. 297 00:17:25.980 --> 00:17:30.980 Their attitude was if we arm, it's very likely that they're going to just try to come and conquer us. 298 00:17:30.980 --> 00:17:34.580 If we don't arm ourselves at all, somebody has to come to our aid. 299 00:17:34.580 --> 00:17:38.680 Okay, if we just put up our arms and say, we have nothing, you have to help us, 300 00:17:38.680 --> 00:17:41.780 it would be a huge humanitarian disaster if nobody came. 301 00:17:41.780 --> 00:17:46.580 And they basically, to some extent, were very good economists. 302 00:17:46.580 --> 00:17:52.080 They said, let's free ride off the rest of the world and hope that they answer our calls. 303 00:17:52.080 --> 00:17:56.080 Fortunately, for a long period of time, nobody bothered Botswana, okay? 304 00:17:56.080 --> 00:18:00.480 And in this early period, they didn't have to engage in massive defense spending, 305 00:18:00.480 --> 00:18:05.280 which certainly eased some of the fiscal burden of being a country. 306 00:18:05.280 --> 00:18:13.280 Final factor helping Botswana develop was just a general openness to dissidents and a toleration of foreigners. 307 00:18:13.280 --> 00:18:18.080 They were very comfortable allowing different humanitarian organizations to come 308 00:18:18.080 --> 00:18:24.680 and not only set up camps there, but in fact like set up full-fledged organizations. 309 00:18:24.680 --> 00:18:29.880 They welcomed foreigners from Rhodesia, later on Zimbabwe. 310 00:18:29.880 --> 00:18:33.360 They welcomed people on the run from South Africa. 311 00:18:33.360 --> 00:18:35.720 Basically, they took anyone who wanted to come. 312 00:18:35.720 --> 00:18:38.640 And you can look at old speeches. 313 00:18:38.640 --> 00:18:39.920 You can talk to people there. 314 00:18:39.920 --> 00:18:43.860 And it was just an attitude of complete openness, okay? 315 00:18:43.860 --> 00:18:46.240 They wanted these feisty people 316 00:18:46.240 --> 00:18:49.320 because maybe it was kind of good for business in Botswana. 317 00:18:49.320 --> 00:18:51.360 You know, the feisty types 318 00:18:51.360 --> 00:18:53.440 might actually be somewhat entrepreneurial. 319 00:18:53.440 --> 00:18:54.740 Let's bring them here, okay? 320 00:18:54.740 --> 00:18:59.320 So in many ways, Botswana was like the Switzerland of Africa. 321 00:18:59.320 --> 00:19:00.800 They were fairly neutral. 322 00:19:00.800 --> 00:19:03.800 They were fairly tolerant and quite open. 323 00:19:03.800 --> 00:19:07.640 And by being open and tolerant, 324 00:19:07.640 --> 00:19:11.560 they certainly were able to develop much more rapidly. 325 00:19:11.560 --> 00:19:14.480 I've talked about their economic performance over time. 326 00:19:14.480 --> 00:19:17.400 It's not just dollars that they enjoyed, 327 00:19:17.400 --> 00:19:20.120 like increases in their per capita income. 328 00:19:20.120 --> 00:19:23.240 It also led to massive improvements in wellbeing. 329 00:19:23.240 --> 00:19:25.920 Illiteracy dropped by more than 50% 330 00:19:25.920 --> 00:19:27.320 over this period of time. 331 00:19:27.320 --> 00:19:29.760 Infant mortality was on the decline. 332 00:19:29.760 --> 00:19:33.400 Sanitation, access to sanitation improved tremendously. 333 00:19:33.400 --> 00:19:36.160 When I was there this last summer, 334 00:19:36.160 --> 00:19:39.720 I was scared to death to go to Africa. 335 00:19:39.720 --> 00:19:42.260 I went and I met with a physician 336 00:19:42.260 --> 00:19:44.640 and they load you up with about a half dozen shots 337 00:19:44.640 --> 00:19:46.200 and you're thinking, this isn't good. 338 00:19:46.200 --> 00:19:50.240 The more shots that you get, the scarier it's going to be. 339 00:19:50.240 --> 00:19:53.240 And I got there and they tell you, don't drink the water, 340 00:19:53.240 --> 00:19:56.560 boil all water, don't talk to anyone, 341 00:19:56.560 --> 00:19:58.220 Get in your house after dark. 342 00:19:58.220 --> 00:20:01.540 All of these things that are really freaking you out. 343 00:20:01.540 --> 00:20:06.220 And we got there and it was just actually a very safe place. 344 00:20:06.220 --> 00:20:09.620 It reminded me a lot of like a small Midwestern town. 345 00:20:09.620 --> 00:20:11.300 I'm originally from the Midwest. 346 00:20:11.300 --> 00:20:12.380 You felt quite safe. 347 00:20:12.380 --> 00:20:16.780 There was no sense of insecurity for your safety. 348 00:20:16.780 --> 00:20:18.660 You could drink the water actually. 349 00:20:19.500 --> 00:20:23.120 It was completely all right in the cities that we were. 350 00:20:23.120 --> 00:20:25.140 When we went out into the more rural areas, 351 00:20:25.140 --> 00:20:26.420 we were a little more careful, 352 00:20:26.420 --> 00:20:28.740 but it certainly wasn't the place 353 00:20:28.740 --> 00:20:29.980 we were imagining it to be. 354 00:20:29.980 --> 00:20:31.780 Usually when you think of Africa, 355 00:20:31.780 --> 00:20:34.860 you have a stereotype like probably not a place I want to go. 356 00:20:34.860 --> 00:20:37.660 And Botswana certainly departs 357 00:20:37.660 --> 00:20:39.520 in a big way from that stereotype. 358 00:20:40.580 --> 00:20:43.500 From 1965 to the present, 359 00:20:43.500 --> 00:20:45.980 they've enjoyed remarkable development. 360 00:20:45.980 --> 00:20:49.180 They've experienced huge improvements 361 00:20:49.180 --> 00:20:51.820 in their infrastructure, their education. 362 00:20:51.820 --> 00:20:55.300 Roads have increased from something like 100 kilometers 363 00:20:55.300 --> 00:20:58.840 of Roadway to about 10,000 kilometers. 364 00:20:58.840 --> 00:21:00.700 The number of flights in and out of Botswana 365 00:21:00.700 --> 00:21:01.820 has been increasing. 366 00:21:01.820 --> 00:21:03.260 Things that we might look at 367 00:21:04.220 --> 00:21:06.540 to get a sense of general prosperity. 368 00:21:06.540 --> 00:21:08.780 All of the signs of prosperity 369 00:21:08.780 --> 00:21:10.820 tend to be pointed in the right direction. 370 00:21:10.820 --> 00:21:14.100 Over time, it's become a more service-oriented economy. 371 00:21:14.100 --> 00:21:17.100 Tourism's now a really big industry in Botswana, 372 00:21:17.100 --> 00:21:19.060 and they've done a good job of marketing it. 373 00:21:19.060 --> 00:21:21.800 But with all of this progress, 374 00:21:21.800 --> 00:21:24.180 there are some things that are pretty puzzling. 375 00:21:24.180 --> 00:21:29.140 Since about the mid-1970s, and I'm going to put up one little diagram here. 376 00:21:29.140 --> 00:21:36.780 Since the 1970s or so, Botswana's government has been growing at a pretty rapid rate. 377 00:21:36.780 --> 00:21:40.460 And I'll talk about the rates of growth in just a minute, okay? 378 00:21:40.460 --> 00:21:51.140 So the data isn't real great here in 1965, but in 1965, Botswana's government spending as a percentage of GDP was around 23%, okay? 379 00:21:51.140 --> 00:22:01.380 From 1965 to 1975, government spending was steadily declining, all the way down to about 12 or 13 percent around 1975. 380 00:22:01.380 --> 00:22:09.100 Okay. Does anyone, by the way, know what government spending in the U.S. is right now, just to have like a general benchmark? 381 00:22:09.100 --> 00:22:12.340 Government spending as a percentage of GDP? 382 00:22:12.340 --> 00:22:17.060 Yeah, it's something like that. Yeah. Yeah, I mean, it fluctuates a little bit, but that's that's pretty good. 383 00:22:17.060 --> 00:22:21.540 And depending on what you measure, you know, some of us think it's like 50 or 60 percent. 384 00:22:21.540 --> 00:22:24.740 But yeah, we'll call it 35 and say that that's good. 385 00:22:24.740 --> 00:22:30.420 In Botswana, it was low and, you know, for a developing country, this is actually depressingly high. 386 00:22:30.420 --> 00:22:35.020 But for the first 10 years, government is on the decline. 387 00:22:35.020 --> 00:22:38.660 The government that we measure anyway is on the decline. 388 00:22:38.660 --> 00:22:42.580 And, you know, Botswana is growing at a 10.7 percent rate. 389 00:22:42.580 --> 00:22:51.980 Around 1975, government begins a steady trend higher and today, government spending in Botswana is about 35% of gross domestic product. 390 00:22:51.980 --> 00:22:58.180 You know, some say that it's pushing 40% if you include a couple of other things that they don't include. 391 00:22:58.180 --> 00:23:04.780 What in the world was going on here in Botswana's history? What are we to make of Botswana today? 392 00:23:04.780 --> 00:23:09.880 I sat down with one of their finance ministers and I asked him, I said, so what is the deal? 393 00:23:09.880 --> 00:23:15.380 You know, you're this rapidly developing economy, but 40% of your development is government spending. 394 00:23:15.380 --> 00:23:18.680 Isn't that alarmingly high for being a developing country? 395 00:23:18.680 --> 00:23:25.080 You know, he said, yeah, of course, but, you know, it's kind of hard to go back on it now. 396 00:23:25.080 --> 00:23:31.880 And he understood the logic of big government, which is a very frustrating cycle to get out of. 397 00:23:31.880 --> 00:23:36.480 I'm going to talk about what happened around 1975, bring us all the way to the present, 398 00:23:36.480 --> 00:23:40.200 and then talk about Botswana's future. 399 00:23:40.200 --> 00:23:44.000 Looking at that graph, between 1975 and 2003, 400 00:23:44.000 --> 00:23:45.360 Botswana's government spending 401 00:23:45.360 --> 00:23:48.560 was increasing at 10.3% per year, okay? 402 00:23:49.800 --> 00:23:51.400 If you compare that to South Africa 403 00:23:51.400 --> 00:23:52.900 over that same period of time, 404 00:23:52.900 --> 00:23:55.600 South Africa was averaging 2.8% per year. 405 00:23:55.600 --> 00:23:58.600 So pretty rapid increases in government spending 406 00:23:58.600 --> 00:24:01.120 compared to its closest competitor 407 00:24:01.120 --> 00:24:03.380 and its biggest competitor, okay? 408 00:24:03.380 --> 00:24:05.680 From 1995 to 2003, 409 00:24:05.680 --> 00:24:07.020 Right at the end of the graph there 410 00:24:07.020 --> 00:24:08.820 where you see another big jump, 411 00:24:08.820 --> 00:24:12.480 it was increasing at 8.3% per year, okay? 412 00:24:12.480 --> 00:24:13.880 Think about the United States again, 413 00:24:13.880 --> 00:24:16.220 to get a little bit of perspective on these numbers. 414 00:24:16.220 --> 00:24:18.060 W is really proud of himself 415 00:24:18.060 --> 00:24:20.560 when he can keep government spending fixed 416 00:24:20.560 --> 00:24:23.640 except for the defense and homeland security, all right? 417 00:24:23.640 --> 00:24:25.960 Botswana isn't even coming close to W 418 00:24:25.960 --> 00:24:29.340 and they're saying, let's increase it at 8% per year, okay? 419 00:24:30.280 --> 00:24:34.020 It's pretty rapid for a developing country, okay? 420 00:24:35.680 --> 00:24:40.680 Why in the world did this happen? Why was Botswana's government growing so rapidly? 421 00:24:40.680 --> 00:24:48.680 Well, in the late 1970s, early 1980s, Botswana decided to establish a national defense. 422 00:24:48.680 --> 00:24:53.680 Today, the national defense makes up 15% of all government spending. 423 00:24:53.680 --> 00:24:56.680 Why did they establish a national defense? 424 00:24:56.680 --> 00:25:02.680 In part, it had to do with some raiding that was occurring throughout the 1970s. 425 00:25:02.680 --> 00:25:05.280 Remember, Botswana was open and very tolerant. 426 00:25:05.280 --> 00:25:09.520 They were welcoming dissidents from South Africa and from Zimbabwe. 427 00:25:09.520 --> 00:25:13.720 While there were freedom fighters and other groups that were really ticked off 428 00:25:13.720 --> 00:25:19.840 that Botswana was protecting people that they wanted back in their home countries, 429 00:25:19.840 --> 00:25:24.840 they would come into the country and basically indiscriminately slaughter people along the border. 430 00:25:24.840 --> 00:25:27.640 Botswana said, we can't allow this to continue. 431 00:25:27.640 --> 00:25:32.480 The numbers were in the hundreds, if not up to about a thousand people. 432 00:25:32.480 --> 00:25:35.880 Civilians who were slaughtered in a lot of these raids, okay? 433 00:25:35.880 --> 00:25:39.680 Botswana citizens maybe rationally said, you know, this can't continue. 434 00:25:39.680 --> 00:25:41.360 We can't allow this. 435 00:25:41.360 --> 00:25:44.720 We're not going to be able to do it all on our own just by trying to like, you know, 436 00:25:44.720 --> 00:25:47.800 arm ourselves and shoot anyone who comes into our country. 437 00:25:47.800 --> 00:25:52.920 We want the national defense there to give us some kind of border protection. 438 00:25:52.920 --> 00:25:59.760 And they got a national defense that provides border protection and a lot of other things to Botswana. 439 00:25:59.760 --> 00:26:05.200 Today, the big controversy is whether Botswana should develop an air force, okay? 440 00:26:05.200 --> 00:26:08.880 A lot of the people we talked to were sitting there scratching their hands and heads saying, 441 00:26:08.880 --> 00:26:11.440 why in the world would Botswana need an air force? 442 00:26:11.440 --> 00:26:13.360 You know, like, who do we have to fight with? 443 00:26:13.360 --> 00:26:18.080 There's nobody flying planes in Africa, you know, let alone people to bomb, you know? 444 00:26:18.080 --> 00:26:24.320 So there are huge problems whenever you start to introduce a national defense. 445 00:26:24.320 --> 00:26:29.600 And you have tremendous pork and corruption charges that have been surfacing in Botswana. 446 00:26:29.760 --> 00:26:36.760 Empirically a lot of development economists have looked at the effect of defense spending on development and on corruption. 447 00:26:36.760 --> 00:26:42.760 Defense spending isn't a good thing for development and is a very bad thing in terms of the amount of corruption in your country. 448 00:26:42.760 --> 00:26:45.760 So not exactly good trends for Botswana. 449 00:26:45.760 --> 00:26:55.760 So from 1975 to the present they go from 0% national defense to 15% of the government budget being eaten up with national defense spending. 450 00:26:55.760 --> 00:26:58.760 That explains a good chunk of the government growth. 451 00:26:58.760 --> 00:27:01.160 In my paper, I also talk about a couple of other things 452 00:27:01.160 --> 00:27:04.120 responsible for the government growth. 453 00:27:04.120 --> 00:27:06.960 Botswana, in a lot of ways, is looking more and more 454 00:27:06.960 --> 00:27:09.280 like the United States over time. 455 00:27:09.280 --> 00:27:12.400 And this isn't a good thing for Botswana, all right? 456 00:27:12.400 --> 00:27:15.560 They've decided that maybe, since the United States 457 00:27:15.560 --> 00:27:18.160 and Western European countries have a lot of education, 458 00:27:18.160 --> 00:27:20.620 that we should invest in education heavily. 459 00:27:20.620 --> 00:27:22.120 Today, if you want to go to school 460 00:27:22.120 --> 00:27:24.720 all the way through college in Botswana, you can. 461 00:27:24.720 --> 00:27:26.420 The big controversy is that you have to pay 462 00:27:26.420 --> 00:27:29.260 for Your Own Books in College, okay? 463 00:27:29.260 --> 00:27:31.180 You know, the government picks up 464 00:27:31.180 --> 00:27:33.900 most of the remaining bill for you, okay? 465 00:27:33.900 --> 00:27:36.500 A huge drain on government spending. 466 00:27:36.500 --> 00:27:39.860 They've also increased environmental regulations, 467 00:27:39.860 --> 00:27:42.860 labor laws over time, all things that make them 468 00:27:42.860 --> 00:27:45.020 look more like a Western country, 469 00:27:45.020 --> 00:27:46.700 even though they're a developing country. 470 00:27:46.700 --> 00:27:48.380 So they're losing that advantage 471 00:27:48.380 --> 00:27:50.100 over a lot of other countries. 472 00:27:50.100 --> 00:27:53.420 I have one other table up here to just show you. 473 00:27:53.420 --> 00:27:55.060 Wow, this thing is so nice. 474 00:27:55.060 --> 00:27:59.060 Instant focus, instant adjustment, pretty cool. 475 00:27:59.060 --> 00:28:06.060 This table is looking at education spending in Botswana from 1970 to 1999, the last year I have data for. 476 00:28:06.060 --> 00:28:09.060 This is relying on world development indicators data. 477 00:28:09.060 --> 00:28:14.060 So when we go into the field, we do rely on conventional data sources, 478 00:28:14.060 --> 00:28:20.060 but we want to back that up with a lot of interviews and information that we gather from the ground. 479 00:28:20.060 --> 00:28:25.780 Botswana's education spending over time has increased from 4 million current US 480 00:28:25.780 --> 00:28:32.220 dollars in 1970 to 450 million dollars in 1999. Quite the growth industry, okay? 481 00:28:32.220 --> 00:28:38.780 Between 1970 and 1980 that rate of increase is 31% per year and then it's 482 00:28:38.780 --> 00:28:46.580 leveled off to a healthy 11-10% from 1980 to the present, okay? This kind of 483 00:28:46.580 --> 00:28:57.580 Education spending certainly has been explaining, let's go back to this one, some of this, some of this rapid, massive increase in government activity. 484 00:28:57.580 --> 00:29:01.580 Okay, two other things that also have contributed to government growth. 485 00:29:01.580 --> 00:29:09.580 Over time, Botswana has had more and more interest groups developing, especially in the capital, Havarone. 486 00:29:09.580 --> 00:29:13.580 One person that we interviewed said, we've learned very well from Americans. 487 00:29:13.580 --> 00:29:16.740 The best growth industry here is interest groups, okay? 488 00:29:16.740 --> 00:29:19.580 And I have that kind of information 489 00:29:19.580 --> 00:29:22.740 that I was able to acquire in interviews. 490 00:29:22.740 --> 00:29:25.260 And they understand that over time, 491 00:29:25.260 --> 00:29:26.580 interest groups are going to increase, 492 00:29:26.580 --> 00:29:29.580 but they all basically... 493 00:29:29.580 --> 00:29:31.420 The logic of special interest government 494 00:29:31.420 --> 00:29:33.320 has basically been established. 495 00:29:33.320 --> 00:29:35.500 So you could look at that early period as a period 496 00:29:35.500 --> 00:29:37.540 where the slate was basically clean. 497 00:29:37.540 --> 00:29:40.060 And after some kind of early period 498 00:29:40.060 --> 00:29:44.200 where they could get policy shocks in later periods. 499 00:29:44.200 --> 00:29:45.360 The government just took off 500 00:29:45.360 --> 00:29:47.400 with more and more interest groups. 501 00:29:47.400 --> 00:29:50.160 I talk about some of those in the paper. 502 00:29:50.160 --> 00:29:52.720 Over time, this makes the promotion of good policy 503 00:29:52.720 --> 00:29:54.240 a pretty difficult task. 504 00:29:54.240 --> 00:29:57.000 Finally, there were some changes in attitudes over time 505 00:29:57.000 --> 00:29:58.240 that have occurred as well. 506 00:29:58.240 --> 00:30:01.080 A lot of them coming from the discovery of diamonds. 507 00:30:01.080 --> 00:30:05.240 With this seemingly infinite resource, which it isn't, 508 00:30:05.240 --> 00:30:06.960 but the attitude there is that 509 00:30:06.960 --> 00:30:09.600 they have this wonderful revenue source. 510 00:30:09.600 --> 00:30:39.600 The attitude has shifted in the way that they view politicians from one where they're where individuals are asking what can I get from you or what will you give me instead of asking you know what's best for the nation so over time there's been a general shift to a concern much more with like am I going to get HIV cocktails do you promise that as a presidential candidate okay as opposed to like what's your policy on economic development okay you can understand how that shift can probably 511 00:30:39.600 --> 00:30:41.440 I'll probably be explaining part of that as well. 512 00:30:41.440 --> 00:30:44.400 So it's not just one factor that's been leading 513 00:30:44.400 --> 00:30:47.200 to Botswana's government growth over time. 514 00:30:47.200 --> 00:30:49.000 It's a combination of things, 515 00:30:49.000 --> 00:30:53.880 but the final result is big government in Botswana. 516 00:30:53.880 --> 00:30:55.800 I talk about ways that maybe Botswana 517 00:30:55.800 --> 00:30:58.120 can reclaim their post-colonial moments. 518 00:30:58.120 --> 00:31:00.880 I call this early period a post-colonial moment. 519 00:31:00.880 --> 00:31:02.160 I shouldn't put my hands on there. 520 00:31:02.160 --> 00:31:04.440 I call this early period a post-colonial moment 521 00:31:04.440 --> 00:31:06.600 where they've had a declining government, 522 00:31:06.600 --> 00:31:08.840 something we don't see real often in the world. 523 00:31:08.840 --> 00:31:11.800 Okay, government getting smaller and rapid development. 524 00:31:11.800 --> 00:31:14.200 Can Botswana ever get that back? 525 00:31:14.200 --> 00:31:16.640 I'm skeptical, but if they want to get it back, 526 00:31:16.640 --> 00:31:18.840 there are some basic things they need to do. 527 00:31:18.840 --> 00:31:21.480 They need to return to a concern with budget balance 528 00:31:21.480 --> 00:31:24.080 and smaller government spending, 529 00:31:24.080 --> 00:31:27.360 something that isn't a first order concern right now 530 00:31:27.360 --> 00:31:29.040 among the Botswana. 531 00:31:29.040 --> 00:31:31.680 When we were over there, the talk was much more, 532 00:31:31.680 --> 00:31:34.160 well, you guys run big deficits in the US, 533 00:31:34.160 --> 00:31:36.340 what's wrong with us running big deficits? 534 00:31:36.340 --> 00:31:38.840 For the first 30 years, they've been very hawkish 535 00:31:38.840 --> 00:31:41.040 about never going in debt, okay? 536 00:31:41.040 --> 00:31:42.380 There's a very good reason for this. 537 00:31:42.380 --> 00:31:45.620 They're concerned that if they go deep into debt, 538 00:31:45.620 --> 00:31:48.620 they could become quite dependent on South Africa. 539 00:31:48.620 --> 00:31:51.380 They're worried about South Africa kind of going bonkers 540 00:31:51.380 --> 00:31:53.460 at any given time and them not being able 541 00:31:53.460 --> 00:31:55.900 to get imports in Botswana, okay? 542 00:31:55.900 --> 00:31:58.540 So for rational reasons, they've avoided debts 543 00:31:58.540 --> 00:32:00.980 for the most part over their history. 544 00:32:00.980 --> 00:32:03.940 More recently, there's a shortfall in revenue 545 00:32:03.940 --> 00:32:05.020 from the diamond industry. 546 00:32:05.020 --> 00:32:09.380 they've said, you know, it's not so bad if we run some deficits. 547 00:32:09.380 --> 00:32:11.300 It certainly would be bad in their case 548 00:32:11.300 --> 00:32:14.740 to be taking on deficits just because of the signal 549 00:32:14.740 --> 00:32:16.780 that reflects in the way that they've shifted 550 00:32:16.780 --> 00:32:18.340 their policy positions. 551 00:32:18.340 --> 00:32:20.980 Another thing that's going on in Botswana 552 00:32:20.980 --> 00:32:23.220 that would be nice to see reform on 553 00:32:23.220 --> 00:32:26.660 is just an end to the handouts for the private sector. 554 00:32:26.660 --> 00:32:28.460 Botswana has become very concerned 555 00:32:28.460 --> 00:32:31.240 with diversifying away from diamonds, okay? 556 00:32:31.240 --> 00:32:34.160 But it's diversification that's thinly cloaked 557 00:32:34.160 --> 00:33:04.160 Special Interest Handouts. Essentially what's going on is the Botswana government is now picking new sectors that they want to subsidize, okay, so textiles is something that they think that they could do very well at, okay, they're basically subsidizing the textile industry which isn't making any money, but they say that it's, you know, a way to diversify their economy in case they run out of diamonds. You understand the difficulty of picking winners or losers in an economy for signaling reasons and for 558 00:33:04.160 --> 00:33:07.240 and systemic reasons Botswana should get out of that business. 559 00:33:07.240 --> 00:33:09.680 And finally, there's a very strange relationship 560 00:33:09.680 --> 00:33:12.560 in Botswana between the state and the private sector. 561 00:33:12.560 --> 00:33:15.040 It's something that they call peristatals. 562 00:33:15.040 --> 00:33:17.200 A lot of other countries call it that as well. 563 00:33:17.200 --> 00:33:20.040 For example, the media in Botswana 564 00:33:20.040 --> 00:33:22.360 is largely supported by the government. 565 00:33:22.360 --> 00:33:24.200 So people are scared to ever come out 566 00:33:24.200 --> 00:33:26.320 and say anything negative about the government 567 00:33:26.320 --> 00:33:27.480 because they're gonna lose a lot 568 00:33:27.480 --> 00:33:30.080 of their advertising revenue if they do. 569 00:33:30.080 --> 00:33:35.080 The government is in cahoots with a lot of the think tanks. 570 00:33:39.000 --> 00:33:41.780 You can't imagine how nice it is to have the Mises Institute 571 00:33:41.780 --> 00:33:43.700 that can say anything it wants 572 00:33:43.700 --> 00:33:45.460 about anything going on in the world 573 00:33:45.460 --> 00:33:47.460 and feel pretty free about that, okay? 574 00:33:47.460 --> 00:33:49.320 In Botswana, there are think tanks 575 00:33:49.320 --> 00:33:52.040 that are basically making sure to tote the party line 576 00:33:52.040 --> 00:33:54.840 and say just what it is to get another contract 577 00:33:54.840 --> 00:33:55.680 from the government. 578 00:33:55.680 --> 00:33:58.540 And there isn't the same level of criticism 579 00:33:58.540 --> 00:34:01.700 or like engagement going on between think tanks 580 00:34:01.700 --> 00:34:03.820 and the government in Botswana. 581 00:34:03.820 --> 00:34:06.340 So it would be nice to see some kind of split 582 00:34:06.340 --> 00:34:09.340 or divide there between the state and the private sector. 583 00:34:09.340 --> 00:34:11.100 These are modest proposals, 584 00:34:11.100 --> 00:34:15.740 proposals that probably won't get put into practice 585 00:34:15.740 --> 00:34:18.620 anytime soon, but things that would be nice to see 586 00:34:18.620 --> 00:34:20.700 over time if Botswana is going to start 587 00:34:20.700 --> 00:34:24.260 to take the right steps towards smaller government. 588 00:34:24.260 --> 00:34:26.800 Just to wrap things up, I'm running out of time. 589 00:34:26.800 --> 00:34:29.480 To wrap things up, what are we to take from Botswana? 590 00:34:29.480 --> 00:34:32.640 I scratch my head, I think about this a lot at night time. 591 00:34:32.640 --> 00:34:34.440 What am I supposed to say at the end of the day 592 00:34:34.440 --> 00:34:35.680 about Botswana? 593 00:34:35.680 --> 00:34:38.200 And the truth is, there are a couple of different things 594 00:34:38.200 --> 00:34:39.200 that I could say. 595 00:34:40.520 --> 00:34:42.880 We have evidence here in the early period 596 00:34:42.880 --> 00:34:45.760 that smaller government, good policy 597 00:34:45.760 --> 00:34:47.720 leads to high development. 598 00:34:47.720 --> 00:34:49.680 Let's not forget about that, 599 00:34:49.680 --> 00:34:53.780 that laissez-faire worked in Botswana in the short run. 600 00:34:53.780 --> 00:34:55.180 Okay? 601 00:34:55.180 --> 00:34:59.740 We have evidence and we have some understanding 602 00:34:59.740 --> 00:35:02.180 of how government grew in Botswana. 603 00:35:02.180 --> 00:35:05.160 The way that it grew in Botswana is quite similar 604 00:35:05.160 --> 00:35:07.200 to a lot of other places. 605 00:35:08.100 --> 00:35:10.140 Mark and I were talking earlier today and we said, 606 00:35:10.140 --> 00:35:12.260 you know, it kind of reminds you of that part in Star Wars 607 00:35:12.260 --> 00:35:14.820 where they talk about people applauding 608 00:35:14.820 --> 00:35:16.660 when liberty falls or whatever. 609 00:35:16.660 --> 00:35:18.820 You know, people wanted a national defense. 610 00:35:18.820 --> 00:35:21.500 People want support for education. 611 00:35:21.500 --> 00:35:23.940 and at the end of the day, what do you get as a result? 612 00:35:23.940 --> 00:35:27.460 A whole combination of processes and forces 613 00:35:27.460 --> 00:35:29.420 that lead to big government, okay? 614 00:35:29.420 --> 00:35:31.180 Similar story to our own story 615 00:35:31.180 --> 00:35:33.180 and to most other countries' stories. 616 00:35:33.180 --> 00:35:35.320 It's good to tell that story again, all right? 617 00:35:35.320 --> 00:35:38.280 That story never gets old for some of us, all right? 618 00:35:38.280 --> 00:35:42.340 Another thing you could take from the Botswana experience 619 00:35:42.340 --> 00:35:43.940 is the power of markets. 620 00:35:43.940 --> 00:35:46.380 At the same time that government has been growing 621 00:35:46.380 --> 00:35:50.020 rapidly over time, Botswana has continued to grow 622 00:35:50.020 --> 00:35:52.000 at Fairly Rapid Rates, okay? 623 00:35:53.120 --> 00:35:54.500 The growth hasn't ended 624 00:35:54.500 --> 00:35:56.700 just because government has gotten big, okay? 625 00:35:56.700 --> 00:35:59.200 And what, depending on what day of the week it is 626 00:35:59.200 --> 00:36:01.420 and what kind of mood I'm in, 627 00:36:01.420 --> 00:36:03.180 I'm willing to tell any of those stories. 628 00:36:03.180 --> 00:36:05.960 And any one of those three seem pretty valid 629 00:36:05.960 --> 00:36:07.980 when you look at the Botswana experience. 630 00:36:07.980 --> 00:36:12.220 So this analysis is basically an overview 631 00:36:12.220 --> 00:36:15.080 of Botswana's post-colonial history. 632 00:36:15.080 --> 00:36:17.140 I think it's a fascinating history. 633 00:36:17.140 --> 00:36:19.020 It has a lot of implications 634 00:36:19.020 --> 00:36:20.920 in understanding the United States 635 00:36:20.920 --> 00:36:22.220 and understanding other countries 636 00:36:22.220 --> 00:36:23.620 that you might be looking at 637 00:36:23.620 --> 00:36:26.220 and understanding Africa's plight. 638 00:36:26.220 --> 00:36:28.420 There are a lot of criticisms of Africa, 639 00:36:28.420 --> 00:36:30.500 African development approaches 640 00:36:30.500 --> 00:36:31.940 that are currently in practice. 641 00:36:31.940 --> 00:36:35.180 We can't have the United States telling Africa what to do 642 00:36:35.180 --> 00:36:37.220 because that would be imposing, okay? 643 00:36:38.180 --> 00:36:41.820 We don't want Africa doing it because they'll mess it up. 644 00:36:41.820 --> 00:36:45.460 Well, if they look at Botswana's experience, 645 00:36:45.460 --> 00:36:47.420 maybe they could have some kind of guide 646 00:36:47.420 --> 00:36:50.400 or like some kind of model 647 00:36:50.400 --> 00:36:53.060 when they approach their own development experiments 648 00:36:53.060 --> 00:36:55.840 in other African countries. 649 00:36:55.840 --> 00:36:57.400 The important thing for them to understand 650 00:36:57.400 --> 00:36:59.540 is they need to look at old Botswana 651 00:36:59.540 --> 00:37:01.660 as opposed to present day Botswana. 652 00:37:01.660 --> 00:37:04.060 I really hope that that in fact happens 653 00:37:04.060 --> 00:37:06.420 when different developing nations in Africa 654 00:37:06.420 --> 00:37:08.660 get serious about reform. 655 00:37:08.660 --> 00:37:10.260 Hard to say that it will though. 656 00:37:11.340 --> 00:37:12.520 Just to wrap things up here, 657 00:37:12.520 --> 00:37:15.100 how does this all fit in with the Mises Institute, 658 00:37:15.100 --> 00:37:16.680 with Austrian economics? 659 00:37:16.680 --> 00:37:28.080 In my opinion, and I think I'm kind of speaking for Pete Bettke here too, in my opinion, this is an approach that's quite consistent with both Mises and Rothbard. 660 00:37:28.080 --> 00:37:33.680 You know, Rothbard apparently told a lot of young students, you know, who are looking for direction, what should we do? What should we do? 661 00:37:33.680 --> 00:37:35.480 Can you tell us what kind of project to work on? 662 00:37:35.480 --> 00:37:42.180 And he would say, I can't do a Rothbard impersonation like Professor Bettke can, but I'll try. 663 00:37:42.180 --> 00:37:45.080 You know, he would say, you know, go do history, you know, history is real good. 664 00:37:45.080 --> 00:37:50.560 and we're trying, you know, we're trying to go out there and we're taking a unique theoretical 665 00:37:50.560 --> 00:37:54.760 approach to the field and coming back and trying to provide answers that really don't 666 00:37:54.760 --> 00:37:55.760 surprise us. 667 00:37:55.760 --> 00:37:56.760 Okay. 668 00:37:56.760 --> 00:38:01.120 It's, you know, this isn't rocket science, you know, the conclusions we reach are ones 669 00:38:01.120 --> 00:38:06.720 that, you know, basic economic analysis should lead you to. 670 00:38:06.720 --> 00:38:10.120 But what's unique about it is that we're doing field work with theory. 671 00:38:10.120 --> 00:38:12.080 A lot of field work is done without theory. 672 00:38:12.080 --> 00:38:18.580 Let's go out there and just say that this is a unique experiment where demand curves, in fact, slope upwards, okay? 673 00:38:18.580 --> 00:38:21.180 That's not the way we're approaching the field. 674 00:38:21.180 --> 00:38:27.780 We have these lenses, you know, which you can call economic analysis, you could call Austrian economics. 675 00:38:27.780 --> 00:38:33.780 We go out the window, we look at the real world, and we try to make sense out of it with those lenses in place. 676 00:38:33.780 --> 00:38:41.280 And that's, in my opinion, how all of this is, you know, fundamentally Austrian at its core. 677 00:38:41.280 --> 00:38:53.280 And with that, I'll shut up, I'll turn this off, if I hit the right button, and I'd welcome any questions, comments, concerns, criticisms, and the like. Yeah. 678 00:38:53.280 --> 00:39:07.280 You mentioned this western copycat phenomenon that's going on. I think it's pretty standard in terms of developing the story in a year. 679 00:39:07.280 --> 00:39:20.280 Do you think that this could change the focus of the direction for ethnography and field research in terms of looking at more domestic issues and performing some very institutional understanding 680 00:39:20.280 --> 00:39:26.280 to send better signals as to what the benefits of Western civilization and commerce are. 681 00:39:26.280 --> 00:39:35.280 I mean, you've got people like in the neocon movement, who are propagating this Western copycat phenomenon 682 00:39:35.280 --> 00:39:43.280 and encouraging foreign direct investment as a successful means for development. 683 00:39:43.280 --> 00:39:56.780 Fundamentally, our position on neoconservatism and Western impositions, whatever they want to send abroad, is that they had better know what in the heck is going on in that country. 684 00:39:56.780 --> 00:40:07.580 This ethnographic approach at its core is one that's saying, you know, let's make sure we have the culture or the indigenous institutions that are going on, the stuff on the ground right, 685 00:40:07.580 --> 00:40:37.580 and we have a good understanding of the history of these countries before we go in unapologetically, you know, throw democracy at them or throw, you know, like some kind of different aid idea, you know, you read the approaches that we've taken previously in development economics and you just get depressed, you know, it's, let's go there and produce shoes in this country and what does it do? It just crowds out local shoe producers who were in fact making some money in that industry and story after story is one where there hasn't been enough sensitivity to the local conditions 686 00:40:37.580 --> 00:40:44.180 so I think the ethnographic message ultimately is one where you have to 687 00:40:44.180 --> 00:40:48.300 recognize that the people there matter and it's one that's decidedly like 688 00:40:48.300 --> 00:40:53.820 anti-western in some sense but yet you know it's all it is those Western 689 00:40:53.820 --> 00:40:57.420 institutions to a large extent that we would like to see established there at 690 00:40:57.420 --> 00:41:04.420 at the end of the day. Let's see, oh boy, you, Peter. 691 00:41:27.420 --> 00:41:29.420 from the presentation I read the paper on, 692 00:41:29.420 --> 00:41:31.420 with the presentation of the states, 693 00:41:31.420 --> 00:41:33.420 but from your discussion today, 694 00:41:33.420 --> 00:41:35.420 it isn't obvious to me which parts of that story 695 00:41:35.420 --> 00:41:39.420 could not have been told based on secondary data, 696 00:41:39.420 --> 00:41:43.420 reports that others have made, World Bank reports and so on. 697 00:41:43.420 --> 00:41:48.420 What exactly is the ethnographic approach given to individuals otherwise? 698 00:41:48.420 --> 00:41:52.420 That's good, and that's something that you have to have value added, 699 00:41:52.420 --> 00:41:55.420 otherwise you could do it from here, or you could do it from reading history books. 700 00:41:55.420 --> 00:42:07.420 I think what it's providing is it's giving you another source of verifying what you're getting from your history books, what you're getting from your World Bank data. 701 00:42:07.420 --> 00:42:13.420 Pete Becci calls it triangulation. You're kind of lining your story up and making sure it fits. 702 00:42:13.420 --> 00:42:20.420 You have your traditional history, you have your conventional data, now you have this third thing that's making sure the other two things are correct. 703 00:42:20.420 --> 00:42:28.420 In Eastern Europe, we had data which was all messed up. We have history which a lot of it is all messed up. 704 00:42:28.420 --> 00:42:33.420 We need that third thing to find out what in the world is really going on there. 705 00:42:33.420 --> 00:42:37.420 In those cases, the ethnographic approach is clearly adding value. 706 00:42:37.420 --> 00:42:43.420 Let's get the story of the local entrepreneur who's engaging in black market activity. 707 00:42:43.420 --> 00:42:55.220 Now, in the case of Botswana, what we were looking for and going there was to try to get an understanding of what people there actually think about the current state of Botswana, 708 00:42:55.220 --> 00:43:04.420 what the reform process was actually like over time, you know, something that you can't get from your traditional historian, who's kind of biased in and of himself, you don't know what... 709 00:43:04.420 --> 00:43:07.420 Could you describe in a little bit more detail what you actually did? 710 00:43:07.420 --> 00:43:08.420 Okay, sure. 711 00:43:08.420 --> 00:43:12.420 Did you sit in the market square and watch people for hours? 712 00:43:12.420 --> 00:43:25.420 Okay, so what we did in Botswana and what we tend to be doing with most of these field work approaches more generally is you do a whole bunch of research up front before you go. 713 00:43:25.420 --> 00:43:32.420 You read everything you can on the country. I had done research prior to this on Botswana, so that was easier for me. 714 00:43:32.420 --> 00:43:40.420 The two other people who came with me to the field did a lot of that, you know, looking at a whole list of historical sources. 715 00:43:40.420 --> 00:43:46.420 Because you get together, you formulate some questions. What is it we want to make sense out of when we go over there? 716 00:43:46.420 --> 00:43:51.420 Then you have to be willing to recognize that maybe the question you're going there with is going to change on the fly. 717 00:43:51.420 --> 00:43:57.420 We went there wanting to make sense out of how diamonds, how bots want to escape something called the natural resource curse. 718 00:43:57.420 --> 00:44:03.420 That whole research program had to be scrapped because we couldn't get into the diamond mines at all. 719 00:44:03.420 --> 00:44:09.420 It was described to us as like Fort Knox. The diamond mines are better protected than the President of the United States. 720 00:44:09.420 --> 00:44:39.420 in the United States. So we said, hmm, you know, we've got to like figure out a different research track here. Now, what did we do when we got there? We lined up interviews with as many people as we could. We were able to get in the neighborhood of 35 interviews, which is about one per day for seven weeks, you know, taking weekends off. And that's a good total, surprisingly, you know, so it's, you know, you try to line up interviews with local citizens, businessmen, and then people in government 721 00:44:39.420 --> 00:44:43.560 The Theory of People who had previously been in government and then you ask them a series 722 00:44:43.560 --> 00:44:44.560 of questions. 723 00:44:44.560 --> 00:44:48.180 It's called, you know, it's just face-to-face interviewing. 724 00:44:48.180 --> 00:44:56.060 Now one of my other people who was with me, one of my team members, was much more comfortable 725 00:44:56.060 --> 00:45:00.160 than I was at like going and just trying to absorb what's going on in the market. 726 00:45:00.160 --> 00:45:04.300 So he would go like off on his own and be doing stuff like in the market square and 727 00:45:04.300 --> 00:45:34.300 And just like interacting and saying, I'm Andres and you know, I'm here to find out what you think about things, you know, and he would be like, sitting in a circle with people and doing his own thing. Now, I wanted more formal interviews because I wasn't all that comfortable doing that. But in the interviews, you're just trying to, you know, basically, it's a detective story and you're trying to figure out, put the pieces in place as to what in the world has happened here. Now, you could get that from a history book, but 728 00:45:34.300 --> 00:45:44.800 As far as I know, I haven't seen a history that's really concerned about this growth of government over time and that can explain it without being there as well. 729 00:45:44.800 --> 00:45:53.800 You know, you could just dig through the archives and maybe tell the same story, but that evidence wasn't there for us anyway. 730 00:45:53.800 --> 00:45:57.800 And even the archive work, you have to get to the university there or something. 731 00:45:57.800 --> 00:46:02.800 I hope that kind of answers what we did and the value in it. 732 00:46:02.800 --> 00:46:12.800 Can you talk a little bit about the overall structure of the government and how it has changed over the past three years? 733 00:46:12.800 --> 00:46:16.800 A lot of their revenue comes from the diamond industry. 734 00:46:32.800 --> 00:46:37.600 industry has been changing over time and they've been renegotiating and trying to 735 00:46:37.600 --> 00:46:43.360 extract more from the government as they go along, you know, and originally it was 736 00:46:43.360 --> 00:46:48.880 basically a 50-50 venture, De Beers and Botswana, it's called Debswana, all right, 737 00:46:48.880 --> 00:46:54.400 De Beers has control rights, they have some leasing rights where they're allowed 738 00:46:54.400 --> 00:46:59.520 to explore for a couple of years and over time the taxes on the revenue being 739 00:46:59.520 --> 00:47:07.520 The amount of money being extracted from the mines has been steadily increasing, so that tax has been going up to maintain a certain revenue flow to the government. 740 00:47:07.520 --> 00:47:19.520 We don't know exactly how that tax is shaping up, what amount of the profit is being taxed, because all of that is really closed, and that information isn't there. 741 00:47:19.520 --> 00:47:24.520 But we know that it's 40% of all government revenue is from the diamond mines. 742 00:47:24.520 --> 00:47:32.520 The structure of government is largely based on the British model. They have kept features of their traditional government in place. 743 00:47:32.520 --> 00:47:45.520 They have something called the Kagotla, which is an old, old traditional institution where they sit around and discuss things and encourage consent and unanimity before they proceed. 744 00:47:45.520 --> 00:47:53.520 That's an institution that's fairly uncommon in Africa as well. So they're less hierarchical than a lot of other African countries. 745 00:47:53.520 --> 00:48:21.520 Can you talk a little bit more about the raiders coming in? For example, why didn't a lot of parties come up? 746 00:48:23.520 --> 00:48:53.520 you know done more interviewing along the border and found out if there were in fact Rothbardian defense agencies or you know if it was just every man to themselves you know I don't know I would assume there had to have been some contracting out you know of like you know somebody who was pretty good at like shooting protecting or you know like somebody protecting like a reserve you know along the border there are a lot of game reserves you know maybe they were more effective protectors I that part of my story I would like to do more 747 00:48:53.520 --> 00:49:18.520 Are there any legal obstacles to that? 748 00:49:23.520 --> 00:49:53.520 the police force prior to the defense was the provider of security or something like that but I would think that I would like to go back again next summer and that would be something I would like to find out more about is in fact were there de facto defense agencies in place doing the job and look more closely at the severity of these freedom fighters as well clearly there were deaths caused by it but was the motivation there 749 00:49:53.520 --> 00:50:04.520 The groups that were being harmed really want the end government or was the momentum already in place for defense and this was just like the final straw in the camel's back, you know? 750 00:50:04.520 --> 00:50:05.520 Joe? 751 00:50:05.520 --> 00:50:17.520 When you said ethnographic, I expect a little bit more micro-micro approach in that I expected you maybe to investigate the cultural foundations of economic activity, 752 00:50:17.520 --> 00:50:32.520 The variation in the tribal attitude towards economic activity, and in particular, the property rights structure among the tribe, and then how that was in some sense revived by the colonial period. 753 00:50:32.520 --> 00:50:38.520 The colonial economic institutions that were left. In particular, the microstructure of markets. 754 00:50:38.520 --> 00:50:50.520 You know, more like Fernando de Soto, even the old Peter Bauer, I don't, you know, how much activity, you use some physics that I don't think I would look behind, I wouldn't ponder. 755 00:50:50.520 --> 00:50:58.520 You know, how much of their activity is non-market activity? Of their production is non-market production, it's household production. 756 00:50:58.520 --> 00:51:18.520 Let's investigate the cultural foundation. The key is property rights. You never really said anything about it. 757 00:51:18.520 --> 00:51:26.800 You know not not as much and I really in this paper I tried to deal with the 758 00:51:26.800 --> 00:51:31.760 post-colonial period to the present much more than the earlier period I I have an 759 00:51:31.760 --> 00:51:36.800 earlier paper that talks much more about the colonial forces and what was going 760 00:51:36.800 --> 00:51:41.720 on in colonial Botswana and pre-colonial Botswana now that was before I went over 761 00:51:41.720 --> 00:52:11.720 over there, you know the truth is it was hard to get people to talk about cultural change over time or the different culture you know they it has been regarded as a fairly homogeneous place you know in terms of just general cultural attitudes there are like some of the old guard who are willing to talk about a change in values you know but like deep cultural differences like is there like a real entrepreneurial group that we could that we could 762 00:52:11.720 --> 00:52:31.600 Find, you know, like that that kind of micro story, right, yeah, yeah, yeah, yeah, yeah, 763 00:52:31.600 --> 00:52:35.600 I would like to hear more about that, put it that way, whether I'm on phase. 764 00:52:35.600 --> 00:52:39.600 I think it's very important what you're talking about. 765 00:52:39.600 --> 00:52:42.600 I think it should also be focused on property rights. 766 00:52:42.600 --> 00:52:47.600 Ultimately, the attitude towards property rights, how they have developed and how they will develop in the future. 767 00:52:47.600 --> 00:52:50.600 These macros mean nothing. 768 00:52:50.600 --> 00:53:00.600 What I think you want to hear is the illusion of these institutions and what we're going to be prognosis for the future. 769 00:53:00.600 --> 00:53:04.600 That's where the problems will come from. 770 00:53:04.600 --> 00:53:07.600 Yeah, I completely agree with you. 771 00:53:07.600 --> 00:53:15.600 You know, I mean, we were talking about wanting to explore the property rights structure there in much more detail. 772 00:53:15.600 --> 00:53:24.600 For example, one thing that, you know, there are like huge constraints on time and getting something produced and, you know, you're only there for seven weeks. 773 00:53:24.600 --> 00:53:29.080 for seven weeks. Now that's just like, you know, kind of making an excuse. And we do 774 00:53:29.080 --> 00:53:34.840 recognize how important the property rights structures were. For example, they generally 775 00:53:34.840 --> 00:53:42.020 have a common landholding policy. You know, so they're very comfortable with like allowing 776 00:53:42.020 --> 00:53:45.800 the tribe to live anywhere on the land, but then you have property rights over your cattle. 777 00:53:45.800 --> 00:53:50.960 Okay, and cattle for a long time has been like a really big thing in Botswana. Now, 778 00:53:50.960 --> 00:53:56.960 One time, cattle has become less and less significant. They're trying to move away from being cattlemen anymore. 779 00:53:56.960 --> 00:54:00.960 So it's become more of a hobby. You get out of town and you go to your cattle post. 780 00:54:00.960 --> 00:54:04.960 And you don't live there and rely on that as much anymore. 781 00:54:04.960 --> 00:54:08.960 But there's stuff to do in that area without a doubt. 782 00:54:08.960 --> 00:54:12.960 And I would like to go back and focus on that much more. 783 00:54:12.960 --> 00:54:19.960 There are a lot of tribal disputes that I don't talk about either between the San and the mining company 784 00:54:19.960 --> 00:54:24.560 that you know have gone to the highest court and everything you know that you 785 00:54:24.560 --> 00:54:40.240 know need to be explored as well yeah I agree and that's that's something that 786 00:54:40.240 --> 00:54:48.200 needs much more research it's interesting there were eight groups 787 00:54:48.200 --> 00:55:00.200 There's a general cluster of Americans hanging out in the evening talking about who they've been able to get in interviews, what they're looking at. 788 00:55:00.200 --> 00:55:06.200 One group was trying to come up with a general equilibrium model of Botswana. 789 00:55:06.200 --> 00:55:09.200 I'm sitting there going, I'm really glad I'm not in that group. 790 00:55:09.200 --> 00:55:14.200 If I go back, I would like to be the property rights group, certainly. 791 00:55:14.200 --> 00:55:29.200 You know, one of my team members, Andreas Meroqueen, actually has been talking about doing stuff related to the property rights structure for part of his dissertation, too, because he was so puzzled by how that's affecting economic activity. 792 00:55:29.200 --> 00:55:38.200 You know, this comments with rights to the things that are mobile, you know, so it's, yeah, a huge question. 793 00:55:38.200 --> 00:55:50.200 Related to that concern is, Rothbard introduced several critiques and innovations on empirical statistics that he would use, 794 00:55:50.200 --> 00:55:58.200 and I was wondering if you would try to use any of his definitions or any other Austrian definitions, say GDP or something like that. 795 00:55:58.200 --> 00:56:28.200 I'm especially sympathetic to his looking, taking out, stripping government from gross domestic product. I've done that. Actually, it's, it's the, it's a different paper. But I've stripped that out. And when you look at like Botswana's development, taking government out from 1993 to 2003, or something like that, you know, it falls to around 2.8% growth from the 5.1% or whatever it was, you know, so I 796 00:56:28.200 --> 00:56:32.760 Let's look at some of that because Botswana's growth miracle doesn't look nearly as miraculous 797 00:56:32.760 --> 00:56:35.280 when you look at just private sector growth. 798 00:56:35.280 --> 00:56:39.600 And then if you go farther and you like take out the diamonds, you know, and you say that 799 00:56:39.600 --> 00:56:43.280 that's like, I don't know, you want to put that into a separate category and say that's 800 00:56:43.280 --> 00:56:45.300 not real entrepreneurial activity. 801 00:56:45.300 --> 00:56:49.560 That's just like good luck to some extent and you kind of take that out. 802 00:56:49.560 --> 00:56:52.080 What does Botswana have going for it? 803 00:56:52.080 --> 00:56:56.560 You know, the things it does have going for it are, you know, a really vibrant tourist 804 00:56:56.560 --> 00:56:57.560 industry. 805 00:56:57.560 --> 00:57:10.440 You know, it has some wonderful natural beauty that they've been able to really play up and, you know, they have been doing some service activity as well, car manufacturing and things like that. 806 00:57:10.440 --> 00:57:19.120 So, yeah, I am sympathetic to Rothbard's, especially his notion of what exactly is it that we want to see in gross domestic product. 807 00:57:19.120 --> 00:57:26.560 And I've looked at that and it diminishes recent Botswana history to some extent when you take government out, you know. 808 00:57:26.560 --> 00:57:31.960 I think we'll end there, we're out of time, and he'll turn it off for a few more questions.