Monday, March 9, 2009

What is the truth of the Asian Miracle?

Bill Easterly's post criticized the UN's recomendation of industrialization via state intervention. His subsequent post challenged the "myth" that the East Asian economies grew via state intervention. His claims are that these economies grew because they adoped pro-market policies. This was interesting because Ha Joon Chang in Bad Samaritans claims the exact opposite. He claims that it is a "myth" that free-market forces created the economic growth experienced by the Asian Tigers.

This debate will go on endlessly because of the inability of economic models to reject anything. Economists will be free to interpret the evidence according to their biases even though they may claim not to be a free market idealogue. In the absence of evidence or rather in the lack of evidence that can proved one sided or the other conclusively, one would think that economists would remain agnostic rather than to ascribe to either faiths of free markets or state interventions.

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