When States Fail

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Quarterly Journal of Austrian Economics
8, no. 3 (Fall 2005):

States Fail: Causes and Consequences
. Edited by Robert I.
Rotberg. Princeton, N.J.: Princeton University Press, 2004.

Do weak governments
around the globe merit assistance? The premise of When States
Fail: Causes and Consequences is that without strong government,
society devolves into chaos. Sponsored by the Harvard University
Failed States Project, this edited volume contains fourteen chapters,
most of them written by political scientists. Not all authors come
to the same conclusions, but they agree on most issues. Thus, I
will treat the arguments collectively. The writers argue that the
United States and other nations have a positive role to play in
helping at-risk governments become strong.

That most contributors
are mainstream political scientists rather than Austrian economists
becomes evident quickly. As the old saying goes, when all you have
is a hammer, everything starts looking like a nail. In the case
of these political scientists, they clearly believe that scientifically
designed government institutions are needed to solve all of the
world's problems.

A small minority
of the contributions are interesting and thoughtful; of the remainder,
the best chapters are the ones that do not say much. The arguments
will be convincing to those who believe in increasing state power
and those who believe that groups such as the United Nations should
be involved in governmental affairs around the globe. The arguments
will be unconvincing to anyone with the slightest appreciation for
free markets or self-governance.

Although these
academics pay some lip service to the importance of markets, they
argue that society crucially relies on strong states. As such, they
want to find ways to make states strong. The arguments rest on certain
basic assumptions that the authors unfortunately never justify.
Nowhere in the book do they offer evidence that having a failed
state or a weak state is bad. At a few points the authors try to
provide evidence for this hypothesis, but rather than attempting
to create an objective measure of the strength of states and then
attempting to correlate that with measures of results, they simply
choose countries with bad outcomes and then define those countries
as having weak states. When high mortality, low literacy, and low
life expectancy rates plague a country, the cause, according to
these authors, is that the government is not strong enough. Never
do they consider the possibility that these bad outcomes could be
due to overly strong states.

The Soviet
Union was certainly a very strong state, and it effectively killed
millions of its citizens (Rummel 1994). If the authors of this book
wish to defend their simple hypothesis that strong states are good,
they would need to ignore the evidence regarding those deaths or
counter with an argument about how the Soviet Union was actually
a weak state. Alternatively, they could start adding other variables
that only certain types of strong states are good, but these essays
appear to equate strength and goodness without reservation. The
volume is not about promoting economic freedom; it is about promoting
strong states.

The book cites
eight countries as having failed or collapsed states and three dozen
as having weak states. Economic Freedom of the World by Gwartney
and Lawson (2004) includes data for twenty of these countries. If
the contributors in Failed States had looked at that data,
they could have seen that these nations' median economic freedom
score is 5.6 which is among the bottom third (i.e., least free)
countries in the world. These countries receive particularly bad
scores for impact of minimum wage (3.9), business regulation (4.2),
and government enterprises and investment as a share of gross investment
(3.4). Does this look like a problem of weak governments or one
of overly intrusive governments?

In addition
to assuming that weak states cause bad outcomes, the authors never
consider the possibility that good outcomes can occur without strong
states. When a country has good results, they simply assume that
the country has a strong state. Yet history does not seem to demonstrate
this point. The government in seventeenth century Holland was highly
fragmented (Stringham 2003, p. 329), and one would think it should
be classified as weak. In addition, the government in early nineteenth
century America was certainly not as strong as the U.S. government
is today (Hummel 1996), and it too might be classified as weak.
In both of these cases, however, the absence of government interference
enabled the market to flourish. Historical work by economists such
as Benson (1990) and Clay (1997) shows that markets require little
more than government getting out of the way.

The authors'
treatment of Somalia is particularly puzzling. The Somali government
failed in 1991, and, after a brief occupation, troops from the United
States and the United Nations left in 1993 and 1995, respectively.
For the past decade the residents of Somalia have lived with virtually
no government (Leeson and Stringham 2005). Throughout When States
Fail the authors consider the situation in Somalia to be especially
bad. Yet, it turns out that the writers judge Somalia to be bad
simply because it lacks a strong state. A recent study by two economists
at the World Bank (Nenova and Harford 2004) documents that Somali
anarchy is not as chaotic as most government advocates would assume.
Despite the absence of government entrepreneurs provide electricity,
water, air travel, schools, and courts. Investment in areas such
as telecommunications has notably increased: Somalis now pay telephone
rates well below elsewhere in Africa, they have 1.5 times more phones
per capita than in neighboring countries, and they have ten times
as many people with phones than when they had government. The situation
is admittedly not perfect. The authors in When States Fail
assume that "Somalia would have fared better" (p. 162)
had international governments intervened more. If only the United
States and the United Nations had continued occupying Somalia, the
authors want us to opine.

In the future,
When States Fail tells us, the United States or United Nations
can help states from failing by helping them strengthen police (p.
38), disarm native populations (p. 170), increase welfare programs
(p. 176), and enact global gun control (p. 128). If anyone knows
of a recipe more at odds with the principles of the American Revolution,
let me know. Had the advice of the Harvard University Failed States
Project been heeded two and one quarter centuries ago, the failing
colonial government would have been rescued, and America would still
be under British rule.

Lest any readers
think I am being unduly harsh on a group of well-accomplished scholars,
let me give an example of the level of scholarship in this volume.
Harvard University's Dr. Donald Snodgrass gives this advice to countries
after a crisis: "After a brief period of rapid catch-up growth,
sustained GDP growth at 5 percent or better should be attained over
a number of years" (p. 260). After that: "Infant, child,
and maternal mortality should be reduced, life expectancy lengthened,
and illiteracy abolished" (p. 262). Surely no one would oppose
such goals, but this Harvard scholar acts as if all government needs
to do is press a button. Does anyone seriously believe that government
has the ability to choose a growth rate? Given that illiteracy has
never been abolished in any nation, including the United States,
does Snodgrass seriously believe that illiteracy can be abolished
in countries that have so many problems?

I am reminded
of the famous French socialist Charles Fourier, who promised that
under socialism: "Men will live to the age of 144 . . . the
sea will become lemonade and wars will be replaced by great cake-eating
contests between gastronomic armies." The political scientists
writing in When States Fail are peddling the same utopian
snake oil under a different package. All we need to reach Nirvana
is to create strong governments, they say. Should we believe them?


  • Benson,
    Bruce. 1990. The Enterprise of Law. San Francisco: Pacific
    Research Institute for Public Policy.
  • Clay, Karen.
    1997. "Trade Without Law: Private-Order Institutions in Mexican
    California." Journal of Law, Economics and Organization
    13: 202–31.
  • Gwartney,
    James, and Lawson, Robert. 2004. Economic Freedom of the World:
    2004 Annual Report. Vancouver: Fraser Institute.
  • Hummel,
    Jeffrey Rogers. 1996. Emancipating Slaves, Enslaving Free Men:
    A History of the American Civil War. Chicago: Open Court.
  • Leeson,
    Peter, and Edward Stringham. 2005. "Is Government Inevitable?
    Comment on Holcombe's Analysis." The Independent Review
    4: 543–49.
  • Nenova,
    Tatiana, and Tim Harford. 2004. "Anarchy and Invention: How
    Does Somalia's Private Sector Cope without Government?" World
    Bank Public Policy Journal 280: 1–4.
  • Rummel,
    Rudolph. 1994. Death by Government. New Brunswick, N.J.:
    Transaction Publishers.
  • Stringham,
    Edward. 2003. "The Extralegal Development of Securities Trading
    in Seventeenth Century Amsterdam." Quarterly Review of
    Economics and Finance 43: 321–44.

15, 2006

Edward Stringham
[send him mail],
adjunct scholar of the Mises Institute, teaches economics at San
Jose State University. He is president of the Association of Private
Enterprise Education and editor of the Journal of Private Enterprise.

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