Easterly's 'Panaceas That Failed'

One may question the content of Easterly’s work, however, is choice of titles and headings is remarkable. “Panaceas that Failed”, Easterly gives a summary of the economic models applied by a variety of developed states and international institutions, that have inevitably failed. The argumentation against the Harrod-Domar Model employed by the US and the USSR is infallible, it is true that the economic reasoning behind the Model can be defined as arguable, at the very best. Yet Easterly chooses to overlook the political reasoning behind the use of such a model, the Cold War was a reason enough to make a plethora of clearly unsuccessful economic decisions. Furthermore, a variety of other failed methods of providing economic aim are listed, along
They serve as an overemphasized summary of what is written in the chapter, giving a clear picture of what is written. General clarity is one of the points that Easterly’s cannot be criticized for. Easterly’s description of the quest for growth passes the incentivization point, defines it as one of the best possible methods of promoting economic growth and continues in search of linked, complementary mechanisms. Luck is important, “Bad luck could create bad incentives; good luck could create good incentives. People respond to incentives”, Easterly takes an unarguable position, where anything that harms the work of incentive-based economic work can be attributed to “bad luck”. A dangerous internal political situation, an international conflict, a natural disaster? “Bad luck” according to Easterly, while the scenario of Japan that invests millions into controlling the negative output of seismic activity, is “good luck”. A “foolproof” position argued through the “roulette” win/loss probability case. Yet one may fail to notice the contradictive nature of the argument, Easterly states that if 1000 people were to bet on red or black in a roulette, after 20 bets, the luckiest could have won 17 times out of 20, while the unluckiest 3 out 20 bets, prospectively 85% and 15%, if the number of total bets was to be increased, both percentages would come closer to 50% (p. 204). However, such argument
Factors that mitigate growth, created directly or indirectly by the governments and the policies they introduce. These factors are ever-present in any state, developed or not, but, the scale of their presence is most visible in Third World states. Inflation, which Easterly studies on the case of Israel of the 1970s to 1980s period. Indexation, which was aimed at keeping fair wages, contributes to further inflation. Similar to the “trap”, this cycle is hard to exit since the implementation of a harsh wage policy for a certain period of time is required, which may cause political unrest for the ruling government. The creation of a black market demonstrated on the example of currency. A government can unwillingly create black markets based on the restrictive policies they implement. Easterly states that there is a strong association between the presence of a high black market and negative economic growth. A black market can be a supplementary feature of negative growth or a cause of it, but its presence is enough to deem it as a phenomenon which contributes to negative economic growth due to the lack of tax obligations on black market goods. If the two mentioned factors are not fully applicable to Kazakhstan, the next, the creation of a high-budget deficit, is a period which Kazakhstan has only recently