Thoughts on economics and liberty

An obstacle theory of development

I am preparing for a talk entitled, “Can India Catch Up? Can Australia Do Better?” – which, once I've delivered it and refined it a bit, I'll extract/summarise on this blog.

In this process, I've come to realise that development is all about removing obstacles to the technical frontier. The following diagram illustrates what I have in mind:
What I'm trying to say here is very simple. 
 
Recall that I've proposed here that 
 
Growth = f(policy(F), governance(F), opportunity(F)) = f(F), where F = freedom.
 
"Opportunity" in the above equation reflects the distance to the technical frontier. For instance, India is very far from this frontier, the West is at the frontier; that is why India is so poor. The opportunity to reach the technical frontier always exists with the poorer nations. They simply need to copy what the leading nation is doing. No effort required to re-invent the wheel. However, they need the right policy and governance to achieve this opportunity.
 
So now the story becomes clear, as outlined below.
 
Each time someone (ANYONE, anywhere) innovates or invents something new, the HUMAN technical fronter is pushed outward.  For instance, the moment Edison invents something, or Einstein creates a new model of the world, the HUMAN technical frontier moves outward.
 
That, in effect, marks  the limit of human progress at a given moment.
 
If information and knowledge could transmit instantly, then all of us would always be at this technical frontier. Convergence would be instant. 
 
But that does not happen. So what prevents a someone living deep inside a village in India from reaching this frontier?
 
That answer is (a) Government obstacles and (b) Social obstacles. The diagram above is self-explanatory.
 
However, it is worthwhile to note that humans are rationally lazy and avoid thinking, and therefore they tend to believe, not investigate.  I experience this daily on this blog where people keep insisting that their outdated beliefs are 'right'.  People would much rather believe in myths and stories (that are romantic and interesting) than put in the effort to master the hard science behind our existence. It is much easier to believe that God made us [zero thinking required] than to keep asking questions where we came from! And so on. 
 
But laziness never gets anyone anywhere far. It is a recipe for mediocrity.
 
What is a government's job in this case? Good governance settings (policy and institutions) REMOVE Government obstacles. In general, this does not happen easily. Hence bad policy and bad governance are typically found, and since these have a lot of inertia, they are hard to change.
 
In addition, social reformers should be left free (no role for the government in this!) to remove religious/social obstacles. 

Removing obstacles is the key

By removing obstacles,  people can be quickly released from bondage and can march up to the technical frontier. The key to development, therefore, is:
 
a) GET OUT OF THE WAY!

b) TEACH PEOPLE TO THINK.
 
In India's case, the game changed long ago, but many Indians keep harping and wasting time on outdated world-views (e.g. cow slaughter or some such thing), instead of putting in the hard work to learn more science and economics. Both the Indian government and Indians, generally, REFUSE to change.
 
Sorry, people, the world has moved on. We don't live in the medieval era now. Time to wake up!
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