Easterly on Adam Smith

William Easterly has a paper here   about a smart Scottish guy who was a witness to actual Economic Development in a very smart, but very poor, part of the world and who was a Messiah to the 'enlightened' beamtenliberalismus  German bureaucratic class which later set in motion 'Listian' nationalist economic development to great effect. Easterly's claim is that this smart Scottish guy founded his own academic discipline.

Can we do other than laugh at Easterly?  Some fifty or fifty-five years ago, post-War Development Economics was universally recognized as retarded shite which fucked up poor countries stupid enough to take 'free money' from the US. By the late Seventies, the loathsome thing had retreated to the safe space of Ivy League Ivory towers to virtue signal while engaging in methodological masturbation and statistical self-abuse. 

Easterly writes-

Adam Smith is not sufficiently recognized as a founder of development economics.

Smith was part of actual Development based on Tardean mimetics. That's just 'Economics'- i.e finding cheaper ways of doing smart stuff one's Tardean target is already doing. Amartya-fucking-Sen- because he actually came from a famine stricken shithole- could gas on about Smith, mangling him completely in the process, but that wasn't 'development economics' at all. It was just retards doing what retards do. 

Smith challenged the longstanding assumption that inferior development outcomes reflected inferior groups, and that superior groups should coerce inferior groups to make development happen.

This is silly. It was always obvious that so long as land is scarce, superior groups replace inferior groups though no doubt slavery and a caste based miscegenation may happen along the way. The principle of comparative advantage does not apply if one side can take control of the factor of production of the other on the basis of an absolute advantage in killing and enslaving and exploiting the fuck out of them.  

Smith made clear that the positive-sum benefits of markets required respecting the right to consent of all individuals, from whatever group.

But fucking over your slave aint a market transaction. Easterly has uttered a tautology- for a mutually respectful relationship to burgeon both sides must respect each other. However, once coercion enters the picture, one side may gain more while the latter loses out. The game may be positive sum but one side is worse off and is suffering demographic or cultural replacement while the other side is much better off because of it. Moreover, rents are created and lodged in an asymmetric manner such that the terms of trade may worsen over time as 'invisibles' increase over 'visible' transactions.

These ideas led Smith to be a fierce critic of European conquest, enslavement, and colonialism of non-Europeans.

The problem here is that if England's European rival was doing that shit then that rival could pay for a better Armada which meant England had to get into the game- e.g. by grabbing the Assiento- or else it became vulnerable to Catholic invasion. On the other hand, Scotland should not waste time and money on expeditions to Darien or wherever. Also, Scotland should try to make England feel bad about itself- coz the Sassenach needs to be taken down a peg or two. It is intolerable that they consider God an Englishman and spend most of their time stuffing their faces with beef steaks while drunk off their head on port wine rather than eking out a bottle off claret over a dish of haggis. 

The loss of Smith’s insights led to a split in later intellectual history of pro-market and anti-colonial ideas.

Intellectual history? Are you fucking kidding me? These guys were all as stupid as shit!  

The importance of the right to consent is still insufficiently appreciated in economic development debates today

Economic development does not depend on the 'right to consent'. It may burgeon because of consent. But it burgeons yet more because of patriotism and  a spirit of self-sacrifice for the Fatherland. Harping on the right to consent merely creates a holdout or concurrency problem. Essentially, importing 'rights' into the debate- i.e. pretending incentive compatible remedies exist- changes Shapley values such that no solution concept is robust. By contrast telling 'Development Economists' to fuck off helps Economic Development get off the ground. 

Easterly does not acknowledge that the pirates and privateers and slavers and slave-traders and so forth who created Empires were not 'intellectuals'. They were, at best, greedy sociopaths and, at worst, fanatical evangelists of an evil God.

It is true, there were one or two, not just 'Smithian' but full fledged 'Benthamite' intellectuals who lobbied Westminster for more colonists to be sent out. But those intellectuals had names like Ram Mohun Roy & Dwarkanath Tagore. They were rational in asking for Whitey to come fuck over their peeps because, as Roy said, the alternative was the Muslims putting them back in their place which would be sad coz they'd have less money and have to write shite Persian poetry instead of virtue signaling English prose. 

One such idea that was widespread and influential for a couple centuries in Western intellectual history is that less developed people were unfit to have the same rights as more developed people.

Rights are linked to remedies. A people who have no remedy for getting killed or enslaved have inferior rights. This is because getting fucked over is inferior to fucking over anyone who tries to fuck with you.  

Underdevelopment equaled innate inferiority,

No. Some underdeveloped people, then and now, were very good at fucking up anybody or everybody who came near them. It was enough for a bunch of guys- like the Afghans or Gurkhas- to show they really enjoyed killing your expensively trained soldiers for them to get as much respect as they wanted. Generally, this involved paying them a subsidy and getting their less blood-thirsty peeps jobs as mercenaries in your Army.  

which implied your inability to make wise choices for yourself.

Studying and then teaching stupid shite- which is what Easterly does- aint considered a 'wise choice' unless the guy really had learning difficulties growing up. 

Advanced development equaled innate superiority, which included the ability to direct development for the inferior people.

Then Mongols turned up to participate in the rape of Berlin and the occupation of much of Eastern Europe. At the time, the very word 'Mongoloid' meant intellectually inferior. The Soviet Union was less developed than East Germany or Czechoslovakia. But Uncle Joe could direct the shit out of development in both places.  

These ideas opened the door for the more developed, allegedly superior people to make choices for the less developed people. Europeans had the right to seize lands of American Indians because Europeans would make the wise choices that would develop the lands more. 

Ideas didn't do shit. Some Europeans seized stuff- sure enough. If their native countries had repudiated them,  they'd still have done it. The USA continued grabbing land and genociding the fuck out of indigenous people long after Adam Smith was in his coffin. But then the same thing happened in Africa and Asia and elsewhere without Whitey being involved. 

Easterly- an ignorant American- takes 5 steps to arrive at his stupid conclusion. 

Step 1: Adam Smith really was a Development Economist To learn from history of development thinking, we first have to be convinced there IS a history of such thinking. There is a curious notion in development economics that the field emerged out of nowhere right after World War II. I used to share that view, writing in 2001: “{For decades and centuries} No economists paid much attention to the problems of poor countries…Suddenly after World War II, we policy experts, having ignored poor countries for centuries, now called for attention to their “urgent problems.””

Development Economics, in India, begins with Dadhabhai Naoroji, a one-time Maths Professor who began compiling and interpreting statistics so as to critique Colonial policy. He became a Professor in London in the 1860s and influenced the rising generation of more radical economists- like Marshall, who knew his Marx and Lasalle as well as his Smith and Ricardo. Marshall's Indian students- but also the Maths graduate, and Financier, Harkishen Lal Gauba who took Marshall's lectures in the early Eighteen Nineties- laid the foundations of Development Economics in India. The engineer Visvesvaraya as well as Judges, like Ranade and Dewans and other administrators worked together to create a synoptic vision of development which had its own cadre- viz. the Servants of India. Ambedkar, with a PhD in fiscal policy from Colombia, and another Doctorate in Monetary theory from the LSE, brought an anthropological and sociological perspective. Furthermore, from about 1900 onward you had Scientific Agronomical Institutes while Indian Statistics developed rapidly from the Twenties onwards. In other words, by the Thirties, everything needed for a comprehensive theory of Development was available in India. Yet development did not occur. Why? Gandhi and Tagore and other such virtue signaling nutjobs thought India should be inferior coz...urm... superiority is vulgar? It aint spiritual? Some shit like that. Still, my point is that it wasn't till American 'free money' was on the table to prevent Development that Mathematical Economists- mainly Bengali, like Sukhamoy how shit am I Chakroborty- got a chance to turn the very term 'Development Economics' into an oxymoron. 

To be clear, Indians- like everybody else- knew that they'd have to imitate Japan- a caste society which began to develop rapidly after it kicked Buddhism in the goolies- by getting rural girls into factory dormitories and conscripting boys and instilling fighting spirit and a proper work ethic into them and also beating and killing Marxists and libtards and so forth. 

Development just means imitating the more developed. Development Economics should be about how to do it cheaper. It's what happened in China in the Eighties but only because no one involved was a Development Economist. China, for its part, was imitating countries like South Korea which, it is true, had listened to Irma Adelman- the woman who could have won the Vietnam war for the US- but then Irma wasn't a proper Development Economist who knew from Turnpike theorems and Bayesian methods. Also, she lacked a penis. So even referring to her as an economist was stretching things a bit.

 Step 2: Smith universally celebrates individual choice

But Smith could do shit about coercion.  

Smith is famous for stressing the power of choices of self-interested individuals, and he does not modify this approach when he covers less developed areas. There is so much attention paid to the “self-interest” part of this approach that the “individual choice” part is often overlooked. At the time (and for more than a century and a half afterwards), the conventional wisdom on development differences stressed innate group differences rather than individual behavior. As we saw with Hume, people thought it obvious that development outcomes for groups simply reflected innate superiority or inferiority of those groups. Inferior groups lacked, among other things, the ability to make the right choices for themselves. Smith opted instead for what historians of thought Peart and Levy (2005); Levy and Peart (2016a, b) called “analytical egalitarianism” for all individuals. He is assuming that individuals everywhere are capable of acting in their own interest, and then that their choices actually benefit society as a whole.

Smith does make an assumption which is peculiar to himself- viz. that at the 'parish' level- i.e. the lowest collective possible- individual self-interest will aggregate in the same way that it would at the highest level. Thus the parish could provide for itself rather than transmit funds to the center which the center sends back. Smith was right about his own 'parish'. The Lowland Scots were the smartest people on the planet back then. But he knew very well that everything could turn pear-shaped if Westminster fucked up big time. Like other Scottish intellectuals, Smith knew that the security of his own people depended on getting their cousins down south to be a little less swinish and stupid. 

Easterly quotes Smith as saying ' “To remove a man who has committed no misdemeanour, from the parish where he chooses to reside, is an evident violation of natural liberty and justice.” Yet, if a parish is a Tiebout model- i.e raises local taxes to fund local club goods- it must be the case that an immigrant who quits his job 'to go on the parish' must be either excluded or subjected to a punitive workhouse discipline such that people in the parish will cease to want to rely upon parochial relief in bad times. This means, provision of the thing collapses. This is an example of information asymmetry or preference revelation throwing a spanner in the works of the armchair pundit.

Actual 'Law & Econ' finds solutions for problems of this sort such that economic development occurs. But this is either a mimetic or wholly idiographic process. Ordinary folk can grasp the thing easily enough- but Development Economists aren't ordinary. They are very very special and require special education. 

Comparing China and India, we might say the former could develop  more rapidly because of its 'internal passport' hukou system. Each area was a 'Tiebout models' which could exclude 'free riders'- or even migrants who had more than paid their way. More liberal countries can't have anything similar. However, the problem arises that  poor area which export youth have little incentive to educate them. The Japanese have a peculiar system whereby you can nominate your home area to receive a portion of your tax bill. Taking advantage of an ethic concerning gift giving, poor regions give presents to their expats. Germany has a different approach. Assuming your Schooling is done by your Church, the portion of your tax which goes to your sect repays their investment. Another approach is for poor regions to 'defeat Baumol cost-disease' by specializing in a particular type of Higher Education which then ensures that kids in local schools have an acquired advantage in that subject. This can give rise to a 'Marshall industrial district' effect.  Indeed, this was what happened in some poorer parts of the United Kingdom in the Nineteenth Century which is why Marshall's name could be attached to the phenomena.

My point is that individual choice doesn't matter very much. It is collective choice at whatever level which can best 'internalize externalities' and overcome preference falsification which matters. But finding the right level of subsidiarity is a discovery process. This is 'emic', not 'etic', stuff. This is an oikonomia to which all those not of the oikos have no access. Their 'akrebia'- i.e mathematical precision- bites at the empty air. On the other hand, an outsider- like Irma Adelman- can say sensible stuff like 'devalue your currency and do export led growth. Don't price yourself out of the market coz you want to stay virginally poor. Shake your money maker while you're still young enough to have a cute turd cutter.' I'm not saying Irma used those exact words. But, there can be little doubt, that she mimed the relevant actions till the South Koreans caught on. 

Easterly speaks of 'Institutions'. That sounds plenty precise. Apparently there are 'good' Institutions and 'bad' or naughty Institutions. The problem is, as every ordinary person knows, that good Institutions can do very stupid shit while bad Institutions, precisely because they are utterly rotten, may not be able to prevent sensible things happening. 

Easterly, explaining why he has to take Step 3, says -

 However, there is still a major loose end – if good institutions partially determine the outcome, these superior institutions could still reflect the wisdom of superior individuals from superior groups.

He means, if black peeps have crap institutions then, in a sense, aint they still crap? The obvious rejoinder is that there were plenty of Whites at the time who were being fucked over- Celtic Highlanders and Irish Catholics to name just two groups close to home- and thus it is only Easterly's own unconscious bias which is being addressed here-

 Step 3: Smith denies that superior institutions reflect superior people This step is the most radical and the most intellectually challenging both in Smith’s day and in ours. It involves first the idea of unintended general equilibrium (or in Hayek’s more general and poetic phrase “spontaneous order”), of which the Invisible Hand of the market is the most famous example.

The invisible hand belongs to the Katechon, that occult economy of Providence which keeps the eschaton at bay- oikonomia mysterion as the good book says- and which had brought about God's universal plan of salvation for the low low price of 30 pieces of silver. Smith grew up at a time when people knew their Bible the way we know donkey porn.

Second, Smith describes how the extent of the market (if we think of that as an institutional feature) varies unintentionally with  geographic accidents that affect transport costs. Third, Smith describes how the institutions that support individual freedom to choose also evolve unintentionally

The problem here is that only people who want to be superior will allow the unintentional evolution of that outcome. But such superiority is arduous. Lazy peeps will prevent the unintentional evolution of shite which makes their life more complicated. 

Why speak of 'accidents' which affect transport costs? Smith may have not foreseen steam ships and railway trains, but we know about them. It was nineteenth century advances which made Scientific racism so plausible. Thankfully, Hitler & Co put paid to any notion that Whitey couldn't be as stupid as anybody else. The fact is Development is only worthwhile if it can defend its fruits. But that defense is game theoretic. Von Neumann in between working out how to make atom bombs go boom, put paid to Economics as something worth studying at Uni. Either do Maths or Accountancy and Finance. As Freeman Dyson & William Press have recently shown, cooperation only exists so extortion can exist and vice versa. Evolvability is cool but we may be evolving into a tastier snack for a predator. 

Easterly writes-

The most radical idea in the Wealth of Nations that breaks the seemingly inevitable link between innate group abilities and outcomes is that of unintended general equilibrium.

because the unintended general equilibrium of the indigenous Tasmanians had led them to discover quantum computers and time travel- which is how come they have gone to wherever the dinosaurs still roam. By contrast, the existing human population of Tasmania got there not through any 'unintended consequence' but because Britain wanted somewhere to send convicts and perhaps also to stop the French getting hold of the territory.  

This is the real meaning of the invisible hand – related to the more general concept of spontaneous order (or with complexity theory, it could be “emergence of a complex adaptive system”). Spontaneous order is often seen today in development as a useless idea, not generating any policy recommendations except perhaps a scary passivity. But it is of great importance in the historical debate about innate differences between groups vs. different outcomes arising from intrinsically equal individuals under different circumstances. If individuals did not intend the good outcome for their group, their allegedly innate superiority does not so obviously get credit for it.

Yes it does. We are innately superior to monkeys coz our 'spontaneous order' is better than theirs. Sadly, if invaders turn up and start killing and enslaving us then our 'spontaneous order' is inferior probably because we are inferior in some sense. That may be the fault of our history but it doesn't change the facts. The Japanese decided they were inferior in many respects to the Americans. It took them more than a century to catch up but catch up they did by working hard and trying to do smart things. 

Individuals in the group with the superior outcome do not have the knowledge or ability to direct development for their own group,

Yes, they do. This is because they can do 'mechanism design' such that 'incentive compatibility' obtains and thus individuals and collectives are motivated to work together to realize a common vision.  

much less for other groups with inferior outcomes.

That's perfectly fair. We know what motivates us. We don't know what motivates people in far away countries. 

Easterly quotes Smith at his most foolish-

This division of labour, from which so many advantages are derived, is not originally the effect of any human wisdom,

Yes it is! First there is human wisdom and then there is division of labor. But, it may be wiser to abandon it in favor of self-sufficiency. This is a pendulum which has been swinging for ten thousand years! 

which foresees and intends that general opulence to which it gives occasion.

But, so far as we know, this is precisely what happened wherever there really was 'opulence'. The 'stationary bandit' makes an effort to attract specialists of various sorts and guards trade routes and levies taxes upon them. If trade routes aren't guarded the division of labor collapses. People abandon the larger settlements so as to get by on subsistence agriculture in places difficult for slavers to get to.  

It is the necessary, though very slow and gradual, consequence of a certain propensity in human nature, which has in view no such extensive utility; the propensity to truck, barter, and exchange one thing for another.

Which one can only do if there is no risk the other guy won't knock you on the head and grab your stuff. 

The size of the market is determined by the length and safety of the trade routes the stationary bandit can command. Easterly thinks it is exogenous. Did Smith think so himself? Perhaps- if his brain was made of porridge. The fact is the Royal Navy was creating a global market and this meant that British opulence would increase- for the opulent- in a manner Smith could little conceive. 

Smith says-

  In opulent countries, the market is generally so extensive, that any one trade is sufficient to employ the whole labour and stock of those who occupy it. Instances of people living by one employment, and, at the same time, deriving some little advantage from another, occur chiefly in poor countries.

Substitute 'counties' for countries and there is something to this assertion- but only if you define 'trade' as 'all economic activities occurring in a region whose main export is synonymous with it- e.g. Steel for Sheffield. Sheffield's tailors and bakers and so forth could all be said to be supporting the Steel trade. 

Easterly describes a strange sort of 'poverty trap'- 

there could be a vicious circle of poverty and no division of labor, or a virtuous circle of growing division of labor and growing prosperity reinforcing each other

This is nonsense. Poverty arising from agricultural involution of a Malthusian sort- or indeed any wider situation where there is zero marginal labour product in the main industry- will see a byzantine division of labor- e.g. domestic servants specializing in very narrow tasks- e.g. the 'hookah-wallah' & 'pankah-wallah' of the Raj era bungalow- but that division of labor disappears once the marginal product of labor begins to rise. That's why nobody now has scullery maids and boot boys and guys whose job it is to cut the tips off cigars. 

In a footnote, Easterly explains 

 To be more exact, the existence of a poverty trap also depends on the relative slopes of the two relationships of opposite causality between development and extent of the market. If the slopes are such that there is no poverty trap, it is still true that starting from a low level of each, the division of labor and extent of the market will feed on each other and increase till they reach a stable equilibrium.

This is nonsense. Either marginal product of labour is stable or rising or the people there are fucked. Expanding the market raises the marginal product of labour in high value adding industries. Thus, if you have a bunch of starving handloom weavers currently producing towels for 'Khadi Gram Udhyog' and you get them to produce granddad shirts for L.A hipsters then, like Fabindia, you raise marginal product and suddenly these guys are doing well. That's why Khadi Gram Udhyog is so determined to prevent Fabindia using the 'khadi' tag. It gets money from the Government to keep weavers desperately poor. 

A factor that exogenously makes the market small, such as the high transport costs to be discussed next, will have a low stable equilibrium at a low level of development.

Nope. The workaround is to go for insanely high value added. Then high transport costs make the thing 'positional' at the farthest end of the globe. Thus coffee made from berries shat out by a rare breed of monkeys in some inaccessible rain-forest will literally be worth more than their weight in gold. 

Many globe trotters have expressed puzzlement as to why the crappiest stuff is found closest to where it is produced while in a distant city you can be sure of getting the best. Where transport costs are a factor, the best is reserved for the furthest destinations. 

Easterly mentions the 'gravity model of trade'. But that is a type of gravity which Force creates. Indian Development Economists created a situation where it was about 30 percent cheaper to buy an Indian made suit from Marks & Spencer in London than it would be to buy it in India. Incidentally, did you know India had its first SEZ fifteen years before China? Since it was put in the charge of bureaucrats who prefer to spend their time in Bombay, it managed to survive but couldn't really catalyse very much.

Finally, a large extent of the market depends on the existence of individual freedoms to trade and to have individual rights to one’s own labor, property, and one’s own choices of occupations and locations.

This exists under slavery because smart slaves pay a portion of their profits to the owner. Indeed, the big advantage of slavery is that people think twice about killing or raping you coz your owner will fuck them over.  

All the benefits of the market in step 2 above depend on these free institutions.

No. They depend on the credible threat of being fucked over by the Slave Owner, or Trading Company, or Monarch, or Mafia boss you answer to. Institutions don't matter. The strong right arm is what permits trade to burgeon. 

England, Scotland, British North America, and Holland had such freedoms, while China, India, and Egypt (especially after being conquered by the Turks) did not.

So, countries ruled by unpopular foreigners- Manchus, Mughals, Mamelukes- tended to stagnate. Was this perhaps because the foreign conqueror knew that if people got rich from maritime trade then these essentially land based Empires would begin to fray in exactly the manner that they did in fact fray and come apart? 

Were these free institutions designed by superior groups?

England and Holland's 'institutions' may or may not have been regarded as free. What is certain is that the guys who designed and controlled them didn't want to be inferior to even the most Catholic of Kings or Emperors. They wanted to be able to tell them to go suck the Pope's dick.  

Smith sometimes saw these freedoms as determined by discrete policy choices by a government. He was after all trying to persuade any governments who would listen to give up zero-sum mercantilist thinking and trade restrictions, and to embrace free trade.

The Germans listened to Smith and after getting their Zollverein, went in a Listian direction. So did the US after fighting a Civil War in which more American lives were lost than in the two World Wars. 

Sounding a lot like a modern IMF or World Bank mission, he preaches to China that 'A more extensive foreign trade… could scarce fail to increase very much the manufactures of China, and to improve very much the productive powers of its manufacturing industry….as well as the other improvements of art and industry which are practiced in all the different parts of the world. Upon their present plan, they have little opportunity of improving themselves.'

But the Manchus got to stick around for another century, living in undiminished splendor.  

This does sound like freedom depends on wise policies by wise leaders.

But the opposite may be wiser if the alternative is having your throat slit. Easterly appears ignorant of the fact that by the middle of the Nineteenth century smart peeps in China and India and the Ottoman Empire etc. all agreed that European mechanism design was superior because it deliberately aimed at making Europeans the masters of the World. Instead of the man of religion quarreling with the courtier or the man of commerce, Europe had mechanisms such that each 'representative agent's' ruling passion caused that guy to do something beneficial for the larger project. The Missionary turns up to preach the Gospel, but- as George Bernard Shaw remarked- gets eaten. Then gunships turn up to avenge the insult to Religion. Trade follows the Flag, unless it is real sneaky in which case the thing works the other way around. 

 The claim of Europeans to have a superior innate genius for institutional design does not hold up if institutions emerge without design.

Very true! The American Constitution was actually typed up by monkeys. NYU, where Easterly teaches, was originally chartered in 1831 not as a teaching institution but a center for cheese fondling. Thanks to 'spontaneous order' it developed into a world class research university though, if you look closely, you will see most of the Professors are fondling pieces of cheese in between writing complex equations on the blackboard.  

Again, Smith mocks the pretension of individuals from groups with superior outcomes – they lack the ability to design those outcomes even for their own group. So they also lack the ability to design a better outcome for other groups that currently have inferior outcomes.

No. Smith mocks certain other pamphleteers with silly 'plans of government'. But Defoe had done it better.  

Step 4: Smith finds moral principles that make possible universal individual choice

Individuals chose stuff all the time. No 'moral principle' is required to make this possible. What on earth could Easterly be getting at? 

Smith also deployed moral principles that support individual choice. In modern terms, he recognized the need both for formal institutions and for moral norms.

In modern terms, I must- being modern- tell Easterly to fuck off. We know that 'formal institutions' are unnecessary coz we use things like Ebay and Paypal and may soon be using crypto-currency. As for 'moral norms' they are normally only mentioned by people who are, or think we are, morons. 

All of Smith’s analytical machinery is based on the notion of individual choice, presuming that the individual has a right to his own labor and property.

Why stop there? Why not presume the individual has the right to be herself? How about mentioning the all important right to have a right to be the subject of a right? If you are going to talk nonsense on stilts, why not lengthen those stilts till they overtop the Sun?  

Moreover, the opportunities for gains from trade only exist when individuals have their contract rights respected, when individuals do not steal from or coerce each other rather than honor the contract.

No. As with Ebay or Paypal, it is enough that the mechanism be incentive compatible. 'Respect' don't mean shit.  

Choice is equivalent to the absence of coercion – each individual has the right to consent.

No. Choice means actually picking between alternatives. Failure to make a choice may have nothing to do with coercion. 'Right to consent' does not matter. What matters is the externality associated with relying upon that consent. The Mafia Don's daughter may have the right to consent to sex with me. But, I'd be a fool not to run far far away if she gives me the glad eye. 

The invisible hand of self-interest only works when your self-interest is constrained to recognize other people’s self-interest to have their rights respected as well.

Nonsense! You need have no knowledge or feeling towards your counterpart in a market transaction. The invisible hand would soon cramp up if I had to enquire if everybody at the grocery store or restaurant was having their rights respected before I could complete a transaction.  

If this principle is violated, this would make your self-interest harmful to others.

My self-interest may be harmful to others in any case- e.g. my winning an Ebay auction to the disappointment of other bidders. However, provided there are no costs or benefits received outside the market (i.e. no externalities) and thus no action in tort lies against me, then no principle has been 'violated'. 

This violation of the Invisible Hand by unequal rights and coercion does not get as much attention as it deserves

from Economists for a very good reason. Economists aint policemen. They aint even lawyers. Fuck they can do about coercion? Put on a Batman costume and go beat up bad guys?  

compared to the usual focus on market failures, externalities, etc.

which is stuff Economists can do something about- or at least make money out of. 

Although formal institutions could enforce these rights to choose, Smith recognized that strong moral principles were even more powerful to make them happen – and that the right institutions would not emerge without the right moral norms.

The Stock Market is an Institution. Which moral norms did it emerge out of?  

The right morals for Smith can be summarized with the idea of reciprocity – any rights that I want for myself, I should respect in others.

In that case, the Stock Market would have collapsed immediately because brokers- who wanted the right not to reveal whether they wanted to buy or to sell-  nevertheless demanded to interact with jobbers who were obliged to quote their spread. Markets are not based on 'equal rights'. One party has a superior duty of care and must observe more stringent disclosure requirements. 

Easterly it seems is a true Development Economist. He has hit on a formula to destroy the market. Gains from trade arise on the basis of opportunity cost ratios. How they are shared may be a function of market power. There is no connection between either of these things and morality and reciprocity. A slave bringing water to an escaped prisoner-of-war, who is perhaps a Prince in his own country, may be able to exchange that water for diamonds. There is no morality here and no mutuality. But there is a gain from trade though distribution of rents- which may involve no 'visible' coercion- may lead to worsening terms of trade for the 'inferior' party. 

Easterly however thinks that something, that fool, Lionel Robbins said must be other than utterly foolish. He concludes- 

Mutual gains from trade are possible only when there is mutual respect for rights.

This is nonsense. I hate and want to kill you. You hate and want to kill me. But we can transact business through a third party, who holds funds in escrow till conveyancing is completed, and there can be a 'mutual gain' even though there is no 'mutual respect'. 

Interestingly, when it comes to real estate and other high value transactions, we follow the same method even if we both respect the fuck out of each other's rights. 

Step 5: Smith criticizes the colonialism of the West and unequal rights for the Rest 

 Had Britain, for some high moral reason, decided to give up colonies, it would not have been able to pay for the Royal Navy. We'd be speaking French or German now.

Smith's criticism, obviously, failed to influence history in the slightest. I suppose, in this respect, we may indeed say Smith was a Development Economist because he was wholly and utterly useless. The fact is even the least productive colonies served their European masters well. The Portuguese monarchy fell because Britain, rather rudely, took some territory in Africa they had been claiming. Spain's generation of 1898 similarly dug the grave of the Spanish monarchy, though Spain retained a small presence in North Africa which permitted Franco to return with 'Moors' whom he set to the task of systematically raping working class women in territory his Fascist allies had 'liberated' for him. Since Franco, as a professional soldier, concentrated on raping and killing his own people- rather than picking fights with foreigners- he showed the superiority of Fascism in the field of Economic Development provided it first concentrates on rape and afterwards gets Opus Dei type Religion and gives up such strenuous sexual activities so as to just get rich and die peacefully in its bed. 

Easterly quotes Smith

  Hereafter, perhaps, the natives of those countries may grow stronger, or those of Europe may grow weaker; and the inhabitants of all the different quarters of the world may arrive at that equality of courage and force which, by inspiring mutual fear, can alone overawe the injustice of independent nations into some sort of respect for the rights of one another

It is certainly true that China is telling America in no uncertain terms that it has achieved 'equality of courage and force'.  Yet, Easterly writes-

 With the popular resurgence of xenophobia and zero-sum thinking in the Western world, perhaps it wouldn’t hurt to follow Smith and talk a little more openly about our economic ideas and moral principles— that individuals everywhere are indeed fit to choose for themselves, and that true progress happens by consent.

How did China get to a point where it can tell Biden to go fuck himself while all he can do is promise that China won't completely overtake America 'on his watch'- which, in the nature of things, can't be very long at all? It was certainly through 'mutual gains from trade'. But it had nothing to do with moral norms or 'respect for rights'.

Yet China is the biggest Development Economics success story ever. How is Easterly able to write such guff when everybody can see, and smell, the elephant in the room? 

The answer, of course, is that he has spent his life studying and teaching a shite subject. Sad.