Tuesday, January 30, 2007

Empire’s Dark Side

The Wall Street Journal published a summary this week of an article on the costs of imperialism.
Even if economists and historians have discovered that imperialism has had global benefits, the benefits don’t match the harm it causes, argue economists Christopher J. Coyne and Steve Davies in Econ Journal Watch.

Messrs. Coyne and Davies single out as typical of the pro-empire argument a recent paper in the Journal of Economic History that showed how bond markets across Latin America flourished after Theodore Roosevelt established that the U.S. would intervene militarily if a country defaulted on its debt.

However, they point out that along with a public good like regional stability, U.S. military intervention can also create public bads. Using a historical index of democracy, they find that very few of the nations where the U.S. intervened militarily in the past 100 years developed democratic institutions. Five years after an intervention, only 28% had a viable democracy, and only 36% had one 20 years after.

The authors say this poor success rate, even when considering positives such as short-term stability, shows how military interventions have downsides such as worse instability later on and client governments focused on keeping the support of the U.S. government, rather than on domestic growth.

There is a lot more to read here.