Chelsea Follett: Today, joining the Human Progress Podcast is Matt Warner. He is president of Atlas Network, a non-profit that aims to secure the rights to economic and personal freedom for all individuals through its global network of think tanks, supporting local NGOs in more than 90 countries. Matt is an expert on economic developments, institution building, non-profit managements, and impact philanthropy, and his writing has appeared in Foreign Policy, The Hill, Forbes, Harvard’s Education Next, and the Cato Journal, among others. And he joins me today to discuss his latest book co-authored with Cato senior fellow, Tom Palmer, “Development With Dignity: Self-Determination, Localization, and the End to Poverty.” This book argues that an end to poverty can only be achieved by prioritizing human dignity. Fostering discussions on how we might achieve higher living standards and lower rates of poverty, of course, is one of the things that and this podcast is all about. So I’ve been looking forward to this conversation. Thank you so much for joining me, Matt, how are you?

Matt Warner: Thank you. I’m doing very well, and appreciate this opportunity. I think the work that you guys do at HumanProgress is excellent.

Chelsea Follett: Thank you. I’m a big fan of Atlas Network. So let’s start with the big picture. What is the book about? And why did you write it?

Matt Warner: Well, Atlas Network, of course, has been involved for 40 years in supporting local organizations, mostly think tanks who are working on strengthening the free society, and right now what’s happening in the global economic development community is this big push to rethink how they go about achieving strengthened institutions of liberal democracy, because we’ve had very disappointing results the last three decades in particular, and this whole idea of localization is their answer to say, “We need to be deferring more and supporting local leadership, local vision for change and putting in the backseat kind of foreign interventionist models,” and so we saw an opportunity, Tom and I, to help further that conversation as sort of… We are encouraged by this turn to localization, but it’s important to really go deep into understanding why localization is important, what is it about local voices that’s critical to getting the institutions right, and we have lots of great examples that we’ve benefited for many years of watching and learning from think tanks around the world who have been doing just that, and gaining an appreciation for the nuances of what looks like partnering with locals and what’s actually supporting local vision for change.

Chelsea Follett: Right. So this book obviously really connects with Atlas Network’s work, but before we delve deeper into the book, could you talk a little bit about Atlas Network, for those viewing or listening to this podcast who might not be familiar with the organization?

Matt Warner: Sure. We’re a non-profit, as you said. We ourselves don’t do work on the ground, but we’re very much close to the work on the ground because we support it both with grants and with providing networking opportunities for think tank leaders around the world who are committed to the free society. Our founder, Sir Antony Fisher, founded the Institute of Economic Affairs in England in the ’50s, which later became credited with many of the intellectual and cultural foundations with which the liberal move in the Thatcher era could happen. And so this idea of think tanks is really starting to get its due both because the number and the quality of think tanks around the world has just exploded in the last 20 years, and also appreciating that there’s something important about an independent voice outside of government, outside of corporate lobbying power, who can articulate and do the deep dive into researching the ideas that are gonna help a society prosper. So our work is both in grantmaking, but also in providing this somewhat niche type of work, a network of peers from which we can accelerate learning and motivate new levels of excellence and shooting for… Shooting for big wins.

Chelsea Follett: It’s very important. So this book centers dignity. How should we understand dignity, and why is it important to international development?

Matt Warner: Well, one thing to start with is to recognize how commonplace and appreciated the idea of dignity is at least in using the term international development. If you go back to the United Nations universal declaration of human rights in the ’40s, we see this term used. If you say the word at a cocktail party, people are agreeable, but to understand what do we mean by dignity, we actually need to take some pause and think about, for example, the work of Deirdre McCloskey or Joel Joel Mokyr to say the way that we think about dignity has actually changed over the centuries, going from something that signifies class or rank to a more universal equal moral worth idea about people.

Matt Warner: And another key aspect of the modern idea of dignity that is so important is that we’ve also, in places where this has taken route, started to appreciate that there’s something unique about an individual’s knowledge about themselves and the life that they wanna lead, that needs to be treated with deference and reverence and respect in our institutions, and so what McCloskey and others will point to as one of the precursors of the Great Enrichment, the explosion and standard of living that’s happened over the last 200, 300 years, is that we had a shift in the way that we thought about the role of the individual in making decisions for their own lives. And the practical, efficient result of that is that you start to have people and institutions participating in supporting an uncoordinated experimentation of innovations and ideas, and this uncoordinated free-wheeling experimentation is how standards of living can increase as fast as possible because you’re learning quickly and you’re pivoting to what works.

Matt Warner: And what works is idiosyncratic to the particular place that a person or community is living, both as a function of the geography, the climate, etcetera, but also the individual’s preferences, which include culture and beliefs and religion, etcetera. And so to try to centralize all of that important data in the economic activity that’s happening is kind of a fool’s errand. What we wanna do is create institutions that allow for those individual expressions of huge human dignity, what people prefer, what they want, what they are aspiring to, what they value, an environment that enables that. A free environment is how you, in a very practical sense, start to achieve economic growth and development.

Chelsea Follett: And to show why dignity is so important, you open the book with an extremely striking and tragic anecdote of a man driven to set himself on fire after being stripped of his dignity. And you give a number of different real-world examples throughout the book to really flesh out what you’re talking about, such as the situation of the Dalit people… So to make this less abstract, could you walk through some of the concrete examples in the book that highlight the importance of dignity?

Matt Warner: So when you’re watching the world of development and you’re looking at projects and what people are trying to do, there’s extreme diversity, just different types of ideas about what’s gonna work, but I have to say that one of the most common threads in different cultures all around the world is that people who are excluded from the formal economy, informal workers, there is such a striking similarity in their articulation of why this is so oppressive to them, and it comes back to the sense of dignity that they feel denied. So you referenced what some of your listeners may recall has been cited as kind of the kick off to the Arab Spring, which is a young man in Tunisia, Mohamed Bouazizi, who since he had been a teenager had provided for his family by buying some goods or produce wholesale and then selling them as a street vendor, and street vendors, again, around the world, it’s such a typical way that people who are excluded find a way to get by. We think about the informal market as sort of a place of failure, but my goodness, what we’re actually seeing is people up against impossible odds and getting their surviving, and they’re being very entrepreneurial about it.

Matt Warner: So this had been Bouazizi’s life, he, like many, had experienced harassment from police many, many times. Because you’re not legal, then you’re also not protected. So the police know that they can take your cash, take your goods, kick you out of where you’re trying to operate, and Bouazizi had made for him a substantial investment the day before and then went to sell it, and his goods were taken from him and his scales, which he had… Were expensive, that he used to weigh and make sure that he’s able to make a profit, those were taken from him. He spent the day trying to get his scales back and get his goods back, finding some recourse in the system, which he was denied, and as you say, his final desperate act to express the sense of indignity that he felt was, unfortunately, to demonstrate in front of a government office by lighting himself on fire, and the story is told that his final words were, “How do you expect me to make a living?” And this is something that I think is an important lesson all around the world, not looking at informal markets as this obstacle to economic development, but actually the seeds of the entrepreneurial activity that every economy needs to treat with dignity, treat with respect, and look at how government and institutions can better protect and serve the expression of that entrepreneurial spirit.

Chelsea Follett: Now, you were the one who originally actually coined the term “outsider’s dilemma”, and this book deals with some of those unintended consequences of outsider-led development interventions, as opposed to a focus on local entrepreneurs and so forth. Could you describe the outsider’s dilemma for those who aren’t familiar with it, and what the book has to say on the topic?

Matt Warner: Sure. Well, I spent a lot of time kind of doing a tour of people who work in economic development over several years, USAID, State Department, private philanthropy, and one of the things that you’re struck by, at least in my experience, is these are well-intentioned people who feel sort of called to do this kind of work, and for the most part, they are doing it because they wanna see communities thrive, and one of the challenges is that it becomes a bit opaque as they are disappointed by results or confronted with unintended consequences, exactly why their best intentions of what they think other people need don’t end up working out.

Matt Warner: And there’s this gentleman reported by the journalist Nina Munk in her book, which is a great way to wrap your head around all the failure that we’ve seen, unfortunately, in development. It’s called… It’s about Jeffrey Sachs, I’m actually blanking on the name, but it’s the idea that this gentleman says, “I don’t understand why they don’t want what we know they need,” referring to a developing community that they’ve been trying to serve with their solutions from the outside, and what you often run into is some well-credentialed PhD from Columbia University or wherever, knows a bit about agrarianism and the latest techniques of agriculture and looks at a developing community and says, “Oh, you know what, you guys ought to do? You oughta switch from growing this crop to this crop,” and the local people may become agreeable, especially when you’re providing hundreds of thousands of dollars to support that change.

Matt Warner: But as we started this conversation talking about there’s something important about local knowledge, about opportunity trade-offs, and so for example, in Uganda, they did just that, they spent $300,000 to support a switch from growing something like a banana to corn, and they were right in the simple fact that they did have a higher crop yield, but what they didn’t anticipate is that there was nowhere to sell the excess corn, the roads to markets were not passable by trucks or it would be too expensive to do so and there’s no way to store it. And so you end up with an actually very worse off community because now they have all this excess corn, and what one widow said was, “Yeah, we have a lot of corn, but we now have a lot of rats,” because it attracted an infestation, and so that’s just one of so many… Unfortunately, so many examples of unintended consequences when outsiders, who for the most part, like I said, at least in my reading, are very well-intentioned and they want to succeed, but they are substituting the knowledge of time and place at the individual level with their own thoughts about what other people need, and that’s what has to change. Oh, the book is The Idealist, and it’s about Jeffrey Sachs.

Chelsea Follett: Good to know. Could you describe the relationship between dignity and innovation that the second chapter covers?

Matt Warner: Yes, so one of the things that I mentioned was the relationship between experimentation and innovation. I learned a lot from Matt Ridley’s recent book on how… He calls it How Innovation Works, and it’s very much a tour of so many different examples of stories of not one loan genius in a workshop creating some new invention that solves everyone’s problems, it’s much more iterative than that, and much more of a sort of decentralized collection of different people doing different things, and that the process of that leads to innovation. And innovation is distinct from invention in the sense that someone can invent something, but whether it’s actually in the form that ends up being marketable and useful as a function of what consumers decide and voluntarily part with money to improve their own lives with, that’s a function of social change, that’s not what one person achieves, and so recognizing this very decentralized set of exercises that lead to innovation, we have to go back and look at what are the institutions that make that most likely.

Matt Warner: I really like the way that Bob Leighton and Carl Schramm put it when they talk about the kinds of economies we want that succeed or ones where there’s a process of constant and continued entrepreneurial revolution. That really gets at the heart of what we’re after, and you start to recognize that institutions have to be built around the idea of human dignity, because it is recognizing that any individual is equally empowered with knowledge about themselves and their preferences and their values, and that that knowledge that they have, which may be tacit, it may not be something they could even express, so it certainly can’t be centralized and collected, that knowledge has to be brought to bear on that process of experimentation.

Matt Warner: And again, to centralize that as folly ’cause you can’t, it’s what experts call complex adaptive systems, which is kind of a mouthful, but I’ve really benefited from paying attention to some of this work, because it’s very different from a linear solution that an expert might come up with. “We need to spend this amount of money in this community to achieve this end,” that’s not the way human activity works, it’s very much a complex adaptive system where great results happen because of a process, so we have to get the process right, not in engineer outcomes, and to do that, we have to enable, protect, and respect the prerogatives of individuals afford them the dignity of their freedom to express those values because those values are part of the economic formula for success.

Chelsea Follett: Absolutely. How does trade fit into this picture?

Matt Warner: Well, one of the unique things about the idea of trade, if you look at polling related to economists, it’s one of the few things that there is near universal agreement on that trade benefits both parties much more than being isolated would, and that has very much to do with some of the natural consequences of expanding the universe of inputs and factors for coming up with these very sophisticated and complex sets of transactions that in retrospect, you could sort of try to tell the story of. But I think one of the things that we’re running into today is as the future of economic development remains a subject of great debate, trade can sometimes come under fire as some of the old ideas in development which had been discarded and sometimes come back again, such as import substitution become attractive to local constituencies and governments, and some of that confusion is happening because of what in the broader economic development space, we look at as perhaps paradoxes of development.

Matt Warner: So many of the Asian countries that succeeded had a mix of what looks like state-led development and sometimes protectionism. But there’s a great book by Michael Schuman called The Miracle, where he details what happened in Singapore and what happened in South Korea and what happened in Taiwan and in China. And it is a mixed story, but in all cases, again, it comes back to where we see success, there are incredible stories of entrepreneurship, what Deng Xiaoping talked about, we will cross the river by feeling the stones beneath their feet, meaning, don’t come up with some five-year plan anymore. Maybe politically, we have to act like we’re doing that kind of thing, but what really ends up succeeding or getting the processes right to let experimentation happen. And I think what we’ve got to do is continue to tell the stories of these complex adaptive systems of lots of individuals pursuing their best sense of what’s gonna work, and then the combination of all of those interactions is how you find win-win solutions.

Chelsea Follett: And in the third chapter of the book, you really discuss that relationship between dignity and enterprise, and you get deep into the economic history of the world. So what was the world of our ancestors like? Why do we tend to view it through rose-colored glasses and what was the secret of economic development that allowed the now rich countries to get to where they are.

Matt Warner: So… Yeah, and in fact, Tom here contributes a great perspective, talking about his grandparents’ standard of living and how much has changed in such a short period of time, especially when you look at the great experience of history, and I fear that some of our contemporaries today, particularly here in the US, sometimes lose a sense of perspective about how unique this time that we’re living in is in terms of solving some of these basic issues that aren’t just about material wealth, they’re about infant mortality and living longer and living healthier, having more of a healthy life today, and so why did this happen? And we better pay attention to why it happened and make sure that we aren’t being dismissive of some of those things. In A Culture of Growth, Joel Mokyr makes this very… Sorry, he boils it down to one of the key things that happened, it’s not the only thing, but it’s a key thing that happened two, three hundred years ago, was people started thinking about ideas as things that needed to be debated and they had to stand up to scrutiny and then combining that with doers. So, you had thinkers and you had doers, what he calls “savants” and “fabricants,” I don’t know how to say it in French, but it’s the doers and the thinkers. And then combining that to say, good ideas have a relationship with effective enterprise and caring and giving dignity to people who are entrepreneurial about applying good ideas to enterprise to achieve efficiency and expand markets.

Matt Warner: And so the relationship between dignity and enterprise is very much one that has to do with the way people think about themselves and about each other. McCloskey also talks a lot about the shifts that happened in thinking about who in society is worthy of our respect? And for hundreds of years, it wasn’t the merchants, it wasn’t the entrepreneurs, it was the civil servants, it was the entitled, The privileged who had government support and backing who owned land as people got respect, not by working, and it was sort of looked down on to have to work, but by owning land, participating in usury and these sort of things, but then you eventually have a shift that those who are tinkering, those who are doing are combining with those who are becoming skeptics around science and caring about what actually proves to be true and in not just sort of a traditional sense of what is. And that combination with increases in freedom to tinker and in experiment, you started to get a feedback loop of what was working? And then that can have a snowball effect in a good way, as long as those who wanna interfere with that aren’t powerful enough to do so.

Chelsea Follett: Of course, even today, we’re still seeing incredible trends and improvement in so many different areas, in many cases with the slight caveat that the pandemic has interrupted things, so hopefully those trends will get back on track. Why… why do you think growing prosperity and the data showing it is so often dismissed?

Matt Warner: I’ve been reading some different ideas about explaining why I find it mysterious. There seems to be some sort of assumed intelligence afforded to complainers or some doomsdayers. And it’s unfortunate because, again, I think we’re getting back to this general theme of caring about what the culture of ideas is like, ’cause I think it’s consequential. And so if we start to see our society afford the greatest accolades to those who are pessimistic and motivated by controlling others in some sort of a punishment for some unnamed sins that we’ve all committed, we don’t deserve to figure our way out of some of these problems. We have to pay a price. I do think that that is dangerous because it cuts against what we know has led to innovation, and we’ve also seen that many of the predictions of the past, because they take as static, all of the conditions and then tweak a few variables over time and say, “Look this is unsustainable,” they don’t anticipate some as yet unknown innovation that changes the game completely.

Matt Warner: We’ve seen this, of course, in the acre per output needed to feed a community, there’s incredible advances that come along when you have the right processes allowed to proceed in place, as opposed to trying to have a central authority make some sort of an expert linear solution to solve a problem based on a limited sense of what is possible. We need as many human minds, free as possible to be somewhere out there figuring out what is gonna help get us to a better place regardless of what the presiding problem is, even when some of these I fully acknowledge and understand are complicated, but I think we have to pay attention to the processes that have worked when we have faced what can seem like existential crisis and not fall for the mistake of…

Matt Warner: It’d be nice to imagine that there’s one genius who if we just all listen to this one genius that they’ll fix it and save us from from the things that we fear, but I’m persuaded to put much more faith in a decentralized system that lets a lot of experiments happen at once. When you go all in on one experiment, not only do you… Are you not hedging your bets that you could fail, but you’re also losing the opportunity to compare your results to other things, and so you lose perspective of what might have been. And so I hope as a culture that we can re-find our footing on appreciating the power of these free-wheeling processes of let’s have a lot of experiments going at once because the problems are real, and the solutions are most likely to come through ways that we don’t anticipate today.

Chelsea Follett: Right, as many minds as possible, and that is a great segue to democracy. You deal with this in the fourth chapter, but which comes first, development or democracy, and how does dignity bolster liberal democracy?

Matt Warner: Well, and so for some who don’t follow global development and aid debates, there are many smart people who have become convinced that democracy is a luxury that very poor communities can’t afford yet. And the idea is that you do need some very centrally empowered control, so that you can get a hold of the mess that is happening today, do the things that these outside experts would say you’ve gotta do, and then eventually, maybe we can have some democracy. But I think that’s a huge mistake. Not only is their updated evidence in our book about the very risky bet that going toward autocracy represents that if you want your best chance at a stable growth in GDP per capita democracy is the better way, but also that there is something important about the empowerment of individual knowledge. Again, that is useful not just for economic success, but for discovering in the context of a particular time and place what the right next iteration of institutional change needs to look like.

Matt Warner: And so I think here, it’s important to think about pluralism as not just the merits of pluralism or not just that it seems like a nice thing to say, “Well, I think everybody’s voice should count,” but to recognize that there’s real value to a solution that emerges as a function of lots of data in the system. I think even someone who feels very deeply convicted about the benefits of free markets such as myself, if you made me king for a day, I think it would be disastrous, and that’s not just because my character is mixed, but because no single person can actually build institutions correctly. As the institutional scholar, Richard Scott explains, institutions, the rules of the game are a function of the people that they govern. And so it’s kind of a two-way street. The people are both the cause and the effect of the institutional manifestation that you get. And so while those of us who strongly believe that liberal democracy is the best governance structure that man has thought of so far, it is not the case that there is one set of institutions that you can make a blueprint of and then copy cat around the world, that’s not what an institution is, one that endures and functions well anyway.

Matt Warner: And that those of us who’ve been fortunate to live in societies that are prosperous whose institutions are fairly functional, we have to remember that those are versions of an ideal of a particular time and place and not the ideal themselves. And so when others… When our friends around the world are working to strengthen their institutions, there’s much to be gained by learning from each other and sharing ideas. Localization should not be mistaken for the idea that there’s no knowledge to be shared, but who gets to decide what is going to be pursued? To me, I think it must be the people who are going to be governed by that institutional change and not someone who gets to fly home and dust off of failure, and so I think that’s very important.

Matt Warner: And so recognizing that, that voices of individuals are important for economic development and for democratic strengthening, not just because it’s morally right to be inclusive, but because there really is value, and it doesn’t matter how formally educated they are, because you need the knowledge of their perspective about their community and what they value. We have examples in development where the frustrated aid worker is saying to the community, you guys are starving, you need to cut down this hay and harvest it, and they say, “Our God will not let us cut down this hay,” and the local aid worker is actually not completely different from this community in terms of ethnicity and religion, but different enough that he’s still seen as an outsider. And they say only God and us know what we need to do here. And so whether they discover on their own how to reinterpret their beliefs to accommodate, using the hay or whether they come up with a different solution that allows them to maintain that, that’s their business. Right, and it’s important that it’s their business again, not just for moral reasons, but because you can’t fix a society and set the people aside as having nothing to do with whether that society is gonna work, it’s gonna be up to them, so they’d better be part of the solution. And I know it’s messy and it’s not easy, but it really is the best bet.

Chelsea Follett: And yet there are some people who claim that authoritarianism or autocracy actually can promote economic development, as you just said, and you tackle that in the fifth chapter, but how do you respond to those claims? Why does autocracy, you say, lead to indignity?

Matt Warner: Yeah, so there’s two things that people who make this claim, I think, don’t appreciate. One is, if you go and look at some of the examples of autocracy that have succeeded in having positive growth rates, what actually happened is not the story we’re getting. So for example, in China, it was very much a series of changes that happened organically because of what people were doing that were then codified and co-opted by the government, so in many ways, China was successful in spite of its government, not because of it. However, there was that sort of cultural shift, and rhetoric does matter again, because the culture of ideas matter, and so there was the cultural shift that said, it’s good to get rich, which was a huge change in China, and so you have dignity afforded to those who are doing and being enterprising. And then the other reason that I…

Matt Warner: The other thing that I think that they under-appreciate is if… And Bill Easterly made this point and did research on it, that he said the right way to look at whether autocracies are a good way to go is not to look at how many autocracies are doing well, it’s to look at all of the autocracies together and say what percentage of them are doing well, because what you’re really proposing is if somebody embraces autocracy, they’re taking that bet, what are the odds that they’re gonna succeed. And if you take all of the autocracies and look at how many are successful, it’s much much lower obviously, it becomes a stark thing, and then you also lose other things that are very important. It isn’t just money Bouazizi in Tunisia cared about dignity as well as material well-being. And we see this when they survey refugees around the world and they say, “What is it that you think would be better for this community to be doing for you?” And they say, “We wanna work. That’s who we are.”

Matt Warner: I’m speaking now of a member of the Rohingya tribe. And he said, “We believe in taking care of ourselves, let us work. We want dignity.” And so, I think we need to pay attention to that. So anyway, the bottom line is, is that autocracy is a big risk. And it’s a big risk… If we’re just looking at the one dimension of whether you’re going to get good growth rates, it’s a big risk, and it definitely comes with some bigger risks related to political liberty and civil rights and all of these other things. And as Amartya Sen points out, you need to remove on freedoms on all of these dimensions in order for development to happen. Like, the definition of development is not just a positive growth rate, it’s also freedom as an end in itself.

Chelsea Follett: People often think of foreign development aid as a nice thing to do, a way of helping people, but you have a chapter titled The Indignity of Development Aid, where you discuss how foreign aid can breed corruption and can disrespect the dignity of the very people that the aid is meant to help. How does that happen?

Matt Warner: So, the common way that aid is deployed is something that is pretty much unavoidable, meaning, I think it’s tempting to go look at all these horrible people bringing aid into a country, and there are examples that really can challenge your appreciation for what they’re doing. But for the most part, I think it’s just a bad system. It’s not bad people, and the bad system is again, outsider ideas, and any time you have taxpayer-funded aid, I think there’s immediately a difficult conflict of interest that is really hard to overcome. Meaning, our aid is part of our foreign policy, and it is very common for foreign policy aims to pollute what aid is doing. But even when aid, ostensibly, at least in name, matches what a local community desires, it isn’t successful when it comes to development. You can send food and feed people, and those people who ate got some food, but if you’re thinking that what you’re doing is helping that country become independent and prosper, you aren’t, for a number of reasons.

Matt Warner: One, you get very perverse incentives at the government level, and we’ve seen this with a country that is highly dependent on aid celebrating and having a party when they find out that they are once again on the bottom of the UN’s worst countries, because it means that their aid largesse will continue. So you have to think about what impact that has on their accountability to their people, because what they’re paying attention to is not sort of a democratic mechanism of serving their people, but serving their foreign masters and making sure that they’re well positioned to continue to get aid. You have incredible amounts of siphoning and corruption, and some cases… I mean, 30% to 50% is common, but there’s cases of 100% of funding not getting to where it needed to go. And then of course, you have just the disturbance of it not being the right economic solution in a particular environment that sets them up for success.

Matt Warner: I mean, we see this with groups that come in and dump a bunch of free shoes and put the local cobblers out of business, and if it was an example of voluntary buyers and sellers, you’d say, “Okay, well, people have consumer sovereignty, and they’re identifying this better product.” But that’s not the case, it’s… And you can’t depend on foreign benevolence and aid to be participating in your economy on a regular basis. And one of the most common things that happens is, even where they get some results, they all go away once the aid dries up. It doesn’t build anything lasting. And so we’re spending all this money, we’re spending all this time and even more than the money, because the money isn’t necessarily a large part of our national budget, but to me, the big problem is that we’re preventing the processes and the paths that are going to work, and that’s where we point to and tell stories about different think tanks around the world who have their own vision for change, and they do achieve that iterative change in institutions based on sort of community input, and then as a result, you see sustaining successes.

Chelsea Follett: Moving on to institutions. Could you describe what you call the failure of copycat institutions, and can you describe your preferred approach of elevating local leadership?

Matt Warner: Right. Yeah, so, the… I think I mentioned earlier some timeline of about 30 years in development practice. Since the Marshall Plan Development has had different sort of themes that it was pursuing and the… I think correctly, the focus has been on institutions the last three decades, but incorrectly, it has assumed that institutions are these products that someone who’s familiar and expert on it can then go and set up an institution somewhere else. And there’s a very helpful book on this by political scientists, Ivan Krastev and Stephen Holmes, who say in fact, that not only is our approach to spreading the institutions of liberal democracy after the fall of the Berlin Wall not succeeding, it’s actually partly responsible for the misplaced resentment of the idea of liberalism. Because we have presented liberalism as this gift from foreigners who know better than you what your country needs. And in fact, what we’re delivering doesn’t work in context, because again, it violates the principle of human dignity that helps you appreciate the role that those who are gonna be governed by the institutions need to play informing those institutions optimally for that time and place.

Matt Warner: And so, you get to this place that’s again, probably worse off than if we had done nothing, because we have now sullied the brand of liberal democracy, and you see this rise of authoritarian populism and people are responding to that again, as Krastev and Stephen Holmes argue, not because it’s a particular ideology that appeals to them, simply because it’s not liberalism, that’s its main virtue. And so they say, “Look what China and Russia are doing, they are different in their foreign interventionist model that we have been, because we were trying to make other people like us, that’s not what Russia and China want. What they want is to make other people serve their interests exclusively to increase their power, both economically and otherwise.” And so, they don’t have a particular set of guiding principles. And so, we’ve gotta do a better job of minding our P’s and Q’s as outsiders and truly looking at what the local vision of change is prioritizing and what initiative it’s taking and then support that.

Matt Warner: So a key thing here I wanna clarify is, it’s not that the ideal path for every country is to just out of whole cloth, do whatever it thinks is best. There are some fundamental truths and principles to the nature of human dignity and its role in allowing… In a very practical sense, allowing each person the freedom to play a productive role in figuring out the economic path to success for that community. But I think what we need to do is find… If we as outsiders want to do something to help, we have to find those who, again, fit that criterion of being subject to the governance of the institutions they’re trying to change, and then within the broad umbrella of strengthening the institutions of liberal democracy, however they see that optimally happening, we can support their vision for change. And we’ve just seen…

Matt Warner: So the new administrator of USAID, Samantha Power, gave a speech in November on the 60th anniversary of the creation of USAID, in which she said, localization is our priority. And then in a follow up… And she set a target of 25% of funds within four years should be going to local organizations up from 6% today. But in December, one of the newest examples of their effort to do this was responding to the Biden administration’s push to get to the root causes of the migration from Central America. And so, they… Out of an office that had $2.5 billion dollars to spend, I know at least $140 million went to a private contractor, a private known contractor who is also an outsider, and so they were tasked with finding local groups, that was part of the value proposition is that they were gonna do that.

Matt Warner: And they went to all these local groups and they were on a tight timeline and they had already decided exactly what they needed them to do, which is go survey people and find out why they’re migrating? And many of the local group said, “No, we don’t think that’s worth doing, we kinda already know the answers.” It isn’t what they think they need. Again, it’s so obviously driven by the foreign policy interests of the US, which we have every right to have foreign policy interests, but let’s not pretend that our aid is the right answer for another country, especially if we’re trying at least in gestures to be paying attention to what local groups need. So instead of coming up with an agenda and then finding local groups and paying them to do what you want, localization needs to be listening first, learning what people are doing, and then to the extent that what they’re doing is in line with strengthening the institutions of liberal democracy, support what they’re doing and in their own capacity building, so that they’re stronger as a participant in civil society going forward.

Chelsea Follett: You also have a chapter on dignity and diffusion of knowledge. Could you talk about that relationship?

Matt Warner: Yeah. So one of the ways that we think about institutional change is informed by this idea of the innovation diffusion curve, where again, if you go back to Ridley and you think about, okay, there’s lots of inventions that happen, but we’ve all seen prototypes for things and they end up not being the thing that ends up being ubiquitous in everyone’s house, because it’s an unrefined thing that has to go through a process. But when you look at the way things go from potential innovations to full embraced innovations in communities and in society, you have these early adopters, and then you have these late adopters and then you have the different sections across the curve, and they all play a different role. And if you think about ideas in that same way, that ideas kinda go through a similar process in terms of the sort of proven utility and the ubiquity of people embracing them.

Matt Warner: There are different roles that people can play in supporting that change, and the key part about that, I think, is again, recognizing that no one of us should be too arrogant about thinking that our particular articulation or sense of an idea is the Alpha and Omega of the correct expression of that idea or how it could be useful. And so, that again, is a process of pluralism where you are dependent, in a positive way, in the sense that you want something to come up to the side that that works. You are dependent on the voluntary participation of others in shaping that idea. And so, when we think about trying to play our small part in making the world a better place, by supporting local organizations and prioritizing and placing a premium on those who developed their ideas in concert with their communities, we just think that that is a much, much smarter, more efficacious way to make success more likely. Because ultimately, you want enduring institutions that people can trust in and rely on, and again, that’s a function of the people that are gonna be governed by it. And that’s a complex adaptive system that has to… That is a process more than it is an engineered result.

Chelsea Follett: So you’ve touched on different parts of this, but what are the book’s ultimate recommendations for reforming development practice, supporting liberal democracy, and what defines what you call “dignity-first development”?

Matt Warner: Yeah, so there are some… Again, some very encouraging things happening in development. Localization at least rhetorically is going in the right direction. You’ll also see related to that, this idea of de-colonizing aid, and so, some of this pressure for outsiders to check their own air again is sort of a common thread. So, I think that’s healthy, but I think we can’t lose sight of the virtues of liberal democracy being the governance we’re aiming for, both because it is as Krastev and Holmes say, proven to be the most supportive of human rights of any other system, but also, because it on net works in terms of human flourishing. And so, if we can combine our commitment to liberal democracy with our humility to not re-shape other people’s communities and societies in our own imagined superior fashion, but instead afford dignity to those in those societies who are working to achieve improved institutional change, we can do that.

Matt Warner: But we also need to be… You know, Atlas Network is in the somewhat unique position of being both a grant-seeker and a grant-maker, because we’re not endowed, and so we play both of those roles and we understand both sides of that relationship. And many who receive grants from donors, you get a sense of how to optimize that relationship, and for donors to kind of know what kind of accountability is most productive to bring and then what is counterproductive. And then for the grantee to know that they should not rely on donors to sort of support some sort of static set of activities, but that they should be trying to build something on their own. So, we talk in the book towards the end about the appreciation for what I would call a universal entrepreneur. You know, within entrepreneurship, there’s debates about what counts as an entrepreneur. And I say, let’s just start… In development, let’s just think about any person who is making choices to improve their livelihood, that’s some entrepreneurial activity.

Matt Warner: And so we talk about people in the informal market who again, are kind of incredibly enterprising up against incredible odds. So, when we think about making… Having as our goal, this sort of constant and continual entrepreneurial set of revolutions, then we need to start thinking about social change as entrepreneurship also, and affording a dignity, as well as an accountability to people who engage in social change. Meaning, you need to do more than just care and express your concern, and you need to challenge yourself to actually achieve change that proves beneficial to people. And so, there then does emerge from these different perspectives, a set of practices for improving economic development practice. And there are some other encouraging trends that I’ll point out that I don’t… That I quibble with, but I think are incredibly important. One is Matt Andrews out of Harvard, he is advancing this idea called PDIA, which I don’t think he went through a branding department, but it’s problem driven iterative adaptation, which is again, this sort of pluralistic entrepreneurial engagement with local people to discover their own paths to improvement.

Matt Warner: So that is gaining speed in development practice, which if nothing else, it’s extremely beneficial for being at odds with the historical traditional practice of parachuting in a very linear engineered solution, so you have that. And then you have growth diagnostics, which is much more flexible about what some of the institutional hang-ups might be, again, at odds with our tradition of copycat institutions. And so, among these different approaches, including our model at Atlas Network, I’m encouraged to see that there is lots of interests along the lines of stopping the mistakes of the past and getting curious about what might be.

Chelsea Follett: Well, I think that’s a good note to end on. This has been fascinating, and I hope everyone checks out your book again, Developments With Dignity. It is available for a pre-order at the time of this podcast recording. And it will ship in February. Check it out and check out the other great things that Matt is doing with Atlas Network. Thank you so much for talking with me, Matt.

Matt Warner: Thank you, Chelsea. My pleasure.