Francesca R
23rd March 2012, 07:15 AM
"Don’t do it" seems to be the message directed at aid agencies, western governments, transnational (Bretton Woods) organisations and NGOs—in respect of the majority of all their respective efforts to help the poor. While the first tragedy of the world’s poor is poverty itself, Easterly’s "second tragedy" is the failure of $2.3 trillion spent on foreign aid in fifty years to have delivered many obvious basics. By page 5 the author admits that no particular remedy will be forthcoming from this text either, since the book’s motto is, at its simplest: "the big answer is that there is no big answer".
Almost as early on, the subject is framed as planners versus searchers being the bad and the good methods of helping development in desperately poor societies. In much of the text this boils down to top-down (bad) versus bottom-up (good), or imposed by the west (bad) versus passing market tests of responsiveness to feedback and accountability (good). Grand designs to end poverty (pace Messrs Sachs, Bono and most of the western politicians who chipped in on the subject in 2005), and doublings of aid, don’t work. Self-designed and voluntarily pursued on-the-ground baby steps do.
So much is non-controversial, though this reviewer would mention that the two forms of development assistance are hardly substitutes. Micro-loans from Grameen bank, four-dollar bug nets for malaria protection, or local construction of a sanitary water system are readily proven easy wins—and it is all the more depressing that things like this are occluded in the enthusiasm for a big push. But the author somewhat sidesteps the necessity for at least some action to be large-scale and co-ordinated, or else it won’t happen. The logical conclusion given the track record to date is presumably for any big push or attempt to "plan a market" not to be attempted. Certainly there are many failures in this regard, where it is plausible to imagine the counterfactual of no action having worked out less badly.
To summarise Easterly’s problems with big-push intervention: the desiderata of good capitalism (property rights, contract enforcement, accountable governance) successfully germinate only so long as they accord to local customary arrangements, and only if they are ratified by a market-augmenting government in the first place. Not that local custom or the will of government needs to accord to a single western blueprint (which was not the case in China, India, Chile, Botswana . . . ). But it is not so simple that legislative norms can be handed to poor governments, such that all is well. And the larger obstacle is absence of government legitimacy anyway. It is no surprise to the author—though a moral outrage—that aid and assistance is overwhelmingly channelled through bad governments such that its diversion to the interests of private elites is pretty much a no-brainer. Aid planners have never figured out how to deal with bad governments, but they give to them anyway (to appease rich donors that something is being done). Yet aid to a bad government apparently makes it worse. (Russia, large swathes of Africa).
Except that this argument does not lead to a solution either. Bypassing rotten power can never get very far without morphing into something that quickly starts to look like regime change, invasion, and indefensible meddling in foreign sovereign territory. Here the author gets into a lengthy diatribe against decolonisation (ostensibly good but done badly in most cases like everything else), "postmodern imperialism", proxy wars to back opponents of undesirable (to the west) regimes, and outright invasions. This reviewer found nothing good to be mentioned about any of this, making the "Hands off" recommendation of the book more powerful. Arguably this veers quite widely from the core subject of aid and development, but Easterly evidently does not fear to tread on ground that many economists would avoid, because "The US army [tries] to promote economic development" with its military interventions. So—fair game.
The bright light, if there is any, is in home-grown development. Aid that responds to feedback from its recipients, that passes bottom-up market tests, and (counterintuitively) that is not pre-planned to be sustainable. Models where searchers find what works, and that leave some level of choice—not unlimited choice—in the hands of the poor (such as aid vouchers), and where people are willing to experiment like crazy with market mechanisms are interspersed though the book as case studies. Aid donors should forget about sustainability because that cannot be reliably forecast, varies from one place to another and across time, and because it predestines a program to the risk of pouring aid down the drain for a long time without pulling the plug and deploying it sommewhere else. In a faint echo of Dani Rodrick, the secret to picking winners lies more in cutting losers before they get too deep. Easterly’s first approximation would be that the last fifty years—at least—have been a woefully protracted episode of losing strategies never being canned, with failure going unnoticed by blind eyes, deaf ears, and interests that have spent way too long aligned with the aid givers, . . . who weren’t supposed to be the ones this stuff was meant to be for, were they?<O:p</O:p
Almost as early on, the subject is framed as planners versus searchers being the bad and the good methods of helping development in desperately poor societies. In much of the text this boils down to top-down (bad) versus bottom-up (good), or imposed by the west (bad) versus passing market tests of responsiveness to feedback and accountability (good). Grand designs to end poverty (pace Messrs Sachs, Bono and most of the western politicians who chipped in on the subject in 2005), and doublings of aid, don’t work. Self-designed and voluntarily pursued on-the-ground baby steps do.
So much is non-controversial, though this reviewer would mention that the two forms of development assistance are hardly substitutes. Micro-loans from Grameen bank, four-dollar bug nets for malaria protection, or local construction of a sanitary water system are readily proven easy wins—and it is all the more depressing that things like this are occluded in the enthusiasm for a big push. But the author somewhat sidesteps the necessity for at least some action to be large-scale and co-ordinated, or else it won’t happen. The logical conclusion given the track record to date is presumably for any big push or attempt to "plan a market" not to be attempted. Certainly there are many failures in this regard, where it is plausible to imagine the counterfactual of no action having worked out less badly.
To summarise Easterly’s problems with big-push intervention: the desiderata of good capitalism (property rights, contract enforcement, accountable governance) successfully germinate only so long as they accord to local customary arrangements, and only if they are ratified by a market-augmenting government in the first place. Not that local custom or the will of government needs to accord to a single western blueprint (which was not the case in China, India, Chile, Botswana . . . ). But it is not so simple that legislative norms can be handed to poor governments, such that all is well. And the larger obstacle is absence of government legitimacy anyway. It is no surprise to the author—though a moral outrage—that aid and assistance is overwhelmingly channelled through bad governments such that its diversion to the interests of private elites is pretty much a no-brainer. Aid planners have never figured out how to deal with bad governments, but they give to them anyway (to appease rich donors that something is being done). Yet aid to a bad government apparently makes it worse. (Russia, large swathes of Africa).
Except that this argument does not lead to a solution either. Bypassing rotten power can never get very far without morphing into something that quickly starts to look like regime change, invasion, and indefensible meddling in foreign sovereign territory. Here the author gets into a lengthy diatribe against decolonisation (ostensibly good but done badly in most cases like everything else), "postmodern imperialism", proxy wars to back opponents of undesirable (to the west) regimes, and outright invasions. This reviewer found nothing good to be mentioned about any of this, making the "Hands off" recommendation of the book more powerful. Arguably this veers quite widely from the core subject of aid and development, but Easterly evidently does not fear to tread on ground that many economists would avoid, because "The US army [tries] to promote economic development" with its military interventions. So—fair game.
The bright light, if there is any, is in home-grown development. Aid that responds to feedback from its recipients, that passes bottom-up market tests, and (counterintuitively) that is not pre-planned to be sustainable. Models where searchers find what works, and that leave some level of choice—not unlimited choice—in the hands of the poor (such as aid vouchers), and where people are willing to experiment like crazy with market mechanisms are interspersed though the book as case studies. Aid donors should forget about sustainability because that cannot be reliably forecast, varies from one place to another and across time, and because it predestines a program to the risk of pouring aid down the drain for a long time without pulling the plug and deploying it sommewhere else. In a faint echo of Dani Rodrick, the secret to picking winners lies more in cutting losers before they get too deep. Easterly’s first approximation would be that the last fifty years—at least—have been a woefully protracted episode of losing strategies never being canned, with failure going unnoticed by blind eyes, deaf ears, and interests that have spent way too long aligned with the aid givers, . . . who weren’t supposed to be the ones this stuff was meant to be for, were they?<O:p</O:p