Easterly on the failure of Third World aid

Topics: Welfare
27 Sep 2006

From: Ervan Darnell



I remember reading years ago Friedman's critique of Third World
aid. It went something like this: If a government is a kleptocracy,
then government to government aid only enriches the abusers. If a
country has respect for property rights, then aid will flow naturally in
the form of investment, and there is plenty of capital for that.
Thus, government to government aid cannot ever be the right answer.

There was good interview on the 9/21 Newshour [1] echoing the same
theme. I can do no better than to quote it:

WILLIAM EASTERLY: There were 1 to 3 million
deaths from malaria last year. It's true of so many simple interventions,
that aid money could pay for over and over again, the existing aid money,
without even increasing aid. And yet, somehow, the aid is not actually
reaching the poor people. [...]

WILLIAM EASTERLY: The total misconception
there is that poverty is a technical scientific problem, that you just
need to come up with a lot of scientific interventions, like bed nets, to
protect people against getting malaria, and improved fertilizer to
improve agriculture, and, you know, about 400 other things like
this.

But it doesn't work to have a bunch of experts parachute in, because
you're trying to solve in microcosm what's a part of a much larger
problem of a society that's not working because free markets and
democracy are not working.[...] And then somehow they just take it for
granted that these will all be implemented by human agents. And that
completely ignores the economic and political problems that make poor
countries poor. Governments in poor countries are -- it's sad to say it,
but we have to face reality -- they're very corrupt. Even when they're
not corrupt, the bureaucracies are very unmotivated and
dysfunctional.

Yes, the central planner mentality is a failure, both in socialist
countries that try it and indirectly via do-gooders trying to force fit
solutions for other countries.

In the same interview (see the link), Jeffry Sachs offered the opposing
viewpoint (also with some good points).

[1]
http://www.pbs.org/newshour/bb/social_issues/july-dec06/foreignaid_09-21.html
====================================================

Ervan
Darnell

ervan@kelvinist.com
http://www.kelvinist.com




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