Thinking About Aid

I read P.T. Bauer, the great critic of the mainstream in development economics, at a formative age. He referred to foreign aid in coolly neutral language as “state-to-state transfers,” and he pointed out how counterproductive and ineffective it could be. Since then, a slew of neo-Bauers, like William Easterly, have introduced a closely related critique, one focused on maintaining distinctions between “Planners” (bad) and “Searchers” (good). Conservatives often deride the World Bank, but within the Bank there is a fair bit of hostility towards Jeffrey Sachs neo-Myrdalian ambition. Though I can’t say I agree with Sachs on everything — I find his apocalyptic tone counterproductive at times — I certainly don’t think his ideas should be so easily dismissed. Fogelians appreciate that heavy disease loads can be a cause rather than an effect of poverty. Rather, I buy the notion that the framework is wrong, and not just for Sachs.

As a brilliant friend of mine was telling me on Friday, it simply doesn’t make to say that “aid doesn’t work” or “aid does work.” “Aid” is a vast category of spending that happens outside of our borders. If the schools in D.C. are failing, the next step isn’t to close police precincts in Yakima, Washington. We need to disaggregate the category. Sachs is absolutely right in this regard. Yet there’s also a normative issue at work. The kind of cosmopolitan understanding that motivates humanitarian assistance suggests that our role is to act on vulnerable populations rather than enter equal relationships with sovereign states. The trouble is that the direct approach tends to undermine the administrative capacity of emerging states. It also, as my friend will argue in his forthcoming book, unites the disparate G77 coalition in ways that are actually counterproductive. The Millennium Development Goals, for example, hold rich states accountable, not the states that actually rule the vast majority of the world’s impoverished people. Failure to meet the MDGs means we hector and cajole rich country governments. The incentives are misaligned.

Reuel Marc Gerecht has often argued that Muslim and Arab populations want democracy for their own reasons, not ours. Iraqis must “own” their democracy if it is going to last. The same is true, and this should be obvious, of efforts to build a flourishing economy. There’s more on this general theme here.