He does not in the entire book argue that we should spend less trying to help the poor. He argues that we are trying to help in ways that are largely ineffective. "I ... keep trying, not to abandon aid to the poor, but to make sure it reaches them." "Western assistance ... can still play some role in alleviating the sufferings of the poor."He does not argue that aid can never be effective. He argues that the way we have gone about it has often been ineffective and proposes some ways to help it be more effective. He cites Botswana as an example of aid "supporting reform and good government," though detailing how abysmally it has failed to do the same elsewhere; he cites pages and pages of World Bank, WHO, and IMF programs that were successful.
He does not claim that we should give up trying to help people. He pleads that we change the question from How can I use foreign aid to solve every problem in the world to "What can foreign aid do for poor people" and then do it. "Aid agencies cannot end world poverty, but they can do many useful things to meet the desparate needs of the poor and give them new opportunities."
He does not provide a blueprint for how to solve every problem with aid. He does suggest several dimensions where significant progress could be made by experimentation in making aid more effective. They include:
Accountability and Specialization "The utopian agenda has led to collective responsibility for multiple goals for each agency, one of the worst incentive systems invented since mankind started walking upright.... Have individual accountability for individual tasks. Let aid agencies sepcialize in the sectors and countries they are best at helping. Then hold aid agencies accountable for their results by having truly independent evaluation of their efforts." "Not overall sweeping evaluations of a whole nationwide development program, but specific and continuous evaluation of particular interventions."
Feedback and Meaningful Participation from Recipients. "The needs of the rich get met because the rich give feedback to political and economic Searchers, and they can hold the Searchers accountable for following through with specific actions. The needs of the poor don't get met because the poor have little money or political power with which to make their needs known and they cannot hold anyone accountable to meet those needs." The jargon is already there, but he takes down Poverty Reduction Strategy Papers as one set of planners talking to another set of planners, often written by the recipient government at the dictation of the donors, sometimes even undermining democratic processes and selections. "Visibility gives more power to Searchers while invisibility shifts power to Planners. The problem with aid is that the poor are mostly invisible." "Participation should mean more buying and voting power in the hands of the poor in aid."
Fund Maintenance. "Aid donors should just bite the bullet and permanently fund road maintenance, textbooks, drugs for clinics, and other operating costs of development projects. Politically dysfunctional governments that don't do maintenance can concentrate on other things. ... The return on spending on instructional materials in education is up to fourteen times higher than the return on spending on physical facilities." p. 190On Peacekeeping: "Peacekeeping could be good, but just who is willing to be accountable for its success or failure. ... Interventionism suffers from the patronizing assumption that only the West can keep the locals from killing eah other. ... Peace usually succeeds war because of a decisive victory by one side, not because of negotiated settlements by outsiders. ... UN interventions produced a stable peace only a quarter of the time. With no intervention, a stable peace resulted nearly half the time." He is overall quite negative on military interventionism.
One thing that I have admired about Easterly is that he is willing to admit that he was wrong. He does so at least twice in the book, once discussing market reform "shock therapy" and once in discussing structural adjustment. I asked him at his blog whether some of his own work fell under a criticism he had just made, and he admitted that one of the papers I mentioned fell into the same category. He promised a bit more of a response which I'm still waiting for, but there's something comforting in talking with someone you know is willing to say "I was wrong." In the book he opined that the military would be the least responsive to criticism, but on his blog has noted with surprise that the military responded the most cordially and promisingly of any group he has criticized.
One of my few criticisms is that he simultaneously calls for more observability while deriding current aid projects for overly focusing on observability without differentiating what should be observable. That is, he wants to trim down the number of goals any agency is responsible for, so it is more observable who does what, but he laments incentives that support building facilities or roads because they are more visible than textbooks or maintenance.
After presenting a fairly convincing case that Planning really doesn't work, I also noted with some irony that there was a heavy element of planning involved in the homegrown development cases he lauds at the end of the book. He acknowledges some of this, that "the success stories follow a variety of formulas," but prefers to call South Korea and Japan's actions intervening in economies rather than planning and to note that China and Singapore are "quite far from a laissez-faire model." "What we do know ... is that the West played small part in them." This leaves open a door for domestic planning to be good and foreign planning to be bad, a door I think he could do a much better job turning into a window or a peephole.
"Success attracts paternity claims." So every theory of development claims success for the various successes. When Sachs visited Cornell, for instance, he laughed at Easterly's assertion that aid hasn't done much and cited the total figure of aid given to China and India. Easterly notes that those large sums only amount to $0.001 per day for each Chinese person and $0.005 for each Indian person. Compare that to the much larger sums spent in Africa (which Sachs calls a mere $0.50 per person) and you wonder how so little could do so much while so much does so little.
Some very good 'side note' sections: The importance of social networks (p. 82-87), property rights (p. 90-99), the difficulties of making democracy work and its evolution (p. 116-129), comparing the cost effectiveness of health initiaives (HIV prevention, AIDS treatment, and others; p. 249-258). He also has some excellent snapshots of World Bank publications from the 1950s or 1980s to today, all saying the exact same thing: things are bad, but there are promising signs out there. I learned that it is much easier for me to be sanguine when reading about the colonial disasters of England, France, and Portugal than to read about the (usually CIA-backed) disasters the US sponsored (270-338).
Notable Quotables after the break:
"We have to separate two questions that are usually lumped together: What can Western aid do? How can long-run prosperity be achieved in the Rest? This book is only about question one. ... If there were such simple answers [to question 2], there would be many more development success stories than there are now. There have been many little answers to particular parts of the Big Question... As Sir Francis Bacon said in the seventeenth century, "So it cometh often to pass, that mean and small things discover great better than great can discover small." p. 28
"The identities of the poorest countries ... keeps changing. It doesn't help the poverty trap legend that eleven out of the twenty-eight poorest countries in 1985 were not in the poorest fifth back in 1950." p. 41
"Free markets work, but free market reforms often don't." "The reforms [in Russia] followed the disastrous sequence of free markets and privatization without first creating the rules that make profit-seeking behavior beneficial to society. Searchers in markets need rules or else they become opportunists who benefit at others' expense." "Nor are markets of much help to those who are now very poor - after all, the poor have no money to motivate any market Searcher to meet their needs." p. 60, 63, 77
"Democracy works, but imposing democracy from the outside doesn't. ... Planners with no feedback and accountability cannot impose a system of feedback and accountability!" p. 116
"All reforms are partial: it is impossible to do everything at once, and no policymaker has enough information even to know what 'everything' is." p. 66
"As an old joke has it, heaven is where the chefs are French, the police are British, the lovers are Italian, and the car mechanics are German - and it is all organized by the Swiss. Hell is where the chefs are British, the police are German, the lovers are Swiss, and the car mechanics are French - and it is all organized by the Italians."
"Any visit to an outdoor market in Africa, Asia, the Middle East, or Latin America will quickly convince you that markets are vibrant in poor countries. ... [But] Any economy in which people do not equalize returns across all types of activities ... is not a free-market economy" p. 74, 75
"Your right to property is only as strong as those around you are willing to acknowledge. ... Legal title is not worthwhile when the assets are not valuable." p. 90, 92
On NEPAD: "It is a little mysterious why the donors embrace a mechanism of accountability for African govevrnments that they would never apply to their own countries. (Would the American government submit to peer review by the Canadians?) Anyway, "peer review" misses the whole point of democracy, which is government accountability to its own citizens - not to some other government." p. 147
"The apolitical approach ... is not apolitical. Supporting a sitting government with funds is unavoidable a political act." p. 147
"Aid agencies have to face reality: is money given to a bad government going to reach the poor? ... It is true that donors do a lot on their own by bypassing teh government. Unfortunately, they also spend massive amounts of their time trying to fix the bad government and work through it ... Even with well-functioning democracies, not everything is done through the government. I could organize a workshop in New York with foreign participants to discuss American economic policies without asking permission from President Bush. I could solicit foreign donations to alleviate poverty in Harlem without checking with the secretary of housing and urban development. Why should donors insist that analogous exercises be run through the government in poor countries?" p. 155., 157
"Politicians and bureaucrats are terrified of the word 'tradeoff.' ... Aid agency managers do talk about setting priorities, but their behavior says otherwise - the political incentives to do token amounts of everything are too strong." p. 187
"Trying to make [a] project 'sustainable' usually guarantees that it will not be 'sustained.'" p. 190
"The frequency with which a recipient country votes with the donor in the UN, and whether the recipient is an ex-colony of the donor, affects how much aid that country gets." p. 192
"Isn't there any society with an illness so advanced that the IMF will decline to prescribe its [usual] medicine? ... The IMF fudged its mission beyond short-term crisis bailouts to be a repeat lender to deadbeat governments." p. 219, 234
"Calling a loan to the poorest countries a 'loan' has become ever more fictional. The World Bank ... should just give the poorest countries grants, not loans. The IMF, which is not supposed to be an aid agency, should get out of the business of loaning money to the poorest, least creditworthy countries altogether. ... One possibility is that the IMF could just make bailout loans when it judges - as any lender does - that the loan is likely to be repaid. How the borrower manages to repay the loan is up to it, just as how I spend my money is of no interest to my Visa company." p. 232, 235.
"Discussion of African beliefs in witchcraft is taboo in aid agencies, as nobody wants to reinforce ill-informed stereotypes. ... AIDS-prevention efforts would do much better to work with traditional healers on fighting HIV transmission than to ignore beliefs in witchcraft because of political sensitivities." p. 248
"It is the job of economists to point out trade-offs; it is the job of politicians and Planners to deny that trade-offs exist. ... This refusal to make choices in inexcusable. Public policy is the science of doing the best you can with limited resources." p. 256
"Money should not be spent according to what the West considers the most dramatic kind of suffering. ... The question facing Western AIDS campaigners should not be 'Do they deserve to die?' but 'Do we deserve to decides who dies?'" p. 257-58.
"As George Bernard Shaw said: 'A healthy nation is as unconscious of its nationality as a healthy man of his bones. But if you break a nation's nationality, it will think of nothing else but getting it set again. It will listen to no reformer, to no philosopher, to no preacher, until the demand of the Nationalist is granted. It will attend to no business, however vital, except the business of unification and liberation.' ... No matter how the West drew the map, there would have been some conflict. No scheme of Western mapmaking would have led to utopia." p. 291
"The CIA trained the contras ... even though CIA director William Casey mangled the name of the country, saying something like 'Nicawawa,' prompting an outburst from an aide: 'You can't overthrow the government of a coutnry whose name you can't pronounce!'" p. 319
On Angola: "Savimbi was to democracy what Paris Hilton is to chastity." p. 328
"During the [Angolan] civil war, Cuban troops defended American companies' oil wells against American-backed UNITA rebels." p. 329.
Only 4/16 countries "were democracies ten years after the US military left." p. 332
"The donors give us what they have, not what we need." p. 338
"What would the World Bank and IMF shock therapists advise if foreign aid were a country? They would probably abolish state ownership, do rapid privatization and downsizing, let the market work, and put an end to bureaucratic central planning. I would favor a more gradual approach, of piecemeal reforms for the troubled country of foreign aid." p. 367
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