Tuesday, May 18, 2004

Hell and the Cartel of Good Intentions

Those who aren't looking to pick up a copy of William Easterly's book could do worse than take a look at this Foreign Policy article of his on the foreign aid bureaucracy, which gives a much more critical take on the realities of foreign aid disbursal than one might get reading only the New York Times and assorted advocacy pieces. I think articles like this one ought to be recommended reading for those who tend to mistake the mere fact of having (or, often, simply claiming to have) good intentions for the far too infrequently realized goal of seeing those intentions come to fruition.

One thing that Easterly's article above doesn't get around to mentioning, but which I think important to mention, is that as hard as it may be for a lot of people to believe, it is possible to kill with kindness, even when none of the cynical shenanigans outlined by Easterly come into play. An example of what I'm talking about can be seen in many a historical food aid program. Given a situation in which millions are starving in, say, south-eastern Africa, it is only natural, and thoroughly commendable, that one should seek to help these unfortunate people. Fired up by a genuine and admirable concern for others, activists organize fund-raising efforts, accumulate thousands of tonnes of grain, and ship them off to the starving poor half a world away. The aid is disbursed by yet other selfless souls on the ground in the afflicted region, the immediate problem of mass starvation is solved, and everyone can feel good about what's been achieved. Problem solved, one might think, but one would be wrong, for the end result is that famine returns yet again once the foreigners' attention has waned, and it does so with even greater force than before they arrived!

What rationale could be given for such a development, one might wonder? Is it a matter of fecklessness on the part of the recipients of food aid, or has a curse been laid upon them by some angry deity, which any efforts by men to overcome must ultimately prove futile? No, all that has happened is that the free food aid was so plentiful, and was disbursed for so long, that it completely priced the local farmers out of the market. Fields ceased to be cultivated, farmers drifted off to other occupations or became aid recipients themselves, and all the while no one noticed what was happening behind the photegenic, beaming faces of well-nourished youngsters to be seen in the aid project reports. Once another disaster struck somewhere else in the world, as they always do, and the foreign dole was withdrawn, the destruction of local agriculture that had taken place was suddenly revealed, and - voila! - hunger and desolation returned with a vengeance.

It's tempting for people reading this to imagine that I'm only outlining a hypothetical scenario here, but the truth is far more depressing: just such a chain of events has played itself out not once but several times across the globe. It happened in Somalia in 1992, it happened in India in the 1970s and 1980s, it happened in Guatemala after the earthquake of 1976, and it is still going on in Bangladesh as we speak, with the country's more privileged classes enjoying access to free food (which was given with the intention that it would be destined for the truly indigent) even as native Bangladeshi farmers are deprived of a market for their crops: in a commodity market, how can anyone hope to compete with "free?"

Even as a self-admitted libertarian, I'm not going to claim that all foreign aid is either useless or harmful, as that is clearly not the case, particularly when government participation is excluded to the maximum possible extent on either side; people in rich countries have every right to voluntarily donate their own money and time to helping those who live in poorer nations, while the best and often only way to ensure that foreign aid does any good for those it is ostensibly intended for is to ensure that the assorted political "big men", bureaucratic functionaries and other government parasites looking for baksheesh/cadeaus/dash/mordida have as little say as possible in the means, location and timing of aid dispersal. No, it is a fact that voluntary private party-to-private party foreign aid, if clearly thought through, can do a tremendous amount of good, but the for this to be true, the emphasis must be on the if clearly thought through. In particular, more foreign aid is not always better, at least not for those targeted to benefit from it; for empire-building staffers in aid organizations, the benefits of ever larger sums to play with are not at all in doubt.

Liberals are wont to criticize more tight-fisted types for being "heartless" and "insensitive" to the sufferings of others, but given the way in which most aid is currently being used, it is clear, to me at least, that the greater sin in our day is an excess of "sensitivity" and "compassion", which prevents well-meaning people from holding the distributors of their largesse more to account, and actually demanding a more hard-headed, longer-term accounting of results before agreeing to give more. Any organization that continues returning cap-in-hand, year after year, decade after decade, seeking ever larger sums in aid of the same cause, deserves to be cut off for having failed in the more important mission of attempting to fix the root problem, rather than rewarded for perennial failure with an ever larger budget and an ever higher media profile.

POSTSCRIPT: Here's a link to the actual policy paper on which the Easterly Article that appeared in Foreign Policy was based. Reading through the paper ought to prove an eye-opening experience: contrary to what some might claim, it simply isn't at all "contrary to voluminously documented fact" that "WB projects have a poor record of achieving their project goals." Easterly is a long-time World Bank employee, and as such he's in as good a position as anyone to know the truth about the World Bank's success rate, yet here he is presenting us with detailed evidence, from the World Bank's very own records, that, all spin aside, the successes of that organization have been rare indeed.

It would be nice if alleviating suffering in the developing world were simply a matter of dumping ever larger sums of money into the laps of those who rule them, as that is easy enough to do, provided the necessary political will exists. Unfortunately things aren't that easy - as far as anyone who's looked hard at all the cross-country data can make out, there aren't any cash substitutes for stable government, a functioning judiciary, an honest and tightly-circumscribed bureaucracy, and economic policies that reward entrepreneurial success rather than punish it. All of these things are what make the difference between wealth and poverty, but they're a hell of a lot harder to get right than simply doling out cash.