Monday, November 5, 2012

Repost of Easterly (Title: So Sen-sible)

Posted on Easterly too last week. A repost:
I found Easterly's critique of foreign aid to be very persuasive. Almost too persuasive. When he argues that aid programs should be tailored to their targeted societies, should sidestep dealings with corrupt governments, and should heed feedback mechanisms from the local populations, it is difficult to disagree with him.

But surely our aid programs, even if prone to the occasional error, already set out with Easterly's intentions in mind? In other words, don't aid programs already try to incorporate Easterly's suggestions?

Easterly almost agrees. He notes that "the working-level people in aid agencies or nongovernmental organizations (NGOs) are more likely to be Searchers than Planners." (18) This relationship makes sense: the upper-class American is the Planner, wants to combat poverty, donates to the Red Cross worker in the developing world, who determines the best use of that donation.

I repeat: is this not what is already happening?

Easterly says no. He qualifies his praise for the working-level people by observing how "Big Plans foist on these workers...taking money, time, and energy away from the doable actions that workers discover in their searching." (18)

To be honest, I do not really know what Easterly means by this. Is his point that aid programs are so large and bureaucratic that they waste aid dollars? Possibly. Easterly certainly criticizes the bureaucracies in his Tanzanian pothole anecdote. (174-175)

Source: PolitiFact
Data on several NGOs, however, reveal reasonable efficiency levels. As the chart above shows, 92 cents of each Red Cross donation dollar reaches its targeted aid program. The same goes for 83 cents of every UNICEF dollar. While clearly imperfect, the operational efficiency of NGOs likely is not the explanation for the ineffectiveness of foreign aid.

Is his point, then, that the leaders of NGOs, the World Bank, and the IMF are incompetent? Not really.

Easterly concedes that "the IMF and the World Bank do succeed in attracting professionals who are dedicated to the mission of poverty reduction...and employees with strong norms of professional conduct do perform better." (177)

Amartya Sen (remember him?) authored a compelling critique of Easterly that captured many of my reactions. Sen wrote that if delivered in a less-extreme fashion, Easterly's lessons "could have yielded an illuminating critical perspective on how and why things often do go wrong in the efforts to help the world's poor." Yet Sen could not accept "Easterly's overblown conclusions...[because even Easterly] acknowledges the successes of many international aid efforts." (Sen, 172)

Ignore poverty reduction for a moment. International aid performs critical humanitarian functions. A recent study by the Social Science Research Network found that foreign aid played a substantial role in reducing infant mortality rates in Kenya. The Chief Economist of the IMF, whom Easterly cites as a denier of the growth effects of foreign aid, admits aid can be useful to save lives.

Even if one accepts only the premise that aid does good in the humanitarian realm - rejecting the idea that aid fights poverty - he or she still stands with Sen.

And I stand with Sen. Ample evidence, at the very least for humanitarian efforts, demonstrates the benefit and necessity of foreign aid. Yet I still find in The White Man's Burden welcome insights into ways of heightening the impact of foreign aid programs.


In all seriousness, I highly recommend reading the Sen critique. I struggled all day to write this blog post because Easterly seems so right and so wrong at the same time - I'd imagine many of you feel this way too. Find the critique here.

World Bank
Social Sciences Research Network
New York Times

Raghuram Rajan and Arvind Subramanian

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