Foreign Aid Face-Off

From an op-ed grudge match (yep, that's what they call it...got to love that name) in the LA Times about "Foreign Aid". William Easterly says "Foreign aid feeds poverty":

This push has been underway for four decades now - and has resulted in the movement of $568 billion in foreign aid from the rich countries to Africa. The result: zero growth in per capita income, leaving Africa in the same abysmal straits in which it began. Meanwhile, a number of poor countries that got next to no aid had no trouble escaping the "poverty trap." Where did all the aid money go?... The way it works is that a large aid bureaucracy such as the World Bank (with its 10,000 employees) or the United Nations designs a complicated bureaucratic plan to try to solve all the problems of the poor at once (for example, the U.N. Millennium Project announced last year laid out 449 steps that had to be implemented to end world poverty). The aid money is then turned over to another bureaucracy in the poor country, which is asked to implement the complicated plan drawn up by out-of-country Westerners. (How complicated? Tanzania - and it's not an unusual case - is required to issue 2,400 different reports annually to aid donors.) In the best case, the bureaucracy in the poor country is desperately short of skilled administrators to implement complex top-down plans that are not feasible anyway - and report on their failure to do so. In the worst, but all too common, case - such as that of the corrupt dictator Paul Biya of Cameroon, who will get 55% of his government revenue from aid after the doubling of aid to Africa - the poor country's bureaucrats are corrupt or unmotivated political appointees... Bureaucrats have never achieved the end of poverty and never will; poverty ends (and is already ending, such as in East and South Asia) by the efforts of individuals operating in free markets, and by the efforts of homegrown political and economic reformers. What are the better alternatives? If the aid agencies passed up the glitzy but unrealistic campaign to end world poverty, perhaps they would spend more time devising specific, definable tasks that could actually help people and for which the public could hold them accountable. Such tasks include getting 12-cent doses of malaria medicines to malaria victims; distributing 10-cent doses of oral rehydration therapy to reduce the 1.8 million infant deaths from dehydration due to diarrheal diseases last year; getting poor people clean water and bed nets to prevent diarrheal diseases and malaria; getting textbooks to schoolchildren, or encouraging gradual changes to business regulations to make it easier to start a business, enforce contracts and create jobs for the poor. True, some of the grand plans include some of these tasks - but to say they have the same goals is like saying that Soviet central planning and American free markets both aimed to produce consumer goods. These tasks cannot be achieved as part of the bureaucratically unaccountable morass we have now, in which dozens of aid agencies are collectively responsible for trying to simultaneously implement 449 separate "interventions" designed in New York and Washington to achieve the overall "end of poverty." That's just nuts. The end of poverty will come as a result of homegrown political and economic reforms (which are already happening in many poor countries), not through outside aid. The biggest hope for the world's poor nations is not Bono, it is the citizens of poor nations themselves.

Jeffrey Sachs says "Foreign aid skeptics are wrong":

Those who contend that foreign aid does not work - and cannot work - are mistaken. These skeptics make a career of promoting pessimism by pointing to the many undoubted failures of past aid efforts. But the fact remains that we can help ensure the successful economic development of the poorest countries. We can help them escape from poverty. It's in our national interest to do so. The first step out of rural poverty almost always involves a boost in food production to end cycles of famine... A second step out of poverty is an improvement in health conditions, led by improved nutrition, cleaner drinking water and more basic health services... The third step is the move from economic isolation to international trade... Today, the skeptics like to claim that Africa is too far behind, too corrupt, to become a China or India. They are mistaken. An African green revolution, health revolution and connectivity revolution are all within reach. Engineers and scientists have already developed the needed tools... Aid skeptics such as professor William Easterly, author of the recent book "The White Man's Burden," are legion. Instead of pointing to failures, we need to amplify the successes - including the green revolution, the global eradication of smallpox, the spread of literacy and, now, the promise of the Millennium Villages. The standards for successful aid are clear. They should be targeted, specific, measurable, accountable and scalable. They should support the triple transformation in agriculture, health and infrastructure. We should provide direct assistance to villages in ways that can be measured and monitored... n this fragile and conflict-laden world, we must value life everywhere by stopping needless disease and deaths, promoting economic growth and helping ensure that our children's lives will be treasured in the years ahead.

By the way, John Stossel is on the case too.