William Easterly, Author & Former World Bank Economist
Simon Maxwell, Director, ODI
Bob Picciotto, Independent Consultant & Former Vice-President, World Bank
David Goodhart, Editor, Prospect Magazine
We are all aware of the extreme hunger and poverty that afflict the world's poor. We hear the facts, see the images on television, buy the T-shirt and are moved as individuals and governments to dig deep into our pockets. Yet what happens to all this aid? Why after 50 years and US$2.3 trillion are there still children dying for lack of twelve cent medicine? Why are there so many people still living on less than US$1 a day without clean water, food, sanitation, shelter, education or medicine?
In "The White Man's Burden", William Easterly, acclaimed author and former economist at the World Bank, addresses these twin tragedies head on. While recognising the energy and compassion behind the campaign to make poverty history he argues urgently and powerfully that grand plans and good intentions are a part of the problem not the solution. Giving aid is not enough, we must ensure that it reaches the people who need it most and the only way to make this happens is through accountability and by learning from past experiences.
Without claiming to have all the answers, William Easterly chastises the complacent and patronising attitude of the West that attempts to impose solutions from above. In this book, which is by turns angry, moving, irreverent but always rigorous, he calls on each and every one of us to take responsibility - whether donors, aid workers or ordinary citizens - so that more aid reaches the people it is supposed to help.
At this ODI & Oxford University Press launch event, the author William Easterly will outline and discuss the ideas contained in his book with Simon Maxwell and Bob Picciotto. As usual, there will be the chance to ask questions and to engage in discussion of these and related issues.
William Easterly began by positioning his argument as the polar opposite of Jeffrey Sachs' argument that 'success in ending the poverty trap will be much easier than it appears' (set out in 'The End of Poverty') and Bono's statement that 'it's up to us' in introduction to that book.
He agreed with a speech by Gordon Brown (UK Chancellor of the Exchequer) that it is a tragedy that half of all malaria deaths could be prevented with medicines that cost 12 cents. But he argued that the bigger tragedy is that the West has already spent $2.3 trillion on foreign aid in the last five decades and malaria victims are still not getting 12-cent medicines. He said that when Sachs and others argue that more should be spent on aid they are missing a fundamental point: the real scandal is that the money spent is not reaching the poor.
He questioned the logic of doubling aid spending (which has happened in 1960, 1973, 1990 as well as 2005) and large-scale plans arguing that these allow donor countries to avoid the issue of how much money actually reaches the poor; and so the tragedy continues.
He criticised large-scale plans such as the Millennium Project Plan (with its 449 interventions), Millennium Development Goals and Poverty Reduction Strategy Papers on the grounds that they depend on poorly incentivised collective action; they have too many indicators and goals; and their success depends also on factors beyond the control of donors. Fundamentally, nobody is responsible for any one result and without such responsibility few achievements can be reached. He also criticised big plans for being publicity stunts, popular with politicians.
He characterised the problem in terms of lack of knowledge. Top level planners do not and cannot have enough information to plan out the end of world poverty. It goes back to an old debate on central planning vs markets.
He outlined 4 elements in what is wrong with big plans. There is:
Lack of 'customer' feedback from recipients of aid;
Lack of incentives in the collective action model
Lack of accountability in donors
Lack of omniscience - planners cannot have complete information
He posed the question: what are the alternatives to large-scale plans? He argued that the free market has good feedback mechanisms which create incentives and accountability. A system of democratic accountability also manages to create feedback mechanism. However, markets and democracy are not a panacea. Historical evidence suggests they have to be homegrown. Nevertheless, markets and democracy should inspire the West to respond to what aid recipients need.
He presented evidence that 42 years of aid plans have not ended poverty. The countries with the highest average aid over this period have seen a mere 0.4% growth in income. Research on aid and growth has failed to find any robust result that aid raises growth. Structural Adjustment Loans (SALs) have failed. 15 African countries received an average of 24 SALs each and their average rate of income per head growth has been negative: -0.4% per year.
He moved on to ask what the alternatives to SALs are. He proposed that entrepreneurial people who work to change things on the ground are the way forward. He gave the examples of a Ghanaian expatriate who send up Ashesi University in Accra; the Mexican government official who first started a small scale programme to pay families to keep their children in school which expanded nationwide into the Oportunidades programme; and Mohammed Yunus, founder of the Grameen Bank.
He concluded that lending for structural adjustment should be discontinued, utopian large-scale plans should be abandoned and there should be fewer task forces and reports. Donors need to develop a way of working that includes feedback, accountability, independent evaluation of aid, incentives and cooperation with small scale initiatives.
Robert Picciotto began by pulling out five main messages from the book:
Global poverty is a scandal
Aid can work
Aid quality matters more than aid quantity
Aid is most effective when it is innovative and provides incentives for change
The aid industry must reform.
He stated that Easterly is right to debunk aid effectiveness research built on cross country regressions; remind readers about the perils of externally induced policy reforms; describe development as a microeconomic phenomenon; and puncture the exaggerated claims of aid advocates.
However, he criticised Easterly for providing comfort to the miserly approach to development of most OECD countries; perpetuating unhelpful myths about the development enterprise; and keeping silent about the distorted non aid policies of donors that help keep poor countries poor.
He argued that aid volumes are, in fact, not large: $2.3 trillion in fifty years is less than $9 per capita per year which works at about 4 cents per capita for the 3 billion poor living on less that $2 a day. As a comparison, US military expenditure is 20 times more that the total OECD aid budget.
He then moved on to cite achievements over the last 30 years: a reduction in poverty, an increase in life expectancy, decrease in infant mortality, increase in literacy, and decrease in chronic malnutrition. Although aid did not do it all, it helped.
He responded to Easterly's criticism of celebrities getting involved in the aid debate by arguing that there is nothing wrong with making aid 'cool' again or dreaming about 'a world free of poverty'. The MDGs capture universal human aspirations.
He challenged the idea that government is always the problem and the market is always the solution, raising the issue of fragile states (where one third of the world's poor live). He questioned the assumption that domestic small scale voluntary initiatives are best, pointing out that the voluntary sector is often less accountable than government and the difficulty of scaling up small projects without official aid support. He argued that development results from a mixture of planning and grassroots programmes.
He concluded that his main criticism of the book is what it omits: development is not just about aid; foreign direct investment, merchandise exports and remittances are all factors. We need to look at the overall framework for development. The next step would be for Easterly would be to 'move beyond his aid bashing phase and apply his ferocious debating skills and his sharp analytical mind to the non aid dimensions of the relations between rich and poor countries. This is where the true challenge of development cooperation lies in the 21st century'.
Easterly responded by disagreeing that aid is more accountable than domestic programmes and clarified that he did not mean to give the impression he was recommending universal privatisation of aid; rather that aid workers should try to think more in market terms.
Simon Maxwell gave comments from the point of view of a consumer, an academic and a European.
As a consumer, he said the book is an excellent read and entertainingly written.
As an academic, he said he had some quibbles; mainly that Easterly is biased in his use of information to support his position (despite criticising others for doing so). He questioned Easterly's attempt to adopt a stance in opposition to the mainstream discourse on aid, pointing out the day to day thinking and work at ODI actually is along the same lines as the arguments in the book. This led him to a point about the responsibility of think tanks to engage with politicians and offer solutions. He said the danger of this book is that it will be seized by those who want to reduce development aid and asked the audience to consider if it is a good idea to argue for not increasing aid. Taking a message to politicians that aid doesn't work will simply result in them cutting it.
As a European, he pointed out that if the arguments in the book can be characterised as conventional European wisdom and Europe wants to be helpful in the development debate, Europeans need to advance the conversation. He criticised Easterly's list of small-scale projects as insufficient to take the debate forward. He said the private sector can only have a successful role if the infrastructure and public goods that entrepreneurs require are in place. He argued that there is a need for large-scale plans, for example in a situation like Darfur.
He concluded that work in places like ODI does offer policymakers options - not perfect ones, but it is better to engage in solving the problem of global poverty than take the Easterly line of turning our backs on it.
Easterly responded that support for aid is fragile and that is will shatter when big promises are not kept. The challenge is to redirect zeal to holding actors in the aid system accountable in terms of whether the money actually improves the lives of poor people. He emphasised that the volume of money spent on aid is not a measure of success.
The discussion covered the following points:
It is time that Africans were asked what they want rather than being told what to do. Money from Africa to the West outstrips the amount of aid going to the continent.
Giving more power to the private sector.
Somaliland is thriving without aid.
Skilled workers leaving African countries to work abroad. How can the flow be stemmed and how can more training be provided in African countries?
The conflation of development, aid and growth.
The 'aid industry' did not push the agenda far enough in 2005.
How do ordinary people respond to this debate? Should they give to development NGOs? How can NGOs prove that the poor people really benefit from the money?
The need for less description and more analysis of the problem.
The EU system of regional support.
The aid industry's real objective is to keep the poor in that state.
Lack of incentives for the aid industry to respond to critiques of its limited impact.