You will recall that there was a flutter in blogland a couple of weeks back about the causes of the famine in Niger, triggered by an article in the Washington Post which claimed that “the rise of a market mentality” had contributed to the famine in Niger. A number of us, including Cafe Hayek, TechCentralStation, Newmark’s Door, The Globalisation Institute, Tim Worstall and me, reacted with a discussion about the circumstances in which there might be a famine but no general shortage of food, and pointing out that the solution may lie not in providing food but money to the very poor.
So it was interesting to see this article on BBC News Online, which is based mainly on an interview with Bill Easterly, making essentially the point that a number of us were making:
"It is axiomatic that flooding the market with food drives down the price for local farmers," Mr Easterly says. …
Mr Easterly and others are not arguing that the solution to perverse incentives lies in withholding emergency aid.
They contend that it could be made to work better in a number of ways, including:
- Providing compensation to local farmers
- Making sure aid stops when things improve
- Giving cash rather than food
But the most effective move would be to focus less on emergencies and more on chronic problems. Mr Easterly says this could be done cheaply in the Sahel.