Tim Worstall reacts to an article by Bill Easterly which I quoted here last week. Bill Easterly argues that we do not have evidence to support the view that countries are caught in a poverty trap, or that countries can be helped to "take off" in a virtuous circle of growth and rising prosperity.
But when a respected academic in the field (as Bill Easterly is) says that the basic structure of the problem has been misidentified, and that thus our solution is completely wrong, don’t you think we might want to sit down and have a little discussion? Instead of throwing money at it in a way that we know is incorrrect?
Of course, that isn’t what Bill Easterly says at all. He would be horrified at being misrepresented in this way.
This is not a debate about whether aid works (which we know it does, on average). Nor is it a debate about the many good things that can be done with aid to help countries to grow and reduce poverty. Bill Easterly would agree with Jeff Sachs and just about every other development expert that these are good things to do, and we should do more of them.
At the heart of the debate is a different question. Bill Easterly (and many of his colleagues at CGD, including me) think that Jeff Sachs overstates the effect that more money, by itself, will make to developing countries. We think that there are many things that poor countries can and should do to help themselves, most of which go under the general banner of improved governance. We think that there are many things that rich countries can and should do, over and above giving aid, to help poor countries, including opening our markets, reducing conflict, tackling corruption, intelligent migration policies, tackling climate change, and reducing the arms trade. Aid is an important part of the story, which definitely helps, but it is only part of the story. Bill Easterly’s point is that it is simplistic to think that we can throw money at the problem and think that this alone will solve it.
In a debate between experts like Bill Easterly and Jeff Sachs, the common ground is often taken for granted, and the discussion focuses areas of difference. To an outsider it may look as if views are heavily polarised. In reality, there is a great deal of agreement: neither Bill Easterly nor Jeff Sachs would say that aid alone is enough; and neither would say that aid is not effective in reducing poverty. They would both agree that the rich countries have a moral duty (as well as it being in their self interest) to give more aid, and to give that aid better. They would agree that there are many other things that the goverments of poor countries and rich countries should do to accelerate the reduction of poverty.
Nothing like Tim’s conclusion follows. Nobody thinks that "the basic structure of the problem has been misidentified". Nobody thinks "our solution is completely wrong". There is a remarkable amount of consensus about the causes of the problem of poverty. There is very widespread agreement, supported by evidence, that aid is effective in promoting sustained economic growth, as well as directly alleviating the effects of poverty in the short term. Far from "throwing money at it in a way that we know is incorrrect", we have clear evidence that aid expenditure is one of the most productive investments of funds that we know of, yielding higher returns than other public or private investments.
So, Tim asks, "don’t you think we might want to sit down and have a little discussion"? There are endless discussions on all this, including one at the United Nations next week. The last thing we need is more discussion. The international community made a historic commitment at the beginning of this Millennium to a set of goals of profound importance, including to halve the proportion of people living in poverty by 2015. We know that we are not on track to meet those goals. Furthermore, we know what we could do to meet them. It would not be particularly expensive for the rich countries – indeed some of the measures, such as opening our markets, would make us better off. The summit next week is an opportunity for the rich nations to recognise that we are not doing enough to live up to the goals that we have set ourselves. We should agree now to do the simple and inexpensive things, which we know work, to put the misery of world poverty behind us.