Dambisa Moyo Says Foreign Aid Can’t Solve Problems, but Maybe Corporations Can - Freakonomics
"Dambisa has big, radical ideas. Most prominent among these ideas is her claim that the more than $500 billion in foreign aid that has been directed towards African countries over the last 50 years, not only hasn’t helped Africa, it has actually hurt Africa. Bill Gates vehemently disagreed. When her book Dead Aid came out laying out her arguments on the topic, Gates described the book as “promoting evil."...
LEVITT: So, thinking about the longer term, if we go back to the 1970s, or maybe the 1960s, places like Singapore, South Korea, Indonesia, Malaysia — they would have had incomes per capita that were similar to Africa?
MOYO: Lower even.
LEVITT: Lower — China as well. And so they’ve been this huge success story and there’s really no country on the African continent that has been what you’d call an enormous economic success story. Is that a fair statement?
MOYO: Ah, maybe save Botswana. I think Botswana tends to be put in the same camp as South Korea. They both received aid money, they’re what they call “aid graduates.” But you know I think for the first point is that these tend to be relatively small countries. Singapore, if everyone could replicate what Singapore has done we would, but a lot of these aspects and the success story around Singapore is one that is hard to scale. And also in many respects really reliant on what I’d call autocratic non-democratic philosophies which are hard to replicate more and more in a democratic world. China is still poorer on a per-capita income basis than some African countries...
We know that countries that trade more do better than countries that don’t trade. We know that countries that have efficient governments do better than countries that don’t. Countries that are more forward-leaning in terms of how they operate do better than countries that are dependent on outside external help. So there really oughtn’t be some big mystery about, you know, Africa’s failure to develop in a sustained way. But I think that aid in of itself is not a problem. The problem is that the aid system in Africa is given in-perpetuity. It’s a completely different model from the Marshall Plan, which was about a $100 billion from the U.S. to help reconstruction in Europe. That was a five-year program. It was sharp and finite. It’s completely different from the aid graduates that I referred to earlier, the Botswanas and South Koreas who also received aid and were able to transform into middle-income countries. We’re talking about a system that has no evidence in history or prehistory of success as a tool for economic growth in a sustained way. It imbues corruption, it creates factions, you end up undermining the political environment because, very smartly, the local African governments court and cater foreign donors and they don’t really care about the local construct of what their people need because their ability to stay in political office is not determined by the local citizenry. But there’s just so many other aspects of how corrosive large foreign aid programs can be.
Ultimately, Steve, we can do better. After over 60 years of doing the same thing and given the counterfactual evidence that we see elsewhere, it just seems to me somewhat foolhardy that we keep going down this route of systemic aid. Rather fortuitously I think two things have happened — I say this with a little bit tongue in cheek — but first of all, China has emerged as an alternative suitor. The Chinese model, again notwithstanding its challenges and its limitations, is a fresh approach and actually creates competition against traditional aid donors. And the other thing that’s happened is that Western donors are pretty much running out of money, they have their own economic challenges. China is the largest foreign lender to the U.S. government. It is a point of irony that the U.S. government is essentially borrowing money from China in order to give aid to Africa...
Over the 60 plus years that aid has been a dominant feature of Africa’s public policy, we’ve been moving the goalpost in terms of what exactly aid is meant to do... If you look back at the original thinking around aid, and my book was dedicated to Peter Bauer, Lord Bauer, who was a Hungarian-born British economist and he, back in the 1960s, cautioned about these open-ended programs. And he was largely dismissed. But he was absolutely right that they would end up really not achieving their fundamental goal of creating sustained economic growth. People who are supportive of the aid regime argue a whole host of things as evidence that aid is working. They would say, “Yes, it’s true economic growth has stalled, but never mind growth, because of aid programs a million girls across the African continent have been able to go to school” or “We were able to build health facilities over 20 countries because of aid.” That to me is a cop-out because that very often requires or encourages African countries to remain dependent on the aid system because it’s got nothing to do with expanding that G.D.P. pie and making sure that African countries can actually grow and contribute and have a seat at the table in the global economy. Part of the problem is that the metrics for judging the efficacy of aid have tended to move and if we go back in history it was supposed to help to jumpstart economic growth and it’s clear from the data that is not what it has done...
LEVITT: Why do you think there’s so much animosity towards big companies right now? It really seems to me that attitudes are more negative towards corporations than I can ever remember.
MOYO: The data does suggest challenges but it’s interesting because if you look at for example the Edelman Barometer — they have an annual barometer of trust — corporations are ranked higher than government and media. I think government’s failure to be proactive and to be a visionary has contributed a lot to this sentiment. When I talk about visionary governments I’m talking about the American government of the 1950s — ‘40s, ‘50s, involved in DARPA, involved in development of Silicon Valley, Manhattan Project — there was just a more aggressive and clear articulation of a future world that would be evolving. Statistics show that this generation of Americans, for the first time in the history of the country, is less educated than the preceding generation. This is not a winning hand...
A friend of mine says there’s a rule of three. That if you have only one minority on the board, people think “Oh great this person’s here because of a quota.” If you have two, people spend their time thinking, “Are these guys getting along or are they fighting, is it a cat fight?” And they said only if you have three does it become immaterial or irrelevant and I’ve always thought that is a very good rule of thumb...
LEVITT: Do you have advice for young people that you think transcends time and space about how to, I don’t know whether it’s to be successful or to lead a good life, what do you tell young people when they ask you for advice?
MOYO: Well especially now, I’m very much driven and guided by this idea that no doesn’t mean never, it means not now. And it sounds pretty simple but I find that for a whole host of reasons there are a lot of young people who very quickly get discouraged because they’re told no they can’t have something and maybe for reasons of fear or insecurity they don’t understand that it could happen but it’s just not right to happen now. And so they leave the conversation thinking, “Oh I’m not getting it because I’m Black or I’m a woman or I’m this, I’m that,” and I worry a lot about society cause I was very much raised in in the world where, “Hey, listen, if you don’t get something, don’t assume that it’s racism, don’t assume that it’s gender, ask the person who’s saying no what you might do to be considered or to have a better shot at it.” I think there’s so much cynicism about those sort of, dare I say, conventional pieces of advice and it’s about, for me, agency and individual performance, recognizing that racism absolutely exists and somehow encouraging people that ultimately if you have a good record of education and progress that the world will come good, is what I believe...
LEVITT: Economic thinking can be enormously powerful because economists think very differently than other people. But since most economists think alike, you really only need one in the room and which economist you have doesn’t matter so much as long as the one you have is reasonably smart, well-trained and has some common sense."
Being against good intentions that lead to bad outcomes is evil. It is one thing to say that the ends justify the means, but for the intentions to justify the outcomes...
More evidence of how white guilt is bad
Liberals will just demand a quota of a minimum of 3 "minorities"
