31 August 2011

More on Budget Support, Cash-on-delivery, and Cash Transfers

Ranil makes some valid criticisms of my (over?) enthusiasm for new and shiny forms of aid.

Notably, that COD does not dispense with conditionality, just shifts it from process to results. I would still argue that this form of aid is potentially more respectful than process conditionality. It is more transparent and more upfront about the conditionality. There is even an explicit contract involved, rather than arbitrary judgement calls on eligibility (Malawi?).

Furthermore, the taxpayer audience point is a really important one here - COD wins hands down. Budget support will never be able to satisfy rich country taxpayers that there is no waste or corruption going on. Many people think that their own government wastes much of their money, never mind a foreign government with no accountability to them.

Nonetheless, this is an unproven technology, which clearly shouldn't just replace all traditional aid. But I do see it as an evolution.

I am more optimistic about cash transfers. Basically, I just don't see how there is any scope for mis-spending money which goes directly to someone who earns less than $1.50 a day. As long as we are confident that they do indeed get the money, I don't even see the need for an impact assessment. They just get the money that they were desperately short of.

Giving money to the poorest could tautologically eradicate income poverty. And if it is technically feasible and affordable, which it kind of is, I basically think we should just do it already, regardless of concerns about long-term constraints to national economic development, or access to education, health, security, and other public goods. I'm still not sure if Charles Kenny meant his $100 billion as a serious proposal, but why the hell not? It's really just peanuts in the grand scheme of things.

And I don't think we should be afraid of permanent handouts. We don't talk about exit strategies to redistribution within the UK. In Owen's words;
the richest people in the world have a duty to support the poorest people in the world – whether they are in the same country or not – as a matter of social justice rather than charity. This is a principle that we accept within our own countries – few of us think that we should aim to exit altogether from national insurance, state pensions or unemployment benefits in our own countries. The same principle should apply globally: there will always be people who are relatively rich and people who are relatively poor, and we should be aiming to evolve institutions which are effective at transferring income from the best off to the wost off around the world. And we will be doing that for the foreseeable future.
It sounds radical, but its really just some pretty old school liberal philosophy. Free markets are fine as long as everyone gets a fair shot, and you don't get a fair shot when you are born into extreme poverty. So as a matter of ethics there should be transfers from the richest to the poorest, for them to provide enough for their children to eat. No child should go hungry just because their parents don't earn enough.

And the evidence? How about Brazil lifting 20 million people out of poverty in just six years through Bolsa Familia? Has there ever been a better anti-poverty program?


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