02 August 2013

Hey Angus! That's why we give directly!

Angus Deaton has a new book (via Tyler), which will no doubt provide a magisterial lesson in economic history, but I'm afraid we're going to have to agree to disagree on policy.

He starts off well (there are a couple of pdf chapters online at the publishers' website here)
I believe that we—meaning those of us who are fortunate enough to have been born in the “right” countries—have a moral obligation to help reduce poverty and ill health in the world.
And then gives a rehearsal of some of those old aid arguments - yeah maybe individual projects are good for people but what about all those bad political incentives. Essentially the balance of evidence really falls on neither side, so it kind of comes down to personal judgement, or taste, or whatever, and Angus had decided that despite sending kids to school and saving lives (for sure) the negative political impacts of aid (possibly) are larger, making for a net negative total impact.
The concern with foreign aid is not about what it does to poor people around the world—indeed it touches them too rarely—but about what it does to governments in poor countries. The argument that foreign aid can make poverty worse is an argument that foreign aid makes governments less responsive to the needs of the poor, and thus does them harm.  
... Those who advocate more aid need to explain how it can be given in a way that deals with the political constraints.
Well guess what PROBLEM SOLVED Angus - you can skip the government and send yo money DIRECT TO THE POOR PEOPLE RIGHT HERE. Do try and keep up now, GiveDirectly.org have been in business for TWO YEARS already. 


Matt Collin said...

Two words: public goods

rovingbandit said...

Personally I'm not convinced that aid to governments has a net negative impact so I'm ok with funding public goods, but for sceptics like Angus there is an easy option right there...

yves083 said...

Haven't read the book but will read it soon. But i think this is his story: John(the aid guy): "Hey poor Smith, take the fish, you need it". Smith(the poor guy): "Thanks. This fish has saved my life, maybe." Anne(the politician): "Oh John gave Smith the fish already? Good for Smith.... and John. Hey Smith, since John gave you the fish there's no need to demand fish from me eh? Lets just leave things as they are." But then if the reason Smith has no fish in the first place is because of Anne then whats really the net benefit to Smith of taking the fish from John?

Michael said...

Plenty of INGOs like FAVL can deliver public goods with very little government involvement.

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