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June 07, 2005

Fame, Fame At Last!

So I get accused of being stupid, prejudiced and a liar, even a reactionary, all in one post. I plead guilty to all of those sins, although not for the reasons enumerated. I am indeed behind the knowledge curve on many subjects and I always fail dismally at IQ tests as my abilities at pattern recognition (pretty much anything visual) are total crap. OK, that’s proven. Prejudices? By the bucketful, lies? Oh yes and not just about sexual activities. I am quite obviously a reactionary as well, being quite open about my  thoughts on the joys of a laissez faire world.

I do however think that Owen Barder is being more than a little unkind in ascribing those epithets to my views on aid. You can rootle around here and at his place to see what I’ve actually said on the subject but here’s my response to his list of the sins and lies which I am guilty of:

Fallacy 1. We have to choose between more aid or more trade.

Sorry, never said it, never implied it and if I have done either it was in error, my not being clear enough about what I meant. I have said that trade would be more effective than aid, I have said that greater trade might obviate the need for some aid, but the idea that there is a straight choice of one or the other, that if we do one we cannot do the other? No, not even I am that stupid. I have said that if we do one we might not need to do the other, and in reverse that if we do one and not the other then we’ll be pissing our money away but those are different points.

Fallacy 2.  Poor countries would be the main beneficiaries of free trade
The main beneficiaries of trade liberalisation would be middle income countries like Brazil, India and China. The very poor countries already have preferential access to many – though not all – rich country markets; and so they might well lose out from blanket competition. This is absolutely NOT a reason to delay trade liberalisation, but it is a reason to be cautious about how much it will benefit the very poor, at least in the short run.

I have said that consumers in poor countries would be the greatest beneficiaries of the dismantling of those poor countries’ own import barriers. I’ve also noted that Lome and succeeding conventions have given the poor countries preferential access. I’ve even noted that greater trade between poor countries themselves would benefit them. But I haven’t stated that poor countries would be the main beneficiary of free trade. I’ve always said that would be us, for as a free trader I am convinced that even unilateral free trade is beneficial.

Fallacy 3. Aid to governments is just wasted – it goes into the pockets of corrupt dictators

I’ve said sometimes, often, seems to, appears to, pointed at obvious cases, but never said always. As Owen points out, it has sometimes been true.

Fallacy 4.  Aid is better given to private charities and NGOs than to governments, which are part of the problem

Yes, guilty, but only partially. For someone like me who sees government as the problem and a problem not limited to poor countries, this should not be that much of a surprise. What I actually advocate is not aid at all in the way that Owen means the word. I would much rather see whatever subsidies we decide to give to be used in leveraging private sector investment in such places. Yes, really, I think that the best solution is that the blood sucking capitalists, greedy, evil bastards like myself, should be encouraged to go out there and exploit the poor by, you know, building factories, providing jobs and wages, oppressing them with the weight of the profits extracted from the sweat of their brows. Shit, worked for our ancestors, didn’t it, all that exploitation by the Robber Barons?

Fallacy 5.  Extra aid in Africa could not be absorbed: it would just be wasted.

Even Jeffrey Sachs worries about this one. Don’t think I’m really arguing against the orthodoxy here.

Fallacy 6. We’ve already pumped billions of dollars into Africa and it we have nothing to show for it. So we know it doesn’t work.

I have quoted others who have made this argument, certainly. Not quite the same as making it myself. That we have pumped in hundreds of billions and not solved (all ) the problems is true, but that just means that we’ve been spending it on the wrong things. Which is rather my point.

Fallacy 7.  The problems that developing countries have had using aid well are mainly of their own making.
The main reasons why aid is not effective as it could be are not because the recipients waste it, but because the donors deliver it so badly. By attaching all kinds of strings and conditionality, donors make it very hard for recipients to get the best possible value for money (one aid project, for example, required bricks to be shipped all the way from Japan to build schools in Uganda, where there are perfectly good locally made bricks, increasing the cost of new schools seven-fold.). Donors refuse to make aid predictable, so it cannot be invested over a number of years and has to be spent as soon as it is available. Donors impose a battery of evaluations, appraisals, systems and other costs on the recipient Government. If donors were to think strategically about their long term interests in reducing poverty, rather than short term commercial and political gain, the aid they give could be much more effective and much more could be given and be effectively used.

I quite agree. Predictability, the unlinking of aid, light reporting and appraisals. You can look back in this category and see me praising such things as being entirely sensible. Owen’s ire may be aroused by the fact that I go further, and argue that there has to be some system of such appraisal, of sorting out which is a good project and which is a bad one.....and that the only successful method, over long periods of time and in aggregate we have of doing this is the profit motive working in free and competetive markets. Thus my continual insistence on private sector actors.

Fallacy 8.  Aid will solve all the problems of the poor.
More and better aid is not enough. Rich countries must reform the trading system, tackle corruption at the source (it is companies and governments from rich countries who pay the bribes that we hear so much about), open their borders to greater migration, reduce climate change, control arms exports, increase the transparency of resources into extractive industries such as diamonds and oil which pay for civil wars, ensure access to essential technologies such as medicine, and ensure that poor people have a greater voice in the international system.

Well, obviously I’m not guilty of this, certainly I’ve never said that aid will solve all the problems  of the poor. Something I’m a little confused about, it being only us from the rich countries that pay bribes. Really? The endemic corruption of the Nigerian oil industry is at least partly so, but Burma?  Zimbabwe? As someone who has worked for many years in an extremely corrupt country the general idea that it is always our fault is complete bollocks.

Fallacy 9.  America is a generous aid donor

Not something that I’ve tried to say although there are those who would point to the value of the security provided. Not guilty here.

Fallacy 10.  Africa is all the same: corrupt, hopeless, incompetent.
Africa is a vast continent, with huge diversity. Any generalisation about Africa as a whole is almost certainly wrong about much of the continent. There are some countries that are not well governed, just as there are in Europe and the Americas; and there are many countries that are democratic and well-led, and which are experiencing economic growth. (There are also democratic countries that are not growing, and undemocratic countries that are growing.) To characterise all of Africa based on outliers like Mugabe would be like generalising about Europe based on Berlusconi.

Again, not something I’ve ever said. I have said that in general, competent government is in short supply....and then made my right-wing usual cry of free markets help to overcome that, but then I say both those things about Europe as well.

Fallacy 11.  It isn’t our fault
Quite a lot of it is our fault. We contributed to the causes, though slavery, colonialism, the cold war, and continuing economic exploitation. We have invented or propped up some of the continent’s worst dictators. Where it suited us to do so, we invented and encouraged hatred (for example, between Hutus and Tutsis – a distinction invented by Belgian colonialists). We continue to impoverish the continent by demanding free markets for the commodities we want to buy, but providing no access to our own markets to enable countries to make and sell products on which they can earn a more stable income with greater value added. We will buy their cocoa beans, but we won’t let them sell us chocolate. Where countries might have a chance of succeeding in world markets – such as beef exports from Namibia or tobacco from Malawi – we subsidise our own exports while forbidding poor countries to do the same, so that they cannot compete for lucrative markets such as in the Middle East. We sell the leaders guns and weapons and we bribe public and private officials. Our consumption of carbon fuels leads to desertification and drought, putting millions at risk from hunger, and yet we expect Angola and Nigeria to guarantee cheap, affordable oil. And then we dump our unwanted food – surplus production by over-subsidised farmers in the US, Canada and Europe – and we pretend we are feeding the hungry, when all we are doing is driving local farmers out of business (we even have the chutzpah to count this economic vandalism as aid).

I’m really not sure why this is aimed at me. I’m one of the most vocal supporters of free trade around, insisting that we should have had it yesterday, that CAP and the US Farm Bill are abominations that kill people in their hundreds of thousands. For pointing this out, for agreeing with Owen’s point, I’m a stupid, lying, prejudiced reactionary?

Fallacy 12.  It isn’t our problem

I’ll agree that I might not have said it is our problem but I have certainly, repeatedly, said that we would benefit from solving this problem. There is not a fixed sum of wealth on the earth and making others richer will only be to our benefit. Perhaps because I argue that we should indeed be doing something for reasons of our own enlightened self-interest I am therefore too far right-wing to be anything other than hateful.

Fallacy 13. The public doesn’t want to spend money on aid and doesn’t believe it works

Don’t think I’ve ever even talked about this point.

Conclusion
Usually I think the blogosphere is pretty good at producing better informed, less prejudiced analysis than conventional journalism. But on this vital issue, it seems that a few people think it daring or trendy to be anti-establishment and argue against development, in the face of overwhelming evidence that it is effective in saving millions of lives, and improving the lives of millions more. I strongly suspect that these self-appointed experts have hardly ever set foot in a developing country, let alone invested any serious time in understanding the scale of the challenges they face. It would be just kind of sad and pathetic if it wasn’t likely to result in the needless death of millions of people.

Who in fuck thinks I’ve ever argued against development? I’ve argued against certain methods of trying to achieve it, from de-kulakisation to spraying fire hoses of money at corrupt governments. But anti- development? I’m being accused of wanting to keep the happy little darkies down on their scrub farms? Sorry Owen, that’s way over the top. Screw you and the horse you rode in on.

This also really rather depends upon your definition of a developing country. Does Russia immediately post-Soviet count? Does living there for 7 years? Does running a business that manufactures in Kazakhstan and Russia count? Does dealing with, for some 15 years now, a highly corrupt, almost lawless, economy give me some insight into what actually happens in such places? Does the perennial problem of beating off the bureaucratic rent seekers allow me to comment upon those who would regard the existence of more such as a solution to poverty?

Here’s what I think is really at the root of Owen’s complaint. I argue, forcefully at times, that the Make Poverty History people are making a disastrous mistake. It is contained within their insistence that there should be no forced liberalisation or privatisation as a requirement for aid (that’s putting it at its kindest. On darker days I think they are saying that there should be no privatisation or liberalisation.). Yet I would and do argue that at least some of the problems faced are precisely because they need and require such supply side reforms. Telecoms infrastructure perhaps, or water, can serve as the poster child here. What do we know from our own experience is the best way to get cheap and efficient such systems?  Why, private companies in competetive markets, hustling to make profits. This requires both privatisation and liberalisation.

I do think it a little harsh to describe as a stupid reactionary, a prejudiced liar, someone who is simply trying to point out that there are even better ways to make Africa rich, in addition to the plans put forward by Mr. Barder, whatever his political or cultural prejudices against private sector involvement in infrastructure provision may be.

June 7, 2005 in Make Poverty History | Permalink

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» 13 fallacies about aid and development? from New Economist
Lambasted by Tim Worstall, praised to the rafters by Jim at Our word is our weapon, Owen Barder's recent blog outlining fallacies about aid and development is well worth a read. Of course, few will agree with all 13 points, especially coming from a sel... [Read More]

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Comments

Sorry Tim - I didn't mean to insult you personally; nor to suggest that you had signed up to each and every one of the points in my blog entry. My aim was to bring together a collection of the points made not only by you but also by others, and to explain why I don't agree.

Owen

Tim adds: The intro to your post:

"I am getting truly fed up with the mixture of lies, stupidity and prejudice being peddled by reactionary individuals like Alex Singleton (posing as an Institute) and Tim Worstall, who are running a small but vocal campaign to raise doubts about the effectiveness of aid."

This is not meant to be personally insulting? Let me know when you do mean to be so, should be something quite special.

Posted by: Owen Barder | Jun 7, 2005 4:34:16 PM

Is it me, or is it the self-declared kindly considerate intellectuals of the left that are always so darn vicious and splenetic about anyone that dares to question their orthodoxy? I am particularly intrigued by his arguments that since a majority of people think something is a good idea in a survey then it makes economic sense to do it.

Posted by: Mark T | Jun 8, 2005 8:43:24 AM

Considering Owen includes both Tim and Alex on his blogroll, I don't really think he looked very hard to find people to chastise.

Posted by: brian | Jun 8, 2005 10:00:38 AM

I think Owen may be even worse than me at failing to insult people. Either that or he's a lying bastard.

Posted by: Squander Two | Jun 8, 2005 11:53:56 AM

Tim

You are right - I was out of order in ascribing to you views that you do not hold; and I was out of order in being insulting.

In my defence, I feel passionately that we risk losing an opportunity to save millions of lives each year; and that this would be a humanitarian catastrophe. But I should stick to the issues in future.

I've amended my blog entry accordingly.

Owen

Posted by: Owen Barder | Jun 8, 2005 9:11:27 PM

Mark says:
"I am particularly intrigued by his arguments that since a majority of people think something is a good idea in a survey then it makes economic sense to do it."

I don't think I said that.

However, as it happens I do think that policy-makers ought to take some notice of how citizens do, or do not, want their tax contributions spent. There is quite a bit of "economic sense" in allowing people to decide how their money is used. Ideally, this is achieved by not taxing them in the first place; but there are some things that can only be provided efficiently collectively.

Removing from people the choice to do things collectively is a loss of liberty and welfare which is no less harmful than removing from them the choice of doing things individually.

Posted by: Owen Barder | Jun 8, 2005 10:02:13 PM