The "poverty trap" figure in my post on Dr. Easterly's Introduction to Reinventing Foreign Aid was difficult to make. How does one express the goals of foreign development assistance without sounding chauvinistic? The answer: one can't. If our way of life isn't better, we have no business interfering with theirs. So why are we talking about the right way to evaluate ways to improve schools in Kenya when we don't have a good means of doing so in the US? It looks an awful lot like development aid is something we developed-country denizens can impose on others, but not ourselves.
Consider three attempts to make society better:
(1) The "war" on drugs
(2) Agricultural aid and subsidies
(3) Microcredit financing
(1) The history of the drugs trade bears a striking resemblance to the history of planned economies and foreign aid. It starts with a good idea to improve the lives of people in one country by using the power of the state (Prohibition/drug bans, socialism/Great Society). The Planners forget important details about circumstances, and maintaining the intervention becomes politically untenable in powerful nations (Prohibition is repealed/"medical marijuana", Regan and Thatcher are elected). So the Planners shift their focus abroad, where the consequences (violence and corruption, stagnation and corruption) are felt by people who are far away. Now food is being destroyed in Columbia, we're using the latest Virginia class submarines to track drug boats, and people in England are sniffing more roach poison. Oh, and the two largest threats to United States security are now paid for largely by cocaine and heroin sales. Progress!
(2) Many attempts to jump-start agricultural economies in southern Africa involve someone with an economics PhD carefully explaining that subsidies are a bad idea for farmers. Assuming efficient markets otherwise, these distort prices, create dependencies and encourage inefficient practices. Like, say, those used in the famously productive EU and US (in fact, no market is less efficient that food). Malawi bucked the trend and now grows enough to export. Meanwhile, Indian farmers who did largely embrace US farming, but not subsidizing, practices are committing suicide in large numbers as their debt burdens become unsustainable. Highly subsidized farms in the US are starting to show their own problems with sustainability as well, while urban agriculture gains popularity in both the US and Venezuela. All agriculture, like politics, is local. Planners would do well to enable more Seekers.
(3) Microcredit lending began as a sort of venture capital for the poor. When it is seen as an aid program, intended not to benefit the issuer but "the recipient's community," it becomes another hand-out because loans are issued based on need, rather than ability to repay. On the other hand, if used judiciously, the same principle of enabling (financing, training and otherwise supporting) profit-Seekers works quite well in Silicon Valley, Bangladesh and probably even New York. Yes, that link is right, a Bangladeshi bank/charity is now trying to help people, and make a few bucks, in New York City.
The upshot of all this is that any charitable activity intended to be a lifeline can quickly turn into an umbilical chord and a tether. Refugees in a not-too-bad camp, welfare recipients and trust fund kids (think Paris Hilton) have little incentive to improve their lot, but every so often an individual emerges who wants to live better. To the extent we can keep her safe, provide food during a famine and do our best to ensure good governance and opportunities around the world we're doing well. Beyond that, I don't think we should be planning her future, whether she lives in Nairobi or Nashville.
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