The perils of development assistance

Once your pie maker learned about William Easterly's work, he found a humanitarian expression of the ideas expressed by Hayek and other classical liberals. It comes down to this central thesis: it is difficult or impossible to genuinely help people without getting to know them well. As often as not, feeding one's self while getting to know them well requires that the potential benefactor get some economic benefit from the target population.

People respond imperfectly to any set of incentives, and so any bureaucratic approach to development aid, foreign or domestic, must be able to absorb substantial uncertainty about eligibility, duration and cost. If the goal is to cause a substantial change in the recipients lives, by definition the goal of most poverty alleviation programs, the uncertainty grows with the success of the program. As a result, program sponsors and administrators tend suffer a fair amount of bureaucratic paralysis because the penalty for a small program being late is minor (from the aid deliverer's perspective), while being wrong about the impacts of the program is often fatal.

Organizations that are extremely hierarchical, such as military forces, handle this uncertainty by declaring a qualified person, singular, to be the decision maker with both the responsibility and authority to seek the desired ends. Decentralized organizations such as markets do a very good job of allocating resources if specific conditions about information distribution and scarcity are true, and these are often enforced by the apparatus of a nation-state. Develop aid organizations fall into a middle ground, making them very frustrating to deal with, and possibly irrelevant.

This is an over-simplified version of a very complicated story, for which your pie maker highly recommends reading Reinventing Foreign Aid and The Economist magazine. However, one thing he has often found to be true is that the best way to really screw things up is to try help selflessly, but ignorantly. If you can't make what you believe come true (generally by force) or gracefully be wrong more often than not (markets seek the "least wrong" solution), then the best you can hope is that the situation you're trying to effect will remain static long enough for you to learn how to understand it.