Developing, an Understanding

With guidance from a visiting professor, I explored the field of development economics this month. If macroeconomics is the Wild West, development is Antarctica: barely charted. The few methodologically sound papers are cited over and over again; most practitioners work outside the realm of tested science.

The two great books I read, however, will give anyone with a passable knowledge of the world a deep sense of what is right - and what is wrong - about development.

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Perhaps the most foundational economics book I have ever read is Development As Freedom by Nobel prizewinner Amartya Sen. His is a philosophical look at the field, and gives a cogent answer to the niggling question at the back of my mind, "Why should we pursue development?" Most of his readers, unlike me, are true believers, so most of his effort is in refining the often hazy views of precisely why and how development is worthwhile. Rather than concentrating on the popular metrics (such as GDP), Sen makes a convincing argument that development is important inasmuch as it expands human freedom.

'Freedom', which I think Sen uses a bit freely, is often confused with 'liberty', particularly by Americans, for whom both words can be no more than jingo. However, strictly speaking, freedom is generally freedom from something bad, whereas liberty is liberty to do something. Armed with this understanding, we can appreciate Sen's appeal to free humanity from infirmity, scarcity, and non-agency.

The 'Freedom' approach is more than an excuse for Sen to write another book. Focusing on freedoms puts in sharp relief the distinction between the constitutive and instrumental role of freedoms. He appreciates both. Thus, democracy is both (constitutively) freedom from oppression and (instrumentally) it fosters and enables the development of other freedoms.

Sen avoids being tagged a 'rightist' or 'leftist', at least in this connection. He can appreciate markets as a freedom in themselves, and also appreciate the instrumental effects of well- and poorly-functioning markets in fostering or inhibiting development of other freedoms.

You can purchase Development As Freedom on Amazon for $8.50, or ask your local college library.

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Less philosophical and more irreverent is Bill Easterly's The White Man's Burden. Easterly, like most other American economists and foreign aid practitioners, is white. And, like a very few other foreign aid practitioners, he recognizes that he is an heir to the colonists of Kipling's poem. Also like the colonists of yesteryear, his ilk has been monstrously ineffective at helping what he calls "the Rest".

Easterly speaks of two tragedies of world poverty. One is that so many live in poverty - or die prematurely of it. The second is the tragedy "in which the West spent $2.3 trillion and still [has] not managed" to prevent the first tragedy (p. 4, Penguin Press, 2006). That's a lot of money, and Easterly says most of it has been wasted.

The book chronicles myriad failures and successes in foreign aid, with the clear theme: Big Plans fail, piecemeal efforts can succeed. I am incredulous at the willingness of the World Bank, USAID, UN and others to work with the same thuggish regimes, warlords, and gangsters - despite watching their money disappear in corruption again and again and again.

Less convincing is his argument that Big Plans have altogether failed. After all, smallpox, guinea worm, polio and other diseases have been largely eradicated. Infant mortality has dropped precipitously and life expectancies are much higher than fifty years ago. His sometimes bombastic style leaves a doubt as to whether his appraisal of Big Plans as failures is not oversimplified. Additionally, he does not address the question of whether piecemeal efforts can expand to sufficient scope and equity to be the principal vehicle of foreign aid.

However, Easterly does convince me that donors will see less poverty for their buck if marginal steps are taken in the direction of realistic goals, feedback, accountability, evaluation, and local control. He also chronicles the absurdities of the aid industry, and the way that aid agencies manage to pay lip service to ideas like "local control" without changing their actual autocratic methods.

He is at his most poignant in describing the deafness of aid agencies to the poor for whom they are supposedly in business.

I once had a pothole in front of my house in Takoma Park, Maryland... I called my city councilwoman, Kathy Porter... the next day, the Takoma Park Public Works bureaucracy was out there filling in the pothole.

Now consider a poor person in Tanzania who wants to get a pothole repaired in front of his house... This poor person somehow communicates his desire to "civil society representatives" and/or non-governmental organizations (NGOs), who articulate his needs through the government of Tanzania to the international donors. The national government solicits a "poverty reduction support credit" (PRSC) from the World Bank (IBRD) and a Poverty Reduction and Growth Facility (PRGF) from the International Monetary Fund (IMF).

To get loans from the IMF and World Bank the government must complete a satisfactory Poverty Reduction Strategy Paper (PRSP), in consultation with civil society, NGOs, and other donors and creditors...

The World Bank then follows a series of internal steps to approve a PRSC, including preparation of a Country Assistance Strategy (CAS), a pre-appraisal mission, an appraisal mission, and board approval, all in accordance with the Comprehensive Development Framework (CDF), Operational Directive (OD) 8.60, Operational Policy (OP) 4.01, and Interim PRSC Guidelines. The government also seeks qualification for the Enhanced Heavily Indebted Poor Country (Enhanced HIPC) Debt Initiative...

[Easterly continues cheekily in this vein for a page]...

If IBRD, IMF, UNDP, FAO, WTO, EU, WHO, AfDB, DFID, and USAID approve the PRSP and release new funds to the national government, then the government will allocate the money in accordance with the MTEF, PER, CDF, PRGF, PRSC, and PRSP, after which the money will pass through the provincial governments and the district governments, and the district government may or may not repair the pothole in front of the poor person's house. (p. 166, 173-175)

Potholes in Tanzania typically remain unfixed.

One glaring omission in The White Man's Burden is the success of Uganda in combating HIV/AIDS in the early 1990's. This represented not only the only significant country-wide drop in new HIV infections, but has been a lasting success. However, Easterly is dogmatically anti-religious, and the fact that Uganda's "Zero Grazing" sex policy succeeded where a phalanx of condom-and-education programs have failed must rankle him terribly. In fact, the story fits right into Easterly's argument: a home-grown, locally led program yielded success, but the fall in new HIV infections ceased when the condom-pushers arrived, and the edge of dangerous urgency dulled. There are other interpretations of this story, which is often blurred by looking at the stock variable (people living with HIV) rather than the flow (new HIV infections), but for Easterly to omit it entirely from his chapter on AIDS shows that there is some conventional wisdom even he lacks the courage to question.

Nonetheless, the book is worth reading, primarily for its willingness to tackle tough questions and admit a lack of answers, all couched in readable prose from someone who knows the World Bank and aid industry as both a practitioner and a scholar. The White Man's Burden is available for $5 at Amazon.