8 comments on “Timmy elsewhere

  1. There is another aspect as well – the West runs things in the Third World. A lot of things. Probably more things than they did when they ran the countries concerned.

    We are exporting well meaning but less aid activists, but we are also exporting know how and skills. In news this week, it has been mentioned that Emirates Airlines is run by a Brit. Two in fact. Tim Clark is the President and CEO while Maurice Flanagan in the Executive Vice-Chairman. And of course the head of Tata Motors did it the wrong way when he topped himself after an argument with the wife. In Thailand of all places. Also British born.

    So they are getting richer. But they need people from functioning countries to show them how to do it.

  2. ‘So they are getting richer. But they need people from functioning countries to show them how to do it.’

    Not necessarily – they just have a labour shortage of the right skill set, different from a lack of knowledge.

    Exactly the same, surely, as the NHS employing doctors and nurses from other countries?

  3. It might be grotesque overreach to think that a bunch of wealthy outsiders know how to intervene in poor countries and turn them into richer ones. But a bunch of wealthy outsiders can more reasonably claim to achieve real transfers to poor people in poor countries and raise their levels of consumption (healthcare, education, water, food, housing, electricity) – albeit probably with high levels of waste in the process – even if they cannot wave a wand a create economic growth. Foreign aid can be about making lives better, it doesn’t just have to be about stimulating economic growth. In fact if you believe that aid only accelerates growth in countries that are likely to be growing anyway (because they are ‘effective’ in some sense) the the ethical case for helping them is fragile and it **might** make more sense to target aid where it will not work, in the sense of promote economic development, but rather try to help people stuck in basket cases.

    also, most mainstream economic theoretical models predict that aid — if conceived of as a resource transfer, not as transmission of know-how — would have a very modest impact on rates of economic growth. Like 0.02 per cent. Now most empirical models of growth are very unsatisfactory so I am not going to claim empirical support for a causal relationship between aid and growth (even though such findings can be found) but I am going to claim that if the true impact is small, your chances of finding robust statistical evidence for it in small samples with crappy data and inevitably misspecified empirical models, are effectively zilch.

  4. Contra Mr Easterly, the ‘obsession’ with international aid in the rich world is not a rich world vanity. First of all, it is not an obsession. In 2012, aid to developing countries amounted to $33 per person in those countries. Foreign aid is still too low given the good it can do. The Iraq war cost more than all foreign aid over the last 50 years (!).

    Secondly, the issue is what good aid can do. Is someone going to do more good by buying £2k worth of Nike goods or by giving that money to the world’s most effective charities, such as the Against Malaria Foundation? Well-established evidence shows that we can save a life for £2000- that is about 60 years of life. Let’s say that a worker in a Nike factory gets 5% of the cost of the produce in wages. So, they get £100 from £2000 spent on Nike goods. It is absurd to say that this will do more good for the poor than if the money were given to the AMF: it will not save anywhere near 60 years of life. Indeed, the charity Give Directly literally gives money unconditionally to poor people. Giving money to Give Directly will get a much higher proportion of money to poor people than does buying things produced in the third world. So, the argument here is not right.

    What Bill Gates is saying is that we ought to give more aid. This is consistent with it being true that free market capitalism is a very powerful force for good. If we have any obligations to bring people in distant countries out of poverty they are not, as Mr Worstall suggests, fulfilled merely by buying things from them. Indeed, they are almost definitely better fulfilled by giving money to the world’s most effective charities.

  5. Doug – “Not necessarily – they just have a labour shortage of the right skill set, different from a lack of knowledge.”

    That may be true. Except it is amazing how utterly and totally incompetent the Third World is. Most of the time. Even the Philippines needed American help to deal with their recent typhoon. Really? This is not rocket science. They still couldn’t do it on their own. Most things like malaria protection do not need high tech or any great level of knowledge. They need some basic organisation and competence.

    “Exactly the same, surely, as the NHS employing doctors and nurses from other countries?”

    There is no labour shortage in the UK. There is an insane government wages policy.

    Luis Enrique – “It might be grotesque overreach to think that a bunch of wealthy outsiders know how to intervene in poor countries and turn them into richer ones.”

    I agree actually. I think development is “emergent”. We all do our own thing, some of which is important, some is not, and out of that, somehow, in a handful of countries the modern world has emerged. How or why we do not know.

    “Foreign aid can be about making lives better, it doesn’t just have to be about stimulating economic growth.”

    It can be a lot of things. Is it anything much in particular? I tend to think not.

    John Halstead – “Contra Mr Easterly, the ‘obsession’ with international aid in the rich world is not a rich world vanity. First of all, it is not an obsession. In 2012, aid to developing countries amounted to $33 per person in those countries.”

    Define aid.

    “Foreign aid is still too low given the good it can do. The Iraq war cost more than all foreign aid over the last 50 years (!).”

    Can do is not the same as does do.

    “Secondly, the issue is what good aid can do. Is someone going to do more good by buying £2k worth of Nike goods or by giving that money to the world’s most effective charities, such as the Against Malaria Foundation?”

    I would go with the shoes. After all, GetWell basically said that AMF had all the funding it needed and no more would be any use at all. That is to ignore the problem with insect netting – Africans tend to ignore them if they are donated.

    “Well-established evidence shows that we can save a life for £2000- that is about 60 years of life. Let’s say that a worker in a Nike factory gets 5% of the cost of the produce in wages. So, they get £100 from £2000 spent on Nike goods. It is absurd to say that this will do more good for the poor than if the money were given to the AMF: it will not save anywhere near 60 years of life.”

    Except the person who gets that 100 quid will spend it and so it will have a multiplier effect. They will save it and it will be lent out or they will spend it and someone else will get that 100 pounds. It only has to have a multiplier effect of 20 to be on par with your donation – and with the donation you are missing the main point. You assume that all of the money gets to the victim. With the AMF that may or may not be true. But it is not true for a hell of a lot of so called charities. Even before warlords start creaming off the top.

    “Giving money to Give Directly will get a much higher proportion of money to poor people than does buying things produced in the third world. So, the argument here is not right.”

    But it will do nothing else for them. It may even be destructive if people think they can get money for doing nothing. But if you buy something, you are contributing to a chain of suppliers and producers. You are making sure someone learns the discipline of the work place, and will acquire skills. Work is always better than passive welfare.

    “If we have any obligations to bring people in distant countries out of poverty they are not, as Mr Worstall suggests, fulfilled merely by buying things from them. Indeed, they are almost definitely better fulfilled by giving money to the world’s most effective charities.”

    If. And all the evidence is that giving money to Tanzania has produced Tanzania. While buying from Singapore and Hong Kong has produced Singapore and Hong Kong.

    Aid is evil. It is about making us feel better at the expense of the Third World.

  6. Luis Enrique – “actually, most very poor people when given money spend it on things like home improvements, food for children and invest is starting a business.”

    Much the same could be said of the British welfare state. It took a whole generation for the old values to be destroyed and the new ones replace them. You cannot claim with a straight face that three years of anecdotes amounts to a damn thing. Wait a generation and see.

    Actually we don’t. We can look to the Middle East where giving charity is a long standing custom. And the result in an entrenched culture of begging.

    “http://www.economist.com/news/international/21588385-giving-money-directly-poor-people-works-surprisingly-well-it-cannot-deal”

    By the way, that source crunches the numbers and shows that Conditional Transfers work best. Big surprise. Just what you would expect – people do waste the money on their own.

    “If anything is evil, it is the attitude that we ought not give money to the poorest people on earth because it will just turn them into welfare queens”

    Because it is working so well among the African American community, right? All our data says your approach causes massive damage to the communities it is applied to. It is evil to do what people like you did to the AA community, and it is worse not to admit it and try to repair the damage.

  7. no, conditional cash transfers have nothing at all to do with whether people waste the money or not, the conditions are to do with eligibility for receiving it – i.e. your child must attend school.

    again you write “Just what you would expect – people do waste the money on their own.” when data clearly shows that people (mostly) do not waste the money. You are operating on the basis of your prejudices.

    note also that the welfare state in advanced economies is conditional things like not having a job so provides an incentive not to get one. An unconditional cash transfer to a very poor African household does no such thing.

    and I think you’ll find that begging happens when people are very poor and have no other source of income (i.e. no job, no welfare state).

Leave a Reply

Name and email are required. Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.