I'd like to begin with some questions, based on the Committed Reader's standard post:

1. According to the Borgen Project, it will only cost $19 billion to end global poverty. Why $19 billion? Would this money be used for new kinds of projects, or to improve the funding for those already in place?

2. As Jonathan pointed out, if $19 billion were all we needed to end global poverty, why haven't the tens of billions already spent on development funding not achieved the desired result?

3. What is the definition of poverty? Does it change over time, in response to rising expectations and the potential of new technologies?
 

Well, congrats to the CR for proving that persistence does pay off :)

Now. Will it take only $19billion to end poverty? I doubt it very much, particularly since the level of both absolute poverty and inequality has been increasing across much of the third world for the last three decades. I suggest the Borgen Project set more realistic goals for itself. However, I think that responses to CR in other threads have been too dismissive so far. I don't think aid, properly administered and targeted, is a waste of time, and it is lazy to suggest that it is 'inevitable' that it will be stolen by corrupt leaders.
Why hasn't aid/development funding worked so far? Well, first of all, by far the largest recipients of aid, certainly from the US (ie the two biggest clients, Egypt and Israel) have received military aid (and in any case are both middle-income countries.) The proportion of the developed world's aid budget spent on actual development for the poorest has declined since 1989. Secondly, much of the aid given out has been tied aid - an indirect way to subsidise products produced by the donor country, often leading to money being squandered on products/projects which are not the most needed. Thirdly, particularly during the Cold War, Western Countries and the USSR gave aid for political, rather than developmental reasons : ie rewarding politically friendly countries, thus donating directly to governments, some of which stole/mismanaged it, and did not particularly care to review the aid's destination. Aid which is focused on investment in infrastructure and diversification of the economy could be a useful tool in promoting economic development, but often it is not in the interest of western countries to create competitors or to encourage third world countries to diversify : certainly in the case of IMF loans, these are often given on condition of 'structural adjustment' - encouraging third world countries to focus on the production of primary commodities, which ties their economic fortunes to the volatile price of one commodity on world markets.. We should not see trade and aid as separate topics, but should note the continuing existence of western protectionism, particularly in the EU, as a contributing factor to poverty.

What, therefore, could 19 billion do? well, firstly we could consider funding projects below governmental level. Distribution of microcredits, the funding of development banks and low-cost loans to communities, the funding of health and literacy projects could help communities to break free from subsistence farming. Secondly, we could focus on infrastructure : the provision of clean water to all communities in Africa is an achievable interim goal, and could have been done with a fraction of the money spent on, for example, Iraq. If aid were offered tied to outcome, rather than process (ie the purchase of western products) this would be a better means of control and to ensure efficiency. Would it solve poverty? No, but it's worth doing.

However, this will not make enough of a difference without reform of the mechanisms of the global economy : particularly a move away from the Washington Consensus. However, there has to date been a relentless focus on promoting the spread of neoliberal ideas and driving down labour standards and infant industry protection in the third world.

Finally, I agree with your initial premise that global poverty matters both from the perspective of 'values' as well as security. The spread of democracy requires a well-fed, educated and healthy populace in which these ideas can take root : not simply the neo-con fixation on its export by force.
 

The best antidote to poverty is capitalism. Please check this amazing presentation where you can see the effects of countries adopting capitalism over planned economies, you will be amazed.
href="http://noblesseoblige.org/wordpress/?p=797" Capitalism Conquers Death
 

Hrmm let me try that again
"http://noblesseoblige.org/wordpress/?p=797" capitalism conquers death

Essentially you see forty years of steadily growing capitalism and a growth of high-energy societies. It's not poverty that's the problem, it's really lack of energy in all forms. (Remember: The most basic form of energy is food.) Where energy is adapted, you see everything improve, where capitalism is denied, and energy low, you see poverty.
 

Ok, so I have not had my coffee this morning... what a mess I made... please if you would do me a favor and clean those links out of previous comments?
one last try:
Capitalism Conquers Death
This isn't blog pimping, if you want to see the vid direct and you should because it is important go here: Ted You Tube
 

"The spread of democracy requires a well-fed, educated and healthy populace in which these ideas can take root : not simply the neo-con fixation on its export by force."

That's not entirely fair, Niall.

The neocon position (at least, my position) is that there are democratic reformers and liberal forces struggling against dictatorships around the world. And that instead of sponsoring the regimes that oppress them, we should take their side. Sometimes - sometimes- with force.

I wholeheartedly agree with you on actions like microcredit, clean water, the opening up of free trade. Actually, I think free trade would do much more good in the long run than piles of cash.

But occasionally there are regimes that oppress their own and export their extremist aggression abroad. One of the preconditions for their peoples' political freedom and economic growth is removing them from power. Sometimes soft power isn't enough.
 

There's an Adam Smith quote that I see every now and then, here it is cited by
Greg Mankiw:

Adam Smith was right when he said, "Little else is required to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice."

I believe that. The trouble is that "a tolerable administration of justice" is not easy; Madison's "men are not angels" comes to mind, and even the best government tends to be staffed by people who believe in what they are doing; they believe they ought to be running other people's lives. My own hopes for ending poverty have more to do with markets and with technology, with Moore's Law surprises like cell phones to connect African fisherman and farmers with their markets, e.g. MIT's EPROM - Why Africa? :

"97% of Tanzanians now have access to a mobile phone thanks to the community payphone model, despite the lack of electrical infrastructure for much of the country."

Look at the graph on that page, and read about "contract laborers" who no longer have to wait around in hopes of connecting with a job; the economic world of the immediate future is fundamentally different from the economic world of the immediate past. (Not only in good ways...but different.) Combine that with the market developments ... standard stuff, but there's always something new, e.g. what the Free To Choose people are apparently talking about in their Ultimate Resource show that comes out Tuesday, and maybe we have something. Freedom and technology? I think so, maybe. I dunno.
 

OFF TOPIC:

Hey OxBlog,

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I am currently conducting a MONEY POLL on my site and am contacting respected bloggers in their fields.

The question I am asking is:
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The purpose of the poll is to generate good money tips ideas for my blog readers. I've decided to contact non personal finance bloggers to get a larger variety of experiences and ideas.

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MONEY POLL: YOUR BEST FINANCIAL DECISION
 

I agree with Patrick and Tom.

Niall, you say that the 'level' of poverty has increased. But the poverty rate is going down. The number of poor people is growing, but the number of not-poor is growing even faster. As to the point that inequality is increasing, why would that suggest that reducing poverty is getting harder? Inequality is found in every wealthy society in the world.

Where you really go wrong is in assuming that the poor people of the world are sitting around eagerly awaiting your assistance. You say water can be provided to Africa at a fraction of the cost of the Iraq war - well, supporters of the war were naive in our underestimation of the level of suffering the Sunnis were prepared to bring to their own community if they could also hurt the Shia. We didn't think people would sabotage generators in their own country. We were wrong.

The thing is, there are conflicts in Africa too - you don't hear about them much, because no one's figured out how to blame the US for them, but they're longer and bloodier than Iraq by quite a bit. Whatever plan you have to get all sides of Africa's civil wars to respect the neutrality of your efforts, please share it with Baghdad.

If infrastructure aid is impossible in some places, it's possible in others. India, Latin America, and some parts of Africa could get clean water (assuming the pride and suspicion of the beneficiaries could be overcome, two more obstacles that those who want to throw money at the poor never consider.) More important is to encourage economic development. The US should take the lead in ending protectionism that hurts third world exporters.

Aid, properly targeted and administered, is not a waste of time. CR has shown no interest in that qualification, so his posts are a waste of time. It is simpleminded to assume that corrupt leaders will not try to steal as much aid as they can. That is why it is important to bypass those leaders as much as possible.
 

Hi Patrick.

In 1970, at the UN, the world's developed nations set a target of spending 0.7% of GDP on development aid. So far, only Denmark, Luxembourg, the Netherlands, Norway and Sweden have met that target. Only the UK, Ireland, Finland, France, Spain and Belgium have plans to meet it by 2015. The US spends 0.15% of its GDP on development aid,compared to 3.4%, or over $400billion on defence, while Canada spends 0.3 to 0.35% of GDP on development aid.

Now, you can argue with me about the intellectual preoccupations of the neocons, but where are the speeches from the likes of Perle, Wolfowitz or Cheney on the need to increase aid? (I know Wolfowitz is head of the World Bank, a position he may not hold for much longer, but what, substantively, has he changed there? Has he any thoughts on how the global economy functions and the way this disadvantages the Third World?) Where does this fit into the plan for a 'New American Century'? We agree on the unfair global trading schemes, but which leading Republican intellectual has taken on his own party's fondness for farm subsidies and protectionism? I agree with you that 'soft power isn't always enough' necessarily, but there seems to be little or no focus on softpower from the Neocon camp, as least as far as I read it. However, this is something of a digression from the main point of the thread.

As for bgates, at least you seem to agree with me that properly targeted aid is not a waste of time, so there don't seem to be any substantive parts of my post with which you are taking issue. I am more than aware that Africa has civil wars, but even small-scale, community-led projects can work in that scenario. In any case, does the 'pride and suspicion' of the recipients really stand up to analysis? Surely this simply means that aid projects should be led and staffed by indigenous people, which I would agree with anyway as a matter of good practice.
 

Niall, Wolfowitz's focus at the World Bank has been corruption; see wapo Feb 2006, IHT April 2006, NYT Sep 2006. This is not a question of avoiding waste in the Bank's budgets: it's a question of pushing Adam Smith's "tolerable administration of justice" on governments that have never known any such concept. (I grew up in Mexico, Nicaragua, Colombia etc, in the midst of stories much like those de Soto has managed to focus attention on.) To the extent that the transparency push succeeds, the benefits thereof (I believe) outweigh all the direct benefits of aid. Microcredit is a wonderful, fabulous idea -- but it's not something that needs to be done by government. (My brother-in-law is doing it in Mexico; political permissions required, but not government money.) In fact very few forms of aid need to be done by government, because most all good forms of aid are good investments, and for the rest -- well, a lot of us send money abroad through foundations that we trust.

Okay, granted that microcredit may have to be administered by Marines in very bad places. And further granted that aid in emergencies is needed, and is often horrendously distorted by rent-seeking big agribusinesses and their Republican protectors like Tom Lantos...ulp, he's not a Republican, is he? Well, maybe it's a bipartisan problem; there are certainly many Republican bad guys in this context.

If (heaven forfend) I were In Charge of trying to end poverty, I wouldn't go as far against it as Becker or Posner, but I would not push to expand aid as such. I would push for free trade, for connectivity (via cell phones, wi-fi, databases...okay, I'm a geek), and by pushing the "tolerable administration of justice" ranging from the Marines on down. (Technology has a lot to do with that too.) But mostly my answers would have a lot to do with Milton Friedman's...Hong Kong, his favorite example may have had a more nuanced story than the one he normally told, but so far as I can tell, Hong Kong really didn't get out of poverty by foreign aid. (Say "tolerable administration of justice" three times, fast.)
 

Hi Niall,

You are right that neocons aren't usually focussed on the extent of American aid to the Third World.

But my point is that for neocons, the soft power solutions such as aid or reconstruction in some cases cannot be implemented under certain kinds of regimes.

Populations, or vulnerable parts of populations, may not be 'well-fed, educated and healthy' in circumstances of ethnic cleansing or religious persecution.

Military force is almost never enough to ensure the emancipation of these victims. But in extremis, it can be a precondition for it. Force does not solve the problem entirely. In the right circumstances, it should create a political space in which the problem can be solved.

This may sound banal. But it was argued against furiously by a range of commentators both 'progressive' and 'isolationist' during the genocide in the Balkans, Rwanda, East Timor, etc etc.

In other words, soft and hard power should not be seen as conflicting priorities necessarily, but sometimes as potential partners.
 

Niall, if your position is that "small-scale, community-led projects" can provide potable water to the entire African continent, I'm not sure why you oppose the idea that poverty can be eliminated for $19 billion.

Europe should be commended for all its aid, even more so because I'm sure they give the kind that doesn't suffer from any of the disadvantages you mention in your first comment. Republicans should take a stand against economic protectionism, but maybe they lack the words; could you refer me to some of the many stirring EU proclamations in favor of free trade?

The US should spend less on defense, but we're in a terrible bind there; peace in Europe is important to us, and Europe on its own is utterly incapable of providing that. Better to let Europe stay unarmed and project onto us their memories of Algiers, the Belgian Congo, and 500 years of empire, than have them rearm and try to reenact those memories.
 

Well well, bgates, a number of your usual misconceptions surfaced in the most recent post.

Firstly, I didn't say that I 'opposed' the idea that poverty can be eliminated for $19billion - I've no idea where the figure comes from, and it does seem low to me, but I'm minded to let the Borgen Project defend its numbers itself (if one of them wanted to comment). I'm sure you are aware that providing drinking water to Africa and ending poverty are quite different, and that the seeming great difficulty of accomplishing a long-term goal is not, in itself, a reason to neglect the medium-term.


As for the 'stirring EU proclamations in favour of free trade', there are none of course, because the EU has with the CAP created one of the most nakedly protectionist trade regimes of modern times. What's your point? Are you assuming that because I live in Europe I can't see this fact? Do you imagine that I equate the five countries who have achieved the 0.7% of GNP target with the entire EU?

As for Europe's colonial past, believe me, you will find few people more critical of that than me. Although you will permit me to point out that some of America's (and the UK's) more costly recent defence commitments were entirely avoidable.

I wonder where these attitudes of yours spring from bgates. Perhaps you would understand the world much better if you didn't reduce everything to some form of battle between Europe (Old world, Bad) and the US (Freedom, Good)fought entirely in your own head. Believe me, I don't think anyone else on this blog is particularly interested in fighting it with you.


As for Patrick, i don't disagree that force and soft power can be complimentary,at times, but the devil is, of course, in the detail, and I suspect that were we to move on to the detail we'd disagree further, so perhaps we'd better just stick to global poverty....

I'm not sure, Tom, that aid from charitable donations could plug the funding gap that has existed since 1970 - i don't think the figures are comparable. But the benefits of fairer trading and technology are clear. I note you mention that government intervention is 'unnecessary' but that isn't the same as saying it is inefficient or counterproductive. Beyond an ideological objection to government, do you have any other reason to suggest that government cannot administer aid projects?

Anyone from the Borgen Project want to step up to the plate?
 

Niall, you're right: in saying that government aid was unnecessary I fell short of saying that it was counterproductive. Let me quote the link I cited, from econ Nobelist Gary Becker on "Is There a Case for Foreign Aid?":

"No economist who has closely examined the evidence concludes that the reason why some poor countries fail to have significant economic growth is because their governments have insufficient resources. The complaint is typically that governments do the wrong things with the resources they have, including their regulatory powers. They discourage entrepreneurship, give cronies special advantages in investments or in rights to import and export, ... Foreign aid only makes it easier to continue to promote projects and policies that are not merely neutral with respect to growth, but hinder any take off into rapid growth."

I mostly agree with that, with exceptions that maybe go a bit beyond his exceptions; so I don't want the US to work towards your GDP-percentage target. I think that would be a bad thing, not just an unnecessary thing, and I doubt that we're gonna agree at any foreseeable future point. (Even though, as I said, I don't go quite as far as Becker in some respects, and have even received grant money for participation in aid projects which may fall beyond his limits of approval though not mine.) But I think we all agree on free trade and technology, and maybe that's enough agreement...I don't think ending poverty would cost $19 billion, I think it would be profitable. Unfortunately, in this we disagree with a whole lot of politicians and the rent-seeking businesses that support them and are supported by them, in the US, the EU, and elsewhere. I dunno.

But anyway I don't expect poverty (as we have understood it for millenia past) to be a problem for more than another generation or so; I'm a Moore's-Law believer and therefore an almost-Singularitarian. I don't suppose we'll agree about that either. :-)
 

ok Niall, you didn't say "I 'opposed' the idea that poverty can be eliminated for $19billion", you said, "Will it take only $19billion to end poverty? I doubt it very much...." and I'm afraid the difference escapes me.

My criticism of your idea of providing water to Africa at a fraction of the cost of building the Airbus - wait, that's not the irrelevant comparison you used, you used the Iraq War for some reason - was that conflict in Africa will interfere with infrastructure development just as conflict in Iraq has. Then you retreated from the unfortunately impractical idea of providing water to the continent to the laudable idea of providing targeted assistance as "small-scale, community-led projects" without noting the climbdown. I thought that was peculiar.

America's presence in the Middle East does not deserve mention in the same breath with Europe's colonial past, and your disingenuous attempt to link the two is terrible. America's goal has always been to replicate what we did in Germany, Japan, and South Korea (or are those American colonies too?)

Niall, I don't think I ever mentioned Europe in any of the many Borgen Project threads I've commented on. The first thing you brought up in your first post on this thread was a criticism of American foreign aid. Every post of yours since has had an unfavorable comparison of the US to some or all of the EU. I don't understand how it's simplistic of me to respond to your criticism.

That's beside your description of unnamed commenters on previous poverty threads as 'unfairly dismissive', and your characterization of a point I raised as 'lazy', to say nothing of the frankly insulting tone of your last. I get the idea that though you don't want to fight with me, you would like to reserve the right to insult me and my country, and you'd prefer I didn't respond.

Tom - sure, the Singularity could end poverty, but what about the more intractable problem of blog pissing matches?
 

Well, bgates, I think we should ask Kurzweil if the Singularity can resolve problems like that; I suspect that he would say, right along with the very model... , that we just "need to be smarter." That might do it, it really might, and being smarter is an attainable goal. ("Expand my mental faculties by merging with technology.") But I agree, ending poverty is easy by comparison. And improving IQs may not improve behavior enough to compensate for the increased damage that off-kilter individuals can do.

Well, some days I'm pretty optimistic.
 

Some responses to bgates:

"ok Niall, you didn't say "I 'opposed' the idea that poverty can be eliminated for $19billion", you said, "Will it take only $19billion to end poverty? I doubt it very much...." and I'm afraid the difference escapes me."

The difference is one of certainty. I've nothing to do with the Borgen project and I didn't come up with the $19billion figure. Challenges to it have been issued, and I've said that I would like to see someone connected to that project justify it. While you're right to note my scepticism that $19billion will be enough to end poverty, I am unwilling without seeing the Borgen Project defend itself (any of you guys interested?) to 'oppose' it definitively.

I note your point on infrastructure in Africa, but I fail to see how it is the case that even in conditions of civil war, an NGO can't, for example, sink new wells, or perhaps construct pipes to a settled community from a nearby water source. I don't think the example of Sunni insurgents blowing up power generators really proves that this idea is implausible. I don't really see that referring to small-scale community projects counts as a climbdown. And most of Africa is not living in conditions of civil war, so even if you are entirely right on this point, it doesn't invalidate the idea of doing our best to bring clean water to as much of Africa as possible.

"America's presence in the Middle East does not deserve mention in the same breath with Europe's colonial past, and your disingenuous attempt to link the two is terrible"

I wasn't attempting to link the two at all. I was also including the UK - where I live incidentally - in my criticism of the Iraq war. Look again at my previous comment to see my very strong thoughts on European colonialism. I don't see the need to justify myself to you on this point at all.

"America's goal has always been to replicate what we did in Germany, Japan, and South Korea (or are those American colonies too?)"

Knowing something of the history of the Phillipines, China, and Latin America, I don't think the 'always' in that sentence is particularly well-chosen. However, this argument need not and should never come down to some kind of US vs Europe pissing contest. Here's the two sentences of yours that really annoyed me:

"The first thing you brought up in your first post on this thread was a criticism of American foreign aid. Every post of yours since has had an unfavorable comparison of the US to some or all of the EU."

This is a disingenuous and possibly deliberate misrepresentation of what I wrote.

I did mention in my first post the history of US aid policy as an *example* of the general point I was trying to make, but that doesn't mean I was singling the US out. Look at the first post again, read it properly this time, and you will find references to the aid budget of ALL of the developed world, the aid policies of Western countries in general AND the USSR, as well as this sentence:
"We should not see trade and aid as separate topics, but should note the continuing existence of western protectionism, particularly in the EU, as a contributing factor to poverty."

How does that count as a favourable comment on EU policy?

In my second post you will note I specifically refer to Canada, as well as some EU countries, being woefully under the 0.7%target (I know from other threads you're not too fond of Canada). So again how does this count as singling the US out? You may not have mentioned Europe or Canada in Borgen Project threads (up until this one), but your insulting and dismissive references to non-Americans on other threads does, I think, justify my earlier description of your debating style and pseudo-nationalist preoccupations.

As for the characterisation of your earlier point as 'lazy' and criticism of the Borgen Project as 'dismissive', I stand by those claims. On previous Borgen project threads you claimed that aid would inevitably be stolen by corrupt leaders.

Here is what you previously said on the matter:
"Saudi Arabia is literally sitting on top of vast wealth, yet much of the kingdom is poor, because the royal family won't allow the public to have wealth. What makes you think your anti-poverty aid won't be stolen as well? If groups of armed men demand a cut, or all, of the aid you're bringing to Congo, what are you going to do about it?

And what good has foreign aid done in the past? Hundreds of millions in tsunami relief was forgotten pretty quickly. France has never forgiven the US for all the help we gave them"


On this thread, commendably, you have chosen a less extreme position, appreciating the nuances of different types of aid and different methods of delivering it, thus, it seems to me, not rejecting the idea of development aid in principle.

There's hope that we may come to agreement yet, bgates. Try not to get so touchy though.

Amities,

Niall.
 

My compliments to all for an energetic and sharp debate. Of the many questions I still have, let me mention two:

1. Can any of the participants in this discussion recommend any broad assessments of what development aid has achieved over, say, the past 30 years, and at what cost?

2. Anyone care to explain what the Borgen Project is?
 

Hi Niall,
I appreciate your request that I be less touchy. It suggests that the insulting tone of your posts is not due to a desire to antagonize me, but derives from your lack of perception of how your smug condescension might be interpreted; and how could I take offense at that?

You stand by your characterization of an earlier point of mine as 'lazy'. You are wrong. Here is why.

The Borgen Project (as we can all say in our sleep) claims poverty can be eliminated for a laughably small sum of money. To disprove a general claim of this nature, all that is needed is a specific counterexample. I provided two: Saudi Arabia and the Congo. I said nothing about 'inevitability'.
Perhaps I was lazy in assuming that sort of information about the nature of logical proof was known to Oxblog readers. If it would help you, I could try to spell things out more in the future.

Now, as to the claim that I am dismissive of BP postings, absolutely. This is not because I see no value in foreign aid, it's because I see no value in the BP posts, which invariably hijack threads and do not even respond to criticisms of the points they make. If I have a different tone in this thread, it's because I'm responding to more thoughtful people.

My meaning in the sentence "America's goal has always been to replicate what we did in Germany, Japan, and South Korea" would be clearer if you were able to read it while remembering the preceding sentence, which makes clear that I was discussing America's presence in the Middle East. (You see how that sentence is a little clunky because of the repetition of 'clear'? I wanted to avoid that in the last post, so I only used the phrase 'in the Middle East' in one sentence.) It is true, as you note, that the US has done shameful things in Latin America, etc, (the American West would not be out of place on that list); but a careful reader would recognize that the US could not be seeking to replicate in the 19th century events that would not occur until the 20th.

David, I looked at their site a bit and was surprised to learn that BP is a purely domestic operation - they want to lobby the US only. The site repeatedly mentions elements of the US defense budget, the way Niall does. It got me thinking: isn't Europe a more logical target for this kind of effort? The US and EU economies are supposed to be roughly the same size, I think; and we keep hearing how the US would have more than enough money to eliminate the world's problems if it didn't spend so much on defense. Well, Europe isn't spending so much on defense; shouldn't the hundreds of billions it's not spending in Iraq be available for several Borgen Projects?
 

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David, by "broad assessment" do you mean the sort of Gary Beckerism I was linking to above, or data-collections (individual case studies) in "Aid Effectiveness Research" at the World Bank, or...? Mankiw links to Deaton :

"Yet empirical work has improved considerably, and some of us who had previously discounted the econometric literature are beginning to think that, indeed, there may be no effect to be found. Aid as we have known it has not helped countries to grow." Mankiw also praises a Kristof column which in turn praises Easterly's book which I haven't read, but which ought to provide what you're looking for...Easterly's own summary (PDF) says:
"The free market is no overnight panacea; it is just the gradual engine that ends poverty. African entrepreneurs have shown what they are capable of... What a tragedy, therefore, that aid agencies have foisted the poorest economics in the world on the poorest people in the world for 50 years."

As assessments go, that looks pretty broad to me. And pretty sad.
 

I firmly believe that quality public education and opportunity (i.e. capitalism) is the recipe for aleviating poverty. We are no different from our poorer relations beyond their lack of a quality education and a free open economy. With a solid education all peoples can overcome other obstacles through their own efforts.