The White Man’s Burden: Why the West’s efforts to aid the rest have done so much ill and so little good

by William Easterly

Boy, has this book started a lot of controversy in the international aid community. You’ve even got Nicholas Kristoff writing an oped piece in the New York Times in response to his book! Easterly, a Professor of Economics at NYU and previously an “insider” at the World Bank, doesn’t pull any punches in asking the hard questions about the results of international aid. He’s an economist, so his book is full of numbers and statistics supplemented with a number of humanizing stories.

In a nutshell, he asks “After $2.3 trillion over 5 decades, why are the desperate needs of the world’s poor still so tragically unmet? Isn’t it finally time for an end to the impunity of foreign aid?” He points out that despite spending all of this money, we still don’t deliver vaccines and other medicines costing < $1 and insecticide-treated mosquito nets at a few dollars to those who need them and die without them. The main issue, he argues, is that our international aid agencies (he focuses mostly on multilateral and bilateral government orgs including USAID, The World Bank and the International Money Fund) are run by planners, not the entrepreneurial, finding-what-works “searchers”. We in the West are very utopian with a grand plan to eliminate poverty always the goal and what the politicians like to talk about.

The Big Push Strategy has no Basis in History

Easterly’s argues through his research data that the following legends persist and drive much of the “Big Push” thinking behind international aid strategy today:

• Legend #1: The poorest countries are stuck in a poverty trap from which they cannot emerge without an aid-financed big push.
• Legend #2: Whenever poor countries have lousy growth, it is because of a poverty trap rather than bad government.
• Legend #3: Foreign aid gives a big push to countries to achieve a takeoff into self-sustained growth.

These “legends” are core premise for the “spend more on aid” supported by Jeff Sachs and others. Easterly questions the existence of this poverty trap concept as there have been many success stories of countries growing wealthy without significant aid (e.g. East Asian Tigers including Hong Kong, Singapore, Taiwan and South Korea). A few notes

• May 2005 study that “found no evidence that either ‘short-term impact aid’ or any other type of aid had a positive effect on [a country’s] growth.” (p. 49)
• “Over 1950-2001, countries with below-average aid had the same growth rate as countries with above-average foreign aid. Poor countries without aid had no trouble having positive growth.” (p. 39)
• Another new study found that as aid represented 8% or more of the GNP of a country that the there was a negative effect on growth. (p. 50) He notes that 27 countries are already about the 8% aid level and that if the Big Push strategy continues that virtually all of the low-income countries will be pushed over the 8% level.
• In reality, he notes that “most countries that escaped from extreme poverty did so with gradually accelerating growth.” (p. 51)

Some additional highlights from the book (I’m skipping a lot of other interesting stuff):

• Government-to-Government Aid. He asks the question why our government aid agencies need to always give to directly to often corrupt other governments rather than through other orgs who could get the money to the intended people/projects.
• Planning Markets? An oxymoron? Why so often do we in the West think that we can go in and impose significant market changes on the Rest and expect them to endure and succeed? This isn’t how it works (or has worked) in the West?
• Political Correctness vs. Truth. Easterly highlights many examples where the IMF and the World Bank have continued to poor money into countries where there was blatant and widespread corruption with their previous capital. They need to call a spade a spade rather than deceiving themselves that somehow a miracle change will happen this time.
• Helping Bad Governments will Make Them Good Governments? Easterly notes that this is a common argument to justify giving money to gangster governments arguing that it will promote their political development and reform. He responds “this argument is based on the overambitious goals of political transformation [which have no historical precedents].” (p. 157)
• No Aid Org is Accountable. Since the multiple international aid organizations have very broad and overlapping (and sometime contradictory) goals/agendas, they can simply throw up their hands when they don’t produce results and blame it on the other guy. That’s why you always hear them take about “inputs”, not “outputs” (results). Easterly argues for scaling back aid agencies to focus/specialize on smaller, specific, measurable projects which they are held accountable for by independent evaluators and the receipients of the aid. Amazingly, this almost never happens today.
• HIV/AID drugs. He explains that it costs $1,500 per year of total cost to administer the latest cocktail of HIV/AID anti-viral drugs even if the meds themselves are basically free. On average, people taking these drugs live an extra 3-4 years. He asks the question … have we ever asked the Africans how they’d recommend we spend the $5B we’ve committed to these treatments? Would they spend it all in this way? He has asked many Africans and they would likely spend very little of the $5B on this healthcare and instead spend it on other much broader impact healthcare initiatives which would save way more lives. Hmmm … interesting.

International Aid Needs Massive Reform

So, is Easterly against international aid? Surprisingly, not. He argues for significant reforms to focus on what works, smaller initiatives (vs. grand plans) and more accountability. So, his grand plan is that there is no grand plan. History argues that it is the initiative of the people themselves along with their governments are the only path to sustainable economic growth. In conclusion, Easterly summarizes:

“Aid won’t make poverty history, which Western aid efforts cannot possibly do. Only the self-reliant efforts of poor people and poor societies themselves can end poverty, borrowing ideas and institutions from the West when it suits them to do so. But aid that concentrates on feasible tasks will alleviate the sufferings of many desperate people in the meantime. Isn’t that enough?”

Scary for the status quo in international aid, but great news for the customer!

Read my full book review