Monday, June 04, 2007

Sir Bob Gives Prime Minister Static Over Foreign Aid

Sir Geldof makes big noise about Canada's aid contributions

Always an outspoken advocate on behalf of impoverished developing countries, sir Bob Geldof recently made a big noise by complaining about Canada's alleged (and seeming) failure to boost its aid budget to what he feels is an appropriate level.

Claiming that Canada has served as a key "blocker" of the aid agenda at the G8, sir Geldof said "it's a bizarre circumstance. Especially today when Prime Minster Harper, in Berlin, was boasting about in a speech that Canada was the most successful of G8 countries in terms of economy for the tenth year running."

In sir Geldof's mind, the matter seems very simple: the prosperity of wealthy countries obligates them to deliver aid to impoverished countries, particularly in the developing world.

He's actually right about that. Unfortunately, sir Geldof, like many of his contemporaries, have been worshipping at the alter of an aid philopsophy that is ultimately a failed god -- that is, the idea that contributing more money toward aid policies automatically ensures high quality aid policies.

While sir Geldof is clearly well versed in what William Easterly calls the "first tragedy" of poverty in developing countries -- the fact that such extreme poverty, and the suffering that accompanies it, should exist in the first place. However, sir Geldof is clearly not acquainted with Easterly's "second tragedy" of this poverty -- that the billions upon billions of dollars spent over decades to try to alleviate this poverty has not improved the lives of these people.

In White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good, Easterly outlines the principle failures of aid policy -- which isn't that not enough money has been contributed to push developing countries out of an ill-concieved and non-existent poverty trap, but rather that the policies have been focused upon large, overarching goals without sufficient attention to the tasks necessary to achieve these goals.

To Easterly, aid policies have lacked the bottom-up accountability that market forces provide. Policy Planners (as Easterly explicitly describes them) attempt to diagnose the needs of the population of these countries without responding to the market signals that denote what these needs actually are.

Easterly argues that more Searchers (market entrepeneurs) are needed in developing countries to determine the needs of the population, and meet them. However, incentive is necessary in order to attract such forces, which implicitly suggests offering a profit for those willing to actually do the job.

While sir Geldof has done wonderous things to alert people's attention to the pivotal issue of poverty in the developing world, he has contented himself to living in a glass house, espousing a "more money, no problems" philosophy for solving the problems of poor countries that, to date, has not worked. Now, he's throwing rocks at governments he believes should be bound by the promises made by their predecessors.

While sir Geldof's criticisms -- conveniently echoed by rock star-cum-world hero Bono -- are misplaced and guided by outdated and immediately discreditable presumptions (largely centered around the policy trap that is the "poverty trap"), the fact is that Canada can fill an important leadership role in the fight against poverty in the developing world by focusing its aid policies away from reckless and often destructive macroeconomic policies (such as structural adjustment and "shock therapies"), and toward more productive microeconomic policies that would help citizens of poor countries grow their anemic economies by creating their own wealth, while also helping the governments of these countries develop the political, judicial and economic institutions necessary to run an orderly society.

Poverty in the developing world is indeed a pivotal issue. However, sir Geldof does not have a miracle solution. While action is necessary, Canada would do better to reject sir Geldof's prescribed discredited methodology in favour of a new approach -- one that could actually succeed.

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