« The Boob in the Café, Part 1 | Main | Update: What We Don't Know »

August 17, 2005

Comments

doug

"Of course, if you mention bad governance and bad institutions, Sachs and others accuse you of blaming Africa’s problems on Africans."

That's patently false. Sachs himself blames bad governance & bad institutions...

When was the last time the US gave $150 billion to Africa? I'm not sure I'm aware that they, or anyone else, has. The US's total foreign aid budget (most of which goes to dictators like in uzbekistan in return for favors such as base lending & is most definitely not humanitarian in the least) is something like 15-20 billion, all though it's probably gone up do to payoffs for countries to join the 'coalition of the willing' (that was money well spent!) and I think Israel still tops the list...

Re: economic sanctions -- worked very in Cuba, now, didn't they? Sometimes they are good, sometimes not. Yet, there are several decent governments in Africa with awful aids problems, etc., but with balanced budgets and low corruption ratings. Giving aid to the government, and to foster civil society there doesn't seem to me to be that bad of an idea...

Re: russia. In fact, Sachs and others, including George Soros, were for giving aid to the Soviet Union just after the fall in order to strengthen civil society, a free press, and democratic institions. They warned that without those, the transition to democracy in Russia and elsewhere would be very tough. Turns out they were right. The 1st Bush administration, still in a cold war 'let's kill the commies' mentality, in fact did not even consider such a (to them) bewildering move... we're all worse off for the decision.

"All we lack is the megalomania to worsen it." Your basic argument is that: We don't really know much about development. Therefore, there's nothing we can do about it, so let's wait for another 50 years till we get more ideas... I don't share your conclusion that economics has learned absolutely nothing except that all government planning is bad. And I really don't think you buy it yourself, nor does any other conservative when they say the same BS in regards to development in africa. When it comes to economic development in america, suddenly economics has a lot to offer us and the answer is always crystal clear -- tax cuts. Tax cuts always lead to more economic growth here, but in africa, if aid money was used to cut taxes, then it would just be a waste. It's the classic conservative contradiction of which there are countless examples -- George W.'s faith in God, & his faith in torture/war w/out purpose, Rush Limbaugh's moralizing on drugs vs. his own drug abuse, bush's & bill o Reilly's being anti-litigation, yet have each been involved in suing people over very petty things (and defeated)...

I think the "mystery" to economic growth is this. If you have a decent government who doesn't do anything really stupid, like attack countries next to it, run huge budget deficits, engage in ethnic cleansing, can give people some confidence in the future and are not massively, irredeemably corrupt, then they will tend to grow. If a country fits this description, even if it is not perfect, then pumping money into the civil society & democratic instutions & yes, the government there will tend to help the economy there. Yes, giving money to bad governments is a bad idea, but i don't think anyone is arguing for that...

Econoclast

Sorry, Edgeworth, I'm afraid your commenters have a more sensible view. A movie is a movie, not an economics lecture, and the "banking in a vacuum" analogy is spot on. I agree, it's always very irritating to see movies where the underlying science is faulty. (For me, the sci-fi movies where people can "mutate" are perhaps the most annoying). But, let's face it, people are not in the theatre in order to find material for their masters theses.

In any case, surely it's important that people should want to do something. Isn't that better than people not giving a damn? I mean, rousing the political will, apart from anything else, should be very good for economists like yourself. (Ah, now I come to think of it, I'm beginning to see the motivation behind your tirade: grant money! That's where the $150bn should go, hey?).

Apart from which, I know we've still got a lot to learn, but I think Development Economics has come a long way in the post-Colonial period, or even in the last 20 years. The disasters of practically every African country since the 1950s have not gone un-noticed or un-examined. I think we must all agree that the Idi Amins, Bokassas, Mobutus, Mugabes and sundry Nigerian generals are not good guys and it's not a good idea to help them in their megalomaniacal schemes. A little googling, however, reveals that development economists have actually started coming to grips with some of the faults of early development methods. Maybe they finally have something useful to contribute.

Finally, let me say that your criticism is nearly all of the destructive kind. I do not hear you putting forward any ideas. I can guess, from your stance on other issues, that you will probably advocate some kind of free market solution. (Let's hope it's not of the same pseudo-free kind that has led to such inequality in our own country). I'm sure there's room for a little of that in Africa, although it's always as well to remember that Africans, like the populations of other countries, are not basically Americans who happen to speak a different language. So let's hear it from Edgeworth: do you give a damn or not? And what would you do with the $150bn (other than buy a car)? What kind of movie would you be making on the subject?

philip

Thanks for commenting, Doug.

Heck, this was a post about the lack of evidence and the self-righteousness associated with the statement "all we lack is the will." The viewpoints you project on to me are not mine at and do not follow from this post.

I would also differ with your perception of the facts. About my claim that Sachs accuses critics of blaming Aricans for troubles in Africa, you say:

"That's patently false. Sachs himself blames bad governance & bad institutions..."

Depends on which day you listen to him. Here is Sachs in a NYTimes quote, speaking about African poverty (linked to in the original post): "The poor are blamed for their problems. We say the poor are poor because they're corrupt or because they don't manage themselves. But in the past two years I've seen exactly the opposite."

Here and elsewhere he is clearly accusing his critics of "blaming the victim", of blaming the poor for their problems, and even accusing critics of calling the poor, themslves, corrupt! He acknowledges that some countries in Africa have troubled governments (you would have to be blind not to) but downplays, in my opinion, the difficulties associated with large-scale projects in places hat lack strong institutions to facilitate them.

And if, indeed Sachs really did "blame bad governance and poor institutions" for African poverty, as you say, this would be a bit inconsistent, because his plans for intervention do not seem to involve changing givernments in any meaningful way.

"When was the last time the US gave $150 billion to Africa?"

This is not an argument and it is not evidence. No matter what the U.S. or any other country gave, you could always pick a bigger figure and say we've never given that much, so maybe if we give that much (or ten times that much or twenty times that much) the results will be better. Evidence becomes irrelevant.

My argument is that evidence from smaller-scale interventions, well monitored, tell us something about the likely impact of larger interventions and the types of programs that will be effective.

You then go on to mention Israel and dictators the U.S. has backed and other subjects irrelevant to my post. My post neither defended nor attacked any of these U.S. policies. Whether or not U.S. policy has been unwise (or its priorities defensible) has nothing at all to do with whether this particular aid project to Africa is any more or less likely to succeed.

"Re: economic sanctions -- worked very in Cuba, now, didn't they?"

Again, I never proposed economic sanctions against anyone. I simply indicated that if one decided that pumping money through unjust or troubled governments was more dangerous to one's countrymen than the economic damage done by refusing those funds, as Nelson Mandela seemed to believe some time ago, then one should have misgivings about the millenium project. I simply pointed out the inconsistency in a movie that wants to have it both ways, wants to praise Mandela while condemning anyone who holds Mandela-type views in the present day.

It is not reasonable to assume that pumping large sums of money through poor governments will be effective--and that "all we lack is the will". That's my point. I never advocated trade sanctions.

"Re: russia. In fact, Sachs and others, including George Soros, were for giving aid to the Soviet Union just after the fall in order to strengthen civil society, a free press, and democratic institions."

I never said they didn't. This is the whole point! Governments rarely cooperate in the ways we would like, neither the U.S. nor the Soviet Union. Why will AFrica be different? Moreover, there is no evidence I've ever seen (in the development literature or anywhere else) that needed institutions are built by other countries "giving aid". Good heavens, how "free" did powerful figures in Russia (e.g., Putin) want their elections to be? If you gave all the aid in the world to Russia, and funneled it through officials whose goals differed from those of the aid-givers, you would be unlikely to accomplish much and might well make things worse. Evidence and common sense both suggest this. Saying someone "favored aid" doesn't mean that "aid" would have magically fixed things. These are hard problems. Period.

And look, I'm not just criticizing Sachs for the fun of it or because I don't like him. He's a smart guy. He did great work in Poland. I'm simply disagreeing with his latest views, and the tone in which they are expressed by him and by others, views for which I see little evidence and which are stated in a way that I believe misrepresents the existing evidence (evidence compiled by people of different ideologies, liberals, conservatives, and flavors in between).

"I don't share your conclusion that economics has learned absolutely nothing except that all government planning is bad. And I really don't think you buy it yourself, nor does any other conservative when they say the same BS in regards to development in africa."

A. This is just silly. I *never* concluded that all government planning is bad! In fact, I quote William Easterly favorably in this very post you criticize, and I argue for smaller-scale projects in which accountability is clearer and feedback mechanisms are stronger. This post has nothing to do with being conservative or liberal or Martian, for that matter. It does not even have to do with whether we should try to help Africa. It is all about what is the *best* way to help Africa and it is about accurately assessing what we do and do not know about how to do that. Large-scale interventions, centrally planned, lacking accountability and feedback, do not seem wise to me.

Why you impute some peculiar set of political beliefs to me, I cannot begin to fathom. (Tax cuts? I hold allegiance to neither major political party. And I neither voted for Bush, nor do I favor Bush's tax cuts or his fiscal policy, as readers of this blog will have read!)

I'm interested in issues of fact, evidence, and common sense, and I like to point out when popular rhetoric lacks these. (I also like to add a touch of comedy and satire.) I'm not interested in scoring points for one party or the other. I'm not sure why you feel the need to do so either, as it only detracts from the facts.

Your comment is interesting, and I thank you for it. But much of your venom, having little to do with evidence about African poverty, is directed against some odd partisan creature of your own imagining.

philip

Hi Econoclast. As to the views of my commenters, I've already responded I think.

You write:

"In any case, surely it's important that people should want to do something. Isn't that better than people not giving a damn?"

I diagree with the dichotomy. When I criticize a specific policy, am I criticizing people for caring? No. And do I ever advocate doing nothing? No. There is a place for discussing the likely outcomes of policies. All kinds of very good and decent people believe silly things. I wish that good intentions always guaranteed good outcomes! Economics is very much about the unintended consequences of well-intended policies. I am supposed to ignore the deficiencies of a policy because the people who support it give a damn?

"...development economists have actually started coming to grips with some of the faults of early development methods. Maybe they finally have something useful to contribute..."

Maybe. There are indeed some things we can try. (As I advocate in the post! I never advocate doing nothing.) Look, there really doesn't seem to be solid evidence for the kinds of claims Sachs makes. There's no political agenda here. Heck, the Washington Consensus was an earlier attempt to sort everything out (very free-market oriented), and it proved to be profoundly lacking, as well.

"Finally, let me say that your criticism is nearly all of the destructive kind. I do not hear you putting forward any ideas. I can guess, from your stance on other issues, that you will probably advocate some kind of free market solution."

Good heavens. So many people wanting to put words in my mouth. I'll give you an analogy. Someone comes out and says "People can fly by flapping their arms." I say "Um, no, there's good reason to believe they can't. Here's why." I am then told my observation is "destructive." I am asked to come up with some other body part that people can flap that will enable them to fly.

Look, these are HARD problems. There are programs and policies that hold some promise. (I am a big fan of microcredit programs, education programs like the one carried out by Indonesia, family planning, some AIDS projects, etc.) And I donate to numerous NGO's myself in the hope that something more will be learned and some suffering reduced. But implementing policies at the scale proposed by the Millenium Project almost gurantees poor feedback mechanisms and poor accountability. And the rhetoric associated with project doesn't gell at all with my reading of the development literature.

Finally, I wouldn't mind any of this if the rhetoric of many who promote the project (not just of the writers of this movie) did not persistently impugn the morality of those who are skeptical of the project. Calling somone lazy (or lacking in will) is not an argument. It is a substitute for an argument.

Anyway, back to work. Thanks for your comment!
pb

J. M. Lawrence

Facts about the causes of poverty in resource-rich Africa? Read the work of African intellectuals, perhaps start with that of the Free Africa Foundation. A search on the term "capital flight" will open eyes rather rapidly. A synopsis follows.

"The Bermuda Triangle" – where money simply disappears – is what Angolans have dubbed the confluence of their country’s state-owned oil company, Central Bank and Presidency, The Economist notes. In that triangle of resource wealth, money and power, far more than $3 billion dollars in annual oil export earnings vanish. Not a trace can be found on government ledgers.

That Angolans were dying of hunger by the thousands in the late 1990’s, failed to compel an investigation into how the money needed to end hunger could remain unaccounted for.

The “corrupt elite” governing Kenya is plundering their country’s economy to amass personal wealth, The Economist reported in 1999.

On that diversion of national wealth into Swiss-type bank accounts, the Roman Catholic Church declared: "To notch up foreign bank accounts at the cost of hunger, suffering, blood and death of others is a repugnant infamy," The Economist conveyed.

The Front de Liberation National, governing Algeria, has doled out $26 billion to officials in their party. This personal allotment of national wealth was recently disclosed by ex-prime minister, Mr. Abdelhamid Brahimi, The Free Africa Foundation relates in “The Rape and Plunder of Africa.”
Under the title “le sang des pauvres,” which translates to “the blood of the poor,” Liberation reported in 1992 that Mr. Moussa Traore, Mali ’s former head-of-state used his term in office to steal more than $2 billion from that country.

And, the “financial drain continues ,” The Free Africa Foundation expounds.

“So money is not the problem here, it’s the management!” the United Nations states in its May 4, 2005 report titled “The IMSCO Proposal/Report: Towards An African Solution.” The report relates that “Southern Black Africa” is “awash in oil and gas and they have more complete control of the world’s strategic metals: e.g. 99% of platinum group metals; 96% of chrome; 98% of manganese; 89% of diamond; 68% of gold; 97% of vanadium and 40% of uranium.”Finding: “These resources (sic) numbers strongly suggest that no one can successfully argue that Africans anywhere are poor, but rather disenfranchised.” Here the U.N. notes: “the world (sic) industrial nations are resources (sic) poor and badly need these resources.” Thus the U.N. determines that,"This wealth places Africa on the top of the Pyramid of the economic Resource War game." The report asserts: "the people of Africa… can and must insist…that African governments are not the owners of African land and wealth."

But most of the continent’s leadership continues to demonstrate an opposing view. "Leadership in Africa, with few exceptions, is seen as an opportunity to get rich rather than serve the people," Mr. Tony Nze Njoku writes in Finance & Development, a World Bank publication.

“Dishonesty, thievery, and peculation pervade the public sector… The chief bandit is the head of state himself,” Mr. George Ayittay exposes in “The Vampire African State” for The Free Africa Foundation. Mr. Ayittay finds that “case after case” demonstrates that most African government officials are "Faithful only to their foreign bank accounts…"

In these foreign bank accounts, an estimated $140 billion had been illegally amassed by 1992, according to Nigeria’s President Olusegun Obasanjo, The New York Times reported. During a meeting of the Organization of African Unity (OAU) that year, President Obasanjo suggested that international financial centers should return this illicitly obtained wealth of corrupt African leaders. Why, then, was President Obasanjo later the same year requesting $64 billion in additional aid from the Group of Seven Industrialized Nations and Russia “when he could have asked the thieves [who] were sitting right in front of his very eyes at the OAU meeting” for the $64 billion, posited Mr. George B. N. Ayittey, Ph.D.
Why hasn’t President Obasanjo asked the thieves at home for the $64 billion? For, “the money suspected to have been stolen by some Nigeria n government officials and kept in foreign accounts [rose] from $50 billion in 1999 to $170 billion in 2003,” Vanguard reports.

On these foreign bank accounts, Mr. David Asonye Ihenacho writes for Nigeriaworld :
First, the sum of 170 billion dollars…is about 60% of the entire debt owed by the entire continent of Africa to the rest of the world…Second, who are these Nigerians with this large sum of money stored overseas? The sum of 170 billion dollars is by far bigger than the entire wealth of the four richest people in the world combined. The wealth of Bill Gates III of Microsoft, Warren E. Buffett of Berkshire Hathaway, Karl and Theo Albrecht of Wal-mart retail and Paul G. Allen of Microsoft combined does not rise up to 170 billion dollars.

Individuals on the continent of Africa were transferring “$20 billion a year into bank accounts in Europe ” during the 1980’s, according to a former U.S. Assistant Secretary of State for African Affairs, the Africa Insider reported.

Critics of the government in Kenya assert that government officials there maintain their largest accounts "in foreign banks and that there is more money from Kenyans in foreign banks than the entire Kenyan foreign debt" of approximately $8 billion, The Washington Times wrote in 1995.

"What Arab country has $50 billion in private savings stashed abroad?” asked The Economist in 1992. Egypt - a country with a $35 billion foreign debt and where “customers fight over Mercedes sports cars that sell for $400,000” - was the answer supplied. And a note furnished was that this is a ‘where a typical monthly wage is $50, and rubbish is collected by small dirty children in rickety donkey-carts"

As is the case for most of the Third World, for every dollar of foreign aid going into Africa, $3 flee the continent for banks in Europe and America, Mr. Philip Emeagwali informed the Voice of America in 2000. "Most African political leaders [have]…bank accounts in Europe," primarily in Switzerland, Mr. Emeagwali continued.

"It is time the West helped Africa to retrieve the money our politicians have stashed in Western banks,” Mr.Ekoue Teko writes for New African. "If this is done…we will have enough to live on without borrowing," he finds.
Not to do so will only perpetuate the ongoing travesty. On the problems confronting Equatorial Guinea, the Cape Times reported in 2004: "the root cause of the turbulence is very likely the same old problem which bedevils many African countries…And that is that the country's leaders are quite simply hogging all the wealth to themselves."

As an immigrant from the Third World told me: "There is no limit to how much they will steal from the poor."

Yet, British Prime Minister Tony Blair and the U.N. are touting a Millennium Project to donate more tens of billions of dollars to the thieving leaders in Africa. Mr. Blair and the U.N. assert that this Marshall Plan is needed to end poverty. They are blind to the fact that, as the Royal Africa Society states: "Africa has had a Marshall Plan several times over in the last 50 years and has little to show for it."

The comments to this entry are closed.