Sach's Attack

May 25, 2009 3:37 AM

Ad hominem attacks, discreditation and the increasingly shrill attempts to gather support against the rapid popularity of Dambisa Moyo's book "Dead Aid" [recently] are raising the question: Has the time come for 'aging western academics and rock stars' to retire gracefully from the scene?

“She has tapped into deep seam of anger from Africans who look at the economic shambles of the western world and ask themselves, ‘who appointed these people to tell Africans how to run their affairs?’,” says Miles Morland, a pioneer investor in African markets.

posted by infini (57 comments total)

The tone of this post makes me want to disagree with it.
posted by beerbajay at 3:49 AM on May 25 [6 favorites has favorites]

I might add a direct link to George Ayittey's TED talk from 2007 on the 'cheetahs vs hippos' dynamic emerging in Africa.

What's most encouraging about people like Moyo and Ayittey is that the anti-aid voices are coming from inside Africa, not outside.
posted by SamuelBowman at 3:50 AM on May 25 [1 favorite has favorites]

from Wall Street to accra
posted by infini at 4:10 AM on May 25

anti-aid voices are coming from inside Africa

Well, from the United States. She doesn't live and work in Africa, does she? Not that this invalidates her arguments, of course, but she hasn't lived there since she was a teenager: she's part of the global Westernised elite. Which, of course, I'm also part of, so that's cool with me. And from my limited reading she's broadly right. But I wouldn't privilege her position because of her ethnicity/race.

Anyway, I read The Bottom Billion by Paul Collier which I found very persuasive: it made the case for some aid while noting the significant problems with aid in general, such as seizure by elites and the tendency to increase the likelihood of coups. "Aid bad!" seems as simplistic and silly as "Aid good!" but I guess this is really about moving the debate along in the political arena, not providing nuanced analysis.
posted by alasdair at 4:32 AM on May 25 [3 favorites has favorites]

From the FT article "“The aid establishment is scared to death of the public relations disaster that a growing movement of independent critical African professionals would be.”
posted by adamvasco at 5:08 AM on May 25 [1 favorite has favorites]

I don't think I was privileging her position because of her race. My point that the strongest voices against aid are the people who have been at the receiving end of aid. But sure, that privileges her and Ayittey by virtue of their nationalities/ethnicities – that doesn't seem unreasonable to me.
posted by SamuelBowman at 5:10 AM on May 25

The "from Wall Street to accra" link is interesting, for several reasons.

I've spent a fair amount of time working on the ground in Africa, some of that time in Ghanian banks in Accra no less, and you've got to be very, very careful about pretty much any data sourced from African institutions.

Local processes and systems frequently lack rigor we take for granted. And in Africa, what you see publicly is seldom the entire story.

For example, sure, the Ghanian stock market was the best performing market of 2008; but things aren't necessarily what they appear. Folks, including many non Africans investing via Closed End Funds / ETFs and other such vehicles, put money into the Ghanian market but as liquidity evaporated from the market due to the global economic imbalances, buyers just weren't to be found.

So yes, shares did indeed surge but daily trading volume on the entire market collapsed to a mere 23,875 shares per day; net / net - traders couldn't liquidate positions to realise gains so not only were the profits meaningless, you were denied access to or use of your capital. Not good.

And much of their economic performance is due to FDI, which surged about 200% between 2005 and 2007.

The Ghanian banking system is still in a very embryonic state of development, with Bentil, Simons,& Cudjoe (2009) noting:

Capital Adequacy regulations require that Banks keep 9% of their assets in primary reserves of cash lodged at the Bank of Ghana, and a further 35% in secondary reserves of Government securities and maturities (our understanding is also that there is a Government of Ghana stipulation that 15% of secondary reserves be held in long-term government bonds.)

By contrast, UK banks are required to maintain 0.15% of capital on deposit with the Bank of England. This is key, as money maintained with a central bank isn't available for lending, and in fact drives deposit rates high - encouraging the saving of cash, but discouraging riskier investments.

Finally, in 1996 - 1998 Ghana underwent a serve debt crisis [ .pdf ], with much of their outstanding obligations either being markedly reduced or cancelled in total.

So clearly the relatively benign economic climate since 1998, coupled with strong FDI and surging commodity prices would sharply increase GDP; it will be interesting to see performance over the next few years but unless Western nations are doing well economically I just don't see much to push nations such as Ghana along.

Some of these Ghanian ex-pats returning from diaspora (as some of my African colleagues call it) may be disappointed.
posted by Mutant at 5:13 AM on May 25 [15 favorites has favorites]

There seems to be two discourses going on at the same time and they are now bundled together, but will harm each other in the long run. The first is this old anti-imperialistic or postcolonial argument of The West not having either moral authority or wisdom to meddle with African development: 'who appointed these people to tell Africans how to run their affairs?’.

The other is what George Ayittey suggests:

Foreign aid should be tied not on promises of African leaders but to the establishment of a few critical institutions:
+ An independent central bank: to assure monetary and economic stability, as well as stanch capital flight out of Africa. If possible, governors of central banks in a region, say West Africa, may be rotated to achieve such independence. The importance of this institution resides in the fact that the ruling bandits not only plunder the central bank but also use its facilities to transfer the loot abroad.
+ An independent judiciary -- essential for the rule of law. Supreme Court judges may also be rotated within a region.
+ A free and independent media to ensure free flow of information. The first step is solving a social problem is to expose it, which is the business of news practitioners. The state-controlled or state-owned media would not expose corruption, repression, human rights violations and other crimes against humanity. In fact, it is far easier to plunder and repress people when they are kept in the dark. The media needs to be taken out of the hands of government.
+ An independent Electoral Commission to avoid situations where African despots write electoral rules, appoint a fawning coterie of sycophants as electoral commissioners, throw opposition leaders in jail and hold coconut elections to return themselves to power.
+ An efficient and professional civil service, which will deliver essential social services to the people on the basis of need and not on the basis of ethnicity or political affiliation.
+ The establishment of a neutral and professional armed and security forces.

I see how this institutions, not interventions -approach could work, but at every step establishing these institutions they would be very vulnerable to just the same rhetoric as the current aid system. Getting these institutions started and populating them with people who are neutral, not lackeys of the local governments is assumed to happen with foreign aid and thus could easily been seen as planting lackeys of the West to control the Africa and just another pair of hands in a new imperialistic project. ('Who appointed these people...') Those local governments who most benefit from the current situation would use this rhetoric in every step.
posted by Free word order! at 5:14 AM on May 25 [4 favorites has favorites]

Isn't the "economic shambles of the western world" is the very reason aging rock stars can't retire gracefully? They just lost half their money.

Joking aside, I enjoyed reading Iris Mwanza's response to One:

“If Africans feel strongly against her ideas then they should not need to be ‘mobilised’ by your organisation. More effective would be to open fora for debate where differences of opinion are welcome,” responded Iris Mwanza, of the Centre for Infectious Disease Research in Zambia.
posted by kisch mokusch at 5:14 AM on May 25

With or without the fish donations or fishing lessons, there has to be a lot more corporate investment in Africa and much freer overseas markets for goods manfactured in Africa.
posted by pracowity at 5:23 AM on May 25 [2 favorites has favorites]

Africa is "Africa" only inasmuch as it has little that adds value to the western concepts of free markets, private property, and corporate gain. In a nutshell, since the collapse of colonial mercantilism in the last age, Africa has been a poor and unreliable source of profits for corporate nations that require stability, western law, and political and socioeconomic compliance.

Africa's value lay only in its strategic geopolitical uses to now defunct cold warriors.

"Aid" is a western sop, embraced by those who feel terrible that corporatism can't seem to solve Africa's "backwardness".

China - a decidedly non-western state - is making great inroads recently and quietly by making strait trades of resources for cash that require no additional IMF type western ideology, no grand military necessity via proxy or otherwise, and no demands for cultural adhesion to anything other than the completion of the business deal.

If anything, the meltdown of western free markets will do much to improve the lot of Africans in the future, rock stars or no.
posted by Aetius Romulous at 5:36 AM on May 25 [2 favorites has favorites]

The "from Wall Street to accra" link is interesting, for several reasons.

Mutant of course explained all the financially-based reasons that it's interesting, but as a former resident of Accra whose boss was part of the returning diaspora responsible for some start-ups, I have a few other things to add.

Mall things:
* If Ms. Adjei is selling washing powder from a van, she probably is not shopping at that new mall. She'll be earning a local-sized income to buy things that are priced in US-prices.
* Most of the stores in that mall, and IIRC the mall itself, are South African. Ghana-based brands/businesses in any market I can think of are less valued than foreign brands.
* Oh, yeah, at least half of the shoppers in there (especially in game, which is like Target) are expats. Only really well-off Ghanaians shop there.
* The caption says "West Africa's largest shopping mall," but it really isn't all that big. It also may be the only mall in Accra.

Bank things:
I'm not a banker, but this is all coming from working in Ghana with Ghanaians.
* Many Ghanaians (even people living in the capital, who went to college) still don't trust banks and don't use bank accounts. Period. This may also be a factor in that insulation Ms. Adjei sees from the credit crisis.
* Those who do, are more inclined towards Nigerian banks and other foreign institutions. I don't think I've heard of Fidelity, even, or it was just a blip beneath the Nigerian biggies (yes, I was there after 2006, when Fidelity started).
posted by whatzit at 5:38 AM on May 25 [7 favorites has favorites]

Many Ghanaians (even people living in the capital, who went to college) still don't trust banks and don't use bank accounts. Period. This may also be a factor in that insulation Ms. Adjei sees from the credit crisis.

Cash based pay as you go informal economies are indeed highly likely to be less affected by the credit crisis

Mutant and whatzit's great insights to the 'from wall street to accra' link aside, what intrigues me is that it feels reminiscent of the early signals of the 'return to india/china' by their respective diasporas... if so, then, perhaps there's hope of a similar resurgence ?
posted by infini at 6:22 AM on May 25

I don't know a damned thing about Africa but I know that if the condescension of "do they know it's Christmas" were aimed at me, especially if I were starving both before and after the song was performed, it would make me livid.
posted by DU at 6:27 AM on May 25 [5 favorites has favorites]

I don't know. I'm sure many upper class Africans might feel insulted by the Aid flowing into their countries, but at the same time the fact is that there are a lot of people living in Africa who have real medical needs. You have refugees from civil wars and stuff. How is investing in factories going to help someone from Darfur?

One of the most irritating things about Africa is the tendency to talk about the entire continent as if it was a single country, with a single economic profile. That's obviously not the case, and yet these anti-aide types seem to be making the same mistake. It's great that these western-educated Africans think they can make a lot of money providing Africans what they need using the capitalist system but how many people are going to suffer while industry builds up?

I think there can be a place for both approaches. Western Aid ought to be delivered in a way that isn't as insulting, I guess. They ought to try to engage local commerce more, to subsidize local businesses, etc.

By contrast, UK banks are required to maintain 0.15% of capital on deposit with the Bank of England. This is key, as money maintained with a central bank isn't available for lending, and in fact drives deposit rates high - encouraging the saving of cash, but discouraging riskier investments.

Sure, but look what happened to the UK banks last year! Not to mention U.S. banks and the rest of the world. I doubt the Ghanian government would have been very appreciative of needing to bail out their banks.

China - a decidedly non-western state - is making great inroads recently and quietly by making strait trades of resources for cash that require no additional IMF type western ideology, no grand military necessity via proxy or otherwise, and no demands for cultural adhesion to anything other than the completion of the business deal.

Is that really a good thing, though? The some of the "moralizing" of the west is a good thing here. If you look at China itself, living standards are getting better but it isn't exactly a bastion of civil liberties. Do we really want more of the world to develop along the Chinese model? It would be better if the west could figure out how to turn African countries into western style democracies, rather then letting the Chinese convert them into Chinese styles autocracies that supply them with resources and more cheap labor.
posted by delmoi at 6:29 AM on May 25 [7 favorites has favorites]

A Kenyan banker speaks today at the mBanking conference volume vs. value in kenya's mobile payment systems - a derail methinks, but mutant may enjoy this

otoh, i'm firmly in the camp of enabling services and systems like these - mobile payments on mPesa, the kickstart 'money maker' pump etc for social and economic development rather than well meaning but ineffective 'aid' and yes, that includes the giving away of mosquito nets rather than putting a small price tag on them
posted by infini at 6:47 AM on May 25

Jeez, that Jeffrey Sachs article on Huffington Post is terrible. It might have been another interesting part of the debate if he didn't so completely resort to strawmanning any opposing views.
posted by lullaby at 6:47 AM on May 25

Do we really want more of the world to develop along the Chinese model?

Is that the royal "we" of America or a "we" that includes the rest of the world?
posted by srboisvert at 7:00 AM on May 25 [4 favorites has favorites]

It would be better if the west could figure out how to turn African countries into western style democracies
I might suggest invading their countries, killing their leaders, and converting them to Christianity - but the alpha release of that program seems to have some bugs in it.

On a more serious note, I do believe that some countries are not ready for democracy yet. I think democracy has a much better chance of taking hold when people's basic needs are being met. Even in North America, democracy would not have stood much of a chance while the colonists were struggling to get enough to eat and to fend off hostile attacks by other imperial powers as well as the native population.

In a lot of Africa, democracy is two heavily-armed warlords and twenty emaciated subsistence farmers voting on who is paying for dinner.
posted by bashos_frog at 7:01 AM on May 25 [1 favorite has favorites]

Is that the royal "we" of America or a "we" that includes the rest of the world?

By we I mean me.
posted by delmoi at 7:08 AM on May 25

On a more serious note, I do believe that some countries are not ready for democracy yet.

Well, literacy rates are the biggest key. But democracy has been done successfully in pretty undeveloped countries, India and Brazil would be too examples. They've both been democratic for a while and both developed pretty well. Hardly perfectly by any means but today both of those countries are very viable. Obviously "democratic" countries can get sucked into traps where only one party ever gets elected and they rig the system and become corrupt. But democracy always holds the possibility of changing governments peacefully if things go pear shaped.

I think democracy has a much better chance of taking hold when people's basic needs are being met. Even in North America, democracy would not have stood much of a chance while the colonists were struggling to get enough to eat and to fend off hostile attacks by other imperial powers as well as the native population.

First of all, most (all?) of the north American colonies were democratic at the local level. So I'm not even sure why you would say that democracy couldn't work. It worked fine on some level. The king of England wasn't exactly running the day-to-day affairs of the locals via oceanic mail.

In a lot of Africa, democracy is two heavily-armed warlords and twenty emaciated subsistence farmers voting on who is paying for dinner.

Again, this doesn't make any sense. In an actual democracy, the "20 emaciated subsistence farmers" would out vote the warlords. (so we're either not talking about a real democracy, or your example is incorrect) And secondly, what democratic African country resembles that situation at all? places where people are "emaciated" are the ones where the political situation has totally destabilized - like darfur or something. Obviously countries like Nigeria, South Africa, Kenya, etc have problems but 90% starvation rates are not among them.
posted by delmoi at 7:18 AM on May 25

First of all, most (all?) of the north American colonies were democratic at the local level.

Early modern British democracy (as the north American colonies were, of course, British) was often limited by property qualifications. So the starving (and servants, labourers, etc) didn't vote, and the justification from the middling and upper sorts who did vote was that a poor man or an employed man could not be trusted to vote independently.

I'm not saying that they were right, just that historically voting rights in Britain and her colonies were generally limited to those whose bodily needs were taken care of.

This was not always true in Rome. And they did vote for who would give them bread.
posted by jb at 7:34 AM on May 25

ah, the tyranny of dominant logic

just like its taking some effort for emerging economies to be recognized for innovation in their own right (yes the tata nano comes immediately to mind) rather than the dominant thinking which had it as innovation flowed from the 'north' to the 'south' or 'west' to the 'east', it seems to me that further down in the 'country perception index' the african nations are struggling to build their own economies and seeking assistance certainly but more in the terms of business development, trade, education, tech transfer and opportunities rather than charity or good works per se - a place where India was at a couple of decades ago and China perhaps a few years prior to that
posted by infini at 7:48 AM on May 25

That said, delmoi makes a good point about functioning democracies in India and Brazil. And I'm not sure where I stand on this issue, considering that many people in rich countries also vote for whichever side will give them bread, aka tax cuts.

But something to think about is how democratic institutions work in different situations. You don't just want to import a system that works in one economy and culture - but rather the people on the ground need to develop a system of responsible government (that is, government responsible to the people) out of their own situation.

But you definitely need a responsible government, and there voting for your leader is not a guarentee that the government will be responsible to the people. One of Moyo's big critcisms of the aid system (also made elsewhere by historians and other scholars) is that it has made it so that even democractically elected governments in Africa who receive aid don't need to be responsible to the economic well-being of their people, because they are not reliant on local economic activity to fund the government through taxes.
posted by jb at 7:49 AM on May 25

reading jb's most recent comment brings to mind iqbal quadir (the founder of grameenphone and now head of MIT's Legatum Center) presentation on centralization, the problem with the aid, governments in developing countries and how to empower those who need it the most, the populace. [set of photos of his slides on "decentralized poverty" ]

from the long now blog by kevin kelly

In Quadir’s view, it’s not that centralization per se creates poverty. Poverty is the natural beginning state of all societies, east or west. Rather, decentralization is the engine which removes poverty and brings wealth. To the degree that infrastructure, education, and trade can be decentralized, wealth will rise in proportion. To the degree that infrastructure, education and trade are centralized, poverty will remain.

Whereas many of us in the west, particularly the digital west, agree with this intuitively, we act contrary to this observation when we give large-scale aid to poor countries. As Quadir’s colleague William Easterly argues in his book The Elusive Quest for Growth, the billions and billions of dollars spent on aid for developing countries has not only *not* helped, it has set them back decades. Aid, as we know it, kills development. This harm occurs because almost all previous aid has funneled through a central government or semi-governmental organizations and that official route tightens centrality. Even if the governments were saintly, and they are definitely not, the scale of money flowing through these centralizing nodes prohibits the distribution of resources, infrastructure, trade, and education. The more aid that arrives, the less development can actually happen.
posted by infini at 7:55 AM on May 25

I'm missing the ad hominem part of the ad hominem link. While Sachs may be arguing against an opinion that isn't Moyo's (which is attacking a straw man) the only thing he says about her, personally, is that she went to some very prestigious universities via scholarships, which is a type of aid, which she is arguing against, which would have made it nigh impossible for her to go to those universities.

An ad hominem attack would be saying she went there the traditional way - old money and support from dad's cronies.

And begging the question is not....oh, you know.
posted by Kid Charlemagne at 8:15 AM on May 25 [1 favorite has favorites]

Re: rock stars, they're generally useless and ought to stick to their day jobs. No offense to musicians, but please, just keep playing pretty tunes, because whatever popularity you get still doesn't make you an expert in anything else.

Regarding 'old aging western academics', there seems to be a divide between postmodernist idiocy and people who actually understand that there are more complex factors that make aid more difficult.
posted by kldickson at 9:18 AM on May 25 [1 favorite has favorites]

I'm always amused by the strange assumption that democracy (or any other form of government, really) is just some kind of "plug-in" module one can slap onto a country without hassle. It's universally compatible! Everyone will take right to it! It just snaps on! Look at how wonderfully it has taken root in Iraq. Oh, wait ...

Underlying this plug-in democracy is a belief that government is not connected to or correlated with culture, which is in turn utterly divorced from religion, which is entirely separate and unrelated to economics, etc. Not ever combination works, otherwise we'd see, I dunno, Totalitarian Hedonistic Jains whose primary export is meat.

And, of course, we will not take a step back to consider this, in our patriotic frenzy, partially aided and abetted by those who can only tell us that we must do something, but whatever it is we're doing today, it isn't right. Not enough aid, goes to the wrong people, we should focus on food, no we should focus on birth control, too much aid, not enough attention to AIDS. With that kind of constant criticism, it's a wonder anything gets done at all. Instead, it's endless frantic switching of programs and initiatives, without stepping back and saying, "How can we measure what it is we wish to accomplish?"
posted by adipocere at 9:19 AM on May 25 [2 favorites has favorites]

Chiming in, I think it's articles like this where the rubber hits the road regarding assumptions on technology (i.e. to what extent is a technology really a political game-changer vs. a conduit for existing power differentials to express themselves?). I don't for a second believe that 'the market' is a solution to the evils critics such as Moyo believe to have been wrought by aid. I hate Sachs' smarm as much as the next guy (probably more), but Moyo is throwing us off-track with a false dichotomy; aid doesn't fail because its patronizing, it fails when institutional checks and balances don't work, technical acumen never gets properly utilized, and the money does not get used as intended (remember, some aid projects actually succeed). By the same token, decentralization per se is not a Platonic ideal to guide our every move; it's just something that's helpful when things are overly centralized. Quadir is dead wrong if he thinks that the natural starting place of society is poverty, and that things pick up the more you decentralize; no long-term history of any society I know of supports such an aggregate pattern. Wealth-creation usually involves (though definitely not solely) massive processes of centralization, whether in pyramid-building or assembly lines.

I think the real lesson we're all trying to learn is not how to choose best between a Chinese vs. American model (a badly misunderstood contrast, but also a totally separate debate), or even whether or not democracy is 'good' in all cases, but instead, how do we get better at creating mechanisms to move resources at a distance without getting snookered by rapacious people who have superior on-the-ground knowledge? This is as challenging a question for private investors as it is for foreign aid donors. And there's no question that development in Africa by default must involve a large proportion of resources from abroad (capitalism wouldn't have it any other way).
posted by LoneWolfMcQuade at 9:29 AM on May 25

On a notice board in the Concern office in Quelimane, 1,000 km north of Maputo, is a hand-drawn problem tree for the “livelihoods programme”. They are:

Weak sense of ownership.
Weak access to information.
Weak knowledge of their rights.
Weak preparation to do business.
Weak negotiating power.
Weak social capital.
Limited vision.
Limited contacts with influential people.
Limited self-confidence.
Social marginalisation.
Low status.
posted by adamvasco at 9:41 AM on May 25 [6 favorites has favorites]

Many Ghanaians (even people living in the capital, who went to college) still don't trust banks and don't use bank accounts. Period. This may also be a factor in that insulation Ms. Adjei sees from the credit crisis.

Cash based pay as you go informal economies are indeed highly likely to be less affected by the credit crisis


From what I'm seeing here in Kumasi, Ghana, the world economic crisis is definitely hitting people in the informal sector (for example, petty traders who sell goods in small roadside stands and do not pay taxes). The informal economy uses credit in the form of small personal loans and extensions of credit by wholesalers. These have dried up since last November. Most people here attribute it to the new government, but I think there are definitely ties to the international economy. For instance, an architect friend of mine said that all his most lucrative projects had dried up, those coming from Ghanaians abroad sending money home to build. A lot of money in the Ghanaian economy comes from personal transfers from Ghanaians abroad, and so their access to personal credit as well as their job status is going to have a big impact on the economy.

It's quite distressing. I'm watching several friends go from getting by adequately to hovering on the brink of crisis.


One of Moyo's big critcisms of the aid system (also made elsewhere by historians and other scholars) is that it has made it so that even democractically elected governments in Africa who receive aid don't need to be responsible to the economic well-being of their people, because they are not reliant on local economic activity to fund the government through taxes.

Not to mention the fact that they may have to submit to economic reforms that are dictated by international lenders rather than by their publics. The barriers to democracy and economic growth in Africa cannot be laid solely in the hands of Africans: aid allows lenders to set economic policies and they have done this in ways that have extracted a great deal of wealth from Africa and left a lot of instability and poverty behind. I hate hearing the "give a man a fish/teach a man to fish" metaphor because aid, to me, seems a lot more like "take away a man's right to fish, give him some oatmeal, then criticize him for not knowing how to fish, call him greedy for wanting fish, and blame him whenever he fishes illegally".
posted by carmen at 9:51 AM on May 25 [4 favorites has favorites]

Remember, some aid projects actually succeed.

I don't think that's something anybody would disagree with – Dambisa Moyo and William Easterly have both praised certain non-governmental aid programmes, and rightly so. Their argument is that intergovernmental aid and the idea that aid can be used to jump-start African economies are the problems. I think they'd be right in saying that not a single African economy has done well thanks to that sort of help from the developed world.

I think of intergovernmental aid as a hangover from the Cold War. Keeping a Mobutu in your pocket might have been necessary back then, and if they could pretend that the money was being used for development, all the better. But the pretense has become accepted wisdom now, despite the total lack of evidence to support the idea that intergovernmental aid works to develop a country.

For some reason Sachs assumes that poverty leads to bad governance (as if wealth led to good governance!). He and others have turned the aid question into a moral one – you're either with us or you're against Africa. Obviously, as people are beginning to realise, it's more complicated than that and the first question is whether intergovernmental aid works.
posted by SamuelBowman at 10:35 AM on May 25 [2 favorites has favorites]

Not to mention the fact that they may have to submit to economic reforms that are dictated by international lenders rather than by their publics.

Oh, I completely agree - the types of policies laid by international lenders would never have been accepted by any developed nation, because they undermine the country's sovereignty. But I think that it's a vicious circle - international lenders can lay such (often stupid or shortsighted) conditions because the governments are dependent on them for the basic cash to just keep functioning. Western governments have run on deficits even when most of the people were poor - but the deficits for William III's wars in the 1690s, for example, were owed to the local British elite, and middling sorts who bought bonds, and paid out of taxes on elites through the Land Tax. Borrowing from their own elites meant that they were responsible to the welfare of those elites, and continued policies that made the country richer, like active protectionism (which was a great thing for them at the time). And when it stopped making them richer, the elites turned on the idea, and promoted free trade.

Colonialism definitely disrupted the welfare of sub-Saharan Africa's elite, and where it didn't so much (as in Botswana), things are actually better. But I think that this connection between the economic well-being of a country and its government is a really important one, because it gives a strong incentive to leaders to help economic development. The US gov't freaks out about slowdowns in the US economy, not just because people are losing their jobs, but because people are losing their jobs and the gov't is losing revenue. If your government is funded primarily off aid (loans or not) or off of control of commodities (such as through mineral rights), then it is too tempting to just take the easy way and not struggle to develop the economy in a more broad-based or healthy fashion.
posted by jb at 10:40 AM on May 25

@ carmen ~ you're right, remittences are a primary source of cash flow and as you say, tracing the flow back shows how and where its drying up in the informal economy as well. Its made me open my eyes to the far more simplistic views i've taken - reading an article on one hand like that linked to in that sentence talking about the cash based economy in Africa and yet, on the other hand, not correlating it to what I've seen with my own eyes in rural Philippines, where indeed so much of the local cash flow (in certain provinces) is directly linked to the 'global economy' and its ups and downs.

in fact, sitting down to think about it, with the help of our friend google, from the People Move blog of the World Bank,

We have revised our forecasts for remittance flows to developing countries in the light of a downward revision to the World Bank’s global economic outlook . We now expect a sharper decline of 5 to 8 percent in 2009 (see figure 1 and table 1 below) compared to our earlier projections.


the entire post is worth a read, imho.

and to your second point, here's a pertinent snippet from the Maputo link in AdamVasco's comment above,

In 1995 the World Bank imposed as a condition for a $400m loan that it stop its protection of cashew processing, then one of the key indigenous industries. The industry collapsed.
posted by infini at 10:46 AM on May 25

Is trade, not aid, the answer for Africa?
posted by infini at 11:06 AM on May 25

When I was working at the NPO/NGO they told this story of a church women's group who really wanted to build a school for an African village. They raised a big gob of money and convinced the NPO/NGO that they just had to partner with them. Despite some misgivings from the NPO/NGO, they went ahead with it. And so, all these white American church women go into the "heart of darkest Africa" and to this village where they dump their husbands off to do the ground work for the new school and do about half the construction. There's this big celebration, and then they're back to America.

A year later, some of the women come back with the NPO reps to see the progress and take pictures of the classes. The building is half-finished, exactly as it was when they left. The women, of course, are outraged and perplexed. So the NPO/NGO reps start talking to the villagers and their elders and soon realize the problem: The village never felt ownership of the school building. The building was foisted on them by these women, and so they never felt any reason to finish and use the school.

And I think that's at the heart of what Moyo and Easterly are getting at. Inter-government aid is not ground level aid. It comes with strings that are national in scope but aren't local in practice. It's very easy to divert away from people in need since it's in these huge, untargeted block grants. And end of the day, there's no ownership by the people.

What Sachs is reacting to isn't Moyo and Easterly and their beliefs, it's to how their arguments will be used. Conservatives in this country have wanted to turn off the foreign aid spigot for years, and they've been buoyed along by an American public with increasing compassion fatigue for the Two-Thirds World. "Foreign aid is wrong" could easy become entangled with "charity is wrong." And if the West stops giving, then that just leaves Africa even more in the hands of the Chinese raw materials industry, who are strip-mining and clear-cutting Africa at a rate those colonial powers could have only dreamed of (though at least China is paying something in return, though whether the people would see any of that money is an open question given that China is paying governments directly as a quasi-foreign aid.).

Sachs is probably blowing this all out of proportion, of course. But it is worrying to see how the Right has latched onto the Moyo argument -- here she is at the Cato Institute in April -- without grasping the nuances of what's she's been saying. Economic aid gets muddled with relief aid, the good parts of government programs (e.g. USAID's partnership with NGOs with long-term investments in Africa) get muddled with the bad (e.g. the IMF), and the idea that targeted funds towards local projects that take the long view are good is lost by the idea that we're throwing our money down the drain.

It's not that people are afraid of what they're saying, or whether they're right. What they're afraid of is how the information, drained of nuance by politics and shortened to misleading quotes for the average person to use to confirm their own biases, would affect potential donors and supporters of aid work.
posted by dw at 11:14 AM on May 25 [6 favorites has favorites]

Their argument is that intergovernmental aid and the idea that aid can be used to jump-start African economies are the problems. I think they'd be right in saying that not a single African economy has done well thanks to that sort of help from the developed world.

Just to underscore, William Easterly in particular (whose arguments I gather are similar in iconoclastic tone to Moyo's) does not come across at all as some anti-aid, free-market-worshipping ideologue in his writing. His main point is that as a career World Bank official he saw the very guts of the system and found them to be rotted to the point of being counterproductive, even if every now and then a good project or two gets funded.

Easterly's a really interesting read on the systemic problems with the aid business - "the cartel of good intentions," as he calls it. Basically, he argues that the very size and structure of your World Banks and UNDPs and USAIDs compels nations receiving their aid to build a mirror bureaucracy of similar dimensions simply to produce all the reports and data and other paperwork required to qualify for many kinds of development aid. And that in so doing, these developing nations assemble a cash-rich, opaque apparatus in the middle (often) of a very poor and highly undemocratic nation - as close to a guarantee of corruption as you'll find.

Anecdotally, I've reported a bit on the international development business (mainly about excellent organizations like E+Co. that are trying to reinvent it) and I have yet to meet a single field worker for a large aid agency who would refute the idea that the system is a colossal clusterfuck. I once spent a fascinating evening drinking with a handful of NGO types in southern India (all of them Indian), and I'd have been laughed out of the room if I'd suggested the aid racket actually distributed money effectively to the people who need it. That crowd might've let me get away with a grim, shrugging "better than nothing," but even that assertion could be easily torn mostly to shreds. These were people who actually put together the grant applications to take the aid money, and not even they would argue it's a smart use of it.
posted by gompa at 11:26 AM on May 25 [1 favorite has favorites]

That said, delmoi makes a good point about functioning democracies in India and Brazil. And I'm not sure where I stand on this issue, considering that many people in rich countries also vote for whichever side will give them bread, aka tax cuts.

In order for the majority to benefit from tax cuts, they have to be above the level where they can support themselves without government services paid for by the taxes of people richer then them. If you have an electorate of mostly poor people, then are certainly going to vote for higher taxes on the rich, and more social services for them. It's up to the rich to then try to corrupt the people elected.

I'm always amused by the strange assumption that democracy (or any other form of government, really) is just some kind of "plug-in" module one can slap onto a country without hassle. It's universally compatible! Everyone will take right to it! It just snaps on! Look at how wonderfully it has taken root in Iraq. Oh, wait ...

I'm amused by people who seem to think certain types of people just can't manage their affairs. Not to get all neo-con here but to often the way "democracy promotion" works in D.C. is that "democracy" means "doing what the U.S. wants" which is why Hugo Chavez gets called a "dictator" even though he is the elected president, and Mikhail Saakashvili gets lauded as some kind of hero. It seems like in Washington being democratic means electing governments of people who an affinity to the west who will do whatever we say.

When a "democracy" is just made up of people we've installed like Iraq, or if we punish countries for voting for people we don't like as in Lebanon and Palestine or supporting coups in Venezuela, that kind of thing, it's going to be a problem.

I think if you don't think Democracy is a good idea for some countries, you have a responsibility to explain what they should have instead, and why it would be better.
posted by delmoi at 11:36 AM on May 25

But it is worrying to see how the Right has latched onto the Moyo argument -- here she is at the Cato Institute in April -- without grasping the nuances of what's she's been saying.

Who's misinterpreting what she's saying, exactly? Cato seems to have a pretty good grasp of what she's saying, judging from the few atricles of her on their site. Easterly on his blog regularly has to point out that neither he nor Moyo are advocating abandoning humanitarian aid, usually in response to strawman attacks from the left. And don't downplay Moyo's free-market leanings According to Cato, Moyo "dedicated [Dead Aid to legendary British economist P.T. Bauer, the first recipient of Cato’s Milton Friedman Prize." Pro Free market does not mean anti-charity.

I can totally imagine some stereotypical right-winger going on about cutting off all aid, I just haven't read any. It seems that the left has been misreading her and Easterly far more then the right has. Who are the fools on the right, exactly?
posted by FuManchu at 11:58 AM on May 25

delmoi: I think if you don't think Democracy is a good idea for some countries, you have a responsibility to explain what they should have instead, and why it would be better.

Don't you think there are countries in the world in which the primary culture present doesn't actually want democracy? Think of all the people who want the church or the clergy to run things. Plus, lots of people have been convinced that one strong leader is the way to go, that anything else is weak... you get the idea.
posted by Mitrovarr at 11:59 AM on May 25

On a more serious note, I do believe that some countries are not ready for democracy yet.

The greatest single step taken in American democracy was the establishment of the professional civil service concept. Previously, civic hirelings were simply party hacks rewarded for loyalty with a government job. The corruption was voted in and voted out in cycles, rather than avoided altogether.

There's no need to wait for a country to evolve anymore. Theoretically, one could have piggyback democracy. If, say, Germany or Canada were allowed by the UN to form a unit to manage the affairs of an African region, then they could govern/manage within certain training and growth targets, while on salaries, and without any personal rights to own anything locally. They could do this until they were voted out by the locals, the UN, or by German or Canadian citizens themselves.

The reason this would work is because corruption usually happens when a foreign corporation operates outside of their home laws and finds or installs local officials who are either corrupt, ruthless or penniless. Preventing these conditions within existing democratic frameworks doesn't seem very difficult to achieve. I can't imagine any moral objections to this method other than fallacious parallels to colonialism.
posted by Brian B. at 12:10 PM on May 25

Don't you think there are countries in the world in which the primary culture present doesn't actually want democracy?

Uh, I've certainly never heard of any. Obviously there are countries where democracy might be politically unappealing because they've done well under a dictatorship or authoritarian government, you can look at China or Dubai. But there's nothing intrinsically "un-chinese" about democracy. Taiwan is a democracy despite having exactly the same cultural traditions as mainland china. Those are practical concerns, not cultural concerns.

Think of all the people who want the church or the clergy to run things.

Who are these people?

Plus, lots of people have been convinced that one strong leader is the way to go, that anything else is weak...

Yeah... convinced by the strong guy who has a monopoly on political discourse. Obviously any dictator with any brains is going to try to convince his people on the virtues of autocracy. That doesn't mean people can't change their minds. Obviously you can't force democracy on people, but you can put pressure on countries to become more democratic.
posted by delmoi at 12:16 PM on May 25

There's no need to wait for a country to evolve anymore. Theoretically, one could have piggyback democracy. If, say, Germany or Canada were allowed by the UN to form a unit to manage the affairs of an African region, then they could govern/manage within certain training and growth targets

Oh yeah, I'm sure the locals would just love that.
posted by delmoi at 12:18 PM on May 25

delmoi: Who are these people?

About half the population of the Middle East? Hell, we have plenty of them in the US. They usually couch it in saying that they'd like to elect pro-God candidates or whatever, but in the end they want theocracy. Maybe with some democracy thrown in, like you vote up the clergyman you like the best or something (just like in Iran!)
posted by Mitrovarr at 12:19 PM on May 25

but in the end they want theocracy

Specifically their brand of theocracy, none others. But, if the majority wanted theocracy above democracy, the theocrats would be pro-democracy, or most easily use democracy to establish theocracy.
posted by Brian B. at 1:05 PM on May 25

In order for the majority to benefit from tax cuts, they have to be above the level where they can support themselves without government services paid for by the taxes of people richer then them. If you have an electorate of mostly poor people, then are certainly going to vote for higher taxes on the rich, and more social services for them. It's up to the rich to then try to corrupt the people elected.

You're talking as if people are rational. Seems to me that most of the people at last month's tea-bagging parties were not well-to-do enough to do without gov't services, but still had no problem calling for tax cuts - or voting for them when they are offered, even as the deficit looms.

My point is that while those in the rich world no longer vote for literal bread (as the plebs did in Rome), but we do vote out of self-interest, or perceived self-interest. And thus as voters, we are easily bribed to support incompetent and/or corrupt politicians and leaders - whoever gives us the most stuff, no matter how much that is going to hurt our society, economy or planet in the long run. So this is a problem in all democracies, and one of the major failings of democracy as a basis of government. Sadly, we still have nothing better.
posted by jb at 1:15 PM on May 25 [1 favorite has favorites]

If you have an electorate of mostly poor people, then are certainly going to vote for higher taxes on the rich, and more social services for them. It's up to the rich to then try to corrupt the people elected divide the electorate with racism and gender bias, confuse them with moral platitudes on fair taxes instead of fair wages, and perpetuate a prosperity myth so the voter will hesitate to raise taxes on their future earnings.

My pleasure.
posted by Brian B. at 1:28 PM on May 25 [2 favorites has favorites]

Has anyone read Moyo's book? How does it compare to The Trouble with Africa by Robert Calderisi? Are the points made reasonably similar?
posted by sien at 4:26 PM on May 25

I haven't read Moyo's book, but Caldersi sounds overly dismissive of the very real and very serious disruption of local economies and societies that colonization caused, and the deep damage that development oriented only to the benefit of the colonials meant. If you have ever looked at a map of the railways in Africa, you would be struck how they look nothing like the railnetworks of Europe, Asia or North America. They don't network - there are few connections across the continent. They all just go from the interior to the exterior; they were all about getting raw materials out. There was no interest in developing the economy, as was done in white majority colonies or in Europe. Just in taking stuff out.

And the country I know of that is doing the best economically and politcally - Botswana - has done so largely because the colonisation of this area was late and light, and largely left the local political and social structures in place.
posted by jb at 6:20 PM on May 25

William Easterly responds at the Huffington Post
posted by FuManchu at 6:22 PM on May 25

The fact is, Jeffrey Sachs' "ad hominem attacks" were mostly accurate.

Moyo *HAS* said that aid should be cut off, in favor of financial instruments such as business loans, the issuance of bonds through the capital markets, etc.

This is pretty much to be expected, considering her recently ended eight-year long career with Goldman-Sachs... but the fact is, she has called for a rapid end of most of the aid to Africa, with only minor exceptions.

"So that means you'll be turning off aid quite soon, I hope... "
- said to Raymond Johansen, party secretary of Norway's Labour Party.

Basically, it seems to me that she would want the world's governments to give money to big financial institutions, in the hope that they will, in turn, issue bonds to hopefully responsible African governments, make loans to hopefully legitimate, responsible would-be entrepreneurs, etc. Basically, we're supposed to trust these financial institutions to not game the system for their own wild profits.

.. and yet, at the same time she criticizes traditional NGO aid as prone to corruption, she fails to point out how issuing bonds or making personal loans isn't just as prone to corruption from many of the same likely sources.

There is merit in the prudent use of financial instruments to help Africa, but the idea that financial instruments are corruption-proof, unlike foriegn aid, is not just naive... it is willfully ignorant, and, when taken to extremes, a case of throwing out the baby with the bathwater.

Ultimately, many of Africa's governments are at the heart of the corruption, and they will find ways to get hold of aid in any form it takes, and/or funnel the available money to their people, at the expense of others.,

Moyo is blaming foriegn aid for not adequately addressing Africa's increased poverty. Not bad leaders and corruption. Not economic fluctuations. Not the huge impact of AIDS. Not rapid population growth that outstrips job creation. Not wars or famine. It's not a confluence of horrible circumstance that holds Africa back. It's well-meaning foreigners and their desire to help that are to blame, apparently.

... and yes, Ms. Moyo wants the vast majority of that aid gone. But the thing is, aid for Africa was initially based on the Marshall Plan, which worked just fine with honest players.

Basically, her ideas make sense if you consider that she identifies as politically Libertarian and Conservative. It's rehashed Libertarian free market theology... hatched from the same people who just failed so spectacularly. Just sprinkle the Libertarian free market pixie dust thickly enough, and wish away all of the structural disaster and dysfunction that makes Africa such a scary, risky place to run an honest business.

The laissez-faire free market is self-adjusting, can cope with everything, and is the best of all possible worlds all the time, right?!
posted by markkraft at 7:44 AM on May 26

and now .... Moyo responds on Huffington Post
posted by infini at 2:48 AM on May 27

Paris judge to examine African leaders' finances
"This is the first time, anywhere in the world, that a judge has recognised the right of a non-governmental organisation to bring a law suit in the names of victims of corruption,"
posted by adamvasco at 3:05 AM on May 27

Again, this doesn't make any sense. In an actual democracy, the "20 emaciated subsistence farmers" would out vote the warlords.
(what I meant was:)
..and the warlords would then gun them all down, and hold another "election," because the first one was found to be "invalid."

Cote d'Ivoire and Congo had coup d'etats, there is too much civil unrest in many other countries for democracy to take root, and there is a sham democracy in more than a few other African states. Violence and autocracy seems to be the rule rather than the exception.

As for what would work better than democracy - I don't know that there is an answer to that. I think it is more a matter of focusing efforts on bottom-up development, rather than trickle-down aid. Micro-lending is a good example of what I mean - aid to the bottom rung, which has a chance of bypassing the corruption above.
posted by bashos_frog at 3:33 AM on May 27

from Moyo's Huffpost thing: "We now have over 300 years of evidence of what works (and what doesn't) in increasing growth, alleviating poverty and suffering. For example, we know that countries that finance development and create jobs through trade and encouraging foreign (and domestic) investment thrive."

Okay, now we're onto history, and I'm in my comfort zone. (Because everything is more interesting when it's 100s of years away).

I'm all for market oriented development - that is, after all, what economic development is about: making it so that people produce more stuff, and can make more money and thus have more stuff (like food and housing, and health care) which makes their lives better.

BUT - what's the best way to do this? Moyo's criticisms of aid are spot-on, but her economic history is not as strong (or as deep) as it should be. For one, foreign investment is not how European economies, like Britain's, developed; they were happy to import skilled foreign workers, but tended to discourage foreign ownership (unless that person came and resided and, you know, spent all their profits in the country), and practiced a hefty amount of protectionism to protect their own producers against foreign competition. Between c1500 and 1800, international market integration was NOT correlated with growth; countries with good trade flows within their borders but also protectionism to protect fledgling industries did better. Those with colonies did even better, but that's so not going to happen for the developing world, so lets focus on what they can do.

There are lots of government investments that have helped European economies and their white-majority colonies which were rarely done for their non-white colonies - again, protectionism for fledgling industries (New Zealand had, Ghana did not, despite both being British colonies), investment in transportation and markets, and also in developing the local economic technology (agricultural colleges - again established in NZ, and not Ghana. Guess who read an article comparing NZ and Ghana?). These types of investments would be a good place to focus aid - how about founding an ag college which studies the local environment and farming practices and works on ways to improve them without stupidly importing western farming models which are neither environmentally sustainable nor economically sensible considering who is doing the farming? But sadly, because of historic neglect during both the colonial and post-colonial periods, agriculture has been ignored in many African countries or, worse, seen as something to tax in order to support more urban development.

Not that urban/manufacturing development is bad - but it seems like it has often been focused on pie-in-the-sky instant transformations into heavy, capital intensive manufacturing (partly inspired by USSR propaganda about its 5 year plans - which, you have to admit, sounded great if you didn't know what was really going on). Fact is that most developed nations today didn't start there - they started small. In 1500, England was really a primary production kind of place - they exported raw wool, and imported cloth, and a lot of other manfactured goods from places like the Low Countries. But through government policy - and selective protectionism - there was active encouragement to develop not a a big industrial manufacturing centre, but small scale manufacturing - stuff that didn't need a lot of capital and could be done by working class people to employ themselves. Stuff like weaving and textiles, starch manufacturing from flour, for all those fancy Elizabethan ruffs, so that they wouldn't have to import from the Dutch, pin making (though there they were undercut by Dutch workhouse labour), etc. The government encouraged this because they were freaking out about an increased population c1550-1650, and increased joblessless, and the trade deficit with the Dutch. As it was, English products were the bottom of the market for a long time, just as the Dutch/Flemish had been the cheapo producers before them.

As for the rest of us: our responsibility should be to stop screwing the developing world to help ourselves. That means voting against protectionist policies in the developed world (including in agriculture - and stop the tarriffs on Pakistani textiles already!), but recognising that developing countries may need protectionism to get sectors going. It means encouraging what economists call "downstream multipliers" - buying fair trade coffee is all fine and good, but it would be a much better trade if it were not just bought for a high price raw, but roasted in the developing country as well (roasting is where most of the value is). Because that would be real economic development, and create more jobs.
posted by jb at 8:04 AM on May 27

I say, if working towards a sustainable solution where Africans can make their own anti-malaria bed-nets (thereby creating jobs for Africans and a real chance for continents economic prospects) rather than encouraging all and sundry to dump malaria nets across the continent (which incidentally, put Africans out of business), then I am guilty as charged. Don't forget that the over 60 percent of Africans that are under the age of 24 need jobs not sympathy.

Again from Moyo's Huffpost - and she's completely right.

BUT it may take protectionism for those African-made anti-malaria nets to be cheaper to start with than mass-manufactured nets from established factories in China, especially as transportation costs have gone down again.

Aid should be in the form of start-up capital for anti-malaria net workshops/factories - either in the form of loans, or maybe partial ownership - but I wouldn't want to see what a lot of pro-market development types have suggested and that is entirely foreign-owned firms just going there for cheap labour and exporting all the profits. You need the profit to stay local, so that it can continue to go on and act as a downstream multiplier. That means some nasty government interference like the Chinese have done by insisting on partial local ownership.
posted by jb at 8:12 AM on May 27

i don't know if this is the right thread for the question, the debate here has been aid or no aid but reflecting back on the Guardian article on Trade, not aid, I'd like pose the question I've been grappling with,

are market based solutions that seek to provide sustainable win win solutions (supporting entreprenuers say through training, products that sell, a social network rather than simply chucking a micro loan at them and watching them sink or swim with their small biz) the right way to go towards alleviating poverty?

/ponders deeply
posted by infini at 9:30 AM on May 27