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The Tyranny of Aid Critics

Shanta Devarajan's picture

Charles Kindleberger (h/t Gerry Helleiner) asserted that all reviewers can be counted on to say three things about a book: “It isn’t new. It isn’t true. And I would have said it differently.”  Notwithstanding their internal contradictions, these statements summarize my thoughts on Bill Easterly’s latest book, The Tyranny of Experts.

It isn’t new. The main point of the book is that the rights of the poor have been systematically undermined, directly by governments, especially authoritarian ones; and indirectly by “experts”, who either prescribe technical solutions that ignore poor people’s ability to come up with their own solutions, or provide legitimacy to these autocratic regimes so that they continue to suppress the poor.  Bill illustrates this point with three historical examples—China between the world wars, Africa at independence, and Colombia in the 1950s—where a combination of western (in some cases, colonial) interests and local elites conspired to keep the large majority of poor people poor for a long time.  The analytical backdrop to these three case studies is the “debate”—a debate that never took place—between two Nobel-prize-winning economists: Gunnar Myrdal, who advocated government intervention to improve the lot of the poor; and Friedrich Hayek, who believed in protecting the individual rights of the poor as a means of their escaping poverty.

But one can take all the facts in the case studies and the characterization of the Myrdal-Hayek debate and reinterpret them as the classic tension in development economics between market failure and government failure.  Market failures, such as the lack of bridges, dams and canals, need some kind of collective action to be solved.  Myrdal and the protagonists in the case studies (especially Arthur Lewis on Africa) were advocating that government should play that collective-action role and build the bridges and canals. 

By the 1970s, it became clear that many governments were not solving market failures.  Bridges, roads and canals were built not where poor people lived but near the President’s birthplace.  Once built, they were not maintained. To protect infant industries (another market failure), governments built shoe factories that never exported a single pair of shoes.  To overcome market failures in education and health, governments provided schools and clinics, but teachers and doctors were frequently absent.  In short, solving market failures had created a set of government failures—situations where governments were not accountable to their citizens in general, and poor citizens in particular.

Acknowledging that much of his book is about market v. government failure (see the sections on “Problems and Solutions with Markets and Governments”), Bill nevertheless presents the arguments in terms of the rights of the poor.  In addition to not being new, this characterization doesn’t explain why the rights of the poor have been violated.  By contrast, we now have a reasonable idea of what causes government failure: citizens are unable to hold politicians accountable because of “political market failures”, and policymakers cannot hold service providers accountable because of asymmetric information.

Furthermore, if we don’t know why the problem occurs, it is difficult to determine the solution.  Bill’s response is two-fold.  First, he questions the use of the term “we”, suggesting that it is part of the problem—outsiders (“experts”) trying to find solutions to help “them” (the poor).  He prefers to have the poor come up with their own solutions (“Part V: Conscious Design v. Spontaneous Solutions”).  Secondly, he doesn’t see the purpose of the book as prescribing solutions.  Recalling the 1960s civil rights movement in the U.S., he hopes the book will create a similar movement for the equal rights of the poor.

Yet, if we view the problem as government failure, there are things that we, as outside experts, can do.  For instance, we can collect and provide information to poor people, so that they can demand what is their due from politicians.  There is evidence that these efforts lead to better outcomes for poor people.  Publishing information about the leakage of funds to primary schools in Uganda led to a substantial decrease in the leakage rate.  Scorecards and village meetings on the quality of clinics led to a substantial decline in child mortality. And some expert-driven technical solutions, such as the Green Revolution, have helped hundreds of millions of poor people escape poverty.

It isn’t true.  The book is full of anecdotes and stories chosen to illustrate its central theme.  Some of them are incorrect.  For instance, at the end of the book, Bill returns to his opening story about the Mubende community in Uganda who were evicted from their land for a timber plantation (which was supported by a private equity fund that was, in turn, financed by the International Finance Corporation), and asserts that the “World Bank’s own Office of Compliance Advisor/Ombudsman…did not fulfill its statutory obligation to investigate the World Bank’s own role…”  The fact is that, when the two parties agree to a mediated settlement—which is what they did—there is no “statutory obligation to investigate”.  Instead, the CAO helped with the mediation and is now monitoring implementation of the agreement.

In other cases, quotes from Jim Kim, Tony Blair and Bill Gates advocating “top-down solutions” are taken out of context, as David Roodman shows in his review of the book.  In all three cases, these people made statements in the same speech or paper that showed their commitment to the “bottom-up” solutions that Easterly is advocating.

In yet other cases, the book is misleading by juxtaposition.  In discussing Arthur Lewis’ involvement in advising the Nkrumah government in Ghana, Bill says: “Nkrumah’s development policies followed the prescription of Lewis and other development economists to raise investment to launch development.  Nkrumah did this by taxing Ghana’s most valuable industry, cocoa production…”  Putting these two sentences next to each other gives the impression that Lewis advised Nkrumah to tax cocoa.  The truth is he did not.  In fact, as the book later points out that, when he found out that Nkrumah was using the cocoa tax and other policies as a way of transferring resources from the Ashanti to his own Akan people, Lewis resigned.

I would have said it differently.  Although he claims not to be writing about aid, Bill’s main targets are external actors, often associated with aid agencies (such as the Kim-Blair-Gates trio mentioned above).  His complaint is that these “experts”, by providing technical solutions to autocratic regimes (and celebrating their development achievements), perpetuate the oppression of the rights of the poor.  Had these experts not advised these governments, would the oppression have been less?  North Korea, for instance, undermines the rights of its people with no outside help or recognition.  And non-state actors like Boko Haram, taking advantage of weak governments, undermine the rights of schoolgirls by kidnapping them.

By focusing on the experts, Bill is detracting from the real problem, which is the failure of these governments to be accountable to their people.  Experts may exacerbate or mitigate the problem; either way, the effect is small compared to the scale of the fundamental issue of government failure. 

Even where external actors are concerned, the main difficulty may not be with their advice but with their finance.  When a donor provides aid to a government, that government becomes accountable to the donor, rather than to its people.  When some domestic NGOs raised questions about the quality of primary education in a low-income country, the President responded, “I don’t know what they’re complaining about.  The donors are very happy with our primary education program.”  This, possibly bigger problem with aid, is not mentioned in the book.

I liked two parts of the book - the section on migration and the chapter on technology.  But overall, by not going further than what we already know about government failure, by selectively choosing facts and quotes, and by focusing on external rather than domestic actors, Bill Easterly’s book leaves me quite dissatisfied.
 

Comments

Submitted by Balakrishnan on

Dear Mr. Devarajan,

Very good review. The book was written by a so-called expert presumably to show how other so-called experts are the real problem. Having decided that he would base this book on that flawed thesis (as you right point our), Mr. Easterly goes about looking for stories to fit that idea. The biggest problem with this books is his lack of understanding about the differences between foreign policy and International aid organizations. In most cases, the policy of proping up dictators during the cold war (or even today) is not relevant and has nothing to do with any external organizations. When the US supported dictators in many countries, such as Pakistan, Indonesia, formally Zaire to name a few, during the cold war and last thing in the minds of the US foreign policy team was wheather the dictators provided fresh water or not. Also, during the course of the cold war, the Western governments have repeatedly used their clout in the International organizations to support loans or credits to the above said countries.

I think Mr. Easterly missed an opportunity to offer a critical analysis of whether the world is best served by Western run organizations such as the World Bank or Asian Development Bank (Japan), or IMF and whether they are relvant in a multi-polar world order. His book would have been better if he has analysed how China supported development model in Africa is different.

Of course, the policies dictitated by the IMF during the 80s and the early 90s were instrumental in devestating economies of many developing countries. May be India survived the early 90s economic crisis by not following the prescriptions offered by the IMF.

Also the book does not make the distinction between structural reforms demanded by the IMF to development assistance by organizations like the World Bank. The Gates foundation, GAVI and the green revolution have proved that there still a great need for data driven development. The availability of open source data combined with RTI (in India) and FOIA (US) will prove that developement does need some form of expertise but with free flow of information.

Submitted by D.McKenzie on

nice review Shanta. Not sure if you saw my earlier review on the Development Impact blog, which offers some related thoughts:
http://blogs.worldbank.org/impactevaluations/tyranny-anecdotes-bill-easterly-s-new-book

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