Trade

Bill Easterly writes about trade. The story is one of my favorites in economics.

But it's incomplete. Some people think that if a country uses trade, e.g. grows food and ships it to Japan, then (some of) the people who make the goods that are now imported will be unemployed. In other words, the economy loses some of it's capacity because resources go unused. Most economists don't believe that story, or if they do think that it's just a temporary phenomenon and doesn't affect that many people (see Paul Krugman's old Slate columns).

Still, people have used this argument about idle resources to berate those who donate goods in-kind. I made a comment on Bill's blog saying this (in a snarky way with fewer words), wondering if he buys it since in the past he seemed to accept it.

Paths to Development

I'll write more about this in the future. Below is my taxonomy for approaches to development. Each includes an example of an effective practitioner who takes (primarily) that approach. There are plenty of hybrids, so I'll list some of my favorite examples of those.

All the names are a little mocking and irreverent because I think setting a tone of being both unserious and critical is important. Too many people are critical (which is important), but dead serious and rigidly ideological, when talking about different approaches to doing a project.

1. The Beggar (Lobbyist)

The beggar lobbies governments for money and legislation. For example, the Live8 concerts, organized by Bob Geldof, lobbied the G8 countries to commit to doubling funding for foreign aid. The NGO ONE in the United States, and its celebrity spokesman Bono, lobby for legislation on debt relief (Jubilee Act), cutting farm subsidies (FRESH amendment), trade reform (GROWTH Act), and providing funding for the treatment of AIDS (PEPFAR).

Examples: Bono and Bob Geldof, ONE Campaign

The appeal of the beggar is plain enough: governments have a lot of money and can use it to solve social problems. We spend a lot of time campaigning for our political parties in the US because we believe their approach to health care or education will improve our systems here. Since many problems in the developing world are likewise problems of education and health care, doesn't the same approach makes sense?

The main criticism of the beggar is that he or she usually doesn't understand the complexity of the issues. Lobbying for bad policy can hurt on a massive scale the same way lobbying for good policy can help on on a huge scale. Also, many intellectuals in the countries receiving the aid the beggar lobbies for think that the aid is paternalistic and encouraging laziness and outright corruption in the receiving country.

2. The Policy Entrepreneur (Academic)

The policy entrepreneur is usually a professor or other academic working for a think tank. They argue for policy reforms based on their research. Esther Duflo, co-founder of the Poverty Action Lab at MIT, is a prime example of an effective policy entrepreneur. Her and her colleague's research has shown which interventions in education, water infrastructure, health and microfinance have the biggest impact. Based on that evidence they have worked to reform policy in both the developed world (foreign aid policy) and the developing world (domestic policy).

Examples: Esther Duflo and co., Santiago Levy and Jose Gomez de Leon, Michael Clemens

The appeal of the policy entrepreneur is straight forward: policy decisions have a much bigger impact than small projects, so making good policy decisions should do more good than doing good small projects. The problem is this can work in reverse. Some policy entrepreneurs turn out to be wrong about issues in the long run and thus each runs the risk of making policy worse, not better. Also, many policy entrepreneurs never have much impact on policy.

Hybrid: Jeff Sachs is both a grade A beggar and policy entrepeneur

3. The Mad Scientist (Inventor)

The mad scientist is focused on technology. There are a lot of mad scientists at engineering colleges such as MIT and in universities with Engineers without Borders chapters. The mad scientist thinks primarily on a small scale, hoping to invent neat new technologies that solve basic problems at low cost. Many of these technologies are directed at income generation, but some are also useful for improving health (e.g. delivering vaccines more effectively).

Examples: Amy Smith

The biggest problem for the mad scientist is that their technologies rarely reach the field after endless prototyping. Economists also often question the utility of this approach by noting that all the technology needed for development already exists and arguing that the problem is how the resources are utilized and distributed.

4. The Dentist (Behavior Change)

The dentist focuses on behavior change. In many cases people in the developing world have poor health or education outcomes because they don't make much effort in school or practice basic sanitation practices. The work of the dentist is difficult--like pulling teeth--hence the name. Particular examples of dentistry are total community-led sanitation, which encourages villagers in rural Asia, to take responsibility for their community's sanitation; hand-washing programs world-wide which encourage people to wash their hands; similar problems encourage the use of condoms and boiling water before drinking it.

Examples: TCLS, Public-Private Partnership for Handwashing with Soap

The main complaints about dentistry are that the dentists are trying to tell people what to do with their lives and that their projects tend to be very slow moving, with only incremental successes. The later tends to be valid while the former is not necessarily a fair representation of dentistry, see TCLS.

Hybrid: Paul Polack of IDE is a Dentist mixed with a Mad Scientist. His organization develops technologies for use by rural farmers, but spends at least as much time convincing farmers to take a risk and buy them.

5. The Santa Claus (Charity)

The Santa Claus has the most basic approach: hand out gifts. This approach is almost too simple to comment on, so I'll just throw in that it's my favorite. The Measles Initiative, which vaccinated millions of kids against measles (and other diseases); Partners in Health, which provides free medical care; and Nothing But Nets, which hands out bed-nets, are three of my favorite development projects.

Examples: Paul Farmer

The Santa Claus, while often the most effective development practitioner, and in rare cases the most celebrated (Paul Farmer), is far and away the most criticized. The Santa Claus is accused to eliminating intrinsic motivation, creating learned helplessness and a culture of dependency, and in general being ineffective as resources are (according to one theory) better allocated using the price system. For people who see development as capacity-building the Santa Claus is repulsive for ideological reasons, whereas pragmatists focused on improving health and quality of life, tend to appreciate some aspects of the Santa Claus approach.

Hybrid: Nearly every development practitioner plays the Santa Claus from time to time, often without noticing it.

6. The Petty Bourgeois (Small Business)

The petty bourgeois are businesspeople who espouse the virtues of microfinance and other private sector (but small scale) interventions. They tend to like projects that start restaurants, small service businesses or cottage industry manufacturing.

Examples: Jacqueline Novogratz, Iqbal Quadir

The main criticisms leveled at the petty bourgeois is that they aim too low. If you help someone making $500 a year to make $550 how much good does that do? What does that person spend the money on? Booze, parties or education? Economists have pointed out that because the poor tend to have little human capital and can only acquire small amounts of physical capital with small loans, they will never be able to earn large profits. Economists have also noted that many people who extend microcredit to the poor have enabled the poor to get deep into debt without necessarily raising their income, which might be a bad thing.

Opportunity Costs

I've reluctant to write this because I think the way of thinking I'm going to argue for here is depressing. It will make you think that you're having less impact on people's lives--which gets distorted into feeling that you are less important. That is most people's visceral reaction. But the upside is that when you use this method to count costs and benefits you (should) be able to better limit costs and create benefits.

Let me start with a story. Angela held a fundraiser at her high school. She and her friends sold 500 cookies for $1 each after school and then sent the money to an NGO that used it to buy 50 children anti-malaria bed nets. Bill wanted to do more. Fundraisers at his school were never going to generate more than a few hundred dollars. But he noticed that there was a competition for high school students to propose a way to "Do Good" and the winner would get $5,000. Bill wrote a proposal to use the $5,000 to buy 300 nets and use the rest to pay to fly to Ghana and distribute them. He won the grant in a close vote over a proposal to spend the money deworming children in Ghana.

Who did more good?

Bill got 300 people nets. Angela only got 50 people nets. Isn't it obvious? No.

If it seems like the statement about the number of nets is the end of the story then you've fallen for one of the most pervasive problems in debate. That statement just listed the benefits--and completely ignored the costs.

And in this case that makes all the difference. The real cost of something is the value of what would have happened otherwise. If Angela didn't organize the bake sale she might have spent the extra time playing volleyball. She also might have prevented the Girl Scouts from selling cookies that today. Compared with the value of saving a (many?) lives, those costs are negligible so maybe it's safe to ignore them.

Bill, though, caused the proposal for deworming not to get funded. The deworming plan was probably of comparable value (perhaps more, perhaps less) meaning that while Bill "saved" perhaps 2 lives he also caused 2 lives not to be saved. The benefit was 2 lives, the cost was 2 lives, and the net benefit (benefit - cost) was nothing. Bill's plan may have done nothing make the world a better place, while Angela's almost certainly did.

Angela, by construction, did more good.

That story is just meant to be an example. Of course it's fictional. And of course the assumptions matter. But it's illustrative. Whenever you apply for a grant you're causing someone else not to get it. The net benefit is only the good from your proposal minus the good of the one that would have been funded. If you open a Fair Trade store right next to another store, and you decrease the business of your neighbor by $5,000 a month while only doing $7,000 yourself, then you've only netted $2,000 in Fair Trade sales for the world. (Of course the distribution of the money could be important too--maybe your suppliers are more desperate and benefit more.)

Too much of the time we don't think at the margin.

Dangers of Obscuring the Point

Sometimes people make arguments in what I call "shotgun" fashion. Instead of listing the key benefits of some policy or project they list all possible benefits in the hope that they'll appeal to a host of different interest and make the project sound like it makes a big difference--by killing two--or five--birds with one stone. I did this when I had to make a presentation about a project I did teaching West Africans to build cheap peanut shellers and I regret it.

I'll use a different example though because it's more illustrative. Take this pitch: "this new energy project lowers costs for individuals, creates jobs, and cuts down on deforestation. Oh, and kids benefit from the fact that the fuel is cleaning burning too!"

When I hear presentations like that is that it makes me wonder if any of those benefits are large. Are they listing many benefits because none of them alone is impressive? And doesn't having a long list obscure the original point of the project?

In the case of the energy project, limiting deforestation probably isn't important in the long run. The impact will be minimal and the environmental consequences are (to my knowledge) paltry compared to the consequences of poverty. The "lower cost" could be (probably is) as little as $10 a year for people, not exactly a kick out of poverty. And it might "create" jobs, but how many? And how many people are displaced in the competing industry? In some ways this is just another argument for trying to be quantitative when talking about benefits and for remembering to be honest about costs.

What I think is particularly interesting in this case is, though, that the added side-benefit, the one that was thrown in at the end, may well be the most important. Indoor air pollution kills millions of kids each year. If they don't die from air pollution they might live to be, say, 50. That's 45 years-of-life added, which we value at $25,000 a piece in the U.S. (roughly). So saving one kid from reducing air pollution is worth (something like) the savings from lowering costs for 11,250 people.

The example that motivated this post was Cash for Clunkers. The program was a total disaster, but many people liked it because of it's laundry list of beneficiaries. It would be progressive (help people driving older cars), environmentally friendly (get dirty cars off the roads), provide a needed stimulus and help the ail car industry. But in reality none of those objectives were achieved efficiently. If we were honest about which were important from the start we could have just designed specific policies for each--at less cost.

Boomerang Ideas

Sometimes a policy debate starts when people find out about something intuitively revolting. They clamor for government intervention to show it down. Academics and others who have been studying the issue for years then come out of the shadows and explain why, as bad as the picture looks, it's better than the alternative. But a few years down the road some young grad students do a study and the whole picture gets a little fuzzy--and puts the evidence half-way back on the side of the initial critics.

Sweat-shop labor is a great example of that kind of "Boomerang debate."

Most people who haven't thought much about it hate sweat shops (here defined as factories that pay, say, less than $4,000 a year to workers). Isn't it some kind of human rights abuse to ask people to work 12 hours a day for less than (the U.S.) minimum wage?

But the thing is, the people who choose to work in a factory are often choosing to because they don't want to work 12 hours a day on a farm like their parents. And they can make 5x (or 10x) as much in the factory as they could on the farm. The point is that if people are freely choosing those jobs then they've got to be better (on average) than the other horrible options they have. Benjamin Powell, guest blogging at Aid Watch, gets the debate this far--and then claims that's the end of the story.

But it's not. Not all sweat shops are created equally. Wages vary considerably, as does safety. Working in a plant making CRT monitors is extremely dangerous while working in a textile mill is comparatively safe. Some sweat shops employ children who should be in school, others only adults. And some pay their workers wages their parents couldn't have imagined--while others more or less enslave their workers, violating every labor law on the books.

Taking that to heart that while it's very, very clear sweat shops are good on the whole--and we're probably better off (in the words of Jeff Sachs) worrying why we don't have enough sweat shops as opposed to why we have too many--labor activists targeting the worst abuses are probably part of the solution, not the problem. This, indeed, is what recent research has revealed: "anti-sweatshop campaigns led to large real wages increases . . . but [no] significant effects on employment."

In so many words: anti-sweatshop activism would be bad if it reduced the number of sweatshops, but since it doesn't it's great--improving labor laws (or enforcement) without harming labor.

If you could invent one vaccine it'd be for . . .

AIDS? Carcer (pretend it's possible)? Heart attacks?

I was talking to friends yesterday and I said that the next frontier in human welfare is dealing with the problems that are all in people's heads. We've eliminated most communicable diseases in the United States and met our basic needs. Not a lot of people die young, and those that do often die in accidents that are hard to prevent. As the rest of the world develops (China and India will both be like the U.S. in 50 years or less, it appears) this will come to be true worldwide.

At that point we can continue to worry about marginal gains to life expectancy from inventing cancer drugs and treating heart disease. And we can worry about priming the engines of growth with education so that 50 years hence our grandchildren can each have $150,000 in income instead of $100,000. Or we could worry about ensuring that 10,000 people don't die prematurely from lack of health insurance.

Or we could look at what the next frontier. Here are projections for 2030 and statistics for today, restricted to the high income countries that most of the world will resemble in 50 years:

Note: I don't know how these numbers are calculated in details. I don't put a lot of stock in exact predictions like these, nor do I like the methology here in particular (I suspect). But I think the general pattern should ring true for anyone living in the United States or Europe and paying close attention. Also, I'd like to emphasize that, while the study thinks of "unipolar depressive disorders" are something that either affect or don't affect people, I think (esp. in the future) it's better to think of them as something to affect everyone to a greater or lesser extent. Some bridges are "unstable" but every bridge has a breaking point. Some roads are bumpy, but every road could be smoother. Some people are a wreak, but everyone gets down when they probably shouldn't.

Also, this doesn't fit anywhere but I know that just because something is a big problem doesn't mean it's the most important problem to work on. The best problems to work on are both big and tractable--is immunizing kids with coping strategies and a healthy outlook tractable? I think so. We immunized most kids against smoking and that alone probably accounts for 90% of the DALY drop we've caused in the past 40 years (in the U.S.)

Useless Research

There's a new book out on the Lord's Resistance Army (HT: Chris Blattman, who authored a chapter).

The book is meant to set the record straight about the Lord's Resistance Army (hence the subtitle), and based on the quote from Chris they're particularly taking aim at the coverage Invisible Children and CNN have done. (I've never seen anyone else do a story or documentary on the Acholi's plight.)

Personally, I find the tone kind of smug. Invisible Children does a lot to help people. It's possible their account is very misleading and I'd like to read the book to get the facts. But I don't think reading the book is going to give me or anyone else much insight into how to end the war. I've never seen any academic research on foreign policy (non-military strategy) that is in any way useful.

For that reason the tone is offputting. Invisible Children, even if its just a propaganda documentary, inspired thousands of (mostly) high schoolers to raise money to help thousands of (mostly) kids get a better education. It also entertained a lot of people (8.0 average rating on IMDb). From a utilitarian perspective it was an "ethical" movie, however misleading. This book on the other hand, has little ethical value if it can't help end the war, and probably won't even entertain many readers.

You can file this post under the theme "unimportance of fact/reality" which I consider a central theme on this blog.

Agricultural Development

I've never been that interested in agriculture in relation to development. But I started reading about the history of agricultural extension on Wikipedia and the World Bank's website--it's surprisingly interesting. The page introduces a framework toward the end that is useful for organizing thoughts about any kind of technology transfer/behavior change.

That said, I'm still skeptical of claims like this (quote from this paper):

The role of agriculture in sustainable development and poverty reduction for the vast majority of developing countries cannot be overemphasized. Forty-five percent of the developing world's population lives in households involved in agriculture, and twenty-seven percent in smallholder households, and most depend on agriculture for their livelihoods. The agricultural sector generates on average twenty-nine percent of gross domestic product (GDP), employs sixty-five percent of the labor force in agriculture-based countries ...

It seems obvious, right. Most poor people are farmers, so the key to reducing poverty is generating more income on farms. The problem with that reasoning is that assumption that people can't shift what kind of work they do. In fact, people can and are very rapidly moving from agriculture to manufacturing all over the world. Most of the poverty reduction world-wide can be attributed to growth in China and (without looking up he statistics) I'm fairly certain very little of China's growth has been driven by agriculture. The fact that "industrialized" and "developed" are nearly synonymous is telling.

Another problem is the potential for immizerating growth. Say farmers in Africa expand the supply of cotton dramatically. That supply shift should lower the price for cotton (e.g. harm Ghana and Togo's terms of trade). If the price effect is large enough it could wipe out most, all, or more than the gains from increasing quantity.

That said, agriculture is still crucial to improving people's quality of life. Millions of kids around the world are malnourished and a bumper crop can be used for, among other things, free school lunches. And for small-scale projects, you don't need to worry about general equilibrium effects, thus agricultural investment will often be a good candidate for a "project."

Update: Nature weighs in with an editorial. It's interesting that they think growth and trade won't solve most of the problem. By 2050 the average American family will have an income close to $100,000 and poor countries like China and Mexico should have incomes comparable to Europe today. Do they really think there will be that many poor people to feed? (And what, beyond supply and demand, caused the crisis in 2008?)

Shaving in India

But according to the survey, most men from Chennai and Bangalore take more than half an hour to shave.

I don't know If the survey was of rural areas or not. But if it was I have an idea for a new development project in India. Does anybody want to design a low cost razor blade?

Bonus useless information: The survey also found that Indian women prefer clean shaven men. That contrasts with a survey in England that found some stubble is best. I just wait until I look like a dirtbag before I shave. Such is life in college.

Commit in September

The Quote of the Day goes to Invisible Children for this Facebook status:

Our friends at the Millennium Campus Network need your help to get 72 million children in a school.

They're going to achieve Millennium Development Goal #2 and set a World Record by having 72 million children in one school.

Joking aside, I do highly recommend singing the petition at Commit in September.

A lot of people don't like these things because they seem useless. Does it really matter that one more person signs the petition? Probably not. But even if there is a tiny probability that one extra e-mail, call, meeting or signature makes a difference, the payoff is massive. When you multiply a tiny number by a massive number you get . . . well, it depends on how tiny and how massive. So you might as well sign because it might be massive. (These models are hard to calibrate so I won't try. But here is an irrelevant fact I will mention to bias your views: based on a model estimated by Gelman et al. though, the expected payoff to voting in a swing state is at least on the order of $10,000.)

Another reason people don't like to sign these things is that they don't think these policy issues matter. Foreign aid doesn't work right? The only way to make a difference is to get your hands dirty, they say. But most small projects are utter failures. If I had to put money on it, your money and time would be better spent dealing with (and preventing) mental illness in the U.S., unless you're working on vaccinations or clean water. In contrast, PEPFAR has put 2 million people on ARVs for several years. That's means that an investment of a few hundred thousand signatures, letters, and calls yielded about 10 million life-years or about 100 life-years per signature. If the average impact of signing at Commit in September is something like 100 life-years isn't it worth 2 minutes?

Handouts

I read a good post on Aid Thoughts and commented, further comments below. Their point is that people can become addicted to aid and unable to help themselves if you give them too much help for too long.

Those are points well taken, with one caveat. A lot of people seem to think this problem stems from the scale of aid, but it doesn't. The incentives people face are a product of how the aid is given. For instance, if you give aid on the condition that for every dollar earned in a micro-enterprise you'll invest more money, that aid incentivizes effort. If you give aid unconditionally and with the expectation that it will flow forever, then you're going to be discouraging work.

That said, sometimes people make the point that we don't want foreign aid to last forever. Eventually countries and people should learn to stand on their own two feet. That sounds nice in theory, but horribly implausible. In the U.S. we have a massive, permanent program of wealth redistribution that most people use to supplement their consumption (EITC, Medicare, etc.) for much of their lives. We know unemployment insurance deters finding unemployment so we set a cutoff date, but we know a lot of people will find themselves back on the rolls next year. We know the EITC phase-out deters working overtime, but we accept it as a necessary evil. Aid does deter effort, but we take it as given that in the long run we're going to handing out aid to the poor in the U.S. Is it such a stretch to think we'll be handing out more aid, not less, to the poor in Rwanda as the world becomes more globalized?

Appropriate Technology

“The technology is the least difficult part of the problem,” Mr. Prestero said. “Manufacturing, financing, distribution, regulatory approval: those are major barriers. There aren’t many examples of a successfully scaled product to serve the poor.”

from a very good overview of one appropriate technology project.

Whither Growth?

Probably not from an army of small-scale entrepreneurs. Chris Blattman notes these good points from Abhijit Banerjee:

1. The poor are not particularly well-suited to be entrepreneurs: They neither have the risk bearing capacity nor the human capital

2. Nor will anyone give them enough capital to really grow the businesses;

3. This suggests that the main source of dynamism has to be growth of medium to large firms.

Easterly on Development

I like this summary of Easterly's thoughts about development.

DRI and the John Templeton Foundation from DRI on Vimeo.

I think an important point here is that there are (at least) two perspectives on development. One is that development is about going from being poor to being rich and you achieve this with economic growth. I think this is what he has in mind and why he talks about entrepreneurs, technology, decentralization, and spontaneous development. The U.S. and Europe grew because of technology and free markets. But growth isn't good on it's own--the hope is that it leads to people buying better health outcomes and happiness.

Another view is that development is mostly about getting people the basics. Thousands of kids die every day because of preventable disease and the goal is to prevent those deaths and pick other low hanging fruit. When we look at the history of health in the U.S. and Europe we see most of the gains came recently from improved diets, vaccines, clean water and improved sanitation. From this perspective development is about getting everyone anti-malaria nets, vaccinations, access to clean water, and three meals a day. In the U.S. we ensure all these things (largely) through free public provision (food stamps, public health clinics, infrastructure the government has a heavy hand) so it's reasonable to think we can "do development" by having governments do it with a pot of say $50 billion from rich donors.

Do voluntourists do more harm than good?

I've heard a lot of people throw fits about wasted aid. It would be nice if development projects were more successful or even if even knew which ones worked (see "Taking evidence seriously").

What I don't understand is why people insist it's easy for someone to do more harm than good? Does anyone really believe that in expectation people going on short-term development trips do more harm than good?

There are obvious benefits to the trips. The people who go are probably more likely to stay in the field of international development. They may be more likely to donate money in the future and have a network effect on their peers. They spend money in-country which increases aggregate demand in the economy, surely in good thing for most developing countries (esp. during the recession). How valuable are these actions? Probably, on average, not that significant, but they are benefits?

What are the costs associated with voluntourism? People have provided plenty of examples of how aid projects can not live up to their potential. But that is different from doing harm. I'm stunned that so few people can tell the difference between tripping someone and watching them trip when you might have prevented it. As far as I can tell (this may be revised over time) voluntourist's are bad because they might annoy some people who don't want them meddling in their community and they might make those people feel they can't help themselves. Those don't sound like big costs and it's hard to understand why, if someone is such a nuisance, people just let them hang around.

Someone should put together a compelling case for why students shouldn't do their little touristy trips abroad that no one thinks helps much but I can't imagine, on average, do more harm than good.

Development Contradictions

All debates are plagued by some messy thinking here and there. But "development" debates, I've noticed, tend to have particularly murky thinking. I think this is rooted partly in the political and racial overtones and partly in the complexity of the issues (they tend to be multi-dsiciplinary). I've complied a list of my top six example of doublethink in development.

1. Some people are against farm subsidies because they lower food prices worldwide--Haiti was flooded with cheap "Miami rice," West Africans complain about cotton subsidies, etc.

But when food prices spiked in 2008 everyone was in outrage. We need to increase supply to ensure low enough prices for the urban poor. So which is it--are high prices good or low prices good? (There is a nuanced position here but I didn't hear anyone taking up that complexity.)

2. A lot of people are for a "human dignity"-based approach. We should listen to what people need and make the technologies they want. The patronizing attitude that we know what they need is wrong.

Then I hear this classic D-lab story: someone built a latrine with locks and the ownered ended up using it as a shed. This is explained as an example of a failed project. But wasn't the result good? The owner chose what they needed (a shed, not a latrine). There is also the malarial net version: they give out nets, people use them to fish, Easterly says this was a waste. But shouldn't some people say "well look they needed a fishing net more than a malarial net?" (There is again a nuanced position here that acknowledges on some issues, esp. health, we know best and should be patronizing.)

3. Some people love this idea of making everything a business. Sure, Nike pays low wages but it's not exploitation, it's the only way to develop. Micro-finance institutions charge usurous interest rates but it's better than the moneylenders.

But then when poor people contract with Millennium Villages to make money giving tours to American tourists in Rwanda, it's a bad thing. It's an affront to human dignity and exploitation. What?

4. Some people think we need to sell things, otherwise people won't understand the value of them. And in any event if you charge a price you ensure the people who need the limited resource are most likely to get it. Plus, it's bad to give things away because it promotes a culture of dependency.

But one tour of India let tourists donate goats to one village they toured. The "problem" was that they contracted with the only guy who could speak English in the village and he just took the goats and sold them. It was, of course, an outrage. It was fostering corruption in the village.

But doesn't it follow the principles we like--allocating the few goats efficiently, promoting a business, making sure people put the goats to use?

5. Daimbisa Moyo wants to end aid. But then says she only means development aid. Humanitiarian aid for health project is necessary and NGOs are ok in her book. But she dislikes PEPFAR. What gives? Is she for AIDS treatment or not? I have no clue after reading the whole debate and her book. You'd think the most influential book in development in several years could be clear on a basic point like that.

5.1 Moyo, like many others, notes that donations can be bad because they put Africans out of work. If we just donate bed nets then it will put the Africans who could have gone to work making the nets out of business. This simple story is not so obviously wrong. But it should be to economists like Moyo. It goes by the name broken window fallacy. I agree that a more complicate story, which emphasizes one of: the value of learning by doing, increasing returns to scale, and positive production spillovers. But people need to note those things if they're important, and explain which ones.

6. The biggest contradiction in development is between the constant exhorting that our goal is to help them help themselves and the reality that we don't. Paul Farmer makes this point--although people want to pretend they are in a position of equality with the people they help they are not. Your health care is better. You can go home. If you live in the community you'll never be treated as an equal, if you're not black. Some people try to become equals by living in the communities for extended periods of time. But how much can that help? Most people argue that the people are smart and are doing what they can for themselves. If you become one of them then you have nothing to do that they haven't tried. Also, the more context specific the project the less likely it is to scale.

If people really believed the goal was to help them develop themselves they'd spend their time on anti-corruption measures (these are complicated), lobbying to reform trade deals, including cutting farm subsidies, and raising funds for NGOs that employ local people to do the work. We'd also lobby for immigration to let more Africans come here, get skills, send remittances, and eventually go back with their human capital and be leaders, entrepreneurs etc. But I don't see a lot of people working on any of the above.

Taking evidence seriously

Banerjee (brief) on taking evidence seriously

Tim Harford's experimentalist manifesto

Assorted Links

1. Good analysis of Rand Paul.

2. Are the Republicans governed by extermists or corporations? There is some tension in these theses.

3. Big story only black people are allowed to speak the truth about. Perhaps that, not racism, is why it get too little press.

4. "the fastest-growing group . . . are men who self-identify as 'mostly straight' as opposed to labels like 'straight', 'gay', or 'bisexual." I don't know what to make of that.

5. Landsburg on psychiatry. I don't think this is fair. It would be like economists asking the public what should count as a recession or unemployment, or biologists asking what should count as life.

6. Cell phone banking in Haiti. I wish I knew more about M-PESA.

7. Is Chinese education as great as everyone thinks? No.

8. I haven't kept up with financial regulation but I liked this summary

9. "Horizontal" health care programs were all the rage a few year ago. Now a Gates Foundation study says they don't work. I'm a little skeptical of the methods based on this AP report. Easterly weighs in.

10. A high school in MA is forcing every student to buy a MacBook.

11. Maureen Dowd wrote a good column for the first time in her life.

12. Ezra Klein on the word "bailout"

13. "Good" professors are easy professors.

14. More debate on whether the Internet is good for you

Technical Jargon about Growth

. . . the baseline growth theory blithely assumes away poverty traps (for example, in the famous Inada condition of the first day of growth theory) . . .

From this old book review. I wish I knew more about growth theory, but I did Jeff Sachs' commentary in particular. Everyone interested in development hates Sachs for one reason or another. But I like him.

Links

1. Is foreign aid bad? No

2. 1999 TIME story on AIDS drugs. (Related: UAEM.) Do health beat writers still have their heads that far up their ass?

3. Yes. These guys do. Leonhardt cleared some of this up a while back.

4. More on foreign aid, RCT edition.

5. If you think Arizona is cruel to immigrants, wait until your read about Mexico.

6. Does travel make people happy? No one knows. I suspect it doesn't. Vacations probably do.

7. An old TIME story about positive psychology