Easterly on Africa

by Don Boudreaux on March 23, 2007

in Foreign Aid

Bill Easterly — who recently taught a seminar for our graduate students here at George Mason — has this nice op-ed in today’s Wall Street Journal.  It’s entitled "Africa’s Poverty Trap."  Here are Bill’s final three paragraphs:

The cowed IMF and the World Bank never mention the
words "free market" in thousands of pages devoted to ending poverty.
Even the World Bank’s 2005 World Development Report "A Better
Investment Climate for Everyone" doesn’t mention the forbidden
words.World Bank economists are so scared of offending anyone on Africa
that they recite tautologies. The press release describing the findings
of the 2006 World Bank report "Challenges of African Growth" announces:
the "single most important reason" for Africa’s "lagging position in
eradicating poverty," finally "has been identified." It is "Africa’s
slow and erratic growth." The next World Bank report may reveal that
half a dozen beers has been identified as the single most important
reason for a six-pack.

Today Unctad (in its 2006 "Big Push" report) still
offers to make possible government "infant-industry policies" for
"small, fragmented economies" by setting up a regional market,
presumably so Burkina Faso and Niger can help absorb the potential
output of the Togolese automobile industry. Unctad lacks everything but
chutzpah: All aid to Africa, it said, should be moved into a new U.N.
Development Fund for Africa, to which Unctad helpfully offered its
"in-house experience," by creating a Commission on Aid and Development
inside of Unctad. Unctad will thus permit the economics of Africa to at
last "escape from ideological biases," so we can finally understand
"why economic activity should not be left entirely to market forces."

The free market is no overnight panacea; it is just
the gradual engine that ends poverty. African entrepreneurs have shown
what they are capable of. They have, for example,launched the world’s
fastest growing cell phone industry to replace the moribund state
landlines. What a tragedy, therefore, that aid agencies have foisted
the poorest economics in the world on the poorest people in the world
for 50 years. The hopeful sign is that many independent Africans
themselves are increasingly learning the economics of how to get rich,
rather than of how to stay poor.

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{ 3 comments }

Joe Roberts March 23, 2007 at 8:54 am

I am just now reading Easterly's book on African aid entitled "The White Man's Burden: Why the West's Effort to Aid the Rest Have Done So Much Ill and So Little Good."

He has a lot of concrete examples of how grandiose plans from aid bureaucracies usually end up not helping the poor and only padding the budgets and salaries of the bureaucrats.

His "proposals" are much more modest in scope, but I suspect more far-reaching over time, and involve small-scale and individual action. They are probably fatally flawed because they do not require a large contingent of aid bureaucrats to administer and help "save" Africa.

golddog March 23, 2007 at 10:22 am

"The next World Bank report may reveal that half a dozen beers has been identified as the single most important reason for a six-pack."

My favorite line.

M. Hodak March 23, 2007 at 5:14 pm

Speech therapist: OK, repeat after me: free markets

UN: Fffffffffffrrrrrrr…fffffff

ST: Good try! OK, let's try it again…

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