Friday, February 24, 2006

Planners vs. Searchers:

Prof. Easterly's Speech:
"Planners vs. Searchers in Foreign Aid"
ADB Distinguished Speakers Program
18 January 2006

(Assigned reading for Wednesday February 22nd. J.Z's comments and questions follow here. You can use the comment feature for your thoughts.)

One of the first things that strikes me about Easterly's speech is the way he comes across in it, i.e. a classic maverick. Having worked in the field of foreign aid and development economics (including with the much-derided WB) I guess we can properly call him a born-again, saved, ex-planner! In fact, when I read this, it reminded me of another title I have often seen on the bookshelves and wondered if Easterly had in fact written that book in disguise: The Confessions of an Economic Hit-man!
It is clear that as an ex-planner, his experience gives Easterly a lot of credibility in critiquing the planners, as he does in great detail (and somewhat harshly) in his speech. After reading The Elusive Quest for Growth, this was a welcome read from Easterly, for me at least.

I found his discussion of the current incentive systems in the field of foreign aid particularly convincing. There does seem to be a moral hazard when the myriad aid agencies are all drawing up plans that -incidentally- always call for an increase in foreign aid and ODA.

I also liked very much his acknowledgement of the complexity of the poverty phemonemon. On page 3 he says: "Poverty is a complicated tangle of political, social, historical, institutional, and technological factors." In its shying away from the oft seen characterization of poverty as a purely economic -or even more rediculously, financial- problem, this is a good characterization -though no definition- of poverty. However, interestingly, I spotted a significant omission. He does not characterize poverty as owing partly to cultural factors. I recall our earlier discussions around this subject and would like to get other people's thoughts on this. One can always stretch political and historical factors to overlap with culture, but I think Easterly's omission of cultural factors is significant still -and welcome.

One of the questions that came to me over and again is whether many of his criticisms against the general category of "Foreign Aid", i.e. foreign aid is wasterful, bad, ineffective, "neither a democracy nor a free market", etc. could better be levied against the current operators and actors in the field of Foreign Aid. There is a fine line here and I may sound confusing. But it does seem to me that foreign aid may remain an effective policy option in the presence of a different incentive structure and a different set of actors who are accountable and responsive to the intended beneficiaries' demands. It does not make sense to me to deride foreign aid itself for what has been the chronic failure of foreign aid administrators. I am not completely convinced by Easterly's argument that a calculated influx of foreign aid and investment by donor countries has been a complete failure, or that they would still be a failure under different circumstances.

I found it interesting that according to Easterly, economic aid and assistance both from Western public and governments might be motivated as much by altruism and noble goals as by a need to achieve the "SIBD catharsis" for their own consciousness...

The "Gordian knot of CDF/PRSP/IF/MTEF/MDG planning."
Enough said.

Sometimes when listening to people or reading texts that are weighed down by a general abundance of vague, overly-generalized, and intellectually labored phrases and words, I get the sense that the other party is bullshitting me and has no idea about the subject they are talking about. I think Easterly makes the same point about the foreign-aid-industrial-complex (to slightly tweak Eisenhower's phrasing of the military-industrial complex). For example terms like: Action Matrix, Integrated Framework, Incorporated Prioritized Action Plan, Comprehensive Development Framework, PRSP, etc. generally suggest s lack of confidence of the writer/speaker with the subjects in question, i.e. distant realities on the ground in Sub-Saharan Africa, South-East Asia, and the Bolivian Jungles.

Or consider the awkward wording in this quote from a UN report on the progress (or lack thereof) on achieving the MDGs:

"The decline in hunger is slowing."

I guess next would be, "An overall decline is observed in the decline of hunger according to the "Integrated Comprehensive Global Universal Hunger Matrix Strategy Framework: Getting Serious about Causing an Increase in the Level of Decline in Hunger"!
Wait, that actually sounds somewhat like Aidinglish (otherwise referred to as "Donor Language"!

Easterly's discussion of "the political economic of aid in the rich countries" was especially interesting (pages 8-9), and it favors planners and celebrities as opposed to searchers and those who "toil in the field mostly unnoticed by the rich country public and media." Reading this, and a latter passage on how aid flow to the national governments (often euphemistically called "the countries") produces fewer good results than to the non-or-for-profit non-governmental sectors, including non-profit NGOs, I was reminded of the brief Foreward to an Afghan NGO's Annual Report for 2005 that discusses similar themes around government and non-government competition and cooperation for implementing foreign aid. I will bring a copy of this to our next class session.

In the first paragraph of the conclusion Easterly writes: "While the aid community planners were dithering about whether to increase foreign aid by a few tens of billions for all poor countries, the citizens of just two large poor countries -India and PRC- were generating an increase in income for themselves of $715 billion every year."
I think there more factors had to do with the India-PRC success than simply the absence of planners here. For instance Easterly fails to mention that both of those countries at more than 1 billion people each have huge domestic markets that could impact economic development and infact industry development in ways that would not be possible for many small and underdeveloped African countries. Furthermore, both had effective governments (in one case, an undemocratic one until recently devoted to five-year plans) that was again absent in the failure cases...

Towards the end, Easterly writes: "The best aid plan is to have no plan."
While he has gone to lengths to prove this point, I think that this borders on "nihilism in economic development philosophy" and I am even tempted to be inordinately presumptuous and correct him as "what you mean is, the best aid plan is to have different, more effective plans." Elsewhere Easterly clearly suggests a change in plans, rather than a total abandonment of plans. That really sounds nihilistic and pessimistic to me (Amartya Sen's review of his upcoming book in Foreign Affairs is titled The Man Without a Plan). Because no matter whichever direction foreign aid goes, it is bound to still be ruled by some sort of a plan...

Lastly, I had a sense while reading some of Easterly's harsher and more mock-toned allegations against Sachs that he might himself be a little carried away (maybe a little) by the intellectual-scholarly turf-war (jealousy? afterall Sachs is somewhat the EconEev and EndPoverty celebrity, after Bono of course) that he is apparently engaged in with Sachs. Here is some of my evidence for this claim: Easterly on Sachs: surprisingly bad and an exchange of Letters to the Editor of Washington Post between the two; and also Sachs v. Easterly.

And finally, some other good links that I looked at while reading Planners vs. Searchers:

Easterly's review of Sachs' The End of Poverty in Washington Post:
A Modest Proposal

A further article driving the point in Planners vs. Searchers home, in Washington Post:
The West Can't Save Africa

Webpage on Sachs' book The End of Poverty on columbia website, with interesting graphs and figures:
Facts on International Aid

The writer of one of the retorts to Easterly's criticism of Sachs cited the following page as an instance of where incrementalism and small steps is actually part of the MDGs:
Millenium Development Goals Quick Wins

Lastly, some positive reactions to Easterly's Planners vs. Searchers speech from someone who was in the audience:
My Kind of Economist

OK. That is about all my thoughts on Planners vs. Searchers. I hope you all get the time to reply before next Wednesday (or since R.R. will be back too, we can spend a little time going over it in the beginning on Wednesday before getting to Rodrik.)

More Aid!
(That is See You Later in Aidinglish)



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