THE WHITE MAN’S BURDEN

William Easterly, Penguin Press, 2006 New York City,New York

Reviewed by Stan Rowland

Charlotte suggested I get this book. In reality it is a strong rebuttal of Jeffery Sach’s work,The End of Poverty. Easterly’s thesis is, over the last 60 years USAID’s, World Bank’s, etc., top-down method to eradicate poverty has been a total failure. He is, in reality, advocating the bottom-up CHE approach to dealing with poverty, though he does not know it.

Planners versus Searchers

Easterly calls the traditional approach of top-down the Planners Approach while he calls agents for change in an alternative approach the Searchers. He compares the two:

Planners:

  • Announce good intentions but don’t motivate anyone to carry them out while
  • Raise expectations, but take no responsibility for meeting them while Searchers take responsibility for their action.
  • Apply global blueprints while Searchers adapt to local conditions.
  • Determine what to supply while Searchers find out what is in demand.
  • At the top lack knowledge of the bottom while Searchers find what the reality is at the bottom.
  • Never hear whether the planned got what it needed while Searchers find out if the customer is satisfied.
  • Think he knows the answer and looks at poverty as a technical engineering problem that his answers will solve, while the Seeker admits he does not know if his answer will solve the problem. He believes that poverty is a complicated t5tangle of political, historical, social, institutional and technological factors. He hopes to find the solution to individual problems through trial and error.
  • Believe outsiders know enough to impose solutions while Searchers knows only insiders have enough knowledge to find solutions and that most solutions must be homegrown.
  • Have the rhetorical advantage of promising great things.

Searchers:

  • Have better incentives and better results,
  • Could find ways to make a specific task work if they could concentrate on that task instead of making Big Plans.
  • Have already achieved tangible results but they have had little chance to deliver in the area of global poverty because foreign aid has been dominated by the Planners.
  • Find things that work and get some reward by doing it.
  • Ask the question what can foreign aid do for poor people?
  • Lack of feedback is a glaring flaw that Planners perpetuate.
  • Bureaucrats, who follow planners, make gradual incremental improvements which are disjointed.
  • Planners have no accountability to see results which motivates a whole organization to change.
  • Rich people have no understanding of the poor and they control what is done.
  • The needs of the poor do not get met because they have little money or political power with which to make their needs known. Neither can they hold anyone accountable to meet their needs.
  • The poor don’t have to wait for the West to save them as they are their own best Searchers. The poor have accomplished far more for themselves through home grown development than the Planners have accomplished for them.
  • Only a few elite Westerners can be Planners while all can be Searchers.

Throughout the book he keeps showing that Planners keep pouring resources into a fixed objective, despite many previous failures and despite the track record that suggests that the objective is infeasible or the plan unworkable.

Easterly also takes to task the Millennium Development Goals (MDGs),as it is a Planners approach.

The Legend of the Big Push

Easterly says “The Big Push Legend” is the poorest countries are in a poverty trap from which they cannot emerge without aid. These investments and actions are needed to remove the constraints to development, after which they will take off. Then aid will no longer be needed. He says that the evidence does not support this premise, and he spends the rest of chapter proving this.

One premise is that the poor are so poor they cannot save and accumulate capital and mustuse their entire income to survive. The planners say that the poorest countries increase will be zero, while in reality the poorest fifth of all countries increased their capital at the same rate as the other four fifths. This is just one of his many comparisons.

He says “The Big Push Legend” is not going to work if the problem is bad government rather than the poverty trap. He says bad government is a main reason for the growing disparity between rich and poor countries, which is in direct opposition to Sachs. He also says they found no results that show that good government policies increased growth. The theory that aid causes additional growth is not substantiated.

You Can’t Plan a Market

Easterly says the free market depends on bottom-up emergence of complex institutions and social norms which is difficult for outsiders to understand. This cannot be planned, but it happens from the bottom-up, inside-out.

Adam Smith, in 1776, taught that some of us have innate advantages in doing some things and innate disadvantage in doing others. Market exchange makes it possible for us to determine what we are good at and to specialize in doing it. We then trade what we do well with others who do other things well which we desire.

Different societies have different amounts of social capital or trust, which is how much people follow certain rules without coercion. Studies have found that countries with low trust have lower economic growth. You must trust strangers for good growth as most societies trust kin-folk. Low income countries are low trust societies. Ethnic specialization takes place more in poor societies than rich societies. Social norms are more effective in communities with face-to-face interactions.

The West cannot design a comprehensive reform for a poor country that creates benevolent laws and good institutions to make markets work. A good market system evolves through a complex bottom-up search for social norms, networks of relationships, and formal laws and institutions that play off each other.

Planners and Gangsters

The Western Planners say that poor countries’ governments are bad and we need to get tough to with the bad government in exchange for aid. Sachs says poor country governments are not too bad and that countries should be free to determine their own development strategies.

Democracy is not a quick fix for poor countries, just as free markets are not a quick fix. Democracy is an intricate set of arrangements that is far more than holding elections. A problem with democracy is the tyranny of the majority. If a majority of a society hates a minority, they may choose to abuse the minority. Social norms may be the most difficult part of building a democracy. Minority rights are even more important in ethnically heterogeneous poor countries. An oligarchy, rule by the rich few, could have decent economic growth. The elite protect only the rich who are incumbents and erect barriers to the entry of newcomers.

Easterly says democracy in unequal agrarian societies tend not to last as it alternates between populist demagogues attempting redistribution and the rich striking back with military coups. Wantchekon shows that new democracies in Africaare mainly in resource poor places. Oil producers were in the fourth worst of the world countries in democracies. Without protection for minority rights, majority ethnic groups can exploit minority ones.

He goes onto say, badly run, corrupt countries are the poorest. As one moves from least democratic countries to the most democratic countries, income increases by a factor of ten. The foreign aid Planners have never figured out how to deal with bad governments. Donors have not figured out how to make good governance happen or how to be selective about whom to give their money. He also points out that there is no correlation between the amount of aid given and how corrupt the country was. Bad government can sabotage the most well intentioned aid. Another critical government input for development is having good public services.

Some progress in government performance in Africa is taking place. When donors and governments work together sometimes they achieve something, even when it is a piecemeal approach. In fact, a piecemeal approach that can be measured many times shows greater progress than more general programs that cannot be measured.

Today IMF and World Bank are not telling governments what to do and therefore poor countries must guess what IMF wants them to do which leads to more confusion and lower results. The international community has supported governments that are bad, but who were against communism. They ended up supporting gangsters who just called themselves governments. This led to a worsening of any development in those countries because of bad, corrupt government.

The UN Millennium Project argues that bad government is not the primary problem facing poor countries and if there is bad government, it is due to a lack of money. The question becomes whether money given to bad governments is reaching the poor.

Today official aid agencies don’t know how to change bad governments into good governments through foreign aid. Bad governments have far deeper roots than anything the West can affect. Don’t expect Western governments or aid agencies to change bad government into good ones. When working with the government doesn’t get results for the poor, aid agencies should try something else.

The Rich Have Markets, The Poor Have Bureaucrats

In rich countries, Searchers work wonders in finding and developing markets. Bureaucratic managers have the incentive to satisfy rich country vanity with promises of transforming a poor country rather than simply helping poor individuals. Foreign aid Planners get little or no feedback from the poor while Searchers concentrate on hearing and responding to the poor. The main customers are the poor individuals in that country, not the country as a whole.

Visibility gives more power to Searchers while invisibility shifts power to the Planners.

Aid agencies answer to many different bosses which leads to not having definable performance reviews. In dysfunctional bureaucracy there is no one to blame when something goes wrong. There must be someone to be accountable to for success. How do you identify programs that work?

  • They devote effort and activities that are more observable.
  • They will have tangible, measurable goal.
  • There is a clear link from their efforts to their results.
  • There are fewer measurable objectives, not a myriad of ones.
  • They will be specializing in solving particular, solvable problems, not a broad utopian goal.
  • When there is more information than what the customer wants.
  • When agents at the bottom are motivated to act.
  • Dedicated professionals are recruited to work with fewer people being hired because of politics.
  • A visible, piecemeal, individually accountable outcome likely to be addressed by Searchers is much more likely to succeed.

Aid agencies spend a lot of time writing reports that takes away time from producing results. Frequently the aid agency is rewarded with contracts for setting goals, not reaching them. There is little feedback from the intended beneficiaries. Aid agencies consistently refuse to fund maintenance and operating supplies as they like to provide funds for infrastructure projects. Aid agencies talk about sustainability that usually guarantees that a program will not be sustainable. Agencies need to begin to fund maintenance and operating funds for supplies, salaries, etc.

Planning that aids visionaries leads to a top down approach while at the same time they emphasize local ownership, which are diametrically opposed. This type of participation diminishes the poor who have little to say of what they want and need. Aid agencies are looking for universality rather than specificity. They are looking for world wide best practices versus what works in each locale.

If aid agencies would narrow their focus on solvable problems, much progress could be made. Agencies must be held accountable for what their programs achieve, not for global goals. Allow different agencies to specialize in different areas. There needs to be independent evaluation done by non-aid agencies who can really measure if the desired outcomes are achieved.

At the center of poverty is the fact that the poor are weak.Little or no feedback is received from the beneficiaries nor the ability to learn from failures. The control of resources should be given to the poor themselves allowing them to choose what they most want and need.

Bailing Out the Poor

In reality, Easterly is proposing that effective agencies would do the following the following ideals:

  • Agencies work better with fewer goals.
  • Unaccountable agencies are worse than accountable agencies.
  • Top-down Planners suffer from information shortages about reality on the ground; therefore, bottom-up Searcher agencies have greater impact.

IMF’s approach is simple. A poor country runs out of money when its central bank runs out of dollars. The central bank needs an adequate supply of dollars so that residents who want to buy foreign goods can change their domestic money into dollars and so that poor country residents, firms, or governments who owe money to foreigners can change their local money into dollars to make debt repayments.

The real test of IMF’s approach is whether it gets results on stabilizing macroeconomics disorder. IMF has been weak in this regard. Countries fail to fulfill the conditions on their own loans and still get new ones. IMF has Planners Disease which keeps doing the same thing over and over again to reach a never-reached objective.

Easterly draws some conclusions concerning IMF:

  • There are some poor countries that are so politically and institutionally dysfunctional that IMF should not be dealing with them.
  • IMF needs to find a way to get rid of its intrusive and complex conditionality.
  • The IMF needs to shed its excessive self-confidence that it knows in detail what is best for the poor, based on an emphasis of the whole economy that shares the presumptions of utopian planning.

The Healers, Triumph, and Tragedy

The focus of this chapter is on HIV and the statistics we have heard before. He discusses the following in relation to HIV:

  • The focus on drug prices understates the expense and difficulty of treatment.
  • On testing, people first need to be tested to see if they are HIV positive and then regularly tested if positive to follow their viral load. Then to see if the drugs are lowering their viral load and to see how the drugs toxic effect is affecting the person.
  • The real figure of treating HIV even with greatly lowered drug prices is at least $1500 a year. This approach is fostered by those who believe that all people have the right for access to life saving drugs. But others say what about the same rights for other diseases that are affecting greater numbers at a far lower cost of only $5 to $40.
  • A well-established public health principleis that you should save lives that are cheap to save before you save lives that are more expensive to save.
  • Easterly pushes prevention, but fully denies abstinence. He does not buy the HIV mantra that prevention is impossible without treatment.
  • He then spends time dealing with the dysfunctional health care systems.

From Colonialism to Postmodern Imperialism

This chapter argues that the old conventional wisdom was correct; the previous imperial era did not facilitate economic development. Instead it created some of the conditions that bred occasions for today’s unsuccessful interventions, failed states and bad government. Colonialism left behind independent states with arbitrary borders that had little chance to build popular legitimacy. Naturally formed states outperformed artificial colonial creations.

Invading the Poor

Military intervention is the perfect example of that this book argues should not be done. The West operated societies with virtually no feedback or accountability. He creates a table that shows where military intervention took place and the disastrous results from doing so. Easterly also looks at particularly horrible country examples where this took place; including Nicaragua, Quilali, Angola, Haiti, Cuba, and Bosnia. And we are still at it.

The Future, Homegrown Development

Success is built on self-reliance and doing things by insiders rather than being enforced plans by outsiders. Most success in the world’s economy are happening in Eastern and Southern Asia, but not as a result of a global plan to end poverty from homegrown reasons and work. The West plays a very small part in this. He documents Hong Kong, Singapore, and China as prime examples. He also points out the progress made by India and Turkey, Botswana, and Chile.