Алистер Смит - The Dictator's Handbook - Why Bad Behavior is Almost Always Good Politics

Ideally, to assess the effectiveness of aid, the international community should undertake controlled experiments, giving aid to some randomly chosen nations and withholding it from others. But since it is unlikely aid will ever be allocated in this way, economists need to use complex (and controversial) statistical procedures to adjust the results according to which nations get treated. Rather than delve into these convoluted procedures, we offer some simple evidence based on the United Nations Security Council (UNSC).

The UNSC is composed of five permanent members (the United States, Russia, China, Britain, and France) and ten temporary members. The temporary members are elected for two-year terms on the Security Council and they are ineligible to be reelected in the two years after their term expires. Election to the UNSC is highly prestigious and, as it turns out, valuable too. Unfortunately, its value comes at a cost: bringing hardship for the people in many of the countries that get elected. On average, nations elected to the UNSC grow more slowly, become less democratic and experience more restrictions on press freedoms than eligible nations that are not elected.15 For instance, during a two-year term on the UNSC, the economy grows an average of 1.2 percent less for nations elected to the council than for nations not elected. Over a four-year period (the two years on the UNSC and the following two years of ineligibility), the difference in growth averages 3.5 percent less for elected UNSC members, that is, nearly 1 percent per year. The effects are much stronger in autocracies than democracies.

The effects of council membership on growth are fascinating and should cause us to question why the UN is held in such high regard. They also provide an important piece of evidence about the impact of aid. Nations elected to the UNSC get more aid. A UNSC seat gives leaders valuable favors to sell in the form of their vote on the Security Council, and the aid they receive results in worse performance for their economy. Recently there has been a profusion of studies that show that nations elected to the UNSC get financial rewards from the international community. They get more US and UN aid, better terms and more programs at the IMF, World Bank, and a host of other institutions. 16 Membership on the UNSC gives national leaders a say in formulating global policy. Many leaders, particularly those from autocratic nations, appear to prefer to sell this influence rather than exercise it on behalf of their people’s interests.

UNSC membership comes as close to a randomized test as we are likely to get. Although who gets elected is not random, it is unrelated to the need for aid. Indeed, population size appears to be the only systematic determinant of UNSC elections. African nations, in particular, appear to have adopted a norm of rotation. Nations are elected simply because it is their turn. The key point is that prior to their election, UNSC members behave no differently from other nations. But once elected they actually underperform. To return to the medical analogy, nations elected to the UNSC are not sicker than nations not elected. They get an extra shot of medicine (aid) and it makes them sicker (poorer, less democratic, and less free press).

UNSC membership gives leaders the opportunity to sell salient policy support. As we have seen over and over again, autocrats need to pay off their coalition. Aid provides the money to do so and that helps leaders survive. Further, aid encourages autocrats to reduce freedoms for two reasons. First, aid revenue means leaders are less dependent upon the willingness of people to work, so the leader does not need to take as many of the risks that arise from freedom, risks they must take when their revenue and worker productivity depends upon allowing people to communicate with each other. Second, the policy concessions are generally unpopular, so leaders need to suppress dissent. UNSC membership brings prominence and prestige to a nation. For an autocratic leader it also means more easy money. For the people of autocratic nations the UNSC means fewer freedoms, less democracy, less wealth, and more misery.

The historical record shows that aid has largely failed to lift nations out of poverty. It is perhaps ironic that while aid affords the resources to alleviate poverty and promote economic growth, it creates the political incentives to do just the opposite. As Edward Walker, US ambassador to Egypt (1994–1998) succinctly put it, “Aid offers an easy way out for Egypt to avoid reform.”17

An Assessment of Foreign Aid

So what are we to think of foreign aid? Is it good for policy, or just good politics?

It has certainly had its successes. Foreign aid, in the form of the Marshall Plan, lifted the predominantly democratic nations of Western Europe out of economic disaster. But the deck was stacked in the plan’s favor. The United States wanted to promote an economically powerful bloc as a means of combating Soviet expansion. The plan therefore promoted economic growth. Democrats need policy success and so were happy to comply with US policy goals in exchange for substantial aid. Yet as we now know, subsequent aid donations have failed to replicate the success of the Marshall Plan.

What aid does well is help dictators cling to power and withhold freedoms. And yet, the quest to make aid work for the poor is phoenix-like in its ability to rise and rise again. Or, come to think of it, maybe, like Sisyphus, we just keep climbing the same hill only to fall down again.

Every decade or so, donor nations launch new initiatives to “get aid working.” The most recent manifestation of this is the Millennium Development Goals. Set up by the United Nations Development Program and adopted by world leaders in 2000, this program sets poverty, health, gender equality, education, and environmental targets to be reached by 2015. For instance, the poverty eradication goals call for reducing by half the number of people living on less than a dollar per day. Commendable as such declarations are, saying you want to make poor people richer or at least less poor and actually doing so are completely different things.

Millennium Development Goals are not the first such declaration to end poverty. They were preceded by efforts to attain “self-sustained growth” first, in the 1940s and 1950s through infrastructure development; then with the US P-4 program to make scientific and technological breakthroughs readily available to poor countries; followed in turn by John Kennedy’s declaration that the 1960s would be the “Decade for Development.” The goals, set back in the late 1940s, remain the same and scant evidence suggests that the world is closer to achieving those goals than it was in the 1950s or 1960s. William Easterly has discussed the hope and optimism that accompany these roughly once-a-decade initiatives. He laments that while each new plan says it will be different, they repeat the same errors of the past. He argues the bureaucracy involved in giving aid ensures funds are given in ways that impede rather than promote economic activity. Poverty persists.18

Still, we don’t need to be completely pessimistic about aid. Our knowledge of how it works has greatly improved. For instance, we know that aid works much better in the presence of good governance (just as we know that more often than not it goes to places with bad governance).19 Proponents of development assistance point to the success of NGOs undertaking directed programs within nations. Some of these programs have produced wonderful successes. For instance, in 1986 the Carter Center started a plan to combat Guinea worm disease, a parasite transmitted via dirty drinking water that affected about 3.5 million people in seventeen nations across Asia and Africa. By 2009, worldwide infections had been reduced to about 3,000, mostly in southern Sudan.