Bah humbug!

Just finished reading William Easterly's A White Man's Burden. In it he describes the unspoken system failure at the heart of the aid merry-go-round:

"I feel like a kind of Scrooge pointing out the ... tragedy [of ineffectual aid] when there is so much goodwill and compassion among so many people to help the poor ... the foreign aid bureaucracy has never quite gotten it - the central problem is that the poor are orphans: they have no money or political voice to communicate their needs or motivate others to meet those needs".

When you buy something in a market or make a vote in a democracy you are sending feedback to the seller or politican. This makes them accountable and pressures them into making decisions whic are your interest, rather than theirs. As the aid system is largely unaccountable the organisations the poor receive a dreadful service.

Since there is no direct line from the poor to the people making decisions, there is a principal-agent problem: aid agencies have too many objectives and each objective is the responsibility of several aid agencies. That is, no one faces the chop when the thing goes wrong.

Having described an all-too-familiar programme failure (this time by CIDA), Easterly writes:

Aid agency watches should tough on such disasters, if only with the aim of strengthening the accountability lobby in foreign aid... The way forward is politically difficult: truly independent evaluation of specific aid efforts... only outside political pressure on aid agencies is likely to create the incentives to do these evaluations.

In the end Easterly sees the way forward as being reliant on pressure from the people who stump up the cash for international develompent: taxpaying citizens.

Mobilize the altruistic people in rich countries to put heat on the agencies to make their money actually reach the poor, and to get angry when the aid does not reach the poor.

We're angry all right!

PS. Check out Easterly's ranking of aid agencies here.