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Soft drinks and cola are ubiquitous in the neighborhood, with many residents drinking at least two cups per day.

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Maputo, Mozambique: Mafalala Bairro is one of about 50 slum suburbs that radiate outward from the bustling concrete downtown of Mozambique’s capital city. Mafalala is Maputo’s oldest informal settlement. To meander along its narrow pathways is to trace the footsteps of numerous national heroes. An incubator of the struggle for independence that is often compared to South Africa’s Soweto, Mafalala consists of labyrinthine alleyways that once surged with anti-colonial resistance. Prior to the end of Portuguese rule, bold poets Noémia de Sousa and José Craveirinha met clandestinely in Mafalala’s haphazard zinc shelters. The neighborhood was also home to Mozambique’s first two presidents, revolutionary fighters Samora Machel and Joaquim Chissano.

A century before Mozambique’s independence, migrants from northern Mozambique and the Comoros Islands introduced rituals called nifalala—meaning “music and dance”—to Mafalala, and the neighborhood never again knew silence. Today, women swathed in capulana cloths and bearing white mussiro-painted faces rehearse Tufo-style routines; teenagers carefully study Azagaia’s socially conscious rap songs blaring from shop speakers; the soulful melodies of Bryan Adams and Phil Collins waft without irony from yards where women pin up laundry; and electric bass vibrates through the walls of Lima’s Bar, where men unwind after the day’s toils.

In Mafalala, the main thoroughfare bursts alive early each morning as women and men set off for ganho-ganho, or grinding itineraries of labor, in the ever-expanding informal economy. Lighthearted chatter in the marketplace and neighbourly drop-ins throughout the afternoon hardly betray the many daily challenges that wear heavily on cheery demeanours. Mozambique is one of the poorest countries in the world, where half of the population falls below the poverty line even in urban areas. The vast majority of Mafalala possesses little sanitation, basic electricity, and few social services. During the rainy season, flooding causes pit latrines to overflow, contaminating the streets as waste flows to open sewers.

Most pressingly, Maputo has the highest cost of living in the country. In September 2010, a price spike in bread was compounded with the elevated cost of fuel and public transport fares. Riots ignited in the avenues along Mafalala’s perimeter, leading to ten deaths and hundreds of injuries after police intervention. Very few of the neighborhood’s impoverished residents have access to land plots, therefore the majority of their income is spent on food purchases. Preparing street food and setting up bancas, or foodstands, have become common ways to supplement incomes. Yet, the rise in food price continues to compromise poor urban dwellers’ ability to purchase quality foods for healthy eating. Growing dependence on cheap alcohol, fried foods, and new processed snacks manufactured in Mozambique exacerbates malnutrition, which paradoxically manifests as both hunger and rising obesity.

While Mozambique remains a predominantly rural country, its urban centres are rapidly expanding, as is the case across Southern Africa. 70% of all urban residents in the region currently reside in informal housing, and Southern Africa will be nearly 75% urbanized by 2050. The ongoing urbanization of poverty necessitates increased attention to the vulnerabilities that urban life brings. Uncertainty regarding the day’s wages and obstacles to adequate nutrition characterize the everyday reality of Maputo’s urban poor.

Nonetheless, vibrant colours, ardent rhythms, and a profound sense of hope permeate the people who call this neighborhood home.

Poet José Craveirinha once wrote of Mafalala:
Só tambor ecoando como a canção da força e da vida

Só tambor noite e dia

dia e noite só tambor

até à consumação da grande festa do batuque!

Oh velho Deus dos homens

deixa-me ser tambor

só tambor!

Only drum echoing the song of strength and life
Only drum night and day
Day and night only drum
Until the consummation of the great dancing feast!
Oh old God of men
Let me be a drum
Only drum!

Serena Stein is an anthropologist and aspiring photographer. She is completing her MPhil in International Development at St Antony’s College, Oxford. In 2011, Serena spent several months living in Maputo, Mozambique where she joined a Tufo dance troupe in Mafalala while researching urban food consumption, prices, and vulnerability. Serena founded Oxford’s Food Security Forum in 2010.

“When I think about that forest, I could cry.”

The laughter lines on 77-year-old Amina’s face fold into furrows of distress. She is describing her youth, when the forest next to the village of Beliqo stretched far and wide. Like most of the residents of this small village of arid northern Kenya, Amina is well aware of the ecological and climatic changes in the region. She talks about the shrinking of the forest and the river, the long-term changes in weather and rainfall patterns. Droughts that hit once a decade half a century ago started to come every four years, then every two, and for the past few years have hit annually. Its inhabitants are pastoralists who herd livestock over communal rangelands, and nothing quite encourages an acute awareness of long-term changes in weather patterns as having the life of your cattle—your sole source of survival—depend on the timing and quantity of the rains. When I spoke with Amina, northern Kenya was experiencing the worst drought in 60 years, killing off Beliqo’s cattle, leaving its people dependent on food aid and exacerbating the violence and cattle-raiding between ethnic groups in the region. No matter where a conversation began, it would almost inevitably turn to the drought. No one brought up global warming, or carbon, or the greenhouse effect, but even the children were aware that the climate had changed, and was changing.

Yet what makes Beliqo fascinating is not only that its people are aware of ecological and climatic changes, but that it has a rich civil society that is beginning to engage with ecological conservation. If civil society is the space—between the formal mechanisms of the state and the economic realm of the market—where individuals form movements, networks, and groups to engage with social issues of collective concern, then Beliqo is particularly well-endowed in this regard. Beliqo has no electricity, no mobile phone network, and is six hours away (over a hellish unpaved road) from the nearest major town, and yet there are almost two dozen civil society groups in the village. One of the most active is the grassroots Community Forest Association (CFA). CFA has taken on the mission of protecting and promoting Beliqo’s forest by employing local boys as rangers to stop loggers, starting tree nurseries and distributing seedlings, and engaging the village in forums about the forest and the river.

In the 1970s Ronald Inglehart put forth the post-materialist thesis, arguing that environmental activism comes after development, that environmental movements are the province of the rich who can afford to think about issues beyond their material well-being. But what Inglehart missed is the connection highlighted by environmental economics between environmental and material well-being, as well as the dependence of the latter on the former. In Beliqo people are not interested in preserving their forest because of aesthetics or nostalgia, nor do they see saving the forest as part of some sort of larger global good. Their goats depend on the forest for fodder, their houses are built with acacia branches, and they thatch their huts and weave their sleeping mats from palm fronds.

In Beliqo the impetus toward conservation is not post-materialist. Materialist concerns with livelihoods are under stress from environmental change and can only persist if the ecology of the region does too. This is interwoven with broader patterns of traditional cultural values conflicting with modern motives, with ethnic conflict over community resource rights, and with time horizons and the clash between long-term and short-term thinking. “The Borana are herders, not loggers”, the elders of the village told me, “it is forbidden for us to cut down a living tree. Outsiders come here with power saws and tempt some of us with the promise of money.” And the money is tempting because ecological and structural changes are making it increasingly harder to survive herding cattle. The people of Beliqo might have an intuition about why the forest is vital, but the pressure of immediate need triumphs over traditional values and long-term thinking. Or it would, were it not for the presence of CFA.

CFA transforms knowledge into action, leveraging legal and social pressure to protect the forest. But CFA exists only because Beliqo, despite being geographically remote and technologically disconnected, is in fact highly integrated in global and national civil society. The knowledge of the national legal structures enabling the formation of a community forest association was brought by a regional land rights-focused NGO who had been holding community forums in the village. They connected the village to a national-level partner NGO focusing in eco-cultural preservation to help CFA write a funding proposal. The proposal itself was tailored toward and funded by a Western foundation based in San Francisco with a mandate to protect cultural and biological diversity.

“CFA is the most effective group of the village. They actually do something”, was a commendation I heard from many in the village. And this doing is undoubtedly the product of being the only community group that has received major funding. The funding came because CFA was the brainchild not simply of community members, but also of regional and national-level organisations engaged with the ecology of the village, who in turn are linked to global funding and, unlike the villagers, speak the language of biodiversity and climate change that many donors in the West want to hear. The linkages between grassroots civil society in Beliqo and regional, national, and international organisations not only brought the knowledge necessary to transform existing local concern into action and a legally recognised organisational structure, but enabled this structure to function by bringing in global funding flows.

In this way the life of a goatherd in a remote off-the-grid village in northern Kenya is impacted by the decisions of someone sitting in a San Francisco office. The concerns of the Beliqo community have transformed into action because of their integration into flows of knowledge and funding operating on national and global levels. Civil society on a regional and national level translated the materially based ecological concerns of the grassroots into the post-materialist environmental language of global movements and funders. This translation enabled ownership and action built on concerns from within the community to be fueled with the knowledge, ideas, and money held by actors from without.

Of course, these flows are not unidirectional. Not only is CFA a grassroots institution building on local concerns, local structures, and local motivations toward action, but it provides national and global civil society with the sustenance it needs for survival. This is information about what is happening on the ground, information that these organisations need in order to justify their mandates and to show that their visions and missions are being fulfilled. Thus civil society establishes a symbiotic relationship between the global and the local: money might go downwards, but knowledge flows both ways.

When I attempt to probe about wider motivations, my questions are for the most part met with bemusement: the change in climate is in the hands of God, and it is only God, not humans, that can do anything about it. It is the regional and national NGOs that are able to transform the materially focused reasons to protect the environment into the global environmentalist discourse about climate change and biodiversity. This transformation in turn propels what is happening on the ground, enabling the community of Beliqo with the know-how, ideas, and funding essential to moving from concern to action. Thus civil society forms a network that reaches deep into the places that the mobile networks and electricity grids still cannot access, linking together the local and the global long before the Internet and the mobile phone arrive to do the job.

Liz Fouksman is reading for an MPhil in Development Studies at Lincoln College, Oxford.

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Kodaikanal, South India—The majority of homes in rural India use poorly functioning, open-fire indoor stoves. These stoves emit high concentrations of respirable particles, carbon monoxide, and black carbon, the second biggest contributor to global warming. Regular use of open-fire stoves causes an increase in air pollution levels that triggers respiratory health problems.

1.6 to 2 million people die every year from this domestic practice.

The Smokeless Stove Project aims to curtail the deadly effects of open-fire stoves. Project workers replace traditional stoves with more efficient ones, which use local, stable materials such as cement, brick, and stoneware pipe.

A smokeless stove has one chamber for fuel, typically firewood. When the stove is lit, its smoke is transferred to a second chamber and safely expelled from the house through a chimney. The measure reduces the release of respirable particles by up to 80% and limits the production of black carbon. Smokeless stoves also maximize fuel efficiency by requiring less wood than traditional stoves.

The Smokeless Stove Project has been continuously running since 2003 and has successfully installed stoves in over 600 homes.

Frances Raquel Narváez read Experimental Psychology at St. Anne’s College during the 2008-2009 academic year. She then traveled to India to develop the Smokeless Stove Project. Frances is currently in Geneva working with the European Broadcasting Union.

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Peter Singer
The Life You Can Save: Acting Now to End World Poverty
Picador, 2009
214 pages
£14.99
ISBN 978-0330454582

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Peter Singer and Jimmy Cayne are not natural allies. Singer is an Oxford-educated philosopher, a vocal vegetarian and an anti-poverty crusader. Cayne is a high school dropout who, until recently, feasted on bacon, salmon and red wine before beginning his workday as CEO of Bear Stearns. Yet in Singer’s new book, The Life You Can Save: Acting Now to End World Poverty, Cayne makes a cameo appearance—not as a villain, but as a good corporate citizen.

Singer heaps praise upon Cayne’s company: “Bear Stearns—before its sale to JPMorgan Chase during the 2008 crisis—made sure that neither apathy nor selfishness prevented its leaders from doing the right thing.” Such a pronouncement would be considered lavish praise for any corporation—but especially for Bear Stearns. When the investment bank collapsed in March 2008, one industry insider called it “payback” for a “firm that seemed to be overly selfish and overly interested in their own gains”. But for Singer, Bear is a beau ideal of benevolence. The firm required all of its senior managing directors to donate 4 percent of their salaries and bonuses to charity, and it checked their tax returns to make sure they complied. In 2006, according to Cayne, the firm’s senior managing directors donated more than $45 million (£32 million) combined. “As far as I know, we are the only company that has this type of policy,” Cayne said.

To be sure, Singer and Cayne do not entirely see eye-to-eye on all matters of philanthropy. Cayne’s charitable giving goes to museums and private prep schools, among other causes. By contrast, Singer believes that “philanthropy for the arts or for cultural activities is, in a world like this one, morally dubious”. He chastises the Metropolitan Museum of Art for paying $45 million for a single Duccio panel painting when the same amount of money could have funded 900,000 cataract operations for people in developing countries “who can’t see anything at all, let alone a painting”. Singer donates 25% of his income to anti-poverty groups each year. (All royalties from The Life You Can Save will go to Oxfam.) Comparatively, Cayne is much less generous: in 2006, his charitable trust gave gifts amounting to 7 percent of his CEO compensation. By Singer’s personal standards, Cayne is still a scrooge.

Nevertheless, Singer sees enormous potential in the Bear Stearns model of employee giving—albeit, with important modifications. Singer suggests that employers withhold 1 percent of every employee’s paycheck, which would then go to an anti-poverty organisation of the employee’s choice. Workers could opt out of the program, but the default would be to donate (and, specifically, to donate to an organisation that fights global poverty rather than a posh prep school, ornate opera house or other “dubious” cause). If major corporations, universities, and other employers adopted Singer’s suggestions, it “would yield billions more for combating poverty”.

For those who are familiar with Singer’s philosophy, the employee giving proposal will stand out as one of the more innovative elements of The Life You Can Save. To a large extent, the book rehashes arguments that Singer has already made elsewhere—starting with his 1972 essay “Famine, Affluence, and Morality”. Singer argued then—as he does now—that from a financial perspective, it is relatively easy to save a life in the developing world. He cites a statistic from William Easterly—a New York University economist who is famously skeptical about the effectiveness of third-world aid. Easterly acknowledges that the World Health Organization’s efforts against malaria, diarrhea, respiratory infections and measles save approximately one child’s life for every $300 (£210) spent. That is roughly the price of a new wool single-breasted suit from Marks and Spencer, or dinner for two with a fine champagne at Brasserie Blanc. When we spend our money on fine clothes or fine food, Singer says, we are valuing frivolous fun above the lives of real human beings.

Yet if every £210 suit is another child’s life, then every £21 hardcover book is a tenth of a child’s life and every £2.10 latte is one-hundredth. Does Singer’s argument imply that all luxury spending is problematic? Yes, but he does not ask us to become bare-bones ascetics. Rather, he sets out specific standards for charitable giving based on income level, and he asks his readers to abide by them. Everyone should strive to donate at least 1 percent of their income to anti-poverty efforts, he says, but someone like Jimmy Cayne should be giving close to 30 percent. (The full set of standards is posted online here.)

More than one thousand people, from China to Chile, have logged onto Singer’s website and pledged to abide by his percentage-of-income standards. Tim Harford—the Financial Times columnist who once penned an “economic case against philanthropy”—now says that Singer’s book has motivated him to donate to Oxfam. William Easterly, writing in the Wall Street Journal, is less persuaded. According to Easterly, “Mr. Singer argues from a small number of… examples that it is relatively easy to do good things for the poor,” even though much aid is wasted due to corruption and incompetence.

But Singer only needs “a small number of examples” to prove his point. Even Easterly would have to acknowledge that some aid organisations are effective. For example, the Addis Ababa Fistula Hospital treats women who suffered debilitating injuries in childbirth that cause them to leak urine and feces continuously; for as little as £100 per surgery, the hospital can cure the condition with a 93 percent success rate. (Singer’s Australian publisher is giving 5 percent of its proceeds to the hospital.) As long as well-run organisations like this exist, and until they are fully funded, donors can be reasonably confident that their charitable donations are going to good use.

Granted, this is not a message that many will want to hear during a deep economic recession. As reviewer Katha Pollitt wrote in the Nation, “the gods of publishing must have had a good laugh” when they arranged for Singer’s book to come out when “so many are broke”. Yet in some sense, The Life You Can Save has appeared at the perfect moment. As a result of the financial crisis, the world has a rare opportunity to put Singer’s ideas into action.

Barack Obama has already imposed a $500,000 (£360,000) compensation cap on bank executives who receive bailout money. Gordon Brown is calling for a global code on bankers’ pay. The public is demanding some sort of change in the way that top executives are remunerated. But as one executive compensation consultant told the Los Angeles Times recently, people in his industry are “pretty damn smart” and will come up with ways to skirt the caps. Companies will compensate their CEOs with restricted shares instead of providing stock options or cash bonuses. They will offer their CEOs new perquisites that do not count toward the $500,000 cap. CEOs might be breakfasting on red wine, bacon, and salmon once again—this time, on their companies’ tabs.

Imagine, however, if Obama and Brown—instead of imposing quixotic compensation caps—forced banks to adopt Bear Stearns-style policies for top executives. Banks might implement an “opt-out” 1 percent plan for the rest of their employees. Unlike compensation caps, bankers might actually embrace such an approach. (Cayne says that most executives found that charitable giving was “incredibly gratifying”.) And unlike compensation caps, society might actually benefit as a result.

Inevitably, some senior executives will object to Singer’s stipulation that their donations go to anti-poverty efforts. They will fight for the right to donate to museums, musical groups and other organisations that Singer deems “dubious”. And whereas Singer believes that developing-world aid is almost always more cost-effective (from a life-saving perspective) than domestic aid, an argument he makes forcefully in One World (2002), it seems unlikely that Singer’s suggestion will garner support unless it allows for gifts to local causes. Even so, a plan that raises the quantity of charitable giving—regardless of which charity—is preferable to a plan that raises the quality of the executive dining room menu, and Singer’s proposal would do more than that. The £32 million from Bear executives alone in 2006 could have funded, by one estimate, 45 million meningitis or measles vaccinations in the world’s poorest places.

Of course, there still is one problem with the “Bear Stearns Plan”: there are few brands that are as associated with ignominy (though “Bernard L. Madoff Securities LLC “and “Stanford Financial Group” give “Bear Stearns” a run for its money). We might call it the “one percent doctrine ”, except that Dick Cheney has already dragged that moniker through the mud. The Bear Stearns Plan is an idea whose time has come—but whose name has yet to arrive.

Daniel Hemel, an MPhil candidate in International Relations at New College, Oxford, is writing a thesis on global financial regulation. He is a Senior Editor of the Oxonian Review.

Dambisa Moyo
Dead Aid: Why Aid is Not Working and
How there is Another Way for Africa
Allen Lane, 2009
288 pages
£14.99
ISBN 978-1846140068

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At Harvard in the mid-1990s, a young Zambian graduate student listened rapturously to Professor Jeffrey Sachs’s prescriptions to bring prosperity to developing countries through the free market. Sachs later abandoned many of his free-market prescriptions in favour of large-scale aid flows from the West to the developing world—and Dambisa Moyo, the former student in Sachs’s auditorium, felt deceived.

“It’s completely hypocritical and it was a great disappointment,” Moyo said at a recent event in Oxford. “I think he’s very dishonest… To me, as an African, the fact that he would dole out the prescriptions he does to other people [in Latin America, Poland and Russia] but doesn’t when it comes to Africa suggests to me he thinks we’re different.”

It is this sense of betrayal, not just by Sachs but by the larger international community, that fuels Moyo’s repudiation of aid as the solution to African poverty. It is the subject of her new book, Dead Aid, which makes a controversial anti-aid argument that should be read, if only to ignite discussion and force aid advocates to justify the status quo.

After setting out to debunk the “myth” that aid works, Dead Aid calls for an end to massive governmental and multilateral aid flows to Africa within five years, including all grants and heavily subsidised loans. Moyo’s claim is that turning off the aid tap will shock African governments into accountability by forcing them to innovate and find non-aid fundraising mechanisms. She spends most of the book describing the multitude of alternatives to “free money”, offering an exhaustive menu of free-market mechanisms that range from collective regional bonds and international debt markets, to small-scale development through domestic savings and microfinance. While she makes a strong argument for private sector strategies, she fails to explain how they can improve governance without the complementary emergence of viable democratic institutions and checks on executive power.

Moyo is the first to point out her argument is not new. Although it fails to engage with previous development theories and critiques, Dead Aid offers a fusion of classic dependency theory (blaming Africa’s underdevelopment on Western policies, namely aid) and free trade advocacy (promoting local growth through international trade and foreign investment). Though her ideas are clearly influenced by the tutelage of (a younger) Sachs and Oxford economist Paul Collier, Moyo dedicates her book to Peter Bauer, aligning herself with a martyr of classical liberalism, long maligned for his staunch criticisms of aid.

Despite her adept polemical positioning, Moyo’s actual diagnosis of aid’s ills remains painfully weak. In the preface, Moyo writes, “This book is a consequence of my thoughts and deliberations over the years.” Indeed, the book relies heavily on personal thoughts and deliberations rather than in-depth, or even cursory research. The first section rejects a litany of possible explanations for African poverty, leaving aid as the sole possible culprit of underdevelopment.

Instead of making a compelling empirical case for the detrimental effects of aid, Moyo launches a haphazard assault on alternative explanations for the continent’s economic stagnation. Without names or sources, she swiftly dismisses longstanding, well-researched arguments that have variously attributed Africa’s economic failures to the continent’s geography, climate change, colonial history, ethnic diversity, civil conflict and weak institutions. The reader is hardly convinced. For example, in order to shunt aside “historical factors, such as colonialism”, she proffers but a single paragraph (four sentences ending with a maddening footnote that cites the Wikipedia entry on the 1885 Berlin Conference).

Moyo repeatedly simplifies the complex challenges facing African countries today in order to overemphasise the extent to which aid is inhibiting economic growth. Ultimately, in bypassing context and the nuances of specific challenges, she weakens her own anti-aid argument. She decries aid for enabling corruption, engendering “laziness”, creating dependency, inciting civil wars and hamstringing civil society. These are important allegations, and familiar topics of conversation for any observer of Africa and development issues—but they are not grounded in evidence.

Throughout Dead Aid, Moyo insists on referring generally to the whole of Africa, and occasionally “Africans”, all the while describing Aid amorphously with a capital “A”. One cannot help but wonder what particular contexts and aid programmes Moyo has in mind, when the only “country” that appears in any detail in her narrative is an imaginary development hell-hole named Dongo, and when the only specific aid project she references is hypothetical, a malaria-net distribution scheme. Notably, this recurring hypothetical anecdote seems unlikely to fit Moyo’s own definition of “Aid”, as most “large-scale multilateral aid packages”, which go to governments, do not involve bed net handouts in rural areas. (The reference may refer to Sachs’s tireless advocacy for free bed nets throughout Africa.)

Despite serious shortcomings in Moyo’s dogmatic diagnosis, the book makes a compelling case for diversifying development funding by exploring private sector options. The list of free-market mechanisms Moyo recommends for financing growth is impressive, moving from the global to the individual scale. For example, she urges individuals to lend directly to African entrepreneurs through Kiva.org. Her big-ticket item for making the cycle stop is the international debt market, where African countries can work their way into investment viability.

Whether African countries can in the near future afford the sorts of loans that would create viable investment markets is unclear, particularly given the economic crisis that has dried up available credit across the globe. Yet Moyo reminds the reader that millions of dollars already sit on the continent in savings, money that could be invested at home, were attractive markets to emerge.

Once Western governments buy the argument that aid does not work, Moyo suggests they look to China for a development model that promotes growth. Moyo’s claim that, “in the last sixty years, no country has made as big an impact on the political, economic, and social fabric of Africa,” is dubious. But she is more focused on applauding China’s public and private “investment assault” than shoring up any sort of historical argument. Protectionists who detest the flood of cheap Chinese goods into African markets and human rights advocates who abhor China’s contentious non-interference policy will hardly be placated by Moyo’s somewhat bizarre presentation of opinion poll data, which is supposed to confirm that China’s presence is good rather than exploitative for Africans. (They may also be interested to know that Moyo was recently proposed as a board member of Lundin Petroleum, one of the Western oil companies active in Southern Sudan.)

As contentious as her arguments are, Moyo herself looks poised to become a lightning rod for debate. She vociferously decries the “glamour aid” culture, faulting it for disenfranchising African politicians and their constituencies. Yet the hubbub surrounding the release of Dead Aid reveals the irony of the book’s endeavour: if Moyo hopes to persuade Western donors and African recipients to abandon aid, she can succeed only by catapulting herself into the heart of the glamour-aid fray she so fervently condemns. So far, the former Goldman Sachs investment banker seems to be doing just that; the society pages of the Guardian recently attended one of Moyo’s book launches at the (glamorous) Hôtel Balzac on the Champs-Elysées.

At her recent book talk in Oxford, Moyo said that Dead Aid was “designed to open up dialogue”. To this end, the book is already a great success. But a “clarion call for change” Dead Aid is not. Lacking evidence and specificity, and completely disregarding the disparate, though uniformly difficult political realities of Africa’s countries, Dead Aid is neither prescription nor plan. Readers excited by the free-market optimism and private sector solutions presented in Dead Aid are left wondering just how to get involved in the apocalyptic and opaque Africa the book describes. Add the challenge brought by the global financial crisis, and surely Moyo has plenty of fodder for her next book contract (publication set for 2010).

Zoe Marks is reading for a DPhil in Politics at St. Cross College, Oxford.

When the Oxonian Review sat down with Paul Collier in his office at Oxford’s Centre for the Study of African Economies, he had just returned from a visit with the US State Department, where he had briefed top American policy makers on his rescue plan for the world’s poorest countries. With the publication of his first book, The Bottom Billion (2007), Paul Collier established himself as a premier authority on international development, presenting aid solutions for the world’s poorest billion inhabitants. In his newest book, Wars, Guns and Votes, Collier moves into the contentious realm of policymaking. Collier anticipates controversy. He writes in Wars, Guns and Votes: “I am aware that I walk on a tightrope.” And he is. Wars, Guns and Votes came out in the UK last week.

A major theme of your book is that democracy can be dangerous if elections are installed without providing the critical public good of security. You propose a game plan that involves installing peacekeepers to the bottom billion countries for at least a decade. This calls for long term intervention by the international community. Could you clarify your criteria for when national sovereignty should be breached?

I think national sovereignty being breached is a melodramatic way of putting it, but there are two distinct contexts that concern us. One is post-conflict situations. Obviously, in conflict situations, when they begin, something has gone terribly wrong with the poverty; you’ve had a civil war. The record of these post-conflict periods is not very happy… about 40 percent of these countries go back into conflict within a decade, and they are responsible for about half of the civil wars that have happened. So we should be able to, as an international community, do much better than that record.

The international community has a big responsibility to the whole neighbourhood because if these situations go wrong, it is the whole neighbourhood that bears the responsibility, not just the country itself.  This is one reason why there is a case for limiting sovereignty or sharing sovereignty on behalf of the legitimate interest of the neighbourhood. The international community is providing peace through the peacekeepers and the money for reconstruction and that gives it both the power and the legitimacy to make sure that the recovery works. […]

There are three key actors and there are no quick fixes. There is the Security Council which is providing the peacekeepers. There are the donors who are providing the money. And there’s the post-conflict government which is setting the policies and also determining how accountable they are to the people. So what I propose is a contract between these three parties and to recognise the interdependence.

But what about the third actor? The local government? Don’t you think that your game plan gives Mugabe the exact propaganda he needs to say: “Look, Western policemen are taking over Africa?”

Of course he will. You can hear him say it. You have to use your brain and say who has actually got the interest of these societies? Is it Mugabe with his fine record or is it mine? The truth is that there is no appetite for a new bout of colonialism. On the contrary, the main problem is that the appetite for concern is so low, and the prevailing sentiment is: “Just wash your hands of it and do things that are decorative.” So, the difficulty is not trying to restrain a voraciously powerful West that wants to restore colonialism, it’s trying to persuade a West that is [complacent]. I was on Capitol Hill just recently and the sentiment that was expressed to me, in the case of Somalia, was: “Build a fence around it and walk by.”

And what a lot of the bottom billion countries have is not national sovereignty; it’s presidential sovereignty. Presidents won’t share power with their own citizens. It’s grotesque that Mugabe is still in power, and certainly not thanks to the endorsement of [Zimbabwe’s] people. Nor will they pool power with their neighbouring government. […]

Presidents are clinging onto power vis-a-vis their own populations and vis-a-vis their neighbours. The result is that their states are not capable of supplying key public goods, so they’ll have to be supplied internationally.

Just now, you mentioned that you went to Washington to convince people to buy into your plan. And in the book, you put yourself in the shoes of a rational dictator weighing pros and cons of allowing international intervention. If you were in front of Mugabe now and had the ear of Obama, how would you persuade them both to sign onto your plan?

I was in the State Department on Monday and talking through these issues. Clearly, the Administration has a lot of legitimacy in Africa. If there were a fair election in Zimbabwe between Mugabe and Obama, Obama would win it easily. So in terms of who is the most legitimate actor, it is clearly Obama. So the issue with America is not legitimacy but overload. It’s whether they see sufficient interest to move. And the argument has to be a combination of an ethical argument based on compassion (here are people socially integrated into the world but economically completely marginalised; they cannot provide the key public goods themselves, so we have to help them to back out of the cul-de-sac they’re in), and a degree of enlightened self-interest—that it is actually foolish to leave societies so precarious that some of them become Somalias. The strategy of building a fence around Somalia and hoping that it disappears seems to me, really, an ostrich-line strategy.

The muddle over American intervention or non-intervention has been so extreme, ranging from total non-intervention (Somalia) to total intervention (Iraq), and a new discourse coming out of Hilary Clinton is “smart power”. That’s a hopeful discourse because what she means is a minimal use of hard power aligned with an intelligent use of soft power. And that seems to me to be the right approach because we haven’t got much appetite for hard power, but […] we can show that the minimum of hard power aligned with an intelligent use of soft power (money, international standards, legitimacy of Obama) can make a difference.

How was your dual argument for ethical compassion and enlightened self-interest received when you actually talked about this to Washington? Did they buy it?

Oh, absolutely. There’s a lot of buy in. I’ve been amazed ever since the publication of The Bottom Billion, there’s been a huge interest on the part of government to align with the agenda. Obviously, not people like Mugabe… they’re a part of the problem.

So the State Department got on board with this?

Well, you have to ask the State Department. But they invited me, and yes, I think there’s a lot of interest both in Europe and in America.

What were their objections?

I think… one strand of opinion would be basically pessimistic and say we’ve failed and failed, there is no point in trying anymore. So there’s a lot of fatigue and despair. And the other sentiment is the sort of, “build a fence and ignore it”…

So the White House didn’t object to your plan based on shortage of resources?

No. And of course, my approach is not just saying that all we need is twice as much money as you’d ever thought of. It’s a matter of marrying money with other policy interventions such as trade, governance, security. For example, I am having a discourse with the American administration on Haiti at the moment. They’ve already done the trade deal with Haiti. So now, the thing to do is to provide the rather modest amount of money that would make it feasible to export on the basis of that trade deal.

The US government has been involved in several coups of democratically elected leaders. Given that track record, do you think it’s really plausible for African dictators to buy into your proposed bait of offering to help them put down possible coups?

What I would like to see military intervention to be used for is to discourage coup d’états. There have been three coups in West Africa in this past week. I’m sure at this very moment, African presidents really are lying awake at night worrying about coup d’états. And the tragedy of coup d’états is that they displace democratic governments just as much as bad governments. Now, I don’t think we should try and prevent all coup d’états… the international community should use its military force to restore democratically elected governments—I don’t see any ethical issue in that. It would actually be disgraceful to do anything else. We already did it in Sierra Leone and nobody accused the international community of neo-colonialism in doing that. So there is a legitimate role for force, serious force in protecting democratic governments.

Now, the neat twist to that is that once you’ve got an undertaking to protect democratic governments, there has to be one condition at least, which is that the government conducts a democratic election. If it cheats, it should not be protected. So I propose an international standard that governments could undertake to adopt on the conduct of elections. And if they adopted that standard, they would be protected, as long as they conducted the election properly. If they then subsequently cheated on an election, that cover against the coup would be withdrawn, and the withdrawal would be a signal. Knowing that, presidents would be much more weary of cheating on elections…

What I was asking was not a normative question of whether or not the US and the international community should intervene to install democratic elections. I am saying that sometimes, the US government actually intervenes to put down democratically governments. Given this track record, how can they be trusted to safeguard democracy?

That’s why it is so important to have clear rules of engagement. When is it legitimate to use military force and when is it not? America’s got a force AFRICOM and that force needs clear rules of engagement because otherwise, as you say, it is going to be treated with a lot of suspicion. But the right rule of engagement is not “never intervene”. If there were a coup in Ghana tomorrow, the right rule of engagement would be to fly in and restore the legitimate government. If there were a coup in Zimbabwe tomorrow, the right rule of engagement would not be to fly in and restore Mugabe—and so we need clear rules to delineate that.

You propose a ten-year period of peacekeeping, during which the economy of the [post-conflict] country is supposed to double. If the economy doesn’t double, what do you propose then?

First of all, there’s already a lot of peacekeepers in there, there are over 100,000 of them now, so this is the future, like it or not. So, the question is really complementary strategies to peacekeeping. Precisely because these economies go so far down during the conflict, it’s relatively easy to get strong growth post-conflict, as long as you’ve got some restoration of reasonable policies, a guarantee of security and flows of aid. So it’s not difficult to get rapid growth. If you don’t get growth, then it’s true, quite possibly you haven’t got a viable exit strategy. Then you’ve got some hard choices, but the world doesn’t come in nice easy boxes.

What are some of those choices?

Well, do you pull the troops out anyway? Or, do you say: “This is harder than we thought, this is longer than we thought.” So, take a country like Liberia or Sierra Leone, or Haiti. So far, economic recovery hasn’t been that great. So does the international community just say: “Time’s up, bye-bye?”

Personally, I think that would be very foolish. Post-conflict is often messy, so the right thing to do is to do what it takes to get recovery… the US left over 100,000 troops in Europe for 40 years to get recovery, and it was a good strategy…it was the right thing to do.

Diana Fu is reading for a DPhil in Politics at Linacre College, Oxford, and is Politics Editor of the Oxonian Review. Amreeta Mathai is reading for an MPhil in Development Studies at St. Anne’s College, Oxford.

Photograph courtesy of Paul Collier

Paul Collier
Wars, Guns and Votes: Democracy in Dangerous Places
The Bodley Head, 2009
272 pages
£20.00
ISBN 978-1847920218

…

…

…

When development economics guru Paul Collier released his bestselling book The Bottom Billion (2007), Niall Ferguson welcomed him into the fold of the African development debate with a punch: “Now comes another white man, ready to shoulder the burden of saving Africa.” Despite the jab, however, Ferguson went on to praise Collier’s approach, which focused on four “traps” that maintain extreme poverty among the world’s poorest billion inhabitants. Ferguson called Collier’s analysis “more convincing” and his remedies “more plausible” than those offered by the other popular giants of development economics, William Easterly and Jeffrey Sachs.

In his newest book Wars, Guns and Votes, Collier has shifted his discussion to the failing democracies that govern many of the world’s poorest “bottom billion”. He argues that elections often create the façade of democracy in bottom billion countries rather than democracy itself. Lacking the enforcement and balance-of-power mechanisms of real democracy, these countries remain on the brink of instability and vulnerable to the sort of violence that stalls development. The post-election violence and controversy surrounding the Kenyan and Zimbabwean elections, the most recent and vivid examples of democracy gone wrong in bottom billion countries, seemed to prove Collier’s point.

Collier offers a nuanced and compelling diagnosis of the driving factors behind post-election violence and persistent bad governance in Africa’s bottom billion democracies. One such factor is inadequate information dispersal, which leaves voters in bottom billion countries in the dark about candidates’ political positions and personal histories. Suspicious of the information they do receive, voters start to make decisions based on who they think is most likely to forward their own interests, often voting divisively along ethnic or religious lines. When honesty and a record of competence fail to offer an advantage in elections, the result, Collier argues, is that “the crooks will replace the honest as candidates”. Wars, Guns and Votes drives to the root of the illiberal democracy that governs many of the world’s poorest; Collier perceptively describes how democracy in its malformed varieties promotes instability and poverty rather than peace and development.

But the analytical rigour that Collier applies to his diagnosis of bad governance in the first part of his book is then absent in his book’s final section of proposed solutions. This becomes particularly troubling when he arrives at his more provocative suggestions. For example, Collier asserts that the West, cognizant of colonialism’s sins, pays “excessive respect” to the “notion of national sovereignty”. What Western donor countries have failed to realise, he says, is that “in reality the typical society of the bottom billion does not have national sovereignty”. Rather, because they lack the ability to constrain the power of an election’s winner, “they have presidential sovereignty”, which can come in the form of democracy-backed dictatorship. We should not, Collier argues, be so ready to revere this sort of sovereignty.

For Collier, sovereignty is defined by a country’s ability and imperative to govern for the people. When bottom billion governments fail to provide key public goods like security, accountability and transparency, he posits that the “international community”—a term that he fails to define in any consistent or plausible fashion—bears responsibility to intervene and supply them. He proposes a number of methods of intervention: most notable are long-term peacekeeping and a system of shared sovereignty (the bottom billion nation would agree to “share” its sovereignty with the international community). In a post-Iraq, post-colonial world, such controversial “remedies” require great clarity of method and purpose. Collier fumbles in answering the question of when, exactly, intervention is warranted and how, exactly, it should be carried out—and confused prescriptions for intervention are, as they always have been, particularly dangerous.

Once the “international community” intervenes in a post-conflict country, how long do they stay and to what end? Collier says the international community should stay for the long haul: “Aid-assisted economic recovery is the true exit strategy for peace-keepers.” But debates on the effectiveness of long-term peacekeeping and aid are particularly contentious for good reason. To propose such measures as if their validity is obvious is to ignore studies that suggest how long-term peacekeeping and aid actually can exacerbate, rather than mitigate, unstable situations.

Collier sidesteps these issues by comparing his suggested intervention to the Marshall Plan. The vague historical comparison brushes over one of many extremely relevant differences: George C. Marshall did not doubt the sovereignty of post-war European nations in the way that Collier does in Sub-Saharan Africa. In fact, in a speech delivered at Harvard University in 1947, Marshall made it clear that the aid package was to be directed to the needs of Europe as stated by Europeans. He declared: “This is the business of the Europeans. The initiative, I think, must come from Europe.”

While Marshall, in forwarding his comprehensive plan for aid, was confident in Europe’s ability to guide its own development, Collier clearly suggests that bottom billion governments cannot do the same. Post-war Europe was re-building its institutions, national infrastructure and informed electorate; that project was entirely different from the building project Collier envisions for the bottom billion.

While we might agree that intervention to quell genocide or to help a sovereign government avert disaster is justified or morally imperative, the grounds for Collier’s suggested intervention are muddled. It seems apt to compare Collier’s proposals to the Bush administration’s nation-building project in Iraq, where the strategy was to enforce peace in a post-election nation and at the same time funnel resources that would promote economic development. By most accounts, the strategy was a disaster.

While Collier does make a valuable contribution by furthering an understanding of the pragmatics of democracy’s failures in bottom billion nations, his lack of clarity on intervention treads on territory that blurs the line between aid and occupation, assistance and intervention. A respected scholar, Collier has won the confidence and audience of several world leaders; it would be irresponsible to use this influence to forward confused plans for intervention, something that, particularly in light of recent history, raises eyebrows the world over.

Amreeta Mathai is reading for an MPhil in Development Studies at St. Anne’s College, Oxford.

Paul Collier
The Bottom Billion: Why the Poorest Countries
Are Failing and What Can Be Done About It
Oxford University Press, 2007
224 pages
£16.99
ISBN 978-0195311457

…

Imagine the journey that human beings embarked on with the development of the first Stone Age tools.  It led us toward a lush-looking mountain which, with progressive social and technological evolution, we then began to climb.  Since that beginning, the peak—if there is one—has remained permanently shrouded in cloud, but at progressively higher levels we find that our lives are richer than before.  Certainly there are very few at any level who would prefer to return to a lower one.  This is the Mountain of Development, and the populations of all the countries in the world are at different positions in the climb.  That is, the human race has become segregated in its ascent.  Some countries are mapping previously uncharted territory of prosperity and well-being on the higher reaches of the mountain.  Others are still working their way around the lower contours.  And even within countries there are differences; some have their citizens clustered close together, others are strung-out over great distances or even split into two or three groups that are barely linked at all.

Paul Collier argues that as a result, one billion of us (a sixth of the world’s population) have reached an altitude where levels of prosperity are beginning to approximate some kind of ideal.  Another four billion are some distance behind, but will reach these higher slopes in the near future due to their growing strength and experience.  But the final billion are struggling.  In fact, they are trapped on the lowest slopes, and in some cases sliding further and further down.  Most of these countries—approximately 70%, excluding the likes of Laos, Cambodia, North Korea, Haiti, and others—are African.  Based on a concern for our fellow human beings and an interest in our societal future, Collier asserts that the primary development objective of the wealthy OECD (Organisation for Economic Co-operation and Development) countries and international development agencies should be to help this ‘bottom billion’ in their ascent.

Collier, head of the Centre for the Study of African Economies (CSAE) at Oxford, is one of the most important and influential authors in development economics. In addition to his work with co-authors on aid, civil war, development, poverty, capital flight and the interactions between these, The Bottom Billion builds on two papers he co-authored in 1999 with Jan Gunning that are now primary references on sub-Saharan Africa’s poor post-independence economic performance.  The book is also the continuation of a more than decade-long academic debate about why some countries have experienced little or no economic growth.  The two other main positions are represented by The End of Poverty written by Jeffrey Sachs—perhaps best known to most as the Special Advisor to the current and previous Secretaries General of the United Nations—and William Easterly’s The White Man’s Burden.  Towards the end of The Bottom Billion Collier explicitly situates his analysis between these two extremes.  One the one hand, he agrees with Easterly that aid is not the primary solution, and that therefore the excessive focus of Sach’s proposals on external financial support is misplaced.  However, unlike Easterly he does believe, like Sachs, that there is still much which can be done by outsiders at a fairly broad level.  In that sense his is a message of optimism.

Collier’s own approach in The Bottom Billion, captured by our mountain analogy, begs a number of questions which are worth noting before we proceed.  First, the idea that all countries are aiming at the same notion of a developed society (i.e. climbing the same mountain) might seem a little more plausible following the end of the Cold War, but there are many cogent voices which suggest the traditional Western notion of development is flawed.  Second, the premise that it is possible, or desirable, to determine what is best for other nations is one that has been historically controversial.  Third, while Collier acknowledges that the nature of growth matters (rather than simply its extent), it is an issue that he otherwise ignores. Finally, and perhaps most problematically, Collier assumes that the middle four billion’s ascent toward prosperity is assured.

The book begins promisingly by arguing that a one-size-fits-all approach to development is inappropriate.  But although one is deemed insufficient, apparently four sizes are enough, because in the second part Collier argues that every country in the bottom billion can be characterised by at least one of four traps: the conflict trap, the natural resources trap, the ‘landlocked with bad neighbours’ trap, and the ‘bad governance in a small country’ trap. These categories seem somewhat arbitrary and akin to methodological gerrymandering.  Why not the ‘surrounded by one country, mountainous and AIDS-afflicted’ trap, which would crudely characterise the Southern African country of Lesotho?  Though whether Lesotho would even fall into Collier’s bottom billion is unclear, because he chooses not to publish the list of fifty-eight countries on the basis that this might ‘stigmatise’ them. (An odd decision, since he appears happy to give individual examples.)

The basis for the creation of the categories as the four main predictors of poverty was ostensibly the econometric analysis (the use of statistical methods in economics) conducted by Collier and his co-authors over the last decade. On one issue at least, the consideration of natural resources, this type of analysis appears to yield some important insights.  A simplistic assessment of the matter might conclude that countries do better when they receive resource windfalls, but in fact this seems to be more the exception than the rule. Collier does a good job discussing the reasons for this: the resource boom displaces other economic activities, reduces the competitiveness of manufactured exports, and creates dangerous political incentives.  The discussion regarding the impact of being land-locked, on the other hand, is vaguely informative but yields nothing new.  In terms of the other two traps, it is hardly surprising to find a relation at the national level between poverty, conflict, and poor governance.  But do we need econometric analysis to tell us this?  More specifically, does an econometric analysis reach conclusions that we could not have reached otherwise, or succeed in giving these conclusions greater validity?

This is one of the main problems of The Bottom Billion: Collier uses econometric analyses to give his arguments weight that they wouldn’t otherwise have.  He regularly makes the point that his claims are based on ‘a mass of technical papers published in professional journals and subjected to blind refereeing’.  Two issues arise.

First, as any professional economist should know, publication of papers based on empirical analysis doesn’t imply their conclusions are true.  It just means the analytical process by which they were reached is not obviously flawed.  That both Sachs and (particularly) Easterly are widely-published should make that clear.  For instance, consider the question of whether aid makes a difference to economic growth.  Some published papers say it increases growth, some say it doesn’t and more recent ones say ‘it depends’ what other factors you control for.  Second, it is all too easy to weave a plausible story around an econometric result. This occurs in a number of places in the book.  One example is the somewhat counterintuitive result that the propensity for oil-related violence in Niger Delta regions decreases in association with higher numbers of oil wells.  Another is the finding that aid appears to reduce the chance of wars, but does not have the same effect on coups.  That selectivity in explanation carries over to inferring causality from correlations.  In one case, for instance, Collier makes the causal statement that a resource-rich country shifting ‘from autocracy to intense electoral competition would lower [its] growth rate by nearly 3%’, but in other places he explicitly refrains from this type of assertion.

Such definitive statements are typically beyond the bounds of what can be determined at the country level when employing the statistical tools of economics in a responsible way. In part this is due to the actual economic theory of growth being unsatisfactory, particularly with respect to developing countries.  To return to our earlier analogy: there isn’t even agreement on whether poorer countries not stuck in the quagmires of the bottom billion should be able to climb the mountain faster because the lower slopes are easier to ascend, or whether by virtue of having developed superior techniques and tools the rich countries are destined to stretch their lead inexorably into the future.  (This is referred to as the ‘convergence’ issue in growth theory.)

Given the credibility derived from using an econometric approach, is it true that Collier’s diagnosis and recommended cures are fundamentally a function of econometric evidence?  The short answer is that they are not. Many of the problems could be diagnosed in a way that combined qualitative insights with much more simple analysis of the statistics. In addition, the policies proposed as solutions rarely make recourse to statistical analysis of the kind that was apparently so important for diagnosing the problems.  As a result Collier appears guilty, in both a methodological and practical sense, of what the African economist Thandika Mkandawire once called ‘the pessimism of the diagnosis and the optimism of the prescription’.

Neither can Collier’s arguments be rescued by appeal to solid qualitative evidence.  The first half of the book contains many examples of poor attempts to illustrate the ‘statistical evidence’.  For instance, is De Beers an example of corporate social responsibility because they have worked to reduce the sale of blood diamonds?  Or did they realise that they could strengthen their diamond cartel by implementing a system which excluded the entry of non-licensed stones?  Is the Mozambican rebel group Renamo the best example of a movement started to fight for social justice that became increasingly dominated by opportunists, when it was actually started in part by the apartheid government in South Africa to destabilise the post-independence government of Mozambique?  Is it not a little dishonest to cite Botswana as a shining example of economic development when, despite sustained GDP growth on the back of diamond production, most citizens remain unemployed, or in subsistence agriculture, and HIV prevalence is among the highest in the world?  (Neither of which, one must add, is due primarily to bad governance, but simply the limited success of attempts to diversify the economy and combat HIV infection.)  Doesn’t recent research suggest that civil wars in Africa may not increase the prevalence of HIV in affected countries, contrary to what Collier claims and also contrary to what had been previously thought?

In the same vein, the book suffers from significant historical omissions and revisions. Most notably, pre-independence colonial history is completely ignored.  This omission is particularly egregious in the African context, where most of the countries in question were once colonies, delineated and structured around natural resource extraction with minimal local development.  One could argue that the current economic problems facing the bottom billion are separable from anything other than their recent pasts, but it is a doubtful claim and Collier doesn’t even attempt to make it.   At one point he does say, ‘In retrospect, it was perhaps a mistake for the international system to permit economically unviable areas to become independent countries…’.  Would that be the ‘international system’ under which Africa was carved-up among the colonial powers for the exploitation of slave labour and natural resources?

Were such revisionism simply tailoring the argument to an audience uninterested in historical baggage one might overlook it.  However, it also results in flawed analysis. Can one discuss ethnic strife in countries like Rwanda without considering the colonial influence?  Is it coherent to decry the role of aid in financing military expenditures, but ignore the hypocritical role of many OECD countries in securing arms deals with dubious states?  Is Tanzania really an example of Uganda’s ‘bad neighbours’ because it invaded the latter, when in fact this was only because the brutal dictator Idi Amin first sent his troops to invade northern Tanzania? Relatedly, though he steers clear of ideologically-based free-market economics, Collier feels the need to defend the structural adjustment policies (SAPs) ‘negotiated’ with developing countries by the IMF and World Bank in the 1980s.  This may not be a coincidence, given that Collier has worked for the World Bank, but it is unfortunate.  SAPs have been used as excuses for economic failure by some governments, but there are documented examples—such as the Mozambican cashew nut industry—where components of the policies destroyed whole sections of various countries’ economies.

Many of these mistakes or selective inaccuracies do not radically harm Collier’s arguments, but they make one very sceptical of the soundness of the story being sold to relatively uninformed audiences.

Despite this, many aspects of the book are praiseworthy.  Collier is frankly critical about the role of Western countries in resource-related corruption, and relative to many economists, he manages to consider the impact of globalisation on poor countries in a non-ideological manner.  (Concluding, incidentally, that it has done them more harm than good.)  In considering possible solutions to the identified problems, he does not exclude certain options merely for the sake of political correctness.  Furthermore, unlike some of his predecessors—such as Joseph Stiglitz, the Nobel Prize winner who authored Globalisation and its Discontents—Collier does give some consideration to how the various changes in OECD policy might be enacted within the existing power structures.

For those already familiar with the issues raised, the book is worth reading because of the spectrum of policy proposals it makes and the fact that it will almost certainly be influential.  Those unfamiliar with the facts and debates will no doubt find it interesting, but would do well to approach it with a sceptical eye.

Overall, where the The Bottom Billion succeeds is in characterising the failure to engage with the development challenges it outlines.  On one hand it successfully critiques many past approaches to growth and development: ill-informed military interventions, excessive rigidity and myopia in development agencies, well-intentioned but misplaced actions by NGOs, and excessively ideological positions on globalisation and its effects on the poorest countries.  In these respects it is a breath of fresh air.  On the other hand, the book itself serves as an example of the very serious problem with the way in which economists inform policy.

Contrary to Collier’s assertion in his introduction, no intractable questions are cracked.  Despite great and admirable efforts to the contrary, economics is simply not a science at such a broad level. Economic theories of growth remain contested and largely of abstract intellectual interest. The result, one of the lesser-known ironies of economics, is that those practitioners most eager to make sweeping, definitive statements based on econometric analysis are often those with either the least understanding of its theoretical underpinnings and practical constraints, or the most willing to overlook them.  Thus the most useful policy recommendations and much of the preceding discussion in The Bottom Billion are, I would suggest, more a function of Collier’s broad qualitative experience and are only tenuously linked to the cited statistical analysis.  This, then, is the economist’s burden: that the tools exclusive to the field are incapable of answering the social and economic questions that are most important.  Hundreds of years on and with the benefit of hindsight there is still debate about what precisely enabled the current crop of developed countries to scale the slopes of the development mountain at such speed; it would be foolhardy to think that people who cannot even answer this question can tell us how the rather different countries of the bottom billion can emulate them.

Seán Mfundza Muller is a South African student reading for an MPhil in Economics at Oxford.

]]> http://www.oxonianreview.org/wp/the-economists-burden/feed/ 0 http://www.oxonianreview.org/wp/redressing-the-balance-noreena-hertz-on-debt-relief/ http://www.oxonianreview.org/wp/redressing-the-balance-noreena-hertz-on-debt-relief/#comments Wed, 15 Dec 2004 12:00:19 +0000 Andrew Hammond http://www.oxonianreview.org/wp/?p=538 Michael Hugman & Dirk-Jan Omtzigt

Noreena Hertz
IOU: The Debt Threat and Why We Must Defuse It
Fourth Estate, 2004
256 pages
ISBN 0007178980

Writing accessible books about technical subjects is a task often attempted but seldom mastered, particularly if the goal is to retain a certain level of academic function as well. Cambridge economist Noreena Hertz demonstrated with The Silent Takeover (2001), which details the ascendancy of the global corporation, that she too has the ability to achieve this level of widespread yet substantive influence. And while one might naturally question the economic content of a book on third-world debt principally endorsed on the back cover by Bono and Bob Geldof, her second treatise, IOU: The Debt Threat and Why We Must Defuse It, remains surprisingly rigorous and scholarly while sacrificing none of its popular appeal.

Fortunately, it becomes clear in the first chapter why Bono’s name appears on the back cover, as Hertz describes his lobbying work alongside Bobby Shriver for the Jubilee 2000 campaign. It provides an insight into the inner workings of the political process: Bono was the driving force behind a campaign in the US to gather congressional support for a $535 million package of debt relief. This initially seems a gimicky starting point, but to assume over-simplification is unfair: the anecdote makes for an interesting and engaging introduction, but it also highlights the political complexity of achieving positive reform. International development is a topic that is rarely high on the political agenda in the developed world; this example illustrates the enormous efforts required to build a consensus for action amongst Western politicians more concerned with their own re-election. And perhaps more importantly, Hertz herein outlines the history of broken promises from the West to the developing world that becomes the backbone of her book’s invective—indeed, this sense of betrayal is integral in order for her to transform IOU from mere exposé into rallying cry.

The first section, largely historical, details how lending to developing countries became one of the principal tools of geo-political strategy at the height of the Cold War. The US, Soviet Union and China became locked into a cycle of competition through buying the allegiance of states through the tactical provision of aid and loans. A striking example is the civil war that ravaged Angola for 26 years, as fought between the Soviet-financed MPLA and US-backed UNITA and FNLA forces. But this is not the whole message that Hertz is trying to convey—it is not simply that lending buys influence. When distributed negligently, such loans can also prop up undemocratic regimes who fail to distribute the loans as promised and who instead absorb them despotically, therefore leaving the burden of repayment upon populations who saw no benefit from the actual transfer of money (and often, as we have seen in the case of President Mobutu in Zaire, serving to highlight certain hypocrisies—or at least oversights—in the donor state’s diplomatic altruisms). This theme is outlined early on and revisited throughout.

With these loans having the primary (if unstated) objective of tying even unsavoury governments to the donor countries for reasons of political clout rather than humanitarian relief, it is not surprising, suggests Hertz, that little money actually reaches the poor. A poignant example of this is the chlorine plant Fallujah 2, fifty miles outside of Baghdad, which was identified as part of Iraq’s chemical warfare building capacity in the now infamous UN Security Council meeting at which the US laid out its case for war. In actual fact, the British export credit agency ECGD had provided the expert insurance to build this £14 million factory. That the export credit agency has provided insurance for weapon-related export is no exception: indeed between 30 and 50 percent of all exports credits prior to 2000 were allocated to cover sales by UK arms exporters.

Through focusing on specific examples of lending practices, Hertz is able to assemble a relatively complete picture of the origins and nature of debt. It was not only developing countries that benefited by accepting loans from the developed world, unsurprisingly, banks in the West became increasingly wedded to loaning from a purely profit-driven perspective. This rocketed in the 1970’s, when a quadrupling of the oil price provided excess cash to many previously impoverished oil-producing countries, who then deposited their newfound wealth—$333.5 billion—in western commercial banks.

Unfortunately, the urgency with which the commercial banks were investing their petrodollars frequently led them to turn a blind eye to the economics of the projects they were financing. In Togo, for example, a combination of export credits and a loan syndicated by German Commercial banks was used to build a steel mill. When the Togolese government realised that no iron ore was available to start production, it ordered the German technicians to dismantle an iron pier located at the port—a pier that had been constructed by Germany prior to WWI and which still functioned well. Once the steel mill had exhausted the pier as a feedstock, it closed down.

Hertz further strengthens her argument by detailing the rise of a secondary market for debt caused by the increase in lending. The Brady plan that emerged in the wake of the Latin American debt crisis of the 1980 created debt bonds, but the unforeseen consequence of this was the power that it gave the market over the fate of developing countries. The interest rate developing countries pay on their debts is extremely sensitive to the market’s judgments about the likelihood of default: Brazilian bonds fell sharply as the popularity of the left-wing presidential candidate Luis Ignacio da Silva rose in the polls. This, for Hertz, is the power of debt. Its influence is pervasive and yet the markets that make the life or death decisions for developing countries seem to care little for the consequences of their actions: as one bond trader observed, ‘capitalism has no soul.’ Hertz’s writing is at its strongest here. Balancing explanation with effect, she conveys crucial ideas that are drawn from a huge body of international finance literature without descending into the technicalities that characterise most work in modern economics.

Perhaps her most strident economic critiques, as well as her greatest moral ire, are expended on the ‘debt vultures’ on whom Hertz places particular focus. These investors buy up the debt of developing countries at reduced prices, and then set about systematically collecting repayment. The world’s poorest countries are taken to court, their assets seized, and every dollar paid in this way is, she suggests, a dollar effectively lost to health and education.

It almost comes as a surprise, then, that her commentary on the role of the IMF, and to a lesser extent the World Bank, is saved until so late in the book. However, when it comes, it is illustrated by Hertz’s own experience in post-Communist Russia as an employee of the IFC, and provides an individual’s insight into a very prominent debate and condemnation (well-known even outside development circles are the very politically-charged conditions of IMF lending and of the dreaded Washington Consensus of structural adjustment). Hertz correctly condemns some of the conditions imposed under structural adjustment programmes as profoundly undemocratic. (Nicaragua, for example, was only able to achieve entry to the Heavily Indebted Poor Country Programme [HIPC] if it agreed to the privatisation of the country’s national hydroelectric company, despite the fact that the Nicaraguan National Assembly had unanimously passed a law suspending all private concessions involving water use.)

One advantage of writing from the front line of the battle against debt is that Hertz is able to explore some of the IMF’s most recent and stark failures. The failure of the HIPC was much deeper than the fact that it attached the same stringent conditions to entry. There has been a wholesale failure to deliver the money needed to back up these solutions to global debt, raising her leitmotif of broken promises once again. Also resurfacing is her condemnation of irresponsible lending: certainly, the IMF was as guilty as anybody of lending to questionable states.

Accordingly, Hertz has already laid much of the groundwork as she moves into the second section of the book, which focuses on the danger that debt poses to developed and developing countries alike. Highlighting our collective dependence on a global market, she notes that the impoverishment of millions abroad results in financial vulnerability at home via currency crises and the transmission of macroeconomic shocks between countries.

And where these connections are present in finance, they are equally powerful in issues of health, the environment and national security. Here, Hertz follows in the footsteps of Nobel prize winner Amartya Sen and Columbia economist Jeffrey Sachs, who have prominently vocalised the wider and more fundamental repercussions of endemic poverty. Debt leads to disease, she asserts, from cholera in South America to the AIDS pandemic that sweeps Africa, which then creates the need for greater aid investment and therefore an exponentially increasing debt. The degradation of the environment functions similarly: by overusing natural resources, health crises inevitably result and the demand for imported goods rise as domestic assets dry up, thus worsening the cycle of debt. However, given today’s increasingly paranoid political climate, the idea that poverty breeds the resentment that in turn fuels global terrorism is perhaps her most effective argument for debt relief. Even to a popular audience, this argument is hardly new, but she presents it forcefully and concretely. In part this is due to the continued use of illustration and empirics to drive the message home, not just on extremist terrorism but on issues such as narcotic trade. And again, this is where her strength is—in reminding her readership that the choices we make negatively affect others, but ultimately also create a desperation that returns to haunt ourselves.

So how do we undo this self-perpetuating mess? Hertz first addresses the termination of lending with wilful negligence, and here her prescriptions are full of promise. A constant theme throughout, irresponsible lending practices are defined by three traits: that regimes that borrowed lacked democratic consent; that monies were not distributed in ways that helped the people; and that the lender could reasonably have known that this would be the case, therefore rending such practices easily avoidable. The arguments that underpin these criteria are drawn from jurisprudence and international law, and are compelling in their simplicity. Hertz then argues for a second category of debt relief. Appealing to the political philosophy of human rights, she argues that wherever the repayment of debt would result in the denial of basic human rights and amenities, then outstanding monies should be waived. Again, her chosen case studies of countries that are spending more servicing their debt than educating their children or caring for their ill have served throughout to set the scene for this argument. In order to determine which countries need such relief, Hertz then introduces her third main point, an argument for an international system of debt reconciliation—in effect a court for international bankruptcy. This is an idea that already has much credence amongst international economists, but one that benefits from being raised in such an accessible book.

At this point, Hertz’s suggestions have real potential to be a significant part of the solution. However, in going on, all too briefly, to address wider issues of development, she tries to cover too much ground. In particular, her ideas on National Regeneration Trusts (NRTs) appear almost as an afterthought. These bodies are proposed as mechanism to distribute funds that accrue from debt relief; control would be shared between government, civil society and international institutions. However, she fails to delineate how the shared control would function, how to determine which societies are ‘civil,’ itself an undefined concept, how ‘nationhood’ is itself defined, and how to prevent the coalition-based NRT from undermining the democratic function of the state in question.

Accordingly, the book is not without its faults: the devil is in the detail when it comes to economic policy and development. Having established so effectively in the opening chapter that political barriers to reform are many, it is disappointing that she does not describe in more detail how to surmount these varied challenges. Similarly, the power of the markets to veto reform of the international financial architecture is hinted at but never really tackled head-on. Finally, the strong-arming of developed country governments in setting the agenda at the IMF and World Bank is acknowledged but never really brought to the fore.

But complaints of omission and over-simplification are always going to be present where an author has taken issues of such complexity—issues normally the domain of professional economists—to a wider audience. But for the most part her criticisms are thorough and accurate, as are her solutions. The final thought that we are offered in the book is conveyed as a challenge: ‘The proposal I have laid out is a blueprint for a new way forward. Discuss it. Refine it. Improve upon it. But don’t ignore it. You can’t afford to.’ IOU is, ultimately, a call to arms: Hertz pleads elegantly and persuasively that third-world debt affects us all, and that lobbying for its dissolution is a battle that must be fought, and fought now.

Michael Hugman is an MPhil student in Economics. His research interests include the application of microeconomic theory to development policy, institutional economics, and finance issues in development economics. He also heads Research and Strategy for a charity working on education resource investment in Kenya.

Dirk-Jan Omtzigt is a Dutch graduate at Exeter College, Oxford. His M.Phil thesis is on pension reform and income inequality.

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