Ignorant of global affairs

William Easterly does not hesitate to express his doubts about develop­ment agencies. After working at the World Bank for a decade and a half, this American economist now teaches at the New York University. The professor’s favourite issue are the shortcomings of his colleagues, the development experts.

Easterly has nothing but scorn for the Growth Commission, which, on behalf of the World Bank, assessed what makes poor-county economies grow (E+Z/D+C June,
p. 225). He wrote in the Financial Times that its final report was so vague that it really only illustrated how perplexed – and thus useless – the experts are. He closed his polemic with a plea that “freedom” be the basis for successful economic development, referring to Friedrich von Hayek’s age-old ideas.

It is true that the Commission did not provide any panacea. But it did outline an interesting role for the state. The Commission is not in favour of simply allowing the market free rein, as Hayek’s adepts from Milton Friedman to Margaret Thatcher did – an approach that, at the World Bank, resulted in radical deregulation and privatisation schemes. Instead, the Growth Commission advises governments to ensure
– that domestic industries become com­petitive through innovation and imitation,
– that meaningful economic reforms find wide acceptance because many people get a share of the benefits, and
– that adequate funds flow into infrastructure and the development of professional skills.

No doubt, these points help to explain the rise of newly industrialising countries in Asia. Easterly’s freedom rhetoric, on the other hand, does not contribute to understanding the recent history of, say, the small city state of Singapore – not to mention the giant People’s Republic of China.

There are many reasons why development has not succeeded as desired everywhere. It bares repitition that the world’s trade regime puts poor rural societies at a disadvantage. But it is brazen to blame development agencies for the market-distor­ting effects of subsidised agricultural surpluses that are shipped from rich countries to poor ones in the form of food aid, which is precisely what Thilo Thielke did in Der Spiegel Online in June. Do ministers of commerce, agriculture or economic affairs in rich nations have no responsibilty for international relations?

Thielke scoffed at unscrupulous leaders in Africa and aid workers who play into their pockets. But he did not mention that the dysfunctional elites of poor countries often benefit from rich nations’ foreign, security and commodity policies, as well as from the action of multinational corporations.

Let’s put things in perspective. Nobody wants Germany’s Ministries of Economics or Labour and Social Affairs to be abolished just because there has been mass unemployment in the Federal Republic since the 1970s. Nowhere on earth is the prevalence of crime turned into an argument against the existence of the police, courts and home ministries. If a finance minister’s right to his title depended on a balanced budget, there would not be many left of them.

Specific fields of policymaking typically revolve around major, unsolved and to some extent even unsolvable problems. The end of global poverty would indeed be a reason to do away with all development agencies. As long as poverty persists, however, we will have to discuss funding, methods and general conditions. But obivously, something has to be done.

In the United States, the world’s super power, the political right has an obvious motive to condemn multilateral policy-making. Easterly is playing their game, though he may deny it. That Der Spiegel, which generally opposes go-it-alone attitudes in the US, should adopt a similar tone, is no proof of its understanding of development issues. Rather, it reveals blatant ignorance of global affairs. If the benefits of globalisation are to be shared fairly, thinking in terms of international equity will have to be the norm in all departments. And that will not happen as long as the media downplay the responsibility of the rich nations’ most powerful politicians and special interests.