The Development Edition

Summary

Slate Money – The Development Edition (January 16, 2016)

Episode Overview

In this special “Development Edition,” host Felix Salmon (Fusion), joined by co-hosts Cathy O’Neill (mathbabe.org) and Jordan Weissmann (Slate), welcomes economist and NYU professor William (Bill) Easterly for a sweeping conversation on the state of global development. The discussion explores: tangible gains in living standards around the world; the role and failures of foreign aid and NGOs; the perils of “expert-driven” development models and authoritarianism; the checkered legacy of the World Bank; and how the world’s poor are increasingly driving their own progress.

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Key Discussion Points & Insights

1. How Much Has the World Improved? ([03:06]–[06:54])

• Big Statistical Gains: Bill Easterly cites dramatic improvements in key indicators since 1960:

  “In 1960, 23% of children born in what was then called the third world died before their fifth birthday. And today that number is down to 5%.”
  — Bill Easterly [03:54]

• Rethinking Africa: Growth rates, technology adoption (e.g., mobile phones), and health outcomes have all improved in Sub-Saharan Africa, challenging persistent negative stereotypes.

  “Africa… growth rate in Africa for the last 20 years has been strongly positive, the best in its history. …Africa is twice the number of cell phone subscribers as the US.”
  — Easterly [04:45]

• AIDS and Ebola have not devastated Africa as once feared, in part due to behavioral change, improved medical treatment, and some targeted aid.

2. Does Foreign Aid Work—and When? ([07:02]–[09:53])

• Aid Wins and Fails: Targeted aid, like support for HIV/AIDS treatment and vaccination campaigns (e.g., GAVI), gets praise. Large-scale, growth-focused aid generally fares poorly.

  “I don’t give aid credit for much else. This one I will.”
  — Easterly (on AIDS treatment) [07:07]

• Negative Effects: Often, aid props up dictators or enables abusive projects; “development” funding is linked to oppression in places like Ethiopia and Uganda.

3. Are Certain Approaches to Charity More Effective? ([09:53]–[12:11])

• NGOs, Imagery, and Respect:

  “That kind of campaign… portraying the helpless child… is likely to be an NGO that does not have a very healthy respect for the autonomy and dignity of the poor…”
  — Easterly [10:42]

• Cash Transfers as Baseline: Programs that give money directly to people (like GiveDirectly) are often as or more effective than paternalistic approaches. Stereotypes about waste (e.g., spending on alcohol) aren’t supported by evidence.

4. Are Charities and Aid Organizations Improving? ([12:11]–[13:10])

• Randomized controlled trials and evidence-based evaluation are improvements but no panacea. Challenges with implementation persist.

5. Refugees, Displacement, and Economic Migration ([16:03]–[20:03])

• Who’s Being Left Behind or Helped?

  “Purely kind of what's usually called kind of economic migration from, say, sub Saharan Africa to Europe... that's actually not necessarily a bad thing.”
  — Easterly [16:03]

• Migration remains one of the fastest ways for an individual to improve their circumstances. Broad-based improvements at home have also made a difference.

6. What Drives Economic Development? ([17:29]–[20:03])

• The poor themselves, through education, entrepreneurship, and investment.
• Role of Government: Transition from interventionist to “enabling” government has helped; infrastructure, basic health, and education matter, but so do political and economic freedoms.

  “Political freedom and economic freedom really go together…”
  — Easterly [18:24]

• Amartya Sen reference: “Democracies don’t have famines”—freedoms provide protection.

7. China: An Exception or Confirmation? ([20:03]–[22:24])

• China’s growth aligns with major increases in economic (if not political) freedom and a move away from central planning.

  “China is a case of the most rapid liberalization in recent history. And that goes together with the most rapid economic growth in recent history.”
  — Easterly [21:21]

8. Trade Policy, Migration, and Development ([21:21]–[23:58])

• Access to world markets is vital for boosting wages and growth, not just for China.
• Movement of jobs (offshoring) and people (migration) are complementary—what matters most is maximizing choices and freedoms.

9. The Pitfalls of Supporting Authoritarian ‘Success’ Models ([24:24]–[26:23])

• Western aid too often supports authoritarian governments in exchange for stability or geopolitical alignment, sometimes at the cost of human rights.
• On so-called ‘benign’ dictatorships:

  “If Kagame really is so popular, why doesn’t he just hold an election? ... Why does he have to rig the election and suppress the dissidents?”
  — Easterly [25:29]

10. The World Bank: Purpose, Legacy, and Current State ([27:59]–[38:09])

• Intellectual Drift: Once promoted sound economics, now lost direction.

  “Now I think the current management of the World bank just doesn’t have a clue how development really happens...”
  — Easterly [27:59]

• Controversial Projects: Under President Jim Kim, alleged complicity with authoritarian regimes and forced resettlement in Uganda and Ethiopia.

  “...a World bank project involved having some soldiers show up with guns, burn down the homes and torch the crops and kill the cattle of 20,000 Ugandan farmers…”
  — Easterly [30:39]

• Loans vs. Knowledge Transfer: World Bank’s attempts to become a ‘Knowledge Bank’ (“McKinsey for countries”) fall flat—most “knowledge products” unused.

  “33% of World bank reports… were never downloaded… 87% were never cited by anyone else…”
  — Easterly [33:16]

• The ‘Expert-Authoritarian’ Model: Emphasis on grand plans, top-down implementation, and disregard for local knowledge leads to poor outcomes.

  “What if the expert advice is wrong? In a democracy there’s accountability… The problem… is nobody ever suffers from any wrong advice.”
  — Easterly [35:17]

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Notable Quotes & Memorable Moments

• On Development Stereotypes:

  “That doesn't fit your usual image of Africa, does it?”
  — Felix Salmon [05:37]

• On Direct Cash Transfers:

  “Can any other aid program that’s spending the same amount of money claim to do as well or better than just giving cash?”
  — Bill Easterly [11:50]

• On Democracy and Development:

  “Political freedom and economic freedom really go together, and they're very highly correlated across countries.”
  — Easterly [18:24]

• On Rwanda’s Kagame and ‘benign dictators’:

  “If Kagame really is so popular, why doesn't he just hold an election? ... Why does he have to jail and murder the dissidents if he's so popular—he could just, you know, allow completely free and fair political competition."
  — Easterly [25:29]

• On World Bank Knowledge Products:

  “33% of World bank reports spreading this knowledge were never downloaded from the Internet… 87% were never cited by anyone else…”
  — Easterly [33:16]

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Timestamps for Major Segments

• [03:06] – Big-picture progress in health and economics
• [07:02] – Aid successes and limitations
• [10:42] – Critique of NGO fundraising and respect for the poor
• [11:25] – GiveDirectly and direct cash as a baseline
• [12:40] – Randomized controlled trials in aid
• [16:03] – On refugees and economic migration
• [18:24] – Democracy, government’s “enabling” role
• [21:21] – China, liberalization, and growth
• [27:59] – The World Bank’s past, present, and future
• [30:39] – World Bank’s involvement in forced resettlement
• [33:16] – “Knowledge Bank” failure metrics
• [35:17] – The perils of “experts and autocrats” development

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The Numbers Round ([41:00]–[42:29])

A classic Slate Money segment, each participant shares a relevant statistic to end the show:

• Felix: Global water withdrawals have tripled in the past 50 years and will rise another 40% by 2030—a worrying trend for development and potential conflict. [41:00]
• Jordan: Americans believe 28% of the US budget goes to foreign aid, versus the reality: about 1%. [41:00]
• Cathy: Contraceptive usage among Ethiopian women aged 15–49 rose from 6% (2000) to 40% (2015)—tangible health progress. [41:51]
• Bill Easterly: “More” democracies than dictatorships in the world now, versus 40 years ago—freedom expanding. [42:15]

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Tone

The discussion is evidence-based, conversational, and often sardonic, particularly in critiques of elite-driven development models, world institutions, and international conferences (“Oh my God... I love to be rude about Davos” – Salmon [07:32]). Easterly is pointed but measured, steering focus toward empirical results and human dignity.

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Summary Takeaways

• The world has made extraordinary progress in health, economic growth, and political freedom, including in places long dismissed as hopeless.
• Aid has clear wins in targeted health interventions but largely fails at driving broader economic development and often enables authoritarian abuses.
• Direct cash transfers to the poor and respect for recipients’ autonomy are gaining ground over paternalistic or top-down charitable approaches.
• Political and economic freedoms, democracy, and “enabling” (not overbearing) governments are essential for sustainable development.
• The World Bank has lost clarity in its mission; its “Knowledge Bank” role mostly fails, and its historic focus on big, expert-driven projects—often with autocratic cooperation—has been problematic.
• On balance, the world is, by most measures, becoming a freer and better place—largely because of, not despite, the resourcefulness of poor people themselves.

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For those interested in these issues at “a much more granular level,” Bill Easterly recommends his new development-focused podcast (launched with NYU’s Development Research Institute).

Transcript

[A]

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[B]

The following podcast contains explicit language.

[C]

Hello and welcome to the Development edition of Slate Money, your guide to the business and finance news and issues of the weekday year century. We're taking a big picture look this week at global development and basically how the world has been getting better or whether the world has been getting better and what people, various different people in the world, are going to do about it or have been doing about it. I am Felix Salmon of Fusion. I am joined as Always by Cathy O', Neill, the data scientist and [e-mail] hi. Hi Kathy. I am joined as always by Slate's Moneybox columnist Jordan Weissman.

[B]

Hello everyone.

[C]

And most excitingly and most fabulously, we are also joined by Bill Easterly who is.

[D]

Hello.

[C]

You are an economics professor at nyu, correct? You are a development expert.

[B]

Not so correct.

[C]

You are famous for having written this book the White Man's why the West's Effort to Aid the Rest of the World have Done so Much Ill and so little good. You have a new book out called.

[B]

What The Tyranny of Economists, Dictators and the Forgotten Rights of the Poor.

[C]

And on top of all of that, you have a new podcast.

[B]

Yes. So the Development Research Institute at nyu, which is I co direct is starting. We're starting our own podcast series on development. Kind of free thinkers on development.

[C]

Fantastic. So this is your little. This is gonna be our sort of very high level introduction to such issues. And then anyone who wants to get nerdy and gnarly and start talking about the real, you know, Granular Debates gets to listen to your podcast, which starts any day now.

[B]

Any day now.

[C]

It'll be up on itunes by the time this comes out. So we're gonna talk about the big picture development. We're gonna talk about the Rights of the poor, which is a lot of the new book that Bill wrote. We're gon about the World bank because I feel that the World bank is this huge and hugely important and hugely influential institution which people don't talk about as much as they used to. But let's Bill start with the very big picture. Your friend and mine, Charles Kenny, famously wrote this book, Getting Better, saying that if you look at basically any indicators other than money, it's astonishing how much better off or even if you look at money, it's astonishing how much the world, how far the world has over the past few decades.

[B]

Oh, yeah, I completely agree with that with Charles. If you just take one really meaningful indicator. In 1960, 23% of children born in what was then called the third world died before their fifth birthday. And today that number is down to 5%. So from 23% of children dying before their fifth birthday to 5% today, that's how much progress there has been in the. What is no longer called correctly. Correctly no longer called the third World.

[C]

It's now called the developing world.

[B]

The developing world.

[C]

Is that a well defined term?

[B]

Well, in many senses it is, yeah. Developing just means kind of all the good things are going up, all the bad things are going down. And that's pretty much true.

[C]

And that's pretty much true across sub Saharan Africa and all the places that we kind of grew up feeling guilty about and worrying about.

[B]

Yeah, I think sub Saharan Africa is the one where there's the most kind of negative stereotypes as being like this place of the. The four horsemen of the apocalypse, war, famine, pestilence. And that's really unfair to Africans. I mean, the growth rate in Africa for the last 20 years has been strongly positive, the best in its history. In the new millennium, it's been twice the world growth rate. Growth that I'm speaking of is of income per person is rising at twice the rate for the world as a whole in Africa. And all kinds of indicators in Africa are turning around. It took the US 25 years to reach 300 million cell subscriptions in Africa. That number was added in less than 10 years. And now Africa is twice the number of cell phone subscribers as the US that doesn't fit your usual image of Africa, does it?

[C]

And this is especially doesn't fit My image of Africa, because I remember reading article after article not so long ago about how essentially all of sub Saharan Africa, and South Africa in particular, were doomed and were going to just become absolutely decimated by HIV aids. And that didn't happen.

[B]

It just didn't happen. Now HIV AIDS is thankfully getting a lot more under control. Now, if you want to mention another big one, Ebola. You know, everybody has said Ebola was this horrific scourge affecting all of Africa. There was even a schoolteacher in Kentucky fired because she failed to disclose that she'd taken a trip to Kenya, which actually was as far from where Ebola was happening as Paris. You know, what was actually happening is Ebola happened in three small West African countries, Guinea, Sierra Leone and Liberia, that constitute about 2% of Africa's population. And in those countries, about 1/20 of 1% died from Ebola. So I mean, I'm very. I don't mean to diminish those who suffered. That's horrific. For those who are the victims, their families and friends, it's horrific. But, but if you would have listened to the news media, you would have, you know, expected that Ebola was like wiping out large proportions of the whole African population. That's just not fair to Africa to portray Africa in such a negative way.

[D]

Going back to AIDS for a second, though, I mean, why did it turn out to be not as bad and why is it continuing to be not as bad? Is that medicine? Is that for treatment? Is that prevention?

[B]

It's kind of all of the above. I mean, there is a lot of progress sponsored by foreign aid, which I'll give due credit to for this. I don't give aid credit for much else. This one I will. And really expanding treatment and saving a lot of lives. But we should not underestimate how much Africans themselves are doing like any of us would do. When there's a fatal disease, you change your behavior in ways that make you less likely to get the disease. And that's been part of the story.

[C]

Next week's edition of Slate Money is going to be the Davos edition.

[B]

Oh my God.

[A]

Our now annual Davos.

[C]

And I love to be rude about Davos.

[B]

Oh, me too.

[C]

It's a very miserable. It's a very like, you know, self indulgent talking shop.

[B]

Self indulgent white men.

[C]

Self indulgent white men. One thing that they did do, I mean, if anyone asks me if I can point to something good that has come out of Davos, I say Gavi. Is that the right answer?

[B]

What's Gavi Yeah, GAVI is the Global alliance for Vaccines and Immunization. And again, let's give credit where credit is due. So I'm going to, if you press me, I'm going to say aid has mostly not worked in promoting development, but there are a few success areas. And we've already mentioned AIDS and vaccines are another long time success area in aid and it's being expanded and continued by gavi.

[D]

So what doesn't work?

[B]

Oh, everything else. So, you know, we've talked about how the developing world has grown. You know, incomes are maybe three times higher now than they were in 1960, again in terms of income per person. And unfortunately that's not correlated at all with where the aid was and the timing of it is not correlated at all with when the aid happened. And aid itself was really just too small to explain most of the growth and the progress against poverty. So, you know, we really should be giving a lot more credit to just homegrown efforts of poor people themselves. That's the bottom line.

[D]

Some of the aid was actually aid.

[B]

Just has its delusion that it's so important and so successful and it's just not supported by the evidence.

[D]

So some of the aid is actually has been counterproductive.

[B]

Right, yeah.

[D]

Can you give a couple examples of that?

[B]

Well, I think the worst thing going on in aid has been the way it's used to sort of prop up dictators who are oppressing poor people. That started during the Cold War when aid was used just to get allies on our side against the Soviets for the US but it's continued very much today in the war on terror. A lot of aid is going to countries like Ethiopia and Uganda that are dictatorships that are really doing horribly oppressive things to their own people, including even forced resettlement at gunpoint. And World bank and USAID projects is happening under the guise of aid. And so that's kind of the worst way in which, in which aid affects negatively the people that it's supposed to be helping.

[C]

And before, and we're going to move on to what you were talking about and the ability of the world's poor to really help themselves. Surprisingly to many. But one last question about aid since we got onto this subject. You're rude about, you know, it's very easy to be critical of multibillion dollar World bank projects, of, you know, politically motivated USAID projects. What should we think about much more sort of retail oriented charities? Like if I see some pitiful child in an ad campaign for a charity in the US and they say they're going to spend my money in Kenya or Botswana or something like how should I think about the work that those people are doing?

[B]

So, yeah, you're talking about all the private non governmental organization called NGOs and you can't really make any blanket statement about them. Some of them are great, some of them are terrible, some of them are in between. The kind of campaign that you just mentioned actually is more likely to be terrible. To portray this sort of helpless child, usually portrayed either a kind of degraded, emaciated condition and soliciting your aid dollars that's likely to be an NGO that does not have a very healthy respect for the autonomy and dignity of the poor making their own efforts to get out of poverty.

[C]

Whereas on the other hand, if it's someone like give directly who's like, we're just going to take a helicopter and drop a thousand bucks on the poor family.

[B]

Yeah, I think cash is really underestimated as a simple way to get out of poverty. Give ca.

[D]

Well, in any case, you can use the cash approach as a baseline to compare to other charities if you have enough information, which of course you might not, but if you have the information, you could say this organization gets this much money and does this much good and compare that to giving directly. It's a good baseline comparison.

[B]

Yeah, absolutely. First of all, the cash programs have been evaluated and have been found indeed to go into good things. The stereotype that men would spend them all on alcohol has been largely disproven. And like you said, it's a great baseline. Can any other aid program that's spending the same amount of money claim to do as well or better than just giving cash?

[A]

So the idea of giving cash is relatively new and it's catching on. This leads me to wonder, do you think charities and maybe aid operations in general are getting better at all? I mean, there's this emphasis now on maybe trying to use randomized control trials to at least measure. They measure results in ways that they didn't before. Is that, is it improving outcomes or is it just, just. Is it just kind of a band aid approach or to bigger problems?

[B]

Well, it's an improvement, but not a panacea. I mean, compared to almost no evaluation or self evaluation which was going on before in aid, now we have kind of outside rigorous evaluation and that's much better, but it's not a panacea. You know, the randomized controlled trials don't necessarily generalize to other settings. They assume that everything is implemented like actually giving a bed net to a poor person. To protect them from malaria, when actually implementation is really the heart of the problem. It often fails to happen in aid programs.

[C]

Okay, so we're going to move on to basically the topic of your new book. So when you're in Kenya, it's an incredibly good idea to cover yourself with a bed net which has been soaked basically in anti malarial chemicals because you don't want to get bitten by mosquitoes because it itches. And you can probably get malaria as well when you're not in Kenya. You do not need to cover yourself with bed nets. What you want is just maximum comfort. You want to be able to lie in bed and think, oh my God, this is my favorite place in the whole world. And have the best night's sleep ever. And the best way to do that is to have the best sheets ever. And the best way to do that is to have bowl and branch sheets. So curl up in the most organic, soft, high quality, just sleep inducing sheets you have ever slept in. And they're the first brand that's ever received fair trade certification. So you know that you never need to worry about how they're made or where they're made. And they donate a portion of every sale to the charity to fight human trafficking, which I think is probably a charity that Bill would be okay with. You get 20% off just for being a slate money listener, which is pretty awesome. That's sheets, towels, blankets, duvet covers, the whole thing. And you get free shipping and it all comes in a beautiful signature box. So go to BollandBranch.com today. 20% off if you use the promo code MONEY. That's the thing to remember. BolandBranch.com, b O L L and Branch.com promo code MONEY. Get 20% off and no risk. You can send it all back if you don't like it. So Bill, the big change in the world, the one way in which the world has got worse, unambiguously worse in recent years is the insane rise in the number of displaced people around the world who are not only poor, but they're also homeless and they have like no anchors and there's these massive refugee camps and it's caused this huge political problem across most of the developed world. And there's obviously a massive waste of human productive potential. Is there an analogy there in terms, you know, it used to be that there were lots of people in the world who just by dint of the country they were living in, you know, their productive potential was being wasted. Now it's not so much where you live. But, like, whether or not you're displaced, this is like a whole new sort of class of very poor people, which. What's going to happen here?

[B]

Well, let's be careful how we talk about this. So obviously the refugees from Syria are kind of a special case where there's this horrific destruction going on and terror that everyone is fleeing from. Those refugees are truly desperate for very understandable reasons. You know, purely kind of what's usually called kind of economic migration from, say, sub Saharan Africa to Europe or from Latin America to the US that's actually not necessarily a bad thing. You know, first of all, for the people who are moving themselves, they're raising their incomes a lot by moving, and then they're sending a lot of their money back to their families in the home countries. So, you know, we talk of this and of course there are big complications with can we get the American and European population to actually be willing to accept these immigrants, these migrants that are trying to improve their own lives? That's a huge complication that we don't have time to talk about.

[C]

Migration has historically been the easiest way to improve your lot. If you're in Chiapas and you're very poor, you're going to remain very poor unless you manage to make it into the US in which case you'll be able to make vastly more money than you could ever do in your home town. Now, what you claim is that, you know, the people who stay who don't migrate have actually done quite a good job of managing to improve their lives over the past few decades.

[B]

Yes, yes.

[C]

And how have they done that?

[B]

Well, they just do it the same way you and I have done it and our parents and grandparents did it. You invest in education, you invest in factories that create employment. You have good business conditions for all of the above.

[C]

Is that a government thing? Can we give the governments credit for this?

[B]

You know, I think partly it's a government thing. So, I mean, I think to take Africa again, I think Africa at independence had this kind of very super interventionist government attitude, you know, that government should just manage the whole economy, should kind of like do things like control prices that really made exporting unprofitable, control interest rates, and it made saving unprofitable. And these are all ways to kind of destroy growth. And the good thing that's happened is governments have moved away from that kind of attitude to a much more enabling attitude that allows poor people to save and export and invest in themselves.

[C]

Does it help if the government is a democracy?

[B]

Absolutely. Yeah, I mean, the political freedom and economic freedom really go together, and they're very highly correlated across countries.

[D]

But governments, at least, at the very least, are involved in infrastructure building.

[B]

Oh, yeah, yeah. Of course. I'm not saying no government. I'm saying government should do what it does best and where it's needed most, which is infrastructure, basic education, basic health services.

[D]

So do you think of it as like there's a minimum required sort of level of freedom and infrastructure and such on, and then after that, you just let people do their thing?

[B]

Well, I mean, I think political freedom is necessary to kind of get the kind of economic freedom that people actually want. And we should not think of economic freedom as something that mainly benefits the rich. You know, when there's something like severe controls on prices that makes exporting unprofitable. The richer producers that have much larger transactions can afford the fixed cost of smuggling to black markets, and the poor cannot afford the fixed cost of smuggling to black markets. So I think it's actually the poor that are hurt most by these very restrictive kind of policies. So I'm not talking about any kind of laissez faire. I'm just talking about allowing poor people to have the economic freedom to improve their own lives, and that's protected by political freedom. They need to have the ability to protest if their rights are violated. You know, Amartya Sen very famously said, democracies don't have famines. That's one small example of how the ability to protest and demand things from your own government protects you against some of the worst things that can happen to you by making available to you the kind of essential public services you need and kind of the essential freedoms you need to improve your own life and feed yourself.

[C]

And how does it. How does China fit into this model?

[B]

You know, China, I think, is a confused, a very confusing example because. And there's a lot of, you know, misunderstandings. You know, why are we so excited about China? It's not because of its per capita income, because that's still like, very low relative to the US it's because it's had very rapid growth over a long period of time. I think that rapid growth corresponds pretty well to actually an increase in political and economic freedom in China, mainly economic freedom. Of course, when you move from very centrally planned economy, you have a totalitarian psycho Mao in charge in creating great famine, great leap forward, cultural revolution, total chaos. You move from that to an orderly government that allows private ownership of farm plots, allows a lot of freedom for entrepreneurs to create value, and you Have a lot of highly trained unskilled labor available to export to the world market. That was kind of the formula for. So the point is that all that changed for the better and then as a result you got rapid economic growth. So it's like change is go with changes, changes in political and economic freedom go with changes in per capita income, and changes in per capita income we call economic growth. So China is a case of the most rapid liberalization in recent history. And that goes together with the most rapid economic growth in recent history.

[A]

We bring up China again. It makes me wonder how much of development boils down to trade policy. Because China maybe it's the most prominent example of a country that has benefited from fairly favorable terms of trade and frankly, fairly loose enforcement of some of the rules of trade when it comes to their currency. Not so much now, but in the past. I mean, is trade really the secret? Is that the biggie really or.

[B]

Well, it's part of the secret. I mean, the ability to. When you have a large pool of unskilled laborer at low wages, one of the secrets of raising their wages is giving them access to the entire world market. So, you know, under which conditions is a worker going to get a higher income if they can only export to a tiny country that they're a citizen of or whether they can export to the whole world? They obviously get a higher wage when they can export to the whole world. And so in that sense, trade is very much a big part of the secret of development. That's not the only thing going on. You know, there's also a lot of production for home markets. It is also very, you know, there's no reason to favor one or the other.

[D]

And so we're talking now about like the sort of offshoring basically, so the migration of jobs from one country to another. Felix started the segment by talking about migration of people. And I'm wondering if you could compare those two. Like which, like the freedom of migration of people or of jobs. What is a faster growth stimulant?

[B]

Yeah, there, I mean, there definitely is a lot of movement of some, some industries from high wage countries like the US to low wage countries like China. That is as part of China's secret of rapid growth and development. Again, we should keep that in perspective. That's fairly small, accounts for a fairly small negative change in employment in the U.S. so this kind of nativist reaction against Chinese exports is not really justified. There's actually far more jobs lost in the US to just technological change that puts out of business the old lines of work and creates new lines of work. That's far more destructive than any trade policy ever is.

[D]

I'm just. I agree with you. I was just wondering from the perspective of the people, like from China, you know, is it better for them to get the jobs shipped to them as such as they are, or for them to be able to leave as a population?

[B]

There's no reason to say one or the other is necessarily better. It's better just to have all those options available to you to raise your income. If your home economy is doing so well, to create a lot of jobs, that's great. You can stay and earn a lot of money. If it's not doing so well to earn a lot of money, you can move somewhere else. That is creating jobs. And to have all those options is a great formula for people.

[C]

It seems to me that what you're saying is that development policy, it basically boils down to some very political basics that you want domestic governments who are going to be giving political and economic freedoms to their populations. And I guess in terms of the development policy of the rich countries, countries, the main thing they should do is just encourage that.

[B]

Well, unfortunately, at the moment they're kind of doing the opposite. Because of what we discussed earlier, that the US wants allies in the war on terror. It's actually giving a lot of aid and intellectual support to authoritarian approaches to development and specific autocrats like those in Ethiopia and Uganda and, you know, even China, despite the fact that it has rapid growth, it's still got in place a brutal autocracy that had the one, the horrific one child policy that has these horrific restrictions on whether you can migrate from the interior to the coast to get a job. The development model just seems to like dictators, this sort of combination of experts and dictators.

[C]

There's an interesting war of words going on right now between the State Department and Rwanda, where Kagame, the president, has just given himself basically president for life authority with, it has to be said, the wholehearted support of the population. Is there such a thing as a benign dictatorship? And if so, is Rwanda a benign dictatorship?

[B]

Well, there could be benign dictatorships, but the burden of proof should be on those who claim that they are benign dictators. You know, and I love this argument because it's like, first of all, how do we really know what the population of Rwanda really thinks about Kagame? How do we really know that in such a repressive environment where, you know, dissidents jailed or murdered? And second of all, if Kagame really is so popular, why doesn't he just hold an election? What's the problem? You know he'll win. Isn't that according to his own words? Well, yes, but why does he have to rig the election and suppress the dissidents? Why does he have to jail and murder the dissidents if he's so popular he could just, you know, allow completely free and fair political competition. And according to you and many other sources, he's so popular he would easily win. So why is he doing this? Maybe it's because he's not as popular as some of us think.

[C]

Okay, so next up, we're going to talk about the World bank, because this is a subject I'm fascinated by. But first I need to talk about TaxAct, which is the sponsor of this show. I've just been watching the Republican debate and everyone says they want to make the tax code so simple. You can use file your tax return on a postcard, which would be awesome, even if it's improbable. In the meantime, the best you can do is taxact.com it's not quite as simple as a postcard, but it's as simple as it gets. Your simple federal tax returns, your state returns are all free. It is easy to use. You can do it on your phone, you can do it on your tablet, you can do it on your computer. You can start anywhere, finish anywhere else. Everything is portable, it's fast, it's easy, it's affordable. It's actually free. If you're doing the more simple stuff, don't pay more for the same forms, the same features, the same functionality. You're going to get your maximum refund guaranteed. So go to taxact.com slate you got this. We're going to move on now to the World bank, which is a fascinating, fascinating institution. It was set up as part of the whole Bretton woods post World War II attempt to sort of rebuild the global economy after the war. Bill, is there any reason for it to still exist? And more narrowly, how is it doing?

[B]

It's not doing that great, to be honest. It's. It's becoming a much smaller and smaller piece of the whole development. Question, is that a good thing or a bad thing? Well, let's get to that in a moment. And I think intellectually it's really lost its way. I worked there for 16 years from 85 to 2001, and kind of during the heyday of the 80s and 90s, I think there was a lot of really kind of sound economics being preached by the World Bank. Sometimes it was There was too much arrogance and attempted coercion of the recipients of its loans to accept our brilliant advice. When I was working there, that was a bad thing. Well, the economics was actually pretty good. And now I think the current management of the World bank just doesn't have a clue how development really happens. All the things we've been talking about in this podcast, I think they don't get.

[C]

So what happens is that the president of the World bank is, for reasons which no one entirely understands, always chosen by the US and is always an American and is often like some perfectly random person like Paul Wolfowitz. And you're like, why on earth? But right now it's a doctor. It's Jim Kim and of all the previous presidents of the World Bank. I mean, the World bank is basically full of PhD economists, but now a doctor is in charge. You seem to think that medicine is the one bit of. Of global development which works. This is maybe not such a bad idea.

[B]

Well, I'm pretty sure he's doing a great job on making sure the vaccines have the right formulas. But he in particular has shown two things which kind of distress me. One is he really does not get the whole economic paradigm of development. I mean, he in his career even kind of criticized economic growth as a force to help poor people. And I think that's just crazy. I mean, economic growth is the main hope of poor people to get out of poverty. And second, he displays what we were talking about before, a kind of alarming sympathy for very authoritarian governments. He went to China and just lavished praise on China's autocratic, on the Communist Party and how wise they were doing everything right in China. He's been behind the support that we talked about earlier of Ethiopia and Uganda. Under him happened this really horrific story in Uganda where a World bank project involved having some soldiers show up with guns, burn down the homes and torch the crops and kill the cattle of 20,000 Ugandan farmers, March them away at gunpoint, and then give the land to a foreign corporation.

[D]

Wow.

[B]

That happened under, you know, basically the whole aftermath of that has happened under President Kim's watch, and he's done nothing about it. And something similar more recently happened in Ethiopia, which with called forced villageization. That was again forced resettlement at gunpoint. It was very well documented in Human Rights Watch and other reports. And again, the bank did nothing about it. Just had no response whatsoever. It was just like, we're just going to continue supporting Ethiopia and Uganda. We don't care.

[D]

I'm going to back us up. Just A second, I thought the World bank made loans. What is this forced resettlement at gunpoint stuff? Is that in the guise of a loan?

[B]

Yeah, that's in the guise of a loan. Forestry project. The forestry was possibly good for improving the productivity of the land on that piece of land. It wasn't so good. And it's not going to benefit the people who thought they were the owners of that land if they're marched away at gunpoint.

[D]

And the other thing I want to make differentiate between aid, which we were talking about earlier, that's just giving money, right? Not loans. And the World bank is expert on loans, correct?

[B]

Well, in practice it's not that much of a difference because these are for the poorest countries. These are heavily subsidized loans, so they're almost equal to aid grants.

[D]

So one of the loans I heard about from the World bank was pretty disastrous to Jamaica a while back.

[B]

I mean there was a documentary about that.

[D]

Yeah, I watched the documentary. Life and Debt, I think it's called.

[B]

Right, right.

[D]

Could you speak a little bit about that situation?

[B]

Well, even with at highly concessional, heavily subsidized interest rates, the World bank was pouring so much and Jamaica was a case of actually not getting subsidized interest rates. So the middle income countries don't get subsidized interest rates. But actually both classes of countries, the World bank just poured in so many loans and they were so unproductive in creating economic growth that the loans just became a huge burden and had eventually to be forgiven by the World Bank.

[A]

One theory I've read is that the World bank would be better off if it actually stopped pouring money on countries. Like if it gave up its core mission some ways and just acted as sort of a reservoir of expertise. Just basically a group of people that could work with countries to improve their internal management, internal policy. Do you think that has any truth whatsoever or is it kind of just a silly idea?

[B]

Well, the World bank has tried to glom onto that role for quite a long time now, calling itself the Knowledge bank, you know, the reservoir of expertise. It's not doing so well getting anybody to listen. There was an internal study that found that 33% of World bank reports spreading this knowledge were never downloaded from the Internet.

[A]

That's sort of like a horror.

[B]

87% were never cited by anyone else, which means they're basically never read. So you know, it's not doing so well. And that relates to this kind of confusion that I think exists now within the World bank about how development really happens.

[C]

I Mean, as I understand the knowledge bank idea, though, it's not so much building the World bank into research institution which creates a bank of knowledge for the world to draw upon. And it's more turning the World bank into McKinsey for countries basically where you send all of these economics PhDs who know what they're doing into various finance ministries and then they say, hey, I think you should do this, or here's a piece of software which can do that, or. And then, and then very quietly, without anything being downloaded from the Internet, the local technocrats come up to speed much more quickly than they might be able to on their own. Does that ever happen?

[B]

Well, possibly to some extent. I'm trying to make some minor concessions here to the general criticism, but actually my experience already in the period when I was at the World bank was that the technocrats on the other side of the table are already better informed than we were because they also had graduate degree PhDs from elite universities. Plus they had the benefit of tons more local knowledge than I did or any of us at World bank experts did.

[D]

Can we go back to the love for the autocrat? I mean, I feel like doing some research for this show. Like, you also talk sometimes about sort of the love for the big project and the story behind that project. It's almost like TED talky, kind of like takeaway that people fall in love with and they just poured money into because it's one salient idea. Do you think that's what's going on? It's like an unscientific kind of.

[B]

That's part of the love for the dictator is that you can imagine that the expert comes in and just says, well, here's exactly what I think you should do. And then the dictator can do it because he's not constrained at all by any parliament or democratic constraints. It sounds like a good model. Just, just immediately implement the expert advice. Because the problem with all of this is that what if the expert advice is wrong? In a democracy there's accountability when you're wrong, you get punished when you're wrong. The whole problem with the experts plus autocrats model is nobody ever suffers from any wrong advice. And there's been tons of very wrong advice, such as, for example, the transition from communism to capitalism in the former Soviet Union, Eastern Europe. There's just tons of wrong advice that was given there. It was catastrophic. In the first 10 years after the end of communism for the former Soviet Union, nobody ever suffered the consequences of giving bad advice for that.

[D]

And the other thing that it doesn't have, when you have that one point of contact between the expert and the autocrat is it doesn't have any grassroots involvement, you know, in creation of the on the ground situation.

[B]

Absolutely. I mean, you know, I really think poor people know best what they need themselves. You know, they're the best authorities on their own needs. And this sort of paternalistic expert coming in thinking, I know better than you do what you need and I'm going to tell your local dictator to give it to you whether you want it or not. I just don't think that's a great model. We would not want that model for ourselves. Why would we force it on anyone else?

[C]

Does the World Bank, I mean, the World bank used to be notorious for just helicoptering in and building dams. Basically this is the big sort of McNamara era vision of the World Bank. We're just going to build dams all over the world, like in hindsight. And then, you know, we moved on and now it's all about knowledge, apparently. But in hindsight, how did all that dam building go?

[B]

Well, it didn't go that well because again, you don't have enough sort of local knowledge to know where the dam should be, how much. Again, involuntary resettlement is the dam creating when it floods the surrounding countryside. But to some extent, the focus on infrastructure had some positive payoffs. You were creating some electricity generation, some roads. All that is good. And in a way it seems better than what's going on now when there are these extremely vague ideas like community driven development. I don't even want to try to try to explain what that means. I know that there was this huge evaluation of all the World Bank's community driven development programs and they concluded that huge amounts of money were just, just spent on virtually with virtually no effect on anything that they intended to achieve.

[C]

So that's a mildly depressing note to end this segment on.

[B]

Well, remember all the positive news we were talking about earlier. But still, even if the World bank is not saving poor people, poor people are saving themselves.

[C]

The World bank notwithstanding, the world is getting better. Don't forget that with any luck, we're going to have some more upbeat and positive numbers in the numbers round. But first, Slate money is also sponsored by Casper, which if you are curling up at night in the world's best sheets from bowl and branch, what you really need to finish off the whole experience is a decent mattress. And the mattress doesn't get better than the mattresses from Casper, which use a combination of premium latex foam with memory foam. You get both of them in here and you get this fantastic mattress sold directly from Casper, the manufacturer to you. No middleman, no intermediary mattresses. You know, these things can cost 1500 bucks upwards, but Casper mattresses are much less cost. For higher quality you can get get a twin sized mattress for $500 up to $950 for a king sized mattress. This is cheap and it is incredibly convenient. It just comes in a box. The delivery is free and you get to try it out for a hundred days. And then if you don't like it, you send it back. It is that simple. Don't just lie on a bed for four minutes in a showroom and work out on the basis of that. You will have no idea. Sleep on it for a few weeks. If you don't like it, send it back. And best of all, you get $50 off when you go to Casper.com slatemoney so that $500 mattress becomes a $450 mattress. $50 off if you go to Casper.comSlateMoney and get your mattress. Okay, we have a numbers round. I'm going to go first, partly because I rarely go first and partly because my number is not so upbeat and positive and I want to end on as upbeat and positive a note as we can. So My number is 3, which is the amount by which water withdrawals, the amount of water being used by people in the world has increased in the past 50 years. It's gone up three times in the past 50 years. It's going to go up another 40% by 2030 in the next 15 years. So that we're going to basically see a quadrupling of water withdrawals in 65 years. 60 years. And I feel like whenever you look at major mass migrations or wars, there's a very good chance that somehow underneath it all is a problem of water and that the water problems, for all that everything else is getting better. The water problems are almost certainly going to continue to get worse. But that's my pessimistic number.

[A]

So my number is 28%. Talking about knowledge earlier, that is on average how much Americans think of our budget goes to foreign aid. That's the American people believe 28% of the US budget goes to foreign aid. The reality is about 1% of the US budget goes to foreign aid. It's almost a little bit unfair because if you ask, if you just poll Americans ask, how much do you think of X goes to X Or like how is income distributed? They always come up with crazy numbers. But it is probably one reason why the one thing everyone always talks about when they say we want to cut the budget, the first thing they mention is foreign aid because they don't realize.

[C]

That most of that is aid to Israel.

[A]

Israel is sought. Yeah, yeah, exactly. It's military, Egypt, things like that. But yeah, Americans have no concept of how little we actually give of our budget, which may be a good thing, actually. Now, conversation.

[D]

I'll go. So 40%. 40% of Ethiopian women age 15 to 49 now use contraception. Used to be 6% in 2000. So that's a lot.

[C]

And that's only in 15 years. That's a big change.

[D]

It's a big change.

[C]

Short amount of time.

[D]

And it's one of the examples where it's actually helped. Aid. Has helped.

[C]

And medical aid, the authoritarian regime there notwithstanding.

[B]

Yes, well, I've already given a lot of precise numbers, so I have a fuzzy number which is just more. And 40 years ago, there were more dictatorships than democracies in the world. Today there are more democracies than dictatorships. Freedom is expanding.

[D]

Hey, that's great.

[C]

That's good. Okay, so on these happier notes, we are going to bring this episode of Slate Money to a close. Thank you very much for listening to Slate Money. A huge thanks to Bill Easterly for joining us today. Subscribe to his brand new podcast to wonk out on a much more granular level about all things development. Subscribe to his show. Subscribe to this show, which you can find by searching for Slate Money in the itunes store. Leave a review and write to us please. As ever, the email address is slate moneylate.com Many thanks to Zach Dynestein the producer, Andy Bowers the executive producer and we'll talk to you next week from an alp.

[D]

Well, some of us will be at an alp. Others of us will just be in the studio.

[C]

Anyone who's up the ALP is welcome to join the viewers big Slate Money party.

[A]

That that could end disastrously.

[C]

We will see you next week on Slate.