How to Help Poor People in Poor Countries, Part 2
By David Henderson
I was gratified by the response–in quantity and quality–to my post yesterday, “How to Help Poor People in Poor Countries, Part 2.” I promised to say what my colleagues wrote in response to my question. Before doing so, I’ll point out that there’s a strong overlap between their choices and the choices of many of the commenters. Also, people’s thoughts were fluid. Everyone got a chance to lay out his/her list and discuss it. People altered and clarified in response to comments. First, I’ll give what they wrote. I’ll transcribe pretty much literally. Second, I’ll say how it confirmed one thought I had and surprised me in two ways that shouldn’t have surprised me.
What they wrote (the number stands for an unnamed individual except in my case):
1. Health (Malaria, TB, AIDS); Education (learning outcomes); Investment (jobs); Government (Good institutions–rule of law, property rights) [He didn’t write down “rule of law, property rights” but everyone had a chance to speak about his/her list and in the discussion, when someone asked what he meant by “Good institutions,” that is what he said.]
2. Invest in Electronic Transaction and Transport Infrastructure in S. Sudan. [In the discussion, he emphasized that the idea is to make money, just as the first point in #5 below.]
3. High Marginal benefit/Marginal Cost programs (deworming children/clean water and land-mine clean-up). Who doesn’t love a bit of microfinance? Careful FDI [foreign direct investment] in bigger projects. [In discussion, she emphasized that the money for high MB/MC programs should go to NGOs, not governments.]
4. Provide a means of promoting education in personal investment. Specifically, this would mean building schools, training teachers, building community centers, and providing business training.
5. Micro-financing. Schools for girls (to keep Oprah away, Greg Mortensen model). Disease prevention. Promote vegetarian diets.
6. Contribute to the campaigns of politicians who will (a) reform immigration laws to enable more of them to come here) and (b) unilaterally drop all barriers to trade with foreign partners. Donate to small scale charities that emphasize micro/market based approaches.
7. Spend money on highest return investment in business to grow my capital stock. Donate to smartest person I know who makes developing world investments. [In discussion, he agreed with someone who said that in that case he needs to get to know more people than he already knows.] Build institutions [His explanation is scribbled but I think it says something about getting rid of trade barriers in the poor countries.] Military coordination with NGOs and USAID/State. [In the discussion, he focused almost entirely on his first point, arguing that if you find a high rate-of-return investment in a poor country, you are likely to be helping people in that country the most.]
8. Education of women; Microloans; Investments in Illness/Disease eradication (clean water); Agricultural education.
9. David Henderson. Microfinance; Use more DDT (certainly in bed nets and maybe beyond that, based on evidence); Put money in think tanks (like this one in Kenya) that emphasize economic freedom.
In the discussion, I pointed out that I was asking, not just the goals, but the particular institutions. People who wanted to give money rather than invest money, when pushed, said that they would give it to NGOs. I asked if anyone would give it to governments in those countries. None would. I asked whether anyone would give it to USAID or the World Bank or the United Nations. None of them would. This is what I had expected.
The two surprises that shouldn’t have surprised me, given that I’m around economists:
1. #2 and #5 (first part). As Adam Smith said, if you’re out investing in things with a high rate of return, you’re helping others.
2. #6. Why didn’t I think of that? That would be first on my list if I did the experiment again.