Angus Deaton’s The Great Escape. Part I

Angus Deaton is the Nobel Prize winner for Economics in 2015 (or better, the winner of the Swedish National Bank’s Prize in Economic Sciences in Memory of Alfred Nobel for 2015). He has devoted most of his career studying consumption and poverty, focusing in the last few years on poverty in the United States. Although in recent times he has made some questionable remarks about the level of destitution in the United States, he is an author anyone working in international aid policy or practice should be to an extent familiar with.

In 2014, Deaton published The great escape, a book aimed to the general public, focused on the dramatic improvement of living conditions of the last two centuries – at least in part of the world (the great escape being from poverty), and on the limits of international aid. I read the book back then and followed with interest the discussion that ensued, a debate the sector and the general public would really need and benefit from. I went back to my old notes, and will publish them here in a series of posts.

A comparison between the last part of The great escape by Angus Deaton and Dead aid by Dambisa Moyo can be an helpful exercise. Both of them criticise international aid, on the ground that it would be doing more harm than good, as bearer of corruption amongst the ruling classes of developing countries, preventing therefore their institutional development and the escape from poverty. However, where Moyo’s account is simplistic and sensationalist in its conclusions (and not so original, for a book published in 2010), Deaton manages to give a more nuanced and contextualized account. Its stance against aid comes at the end of a long reflection on the “great escape” from need and poverty experienced by millions of people in the last two centuries, escape that however has left many behind, people now struggling to regain the ground.

The core message of the book is that the world is nowadays a better place than two centuries ago: focusing on material poverty and health as two key factors of progress, Deaton examines their historical development in the last two centuries. Even if he is an eager progressive, Deaton doesn’t forget the most problematic aspects of the great escape, be them the intrinsic limits of growth (read: global warming), and therefore the eventuality of an end of the process (not remote at all, according to the author), be them the errors, if not the crimes, committed in development’s name.

Here I will focus mostly on the last part of the book, a critical account of international aid, by reason of personal interest and competencies, and also because I believe it can – with some caveat – teach something to whom is involved in the aid industry and has some interest towards low-income countries.

Again a couple of preliminary pointers. Also in this case Deaton doesn’t claim to be particularly original, he draws from well known authors and theories, summed up in a systematic review (tough not flawless, as already pointed out by others, and as I will try to show). The author focuses his critic against a “hydraulic” conception of aid, according to which channelling some resources to the poor would directly benefit them, as it would happen moving some water in a perfect hydraulic system (Angus Deaton, The great escape, 2014, p.248-252). Deaton argues that this concept is totally misleading, as international aid concurs to perpetrate dysfunctional institutions, unable (or unwilling) to provide their citizens with good services. In a similar fashion with raw materials, aid gives governments a source of income that makes unnecessary to have a functioning tax system. As a consequence, it perpetrates corrupt governments, which don’t need to be accountable towards their citizens. That sort of social contract in place in (at least a good deal of) high income countries goes missing, denying both services and democracy.  To sum up, “if poverty is not a result of lack of resources or opportunities, but of poor institutions […] giving money to poor countries – particularly giving money to the governments of poor countries – is likely to perpetrate and prolong poverty  (p.254).  Plenty of examples are out there. For obvious reasons, the first that came to my mind is South Sudan, rich in oil, aid darling, basically without a tax system and for the last few years at the centre of a conflict involving two blocks of power. With regard to the point that these dynamics can be stopped with conditional aid, the author points out that this historically never happened, both for lack of incentives for donors in halting aid (on one side fearing the loss of trade agreements, on the other, simply to avoid the total collapse of the country), both because are not the donors to suffer the “side effects” of aid, but just the people of the recipient countries, that basically lack the opportunity to have their voices listened to (p. 277).

This leads us to the second aspect, about democratic participation, or more properly the power relations, with which NGO workers should to a certain extent be more familiar. We can distinguish two aspects, one about the development projects (NGOs’ favourite approach) and the structural features that aid retains also in this fashion. Deaton admits that the single project may have positive effects, but this should be considered in a wider and systemic perspective, where the effects are wider that those of the single project (Id., p. 272). For a number of reasons, indeed, a successful project may have negative side effects (e.g. because some government officers had to neglect some other duties to focus on the project), and of course successful projects can go together with failures. Secondly, even this form of aid is missing the feedback between governors and governed, weakening the power of the letters towards the formers. In this way, aid is delinked from the home needs of a country, as it has to answer more to the needs of the donors – or to the needs of the governors of the beneficiaries. The voice of the beneficiary people is still missing. Deaton invites us to imagine a Swedish aid agency ready to fund Medicare for fifty years, conditional on the abolition of death penalty and acceptance of gay marriages in the US. Not necessarily a great example of democracy – and you can easily imagine how welcome that would be among a sizeable share of American citizens:

But taking a country into foreign receivership is hardly a good start on building the kind of contract between government and governed that might support economic growth over the long haul. It is not possible to develop someone else’s country from the outside.  (id, p. 282)

Obviously, Deaton’s argument is more nuanced and subtle than how I could explain in a few lines (for example, his stance on medical aid as well as humanitarian aid is more positive than that about economic aid), but broadly speaking this is his point.

I personally recognize a point to Deaton’s position, especially in terms of it being a good historical explanation on how international aid didn’t manage to help low incomes country especially during the Cold War. However, his conclusions can be and have been challenged, and I will focus on this debate in a separate post.

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