“For God’s Sake, Please Stop the Aid”

Speigel has a very interesting interview with Kenyan economics expert James Shikwati where he says that aid to Africa is doing more harm than good. Excerpts:

Huge bureaucracies are financed (with the aid money), corruption and complacency are promoted, Africans are taught to be beggars and not to be independent. In addition, development aid weakens the local markets everywhere and dampens the spirit of entrepreneurship that we so desperately need. As absurd as it may sound: Development aid is one of the reasons for Africa’s problems. If the West were to cancel these payments, normal Africans wouldn’t even notice. Only the functionaries would be hard hit. Which is why they maintain that the world would stop turning without this development aid.

And later:

Why do we get these mountains of clothes? No one is freezing here. Instead, our tailors lose their livlihoods. They’re in the same position as our farmers. No one in the low-wage world of Africa can be cost-efficient enough to keep pace with donated products. In 1997, 137,000 workers were employed in Nigeria’s textile industry. By 2003, the figure had dropped to 57,000. The results are the same in all other areas where overwhelming helpfulness and fragile African markets collide.

I know nothing about Africa, or aid to Africa. I don’t have enough information to decide whether to agree with Shikwati or not. But this sure is a contrarian viewpoint – a side to the argument that most people are unfamiliar with. Hence, I believe it is a must read. I love contrarian points of view. Read the full article.

In Praise of Idleness By Bertrand Russell

Recently found this article by Bertrand Russell lamenting that modern society (the article was written in 1932) puts far too much emphasis on “work”. He makes an intriguing argument that everyone should do less “work” and should have more leisure to pursue other activities. Excerpt:

When I suggest that working hours should be reduced to four, I am not meaning to imply that all the remaining time should necessarily be spent in pure frivolity. I mean that four hours’ work a day should entitle a man to the necessities and elementary comforts of life, and that the rest of his time should be his to use as he might see fit. It is an essential part of any such social system that education should be carried further than it usually is at present, and should aim, in part, at providing tastes which would enable a man to use leisure intelligently. I am not thinking mainly of the sort of things that would be considered ‘highbrow’. Peasant dances have died out except in remote rural areas, but the impulses which caused them to be cultivated must still exist in human nature. The pleasures of urban populations have become mainly passive: seeing cinemas, watching football matches, listening to the radio, and so on. This results from the fact that their active energies are fully taken up with work; if they had more leisure, they would again enjoy pleasures in which they took an active part.

See full article. It is a long article, and a little slow in the beginning but it has lots of insightful snippets and is well worth the effort.

Can India afford its villages?

An editorial in livemint puts forth the thesis that the answer to rural India’s problems does not lie in the development of the villages, but rather in the development of the villagers. And they claim, paradoxically, that the best way to do that is to convert them into city dwellers.

There has been a general tendency to romanticize village life as a return to our roots. What is noticeable, though, is that most people who romanticize village life in India tend to live in cities—in India, or elsewhere. They also seem incapable of noticing the irony implicit in this romanticization, since their forefathers, too, were once villagers —who migrated to cities for good reason.

The main problem they see with development of villages is that a typical village is too small to allow efficient delivery of (at least some important) goods and services. Like electricity.

The economics of power generation and distribution do not allow decentralization to the level of villages that are home to a few hundred people. The average cost of per unit of power makes it prohibitive. The only way for a small 1-2MW decentralized plant to provide power for a village of 1,000 people is for the villagers to pay substantial premiums—which is highly improbable.

However, an earlier post on the Indian Economy blog suggests an alternative way to fix this without giving up on the villages:

Given that rural populations are very poor, it is reasonable to expect that the aggregate demand of a single village for any single service will be very low. However, the aggregate demand for, say, a 100 villages for a single service could be significant. Aggregating the demand for many different kinds of services of the same 100 villages would translate into lot of services. These services would require infrastructural inputs which can be commercially and sustainably supplied. Thus, a RISC would supply to the needs of about 100 surrounding villages.

Considering that Atanu Dey is a co-author of both the above posts, I am not sure why the livemint editorial does not have any reference to the RISC idea.

In any case, it is very common for people to subscribe to the “village life is great” philosophy without really putting too much thought into it. And these two articles should go some way in ensuring that you understand the issues a little bit more.