David R. Henderson  

How to Help Poor People in Poor Countries, Part 2

How to Help Poor People in Poo... Some History of Deposit Insura...

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.

Comments and Sharing

COMMENTS (14 to date)

Invest money with some Indian businessmen to open up sweat shops.

Thomas Sewell writes:

Leaving of course, the open question that started the discussion:

If no one with any competence would give money to the governments of the these nations to try to help their people, why is that exactly where our government gives the vast majority of its "foreign aide" money?

Is it really just about signaling caring instead of actually accomplishing something positive, or is it all just a bribery slush fund for the state department to use as diplomatic credit?

Les writes:

Response to Thomas Sewell's question: why is that exactly where our government gives the vast majority of its "foreign aide" money?

Answer: Because its not the government's money - its the taxpayers' money. So the government is only giving away other peoples' money, not its own money.

Steve Sailer writes:

It's fascinating how promoting birth control has disappeared off the list of ways that it's publicly acceptable to help Africa and Haiti.

OneEyedMan writes:

I considered that in my proposal, but my understanding is that general female education is more effective in fertility control and has other benefits too without any of the moral or political conflict., so I went with that.

Steve Sailer writes:

Yes, but what promotes general female education more than not getting pregnant as a teen?

Steve Roth writes:

I don't often find myself agreeing wholeheartedly with Steve Sailer, but I do on this one. $10 billion worth of free condoms (etc.). Great short-term effects (non-mothers benefit immediately, and less unwanted children with their associated difficulties), and long-term, it's the probably cheapest way to slow carbon emissions hence anthropogenic climate change, with its inordinate impact on poorer countries. I saw a study that estimated $7 per ton of carbon mitigation. Even if it's twice that, it's about the cheapest method around. Not sure if they figured the obvious short-term benefits into calcing that number.

My impression from friends who've talked about this with Gates Foundation folks is that Steve is also correct about this being the unmentionable subject in the development biz.

Prakash writes:

@Steve Sailer

A person from India, Arvind, who commented on David's last thread mentioned population control. People who have to live with the problem generally point it out first. But even his suggested method was education, because education is generally accepted as the best method to control population in the long term. Wait for the urbanization/education led demographic transition to act out its long term course. Human worldwide population will eventually top out.

My own suggestions are transhumanism inspired.

Research into the personality cluster that defines successful AND empathetic human beings. Better tests to identify the same. Research into the causes.

Research into human intelligence, rationality and creativity. Popularization of any effective discovered methods.

If genetic causes are dominant for any of the 2 above, then research and development of cultural memes that will ensure survival of the same.

Identification of genius level talent in India's villages and provision of food, hostels and scholarship for them.

The extent to which biological entities can create items that we value is presently minimal compared to the scope of whats possible. I'll create an x-prize to develop the next blockbuster crop. Maybe it will be a cotton that is as strong as spider silk, maybe a bamboo that approaches the strength ratio of carbon fibre, maybe a fruit that will provide all vitamins in one bite. It will create more agricultural options for millions of farmers.

Gian writes:

Why promote vegetarian diets?. What is this has to do with economic growth?. Has meat proven to be causing or promoting poverty, vice and war?

MikeDC writes:

So bomb Libya wasn't a common response? I'm shocked!

geckonomist writes:

am with nr. 6.

Freedom of labour, goods & capital.

Eric writes:

I think #6 is a terrible idea. I agree wholeheartedly with the sentiment that the best way to eliminate poverty is open borders. On the other hand, I don't want to donate on the basis of sentiment. I've become convinced (by Bryan Caplan) that the will of the median voter is the best first approximation to government policy. Public Choice theory and money buying elections is a small second-order correction. Even spending $10 billion on campaigns will not appreciably change U.S. immigration policy. Too many voters are against it. I'd guess, based on the immigration reform attempt a few years ago, that it is already true most current congressmen and senators would favor more open borders but are unable to overcome the will of their constituents. It's unlikely $10 billion would even be sufficient to elect the candidate. But, if it did and he succeeded in opening the borders, there would be a voter backlash similar to the 2010 response to bank bailouts and Obamacare. That is $10 billion down the drain.

Philo writes:

Though you did not specify a time scale in the previous post, it now appears that you meant: How could the possessor of $10 billion do most *in the very short run* to help poor people in poor countries? My answer focused instead on the long run.

sourcreamus writes:

Eric is entirely correct.

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