Angus Deaton Talks To Cato About His Book The Great Escape

Here is the link. Excerpts:

"Throughout history, the greatest episodes of human progress are what I call “the great escapes.” The most obvious dimensions are the escapes from material destitution, ill health, and premature mortality. I focus mostly on health and wealth, but it’s worth mentioning that there are many other examples as well.

Today, there are more people living under democracy, for example, than ever before. There are enormous, large-scale reductions in violence around the globe over the centuries which contribute greatly to human well-being. We’ve seen huge increases in education, particularly — but not exclusively — among women. In many parts of the world, the schools they are going to leave a lot to be desired. But it’s a start, and it reflects a trend that is quite new. Finally, I argue that increases in life evaluations have also accompanied this progress. In short, people know that their lives are better and they will tell you as much.

Now, just like in the movie, most of these episodes have only allowed some to escape — leaving many others behind — but ultimately that’s the nature of the beast. Progress does not come evenly. In that sense, it is one of the great engines of inequality. But it’s very hard to object to this sort of inequality. Why, if some escape and some don’t, is the world a worse place? Well, it’s not."

"The absence of state capacity is one of the major contributors to poverty and deprivation around the world. Without effective states working with active and involved citizens, there is little chance for the growth that is needed to abolish global poverty. Unfortunately, the world’s rich countries are making things worse. Foreign aid undermines the development of local state capacity.

This is most obvious in countries where the government receives large amounts of direct aid. These governments need no contract with their citizens, no parliament, and no tax-collection system. Why would they pay any attention to the needs of their own people? If they are accountable to anyone, it is to the donors. But even this fails in practice.

Under pressure from their own citizens — who rightly want to help the poor — wealthy countries feel the need to disburse money just as much as poor-country governments need to receive it, if not more so. What about bypassing governments and giving aid directly to the poor? The immediate effects are likely to be better, especially in countries where little government-to-government aid actually reaches the poor. And it would take an astonishingly small sum of money — about 15 U.S. cents a day from each adult in the rich world — to bring everyone up to at least the destitution line of a dollar a day.

Yet this is no solution. The world’s poor cannot forever have their health services run from abroad. What is missing from these countries is not money. Poor people need government to lead better lives; taking government out of the loop might improve things in the short run, but it would leave unsolved the underlying problem. Aid is simply racked with unintended consequences. It undermines what poor people need most: an effective government that works with them for today and tomorrow.

In short, the world is a better place than it used to be, despite the fact that many have yet to make the great escape. What can we to do to help that process along? One thing that we can do is to agitate for our own governments to stop doing those things that make it harder for poor countries to stop being poor. Reducing aid is one, but so is limiting the arms trade, improving rich-country trade and subsidy policies, providing technical advice that is not tied to aid, and developing better drugs for diseases that do not affect rich people.

Poor countries, just like their wealthy counterparts, need their own good government — not one that was thought up for them by the rest of the world. We cannot help the poor by making their already weak governments even weaker."