William Easterly’s article “The Utopian Nightmare,” echoes the sentiment of his earlier book The White Man’s Burden. In the article, Easterly argues that development aid is being wasted and that rich countries should not increase funding for development agencies unless the severe structural problems and waste are fixed. Even then, Easterly proclaims, the developing world is better off coming up with their own solutions to problems, without any big push from the West. However, many commentators disagree with Easterly’s assessment of the situation, pointing out that while his critique is valuable, his solution is misguided.
The Problem with Big Push Solutions
Easterly writes that the traditional approach to foreign aid failed miserably because it avoids doing things piecemeal, but instead invests billions of dollars across the board on lofty unattainable goals. In his book, The White Man’s Burden, Easterly demonstrates how other countries developed without the assistance of a big push development program. In East Asia, countries were able to transform from near African levels of poverty to economic powerhouses, while receiving negligible amounts of aid. This clearly shows that countries can develop through domestic solutions. These countries did not eradicate poverty overnight through great democratic revolutions or massive inflows of western cash. They did it through a slow homegrown reform process designed to meet their needs and their specific circumstances. South Korea and Taiwan are excellent examples.
This argument goes to Easterly’s main point that money should not be wasted on aid agencies when ground-level actors, which Easterly calls “searchers,” have market solutions to development problems. In “The Utopian Nightmare,” Easterly illustrates the argument using the example of men’s hair growth products. He states that the demands of the rich, e.g. curing male pattern baldness, are met through market solutions, and that the needs of the poor should be identified and met the same way.
The Limits of Market Solutions
Unfortunately, as Nobel Laureate Amartya Sen points out, Easterly fails to recognize that development does not work the same way as business markets. “[T]here is a radical difference . . . between the enterprise of supplying “what is in demand” — which is integrally linked to the buyers’ ability to pay — and that of supplying needed goods and services to people whose income and wealth do not allow a need to be converted into a market demand.” While it is valuable for big development agencies to better seek out the needs of the poor, it is dangerous to advocate excluding their much needed assistance from the equation on the assumption that the free market is better suited to solve the problem.
Another argument against Easterly is that his solution is just as Utopian as those he is criticizing. Easterly criticizes the WHO for calling for more aid when 20-40% of their budget is wasted. However, as one critic points out, Easterly’s solution to cut funding to the WHO in favor of a local market oriented solution to the problem is unreasonable. Regrettably, it is just as lofty and idealistic to advocate cutting funding for these agencies until they go through dramatic reform.
While everyone acknowledges that the leaks should be fixed, 60-80% of the funding is still desperately needed. This alone should be a reason to increase funding. “The realist, pragmatic approach to this conundrum is to fix the leaks even as we increase aid.”