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Foreign Policy Analysis
World Poverty: Foreign Aid vs. Charity That Actually Works – Learn Liberty

World Poverty: Foreign Aid vs. Charity That Actually Works – Learn Liberty


Between 1950 and 2000, western governments and
NGOs spent $2.3 trillion on foreign aid. But many development economists wonder,
whether that money was spent in ways that actually led to real lasting
improvements in human well-being. Is there a better way? Most foreign aid programs are based
on a top down model with governments, NGO and
experts deciding what the poor need. But there are four reasons why top-down
systems are often ineffective. First, top down systems
lack local knowledge. Experts might think they know what poor
Africans need to improve their conditions, but the fact is that there is a lot
about their lives, their customs and their local environments. That we simply don’t know or understand. Whatever plans we make for them without
the benefit of that knowledge will likely be ineffective and could be disastrous. To give just one, small example. When Jeffrey Sachs Millennium Village
Project gave high yield seeds and fertilizer to a village in Uganda to help
them grow their maize more effectively, it worked. Crop fields increased by almost 300%. But because the village had not developed
any storage for excess crops and because there was no road network to transport it
elsewhere, most of that excess sat around to be consumed by rats and
other pests and the rats brought disease. The second problem with top down systems
is that they often come with a lot of bureaucratic inefficiency. The more money you spend
on administration and the more hoops you have to jump
through to try out new ideas, the harder it is to get help where
it’s most desperately needed. Third, top down systems often
work by channeling money to the poor through their governments. But since those governments
are often inefficient or corrupt, much of that money never actually makes it
into the hands of the people who need it. In fact,
by making corrupt governments richer, it sometimes makes the problem even worse. The brutal dictatorship of Robert Mugabe
in Zimbabwe is a tragic case in point. Finally, when top down programs fail,
they fail big. Spending a lot of money on a single
program means that if you miss the mark or there are unintended consequences, those failures can have
a mass destructive impact. And the bigger the program is,
the harder it is to change course and learn from your failures. Recently, one group of people came up
with a radically simple alternative. Give the poor cash and let them spend
it on whatever they think they need. Some of those people choose
to spend the money on food. Some people spend it on a new roof. Some people buy chickens and
sell the eggs for profit. The point is they get to decide. GiveDirectly is an example of a charity
that works from the bottom up rather than trying to figure out what the poor
need from the outside and then coming up with a grand
plan to give it to them. GiveDirectly empowers the poor to
make those decisions themselves. It’s one of the highest rated
charities on givewell.org and it’s making a real difference
in people’s lives. And unlike foreign aid,
GiveDirectly is a voluntary charity, which means it only has money to work
with if you decide to give it to them. That means it has a strong
incentive to keep its cost low, its impact high and
to learn from its mistakes. The lesson is that big problems don’t
necessarily need big solutions. Sometimes, the best way of dealing with
a big problem is let lots of different people try lots of different small ideas
and find out which ones actually work. [MUSIC]

17 comments on “World Poverty: Foreign Aid vs. Charity That Actually Works – Learn Liberty

  1. Kiva.org is another great way to help people in the developing world. It's done through interest free loans. And it's amazing.

  2. Giving people in developing countries money isn't simply enough. The way that those people spend their money is limited by their educational opportunities, their health situation, and the lack of infrastructure in their area. Those needs cannot be met just through charity as the sheer amount of capital needed to overhaul those systemic limitations is enormous.

    No major world economy became the successes they are today because of charity aid in the past. They did so by making the necessary investments into education and infrastructure as well as tackling the multiple bottlenecks that hampered their country before in order to grow their economies. Developing countries need that type of aid, they need money to build bridges, roads, railways, and schools. The problem comes through the implementation.

  3. If an issue is that people trying to help don't understand the locals, wouldn't it make sense to send some of the locals to college for economics so they can figure it out for themselves?

  4. Many governments in these backwater hell holes are utterly corrupt.  That can have consequences in many un-obvious ways.  For instance, many of these countries have never had thorough land surveying done.  Therefore it is nearly impossible to get a clear title to land.  The people who are connected to the corrupt leadership get clear titles to their land, but nobody else does.  People do not want to invest in improving a piece of land if they don't have clear title to it.  You spend years making it productive and one day a man shows up with a law officer and a piece of paper telling you to get off of his land.  This is a very common issue in those countries.  Also, most corrupt leaders refuse to grant business licenses to people who are not in their family, or who refuse to give them extortion money.  Once again, people are hesitant to invest themselves in building a business when they know someone may show up one day and close them down.  First world countries would be smart to demand that countries they are trying to help commit to fixing these issues before aid is committed.  Then they need to be watched to make sure there is follow through.

  5. That is utter bullshit!!
    If you want to help the poor, then do it the way the chinese did!!!!!
    1 child policy and (abandon communism, socialism) free market and no help for anybody!!!

  6. OK, the audio on these videos need to be increased pretty heavily. You should set limits on the audio to -1 to -3 dbi.

  7. One thing I'd worry about would be creating a dependence like we see in the west, maybe limit it to a one time payment, or annually or whatever. Also I would worry about them becoming targets for criminals, there's not a lot of law enforcement in many places and if people suddenly have cash…

  8. Need to up the volume. It's fine for computers, but not so hot for mobile devices. These days, it's about learning on the move. 😉

  9. I think you guys should leave the source of the information (ideas, graphs, charts, quotes, etc) in the description of the video. Sometimes I spend a lot of time researching for this data so I can decide about its liability, It would be great help if you put the links to the sources in the description. Thanks!

  10. How do you weird Libertarians or Liberals or whatever you call yourself feel about things like Kiva and Zopa and Prosper? Is that against your Ayn Rand religion?

  11. MY NAME IS NASEEMA, I AM WORKING AS EXTENSION OFFICER IN PANCHAYAT RAJ DEPT IN RODDAM MANDAL, ANANTAPURAM DISTRICT. I WANT TO ADOPT ONE VILLAGE AND DEVELOP. BUT THERE IS LACK OF FUND IN RODDAM VILLAGE. THIS IS BACKWARD AREA. IF ANY ORGANISATION DONATE MONEY FOR THIS VILLAGE, I WILL DEVELOP THIS VILLAGE AS STANDARD. I WANT TO MAKE THIS VILLAGE AS ADARSH VILLAGE IN ANDRA. PLEASE ANY ORGANISATION OR ANY CELEBRETIES , ANY PERSON DONATE MONEY. I AM WAITING TO ACHIEVE MY DREAMS

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