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Showing 1-1 of 1 reviews(3 star). Show all reviews
on June 3, 2010
This book opens with a scene at a prominent church near Wall Street. The congregation's regular prayers now include a mention of the United Nations' Millennium Development Goals, a plan for substantially reducing global poverty and its crippling effects by the year 2015. Our authors' reaction? To denigrate this sign of the growing movement to greatly increase rich-country aid to poor countries as totally misguided. As the title, The Aid Trap, indicates, they see foreign aid, in fact, as a negative factor. R. Glenn Hubbard, dean of the Columbia Business School and a former chair of Pres. George W. Bush's Council of Economic Advisers, and William Duggan, a senior lecturer at the school, certainly have the credentials to deserve a hearing in the current debate over how best to address the issue of global poverty. However, this book has two basic drawbacks. First, it is not as well written as it should have been, with many sections lacking clarity or documentation for factual claims. Second, this is an ideological tract pushing the faith of private business as the only savior of humanity. The authors throw in only an occasional nuance acknowledging the need for some government role in alleviating the plight of the world's poorest people.

Hubbard and Duggan argue that foreign aid funds a system of recipient government agencies and foreign non-governmental organizations that provide crucial goods and services, but which thereby crowds out the indigenous business sector. No private local well-drilling or transport companies can compete successfully where free money or aid workers from abroad are already on the job. However, a thriving business sector, they say, is the key to development. They propose a Marshall Plan for helping the business sectors in the developing world (presenting a rambling discussion of how it worked after World War II for rescuing the European economy, and an equally scatter-shot outline of how it could be adapted today). This would entail diverting a portion of current aid money (perhaps 10%) and giving grants to help local governments improve or establish a proper business system and loans to small enterprises to get started and grow stronger so they can be competitive. Here's one of their nods to a role for government and even foreign aid itself. The result would be an ever-growing private business sector that would pay taxes to the government, from which the government would fund the projects for health care, education, and basic infrastructure now being inefficiently undertaken by foreign aid. From there, it's onward and upward toward mass prosperity. This is the only path that will succeed, though it will take time.

Do the people of the poor world, especially the bottom billion of this planet's inhabitants who live on less than $1 per day, have the time for this plan? Jeffrey Sachs points out that about eight million of these people die every year because of their poverty: they are too poor to afford adequate nutrition, health care, clean water, credit for seeds and fertilizer, transportation to markets, and so on. So we can ramp up our aid now, as the UN Millennium Development Goals call us to do and work on the fixes we know will work in the short term, and build a foundation for the future. Or we can pray for business to do its work in the long run.
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