Far from creating a “dog-eat-dog” world, Adam Smith shows why capitalism instead creates a society of cooperation and mutual benefit.
The grand narrative goes something like this:
Some nations are rich, others poor. Poverty begets misery. Since we all wish to live in a world defined less by misery than by happiness, rich nations have a moral obligation to offer a friendly hand of assistance toward ‘less fortunate’ nations. Without significant financial and technical assistance, the poor and suffering are destined to wallow in deplorable indignity. If rich nations simply fulfill their responsibilities toward their fellow men through humanitarian action (at relatively little cost to themselves) poverty and misery could be eliminated in our lifetimes.
In Doing Bad by Doing Good, Christopher Coyne challenges this narrative in arching, empirical style. Not only is humanitarian action often less than effective (a critique readily admitted by even its most ardent defenders), it very often hurts people.
Coyne, of course, is hardly the first to raise such a concern. William Easterly (The White Man’s Burden), Michael Maren (The Road to Hell), and others have been here before, but Coyne brings a unique perspective about human action that warrants a read. Those who ascribe to the Austrian School, or read with relish anything from the ‘George Mason Mafia’ will find ample evidence to support their worldview. For those who do not, this may be the primary failing of Coyne’s book: it makes excellent reading for the choir.
Be that as it may, Coyne makes a cogent and convincing case (at least as seen from this pew) for why we should be skeptical of prevalent models of humanitarian action. In econometric fashion, he chronicles how state-led humanitarian action utterly fails to achieve its desired ends. Doing Bad by Doing Good is further affirmation of a coherent and demonstrable worldview: State action, regardless of its intent, often precludes the very ends it seeks. It is not enough, Coyne tells us, to expect excellent outcomes from excellent intentions. In dismal array, Coyne forces us to look at results, and they are troubling.
In the Helmand province of Afghanistan, where U.S. and NATO forces are currently battling for ‘hearts and minds’ against an entrenched Taliban, humanitarian assistance has a long and illustrative pedigree. For a century, programs for electricity generation and flood control have been notoriously ineffective (Germany and Japan tried their hand in 1930s and the U.S. has been spending profligately since 1946). Not only have these costly efforts failed to raise the standards of living in southern Afghanistan, but have often made things distinctly worse: a dam construction project salinized the soils, making them useless for farming. Flooding of fields by farmers unused to water abundance actually decreased agricultural output. Nomadic tribesmen who didn’t particularly want to change their way of life were ‘resettled’ on marginal farmlands, leading to armed strife with established communities who didn’t particularly want to have new, foreign neighbors.
Today, as if to drive the point home, the Helmand province produces 40 percent of the world’s heroin in poppy fields crisscrossed with expensive, abandoned irrigation canals built by Americans in the 1950s. The empty canals provide excellent cover for Taliban insurgents shooting Americans in the 2000s.
Coyne’s book is not a rogue’s gallery of failed humanitarian projects (though perhaps it ought to be). Rather, it is an economist’s attempt to explain why humanitarian action fails to work very well. Coyne shows how the “business” of humanitarian action was dramatically co-opted by states, bureaucratized into the realm of supra-national institutions. He then demonstrates how this bureaucratization introduces a deeply self-serving political economy within the ranks of those whose mission appears to be relief of human suffering. Coyne is particularly effective at describing why people who mean well so often do poorly, as they succumb to the “Planner’s Problem.”
For anyone familiar with basic economics, or alternately, has lived in the real world for more than a year, the answer will come as no surprise: large, centrally planned programs designed to “maximize welfare” inevitably fall victim to the “Planner’s Problem.” When attempting to influence the actions of numerous rational, independent actors, the Planner (be it a State, Bureau, Department, NGO, etc.) cannot access and manage the unimaginably vast array of information that the allocation of scarce resources requires. The problem, in short, is pitting a few brains against many. Regardless of talent, training, funding and dedication, a squad of experts cannot hope to more efficiently distribute resources than a networked assortment of self-interested individuals signaling via prices.
For those who don’t find the discipline or jargon of economics particularly alluring, I summarize Coyne’s logic thus [skip ahead if you “get” it, not all of us do]:
Humanitarian action (except in cases of immediate, life-or-death provisioning activities) is intended to increase the wealth of the ‘target’ constituency. Ostensibly, something important is in short supply, making the affected peoples worse off than if they had that crucial resource in greater abundance. In the case of Afghanistan, for instance, it appeared to a number of experts that what was lacking was readily accessible water. Developing a technically sophisticated water-delivery infrastructure seemed the logical answer. It was technically feasible, apparently affordable, and would eliminate water scarcity, catapulting a destitute population into the Jet Age. This cadre of experts then attempted to distribute this scarce resource among tens of thousands of very clever, very tough, and very possessive humans. Did okra-farmer X need more water more badly than maize-farmer Y? Frantic teams of foreigners, tasked to find out, busily polled the communities in a language they didn’t speak and in a culture they didn’t (and couldn’t) understand. Not surprisingly, the answers to how to allocate efficiently this now abundant resource remained utterly beyond the ken of these well-meaning elites.
Importantly, though, it’s not simply a question of language or cultural barriers. Even if they had been perfectly possessed of the requisite social skills, they still couldn’t have succeeded: the system would be impenetrably complex even if it were static, but the system was adjusting by the minute. No single entity can possess enough information to efficiently distribute the resource.
And yet markets do this quite efficiently and with little fanfare all the time. When people freely trade, they spontaneously develop a networked “brain” which sends signals throughout the community in the form of prices. Farmer X, realizing that his crop of okra was a big hit last year (high prices), buys extra seed from neighbors and looks for an extra quarter-hectare to plant. Farmer Y, seeing maize prices down last year, offers to rent his land to Farmer X who seems to have a great thing going. Though neither of them is conscious of it, prices (of crops, of seeds, of production efficiency, of land, of labor, of water access, and a thousand other factors) have reverberated within this system. The “brain” has signaled all market participants where their time and talent is to be best apportioned, and has also re-allocated resources toward their relatively higher ends. Thousands of individuals, with vast amounts of extremely site-specific information, are unconsciously communicating with each other, efficiently moving resources to where they more appropriately belong.
The Planner’s Problem, Coyne convincingly demonstrates, plagues humanitarian action at every turn. A lack of faith in individuals to freely associate, and for markets to coordinate spontaneous wealth generation is a consistent (albeit shrouded) feature in the mind of what Coyne terms in an homage to Adam Smith, the “Man of the Humanitarian System.”
Smith wrote in his Theory of Moral Sentiments (1759) that the “Man of the System” was apt to be:
Very wise in his own conceit. . . He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them. . .
Coyne applies this concept neatly to modern humanitarian planners, describing in excruciating detail the futility and harm that can result when naïve optimists attempt to manipulate complex human dramas. As he relates, the “Man of the Humanitarian System” invariably produces, “a recipe for the emergence of harmful and persistent negative system effects, as political actors continue to intervene in complex systems with little knowledge of the full consequences of their actions and dishearteningly little reason to care.” (165)
This gloomy verdict, happily enough, eventually eases in the final chapters as Coyne describes his “Development as Discovery” model. In this, Coyne invokes F.A. Hayek’s famous Nobel Prize lecture, asking that we recognize the impossibility of acquiring full knowledge of complex systems. Hayek metaphorically suggested that those in power act more as gardeners establishing appropriate growing conditions, instead of craftsmen manipulating discretely bounded handiwork. Development as Discovery follows this constrained approach, allowing for the economic problem of humanitarian action to be solved through experimentation, feedback, and adaptation. This concept, which resonates with Easterly’s earlier Searchers paradigm, places the adaptive individual at the center of decision-making, banishing the bureaucracy-minded technocrat to the periphery.
Coyne’s final analysis is both sober and edifying: the business-as-usual model of centrally planned, largely ineffective humanitarian action will continue to grow under the state-sponsored “humanitarian edifice,” a gargantuan sector of self-promoting vested interests. To those of us who view these actions with a jaundiced eye, prepare for an endless series of lost battles.
Yet, take heart, the war is being won: economic progress, the only true and lasting solution to human poverty and misery, is flourishing around the globe. Economic freedom across the globe has been on a precipitous rise for generations, particularly in the last few decades. Billions of increasingly liberated individuals are discovering marvelous solutions to problems of scarcity through free exchange. Increasingly, they are doing so with less direct oppression from local authorities. To be sure, this rising tide owes almost nothing to the Man of the Humanitarian System, but their idle splashings are none too detrimental.
Coyne’s central purpose is clear: to shift the discussion of humanitarian action from the normative perspective—how should people behave?—to a positive analysis—how do people actually behave? For anyone valuing an economist’s way of thinking, nothing could be more welcome.
And yet this is precisely the book’s problem. The political question over humanitarian action is fundamentally an emotional one; human suffering and appalling conditions are what prompt humanitarian interventions in the first place. Consequently, we are drawn into our “limbic corners” when discussing responses to humanitarian crises. Inevitably, we become concerned with the “should” questions; intentions and goodwill prevail over hard-nosed results and undeniable logic. The need, then, is to appeal to our sentimentality to draw us out of these corners.
As a reference guide to the sorts of economic hazards planners face, Doing Bad by Doing Good is unassailable. As a template for a new model of humanitarian action, it lacks a compelling emotional entreaty. A future enhanced edition would be formidable indeed if it were to incorporate provocative human vignettes that demonstrate the pernicious effects of poorly formulated humanitarian aid. If Coyne, whose avowed purpose is to “shift the discussion,” would intersperse his arching economic arguments and data tables with personal stories, complete with names (currently, the only names are to be found in the bibliography) he would bridge a tremendous void.