This is a long-lasting insecticide-treated
bed net. When used correctly, it has been shown to
reduce deaths by 20% for children under 5. It costs just one dollar and sixty six cents,
or about 30% less than the cheapest coffee at Starbucks. That’s the thing about extreme poverty. The poorer someone is, the simpler, easier,
and cheaper are the immediate remedies. Life-saving vaccines and high-yield seeds
cost just pennies each when bought in bulk. Yet, in the past 60 years, the rich world
has collectively given $3.5 trillion in development aid to poor countries. The Marshall Plan, by contrast, cost 150 billion
in today’s dollars. So, where has all this money gone? Why does a problem for which we’ve devoted
so many trillions of dollars and know of cheap solutions to, remain? The obvious and seductive answer is corruption. Aid, we’re told, ends up in the hands of
dictators, who spend it on palaces, leopard skin hats, and Lamborghinis. If only this money actually reached the people
who need it, these problems would simply disappear. …But would they? How do we know that corruption, itself a very
real issue, isn’t hiding an even bigger one? How do we know, in other words, that when
foreign aid does reach the intended recipients, it produces the desired results? The only way to find out for sure would be
an experiment. And to dispel such an intuitive assumption,
it would have to be impeccable — staffed by the world’s foremost experts, supported
by many millions of dollars, and untarnished by ulterior motives. As it turns out, such an experiment was conducted
— for 10 years, starting in 2005… Sponsored by CuriosityStream and Nebula, where
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for example, its generous foreign aid policy. In it, we explore a deeper, historical explanation
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of exclusive full-length PolyMatter Originals, along with others on Chinese censorship, COVID-Zero,
and China’s rare earth monopoly. Watch all of them today for just $15/year
with the CuriosityStream and Nebula bundle. This is Marie. Like almost everyone who lives in Burundi,
one of the poorest nations on earth, with a per capita GDP of about $800, she lives
in a small, rural village. Why is Marie poor? There are a hundred different “macro”
answers — a lack of foreign investment, corruption, red tape, the absence of property
rights, and so on. Eliminate these impediments, history suggests,
and economic development naturally progresses through a series of discrete stages. A nation moves from agriculture to manufacturing
to services and consumption. It’s a known and predictable formula — the
kind of rapid transformation epitomized by East Asia. It’s how you go from here… to here in
the span of a few decades. But before any of that can happen, there are
a few prerequisites — “starting conditions”, if you will, that we tend to overlook. You might say that the real reason Marie is
poor is that she can’t sell her family’s crops. She can’t sell her family’s crops because
there are no paved roads to get to and from the nearest market. And there are no paved roads because the area
is infested with disease-carrying mosquitoes. These very basic problems like mosquitoes
ultimately prevent Burundi from even reaching, much less climbing, the economic development
ladder. It’s what you might call a “Poverty Trap”. You may have heard of it as something like
“without a car, you can’t get a job. And without a job, you can’t get a car”. In this case, it’s just much more extreme. So, how does a nation escape this trap? How does one get to the first rung of the
ladder? Jeffrey Sachs, a famous economist and director
of Sustainable Development at Columbia, argued the solution was quite simple. Instead of tackling Malaria, then moving on
to clean drinking water, and so on — each of which he said was insufficient on its own
— all these things needed to be solved at once. It was called the “Big Push”. To end extreme poverty, in other words, you
must address all the “root causes” at the same time. After you’ve killed all the mosquitoes,
cleaned all the water, and built all the roads, everything else will follow. These steps are akin to “clearing the runway”,
eliminating obstructions, allowing the plane to take-off on its own. So confident was he in this theory, that he
decided to launch an experiment, called “The Millenium Villages Project” in 2005. It would begin as 14 sites in Kenya, Uganda,
Tanzania, Mali, and elsewhere. Once these were successful, he promised, they
would become the proof of concept for a giant, global Marshall Plan to end extreme poverty
once and for all. Not only would it not be very hard, but, according
to Sachs, neither would it even be expensive. Ultimately, he said, this was an investment,
not an act of charity. These massive, life-changing upgrades to health,
agriculture, education, and infrastructure would cost just $120 per villager. It was “teach a man to fish” in practice,
at scale, and without compromising on corruption. It all sounded pretty intuitive. Instead of just parachuting-in free stuff,
they would teach skills, create jobs, and encourage the creation of sustainable businesses. Who doesn’t want to believe that you can
permanently pull someone out of extreme poverty, and all for about a day’s wages in a rich
country? It was a seductive idea. It also fit our preconceptions about poverty. All these people needed was a little outside
help to get going on their own. Each Millenium Village was guided by a 147-page
handbook written by 29 experts, most from Columbia University. It was the summation of everything we know
about alleviating poverty — from specific instructions to increase crop yields to goals
for community involvement. Schools were built, ambulances delivered,
clinics constructed, clean water provided, and practically everything in-between. Crucially, the project hired its own teams,
completely bypassing corrupt officials. But it wasn’t long before the handbook,
written in New York, collided with reality, in rural Africa. Corn, for instance, was chosen as the main
crop in Uganda for sensible, scientific reasons — it’s resilient, nutritious, and not
very difficult to grow. Sure enough, the first crop was a major success
— with the average yield doubling in only a year. In fact, there was far more than the village
could possibly eat. There was just one problem: there was nowhere
to put it. Not only were there no storage facilities,
but without any nearby markets, there was no way to sell it without losing money. To make matters worse, only after investing
$300,000 on the high-yield crop did the project managers find out that Southern Ugandans don’t
actually like corn — they called it “prison-food”. Realizing this, Sachs scrambled to find a
buyer for the corn, eventually convincing the World Food Program to buy 150 tons of
kidney beans instead. This, they thought, was the key to success
— commercial agriculture, allowing the Ugandan village to sell its crops on global markets. But to do so profitably, it was calculated,
the village would need to produce three crops a year, which demanded much more water. Unfortunately, there was no nearby water in
this Southern Ugandan village. The closest source was over 3 miles away — which,
of course, they had to walk to get to — much of it uphill. Sachs then managed to convince an American
company to donate $150,000 worth of pipes to transport the water. But it was later discovered that just shipping
the pipes would cost another $120,000. “Scrap that”, they decided, and opted
to import eight donkeys to do the job of transporting the water, instead. Despite all that work, however, half the donkeys
died of exhaustion after only a few months. Now, each of these mistakes may seem trivial
and preventable on its own. The project could’ve simply asked Ugandans
which crops they preferred in advance, for instance. But taken as a whole, the theme is clear:
there can be no true ‘handbook’ to end extreme poverty. There’s no single, universal formula, model,
or theory. Time and time again, the project ran into
unexpected hurdles — many of which would’ve been plain impossible to anticipate, nevermind
prevent. The villages had no way to deal with crime,
for example. Nor was there a chapter for natural disasters. Like any human, many of the villagers sometimes
acted in ways you might describe as “economically irrational”. For example, spending less money on fertilizer
than the handbook explained was optimal. The project’s managers were frustrated to
find villagers using mosquito nets on goats, rather than children. So much of its success depended on trust,
for which there’s no quick or easy equation, and in some cases had been burned through
early failures, like what happened to the donkeys. This is not to say the project was a total
defeat. Malaria decreased almost immediately and primary
school enrollment soared. But when all was said and done, one independent
researcher calculated that it ended up costing $12,000 per household lifted out of poverty. For context, that’s about 34 times the average
local annual income. What’s more, we don’t even know whether
those gains lasted after the project ended in 2015, or if they were just temporary. In fact, it’s hard to say how many of the
project’s successes would’ve happened anyway. Without a control group, the best we have
are estimates — one of which concludes that only half the purported results were actually
due to the project. Some research goes a step further, suggesting
aid often does more harm than good because of unintended consequences. Professor Nathan Nunn writes, quote, “We
may have our largest… effects on alleviating… poverty if we focused on restraining ourselves
from… harming less-developed countries rather than… fixing them.” Tariffs and anti-dumping duties suggest that
aid is often based more on the needs of the giver than those of the receiver. Now, “foreign aid” is a broad concept
and some types, like disaster relief, are unquestionably positive. The point is not that foreign aid can’t
work, but that right now it largely doesn’t. Consider how powerful that $12,000 that it
cost to lift one household out of poverty would be if simply given, no strings attached,
to that family. Even if you just invested that money, giving
the interest to the family directly, that would be, at a 5% interest rate, $600 a year
forever. The unequal effects of climate change will
drastically increase the need for foreign aid this century. So, until and unless we discover that seemingly-mythical
‘formula’ to end extreme poverty, it’s worth asking: What if we just gave that $3.5
trillion in foreign aid directly to the people who need it? At the very least, rich countries could stop
imposing onerous conditions on aid — something China has often been held-up as a model example
of. It offers money to developing countries with
no strings attached. Yet, for all its efforts, China has few, if
any, friends. If its objective is to “buy the world’s
love”, it doesn’t seem to be succeeding. There may be an overlooked, historical reason
why China has such a hard time making allies — a fundamental difference in the way it
sees itself and others. And we explore that theory in this new episode
of my ongoing Nebula Original series. If you’re not subscribed to the Nebula and
CuriosityStream bundle, you’re missing out on an additional 50% of PolyMatter videos. These are full-length exclusives, and the
good news is you can watch all of them — over an hour of extra content — right now for
just $15/year with the CuriosityStream and Nebula Bundle. On CuriosityStream you’ll find great feature-length
documentaries, like “Don’t Panic; The Truth About Overpopulation”. It’s a refreshing breath of fresh air about
why we don’t need to worry about overpopulation. Click the link on screen right now or in the
description to get both Nebula and CuriosityStream for an amazing fifteen bucks a year and go
watch the new Original episode over on Nebula.
