Easterly vs Sachs: The Great Development Debate
William Easterly’s The White Man’s Burden hit bookstores this month, and it is not a gentle book. At 382 pages it constitutes something close to a systematic demolition of the assumptions behind modern foreign aid—which is to say, a demolition of Jeffrey Sachs. The two men have been circling each other for years. This is the direct engagement, and it is worth taking seriously because both of them are serious economists.
The core of Easterly’s argument is a distinction he draws between Planners and Searchers. Planners arrive with a blueprint—a coordinated big push, a Millennium Development Goal, a five-year program—and measure success by inputs disbursed and meetings held. Searchers, by contrast, find out what actually works by running experiments, accepting failure, and responding to feedback from the people they are supposed to be helping. The trouble with aid, Easterly argues, is that it has been organized almost entirely around Planners. Nobody is accountable to the poor themselves; the career incentives in the World Bank or USAID run toward volume, not results.
The $2.3 trillion figure that appears in the book is cumulative aid to developing countries since the 1950s. Easterly’s challenge is simple: produce the growth. Sub-Saharan Africa received roughly $568 billion in official development assistance between 1960 and 2003 and its per capita income has barely moved. He is not saying aid caused stagnation; he is saying the causal link between aid flows and development outcomes is almost impossible to establish. That should unsettle anyone who treats increased aid commitments as self-evidently good policy.
Sachs’s counterargument, laid out in The End of Poverty last year and now being operationalized in the Millennium Villages Project, is that poverty traps are real and that the necessary investment to escape them exceeds what private capital or self-help can mobilize at the margin. The Millennium Villages—twelve clusters across ten African countries, launched in 2005 with Columbia University backing—are the empirical bet. Give a whole village enough fertilizer, bed nets, school meals, and basic health care simultaneously and watch what happens. The point is to test the big-push hypothesis at the village level rather than the national level, which at least narrows the causal inference problem.
Easterly thinks this is Planners cosplaying as Searchers. His review of the project in the Washington Post this month pulls no punches. You cannot measure the counterfactual; you have no control villages; and when the project ends and the NGO money leaves, what exactly is the sustainable mechanism? The villages themselves have no say in what intervention mix arrives. The feedback loop runs upward to Sachs’s office at Columbia, not downward to the farmers.
The institutional backdrop matters here. Easterly left the World Bank in 2001—not entirely voluntarily, depending on who you ask—and is now at NYU’s Development Research Institute. Sachs is at Columbia’s Earth Institute and sits on the UN secretary-general’s advisory panel. These positions are not incidental to the debate. Sachs operates within the apparatus of official development; Easterly criticizes it from outside. That gives each man different incentives about what conclusions are permissible.
The deeper problem Easterly is pointing at is political, not technical. Aid without accountability creates a principal-agent mess that is very hard to untangle. The principals—donor governments, the UN, the G8—care about optics at home. The agents—the bilateral agencies, the implementing NGOs—care about contracts renewed. The supposed beneficiaries are at the end of a very long chain and have no formal mechanism to fire anyone. Sachs would say that he cares about outputs, and the Millennium Villages data will eventually speak. He may be right. But Easterly’s historical survey of fifty years of aid gives you good reason to set your prior for that outcome somewhere modest.
Neither man has much to say about the financial sector, which is curious since microfinance—Grameen Bank, BRAC, Compartamos—is the one area of development intervention with a reasonably legible feedback mechanism. Whether that matters for the bigger argument about the Washington Consensus is something we pick up in our look at what has replaced the Washington Consensus four years after Stiglitz. The political economy of institutional reform in specific countries runs through a different question, one Benjamin Friedman began raising in his 2005 book about the moral consequences of economic growth. And readers curious about what aid-without-accountability looks like at the national level might start with the banking sector in Mexico, which our post on fixing Mexico’s banks rather than China’s treats as a fairly instructive case study.