0.7 Percent Is Stupid

I’ve been sitting in lots of meetings and covering paper with lots of ink recently about the Sustainable Development Goals and Financing for Development. And when the topic of aid comes up I nod sagaciously along with others in the room when someone says “well, of course, there won’t be any more aid coming out of the Addis financing conference, it is all about redistributing the pot.” Sometimes I’m the one to write or say it, then have a brief chat about that redistribution before switching to other topics like private finance or trade.

But some participants in some of those meetings (who’ll go un-named but you know who you are) don’t take the wizened approach when the 0.7 percent aid target comes up. Instead they say something like, “In this year when we’re all signing up to a massively ambitious development agenda, shouldn’t we accept there is a vital role for not just aid but more aid? In this year of all years, shouldn’t we be pushing to reach 0.7?”

0.7 percent is stupid. It has no defensible empirical basis. Aid (even were it to actually reach 0.7 percent of industrialized country GDP) is simply less important to overall global development prospects than domestic resource mobilization, technology flows or private finance. 

But the real reason the aid goal is stupid is because it is obscenely small.

A few years of flat GDP growth in rich countries, and a few years of income convergence between poor and rich countries, shouldn’t hide the basic facts: most people in rich countries are amongst the very richest people worldwide ever in history. And they remain orders of magnitude richer than people in the poorest countries today. 

The big reason they are rich is not because they signed up to some social compact to form a more perfect union, nor because they work harder, nor because they are genetically superior or naturally smarter. They are rich primarily because of where and to whom they were born.  This isn’t a position they "earned." It is the luck of the draw.

And rich countries have taken the lead in creating a global system to ensure that luck lasts a lifetime: we don’t provide poor people the tools to seek opportunity like decent health, a good education and the kind of safety net that allows them to take a chance without risking catastrophic consequences; and we don’t let them move to where the better opportunities are to be found – locking them behind border fences or letting them drown in the Mediterranean instead. 

There is nothing natural or inevitable about this system. It condemns the considerable majority of the World’s poorest to remain amongst the World’s poorest until they die. That the citizens of OECD countries fork over about 35 cents out of every hundred dollars they get as some sort of recompense is a simply pathetic response.

None of this is new, none of this hasn’t been said before, and it doesn’t change the political reality of a world where Addis probably won’t deliver more aid (let alone more effective responses like open borders).  But those participants who bring up 0.7 percent in meetings about global development are right.  It is worth repeating once in a while: the current political reality is a human obscenity. 

At the very least in the financing for development discussion, I think the UK position should be adopted: Addis should explicitly call for high income and upper middle income countries to lay out their commitments to provide international public finance, so we can see those commitments in all of their inglorious and paltry scale.