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Migration and development, economic growth, aid effectiveness, economic history
Michael Clemens is co-director of migration, displacement, and humanitarian policy and a senior fellow at the Center for Global Development, where he studies the economic effects and causes of migration around the world. He has published on migration, development, economic history, and impact evaluation, in peer-reviewed academic journals including the American Economic Review, and his research has been awarded the Royal Economic Society Prize. He also serves as a Research Fellow at the IZA Institute of Labor Economics in Bonn, Germany, an Associate Editor of the Journal of Population Economics and World Development. He is the author of the book The Walls of Nations, forthcoming from Columbia University Press. Previously, Clemens has been an Affiliated Associate Professor of Public Policy at Georgetown University, a visiting scholar at New York University, and a consultant for the World Bank, Bain & Co., the Environmental Defense Fund, and the United Nations Development Program. He has lived and worked in Colombia, Brazil, and Turkey. He received his PhD from the Department of Economics at Harvard University, specializing in economic development, public finance, and economic history.
President Bush literally shoots for the stars in his 2004 budget with a 5.6 percent increase to NASA’s budget. He doesn't just want to win this fall; he wants a legacy. I wonder if he knows that Cadillac legacies are available at Pontiac prices.
The idea of sending a person to Mars is to elevate humanity as whole and reinforce America's status as the world's economic and intellectual powerhouse, as well as leave a monumental legacy for the president who proposed it. Eradicating or at least turning the tide against HIV world-wide would accomplish all these goals, and as I calculate, at a small fraction of the cost. This comparison is about more than sniping, "we should be spending the money at home not in the stars", it's about accomplishing a grand vision that elevates America's stature in the world community. Surely being remembered as the President who had the vision to end HIV would be a proud legacy for President Bush.
The preposterous truth is that this pharaonic legacy would be cheap; in relatively terms, very cheap. First of all, how much will the Mars/Moon initiative cost? The Center on Budget and Policy Priorities, a respected, independent, non-partisan think tank in Washington, DC, ran the numbers and put the total cost in the "many hundreds of billions of dollars, possibly as much as $1 trillion" in a January 9th press release. While new allocations to NASA will be initially modest, recurring lifetime expenditures like maintaining a lunar base will quickly add up to this literally astronomical figure.
Next to that, the cost of stopping the greatest epidemic of infectious disease ever recorded costs a pittance. Addressing a summit meeting in Nigeria on April 26, 2001, Kofi Annan put the cost of a credible global fight against HIV/AIDS at "an additional seven-to-ten billion dollars a year ... in the world as a whole, over an extended period of time."
The math is easy. Take the cost of the AIDS fight at $8.5 billion, in the middle of Annan's range. Any banker will tell you that a perpetual stream of $8.5 billion payments is roughly financially equivalent to a lump-sum, one-time payment of somewhere between $85 and $170 billion, depending on the interest rate. Remember, that's a one-time payment, never to be repeated, and it would cover the entire global fight -- even in the absurd case in which other donors and afflicted nations contributed nothing at all -- so it's surely an overestimate of the true cost to the US. And the stream of payments would not be literally perpetual, further lowering the true one-time equivalent cost. No matter what, that's a small fraction of the cost of the hundreds of billions, potentially approaching $1 trillion, for the Mars/Moon plan. The bottom line: A Bush legacy of crushing history's greatest epidemic would cost one fifth to one tenth as much as his lunar legacy.
Some say throwing money at AIDS isn't enough, or that we need to take care of our own before we solve 'foreign' problems. Does money for global public health go to waste in strange corners of the world with funny names? Smallpox afflicted Abraham Lincoln right after the Gettysburg address; we eradicated smallpox in 1977 after decades of expensive effort. Polio crippled Franklin Delano Roosevelt; today the World Health Organization proclaims that polio has been "beaten back to only a few remaining reservoirs" and we are at the doorstep of forever eliminating it from the earth. We have saved our own and we have saved others through our contribution to these noble, epochal efforts.
These are the great monuments of our age so far, but the biggest target remains: Over 10,000 people die in Africa every day from HIV in Africa. That's like a packed 747 jet crashing every four hours without end. It's like September 11th every day of every week, all year long. We have the power to stop that, and stop it for all time. No other legacy that great could be this cheap.
Every developed country was once a developing country; every rich country was once poor. In other words, we can relate to the experience of today’s poor countries because we’ve been there, done that. The better we understand what Americans needed back then, the better we will understand what citizens of today’s poor countries need from us now.
Take Seattle. As hard as it may be to imagine today, the Emerald City was once an isolated, boggy settlement where life was very difficult—difficult in ways that parallel the challenges faced by many of today’s poor throughout the world. Many of today’s developing countries say that to overcome their poverty they need access to wealthy markets, financial assistance, technologies to overcome their health problems, private foreign investment, and many other things that we outsiders can provide. We should understand their desires because we wanted the very same things back when it was Seattle’s turn to overcome large-scale poverty.
But don’t take my word for it. We can ask those long-dead settlers directly, by cracking open the history books—like Robert Ficken’s Washington Territory—and posing a simple question: When what is now Seattle first became part of the US as a territory in 1848, what did the people who lived there want?
Access to trade. In the first half of the 19th century Washington was exporting mostly primary products—just like today’s poor countries. It was hard to make a living that way, since world fur prices were on the decline (like today’s coffee prices). To make matters worse, the Hudson’s Bay Company had an effective trade monopoly over what is now Washington. As the only game in town they could force the prices commanded by Washington’s products even lower, and refuse to buy manufactured goods in order to appease British manufacturers. When today’s rich countries use tariffs and subsidies to blocks poor countries’ food and textile exports, they are playing a similar game. Early settlers in Washington got so fed up with this state of affairs they asked the US federal government to flex its muscle and kick the British out. President Polk promised as much in his inaugural, and the area officially became US territory a few years later. Outsiders had helped Puget Sounders gain access to wealthy markets far away.
More aid. Between 1848 and 1853, today’s Washington was just the northern part of Oregon territory, and residents of Puget Sound complained bitterly that federal money appropriated for territory was spent mostly in the south. And even when Washington became its own territory, an 1875 newspaper editorial complained that “so far as assistance for the development of our territory is concerned, we might as well look to the government of Japan for it, as from that at Washington [City].” The settlers lobbied hard for, and got, help from the Army Corps of Engineers to improve transportation on the Columbia and Snake Rivers. Early Washingtonians were hard-working, yes, but they wanted outsiders to give them a hand starting out—not entirely unlike many African countries today.
More private capital. Despite many rich country critics’ reservations about foreign investment, nearly all of today’s developing countries want more of it, preferably subsidized. Puget Sounders of the 19th century wanted outsiders to invest too, in projects like the Northern Pacific Railroad that helped get their fledgling economy going. Such private investment did arrive—helped by massive subsidies from wealthy taxpayers back east. When during the Civil War the US Treasury had other concerns and subsidies to Washington Territory temporarily ebbed, locals were horrified at the usurious rates they had to pay to borrow money for their businesses. The high interest rates paid by developing country borrowers today limit their access to capital and are just as harmful.
More security. Settlers in Puget Sound had to worry constantly about being attacked. Early on, there were the military and territorial ambitions of the Spanish, the French, the Russians, and the British to contend with. Later, armed conflict between native residents and new settlers was frequent. Outsiders sent the settlers a lot of help to keep the peace, including soldiers based in Walla Walla and Yakima. When many of those soldiers had to leave to fight the Civil War, the Puget Sound Herald warned that they had been left defenseless at a time when “the Indians are preparing for a renewal of hostilities.” Whatever your views about how Native Americans were treated, the fact is that early settlers were concerned for their most basic security. When countries like the Democratic Republic of the Congo cry out for international peacekeeping troops to stop ethnic conflict in their territory, they are expressing similar concerns.
Less corruption. Territorial governments were appointed from back east, not elected locally. And those appointments were often political favors handed out to Easterners who were only too happy to use the positions for personal gain. Territorial residents complained of “spoils-oriented politics” and wanted statehood in part so that they could vote out corrupt politicians. They didn’t want outsiders installing rulers who would steal from them. When developing countries have complained of US support for corrupt regimes in the past—such as our massive aid to the brutal kleptocrat President Mobutu in Zaire—they are expressing parallel aspirations.
More migration. Between 1880 and statehood in 1889, Washington’s population roughly tripled, then tripled again by World War I. It was key to Washington’s early development that people could go where the economic opportunities were, rather than being trapped somewhere else. If something had stood in the way of that movement, Washington wouldn’t have had workers to build its future, and the migrants themselves would have remained poor, underemployed Virginians and New Yorkers. Everyone would have been worse off. This doesn’t mean that opening borders is the easy answer today, but it does mean that since Seattle was built through the free flow of workers, it might understand why many of today’s workers in low-income countries want to go where the opportunities are as well.
Better public health. Ten thousand people died of AIDS yesterday in Africa, as well as three thousand from malaria. Our public health in America is so excellent today compared to Africa’s—forget about relative trifles like West Nile Virus, Lyme Disease, and Monkeypox—that we forget we had our own age of epidemics. Years ago, you could get Malaria over large areas of what is now the United States. In what is now Washington State in the early 19th century, hundreds and sometimes thousands of people were killed in various outbreaks of smallpox, measles, and influenza. Those problems were eventually solved, but not by technologies developed in Seattle. The technologies that make Washington so healthy today were developed by outsiders and brought in by outsiders, often with massive government assistance. Today’s poor countries need the same help, and it’s as much of an emergency for them as it was an emergency for our familes when we were dying.
Equality for women. In what is now Washington, before 1883, women were second-class citizens who couldn’t vote, even in local elections. They had to wait until 1920 before they could vote in national elections, not unlike their counterparts today in many Middle Eastern countries who are only now gaining these rights. We were once no different, so we should understand their aspirations and struggle. Washingtonian women needed the help of political collaborators from across the country to push for their human rights at home.
In short, many of today’s poor countries want the same things from outsiders that we once wanted—and got. We should be supportive, not stingy (witness our reluctance to give more than ten or fifteen cents of foreign aid per person per day). The US government invested in Seattle by giving it the chance it craved a century or two ago, and the return on that investment is Microsoft, Boeing, and Starbucks, along with all the well-being they’ve brought to Washingtonians and to the world.
Government policy didn’t make those companies; entrepreneurs’ sweat did. But government responded to the needs of Washingtonians when Washington was poor and wanted a level playing field. That helping hand has gone a long way.
Imagine how different the world would look 150 years from now with Kenyan-made computers, a Congolese chain of cafés, or Laotian aircraft flying the skies? If these things seem ridiculous, try telling the 22 people who came aground in the mud at Alki Point in 1851 that one day the richest man on earth would be from Seattle. Then try explaining to them how he made his money. It was neither fur-trapping, nor gold-mining, nor wheat-harvesting, my friends.
The possibilities for today’s poor countries in the 22nd century are just as unimaginable. What is not hard to imagine is that they will need help—our help, and a lot of it. We know that because Seattle got similar help from the outside. The only question is whether or not Seattle and the nation it helps make strong will give today’s poor countries a step up to the level playing field, or kick away the ladder.
Michael Clemens is a research fellow at the Center for Global Development.
Last week, Nigeria hosted the African AIDS, Tuberculosis and Malaria Summit in its capital city, Abuja. The summit was attended by numerous participants, including heads of state, government officials, members of the civil society, donor and UN agencies and program implementers from throughout sub-Saharan Africa. The purpose of the summit was to review the achievements made toward the landmark Abuja 2001 agreements and identify gaps and constraints to achieving those objectives and the Millennium Development Goals.
According to AllAfrica.com, the major outcomes of the summit include:
Leadersâ€™ reiteration of commitment to devote 15% of national budgets to improving the health care system; and
Resolution passed declaring that by 2010, 80% of those who need it should have access to HIV/AIDS treatment, including ARVs.
Although it is notable the level of political commitment and idealism showed at the summit and reflected in these goals, in the end setting such high standards may undermine the great deal of progress that has already been made and will no doubt continue through the decade. As my colleague Michael Clemens argued in a previous post, by adopting goals that are irrelevant and/or unachievable in poor country contexts (such as the MDGs and the WHOâ€™s 3x5 initiative), many of the great development successes - including the expansion of access to ARVs - will likely be labeled failures. There is no doubt that tremendous mobilization and commitment will be required to revitalize the health systems in many of these countries and to meet the growing need for ARVs, but let us not forget to also celebrate the heroic work that has already been done.
During the early 1990s Germany received over half a million Yugoslavians fleeing war. By 2000, many of these refugees were repatriated. In their new paper, Dany Bahar and his co-authors exploit this episode to provide causal evidence on the role migrants play in contributing to productivity shifts in their home countries after their return, as explained by changes in comparative advantage.