Saturday, November 27, 2010

Press Briefing

Nov 27, 2010

Against Ridley, Bill Gates: Africa Needs Aid, Not Flawed Theories -

Africa Needs Growth, Not Pity and Big Plans. By MATT RIDLEY
WSJ, Saturday, November 27, 2010

Bill Gates likes my book "The Rational Optimist." Really, he does. Even though he dislikes my points about Africa and climate change, these take up, as he notes, just one chapter. The rest he summarizes fairly and intelligently, and I appreciate that. It's great for an author when anybody reviews a book "well" in both senses of the word.

It is worth explaining why I chose Africa and climate change as the "two great pessimisms of today." The answer is simple: Whenever I speak about optimism and someone in the audience protests, "But surely you cannot think that we can ever solve..." the subjects that most frequently cross their lips next are African poverty and global warming. Mr. Gates also mentions potential threats from super-intelligent computers and pandemics. Maybe he is right to worry about them, but I have yet to be persuaded that either is more than a small risk.

Mr. Gates dislikes my comments on climate change, which I think will be less damaging than official forecasts predict, while the policies designed to combat climate change will be more damaging than their supporters recognize. I argue that if we rush into low-carbon technologies too soon, because we think the problem is more urgent than it is, we risk doing real harm to ecosystems as well as human living standards—as the biofuel fiasco all too graphically illustrates. The rush to turn American corn into ethanol instead of food has contributed to spikes in world food prices and real hunger, while the rush to grow biodiesel for Europe has encouraged the destruction of orangutan habitat in Borneo.

I also argue, however, that it is highly unlikely, given the rate at which human technology changes, that we will fail to solve the problem of man-made climate change even if it does prove more severe than I expect. For example, the world is on a surprisingly steady trajectory toward decarbonization. The number of carbon atoms we burn per unit of energy we generate is falling as we gradually switch from carbon-rich fuels like wood and coal to hydrogen-rich fuels like oil and especially gas. At current rates, we would be burning almost no carbon by about 2070, though I suspect that point will never actually be reached.

The question that I pose in the book is whether optimism is likely to be right. In essence, neither Mr. Gates nor I think that the problem of man-made climate change is going to prove insoluble or fatal to civilization. We disagree only on how urgent it is to devote massive expenditures to dealing with it, which would put poverty reduction at risk. I think that direct spending to alleviate malaria, which now kills a million people a year and whose incidence is likely to increase as a result of global warming by less than 0.03% per year, is a far higher priority. So does Mr. Gates, judging by his foundation's spending.

It is on Africa that Mr. Gates throws his sharpest barbs. Yet, once again, I think that we agree on the most important point, namely, that Africa can have a good future. "Development in Africa is difficult to achieve," he writes, "but I am optimistic that it will accelerate."

Yes! I don't believe that "everything will be just fine in Africa," but I do think that Africa's real and profound problems can be overcome. My targets are the ubiquitous pessimists who say that, whatever we do, Africa is doomed to remain stuck "in deepest, darkest poverty," in the words of one environmentalist.

Yet, with exceptions such as Somalia and the Congo, economic growth is gaining momentum all over the continent, birth rates are dropping and poverty is falling, as the Spanish economist Xavier Sala-i-Martin has documented. Lots of people deserve credit for this, among them Bill Gates. His foundation, as far as I can tell, does exactly what I suggest in the book by concentrating on solving real medical and humanitarian problems.


* $44 billion
Official development aid given to Africa in 2008
* $3.3 billion
Official development aid given to Ethiopia, Africa's top recipient of aid, in 2008
* 41% Aid to Africa that went to social services, including education and health care, in 2008
* 19% Aid to Africa that went to economic development in 2008
* $7.2 billion
Amount of development aid given by the U.S. to Africa in 2008
* 58% Africans living on less than $1.25 a day in 1996
* 50% Africans living on less than $1.25 a day in 2009
* $510 Gross domestic product per capita in sub-Saharan Africa in 2000 (in 2000 dollars)
* $623 Gross domestic product per capita in sub-Saharan Africa in 2008 (in 2000 dollars)

Sources: Organization for Economic Cooperation and Development, World Bank

Far from saying that aid "doesn't work, hasn't worked and won't work," I actually say this in my book: "Some of the most urgent needs of Africa can surely be met by increased aid from the rich world. Aid can save lives, reduce hunger, deliver a medicine, a mosquito net, a meal or a metalled road."

I go on to say that "statistics, anecdotes and case histories all demonstrate that the one thing aid cannot reliably do is to start or accelerate economic growth." Now here I admit that Mr. Gates does have a point. Unintentionally, I have given him and perhaps other readers the impression that, in my view, combating malaria or AIDS does not pay economic dividends. It does.

What I do take issue with is economic aid designed to stimulate economic growth. For example, a 2006 study by Simeon Djankov of the World Bank (now deputy prime minister of Bulgaria) and his colleagues concluded that "foreign aid has a negative impact on the democratic stance of developing countries and on economic growth by reducing investment and increasing government consumption." Economic aid diverts resources into projects that fail, puts money into the pockets of corrupt government officials and crowds out the efforts of entrepreneurs. In one example, only 13% of educational aid to Uganda reached schools; the rest was siphoned off by rent-seeking officials.

I am disappointed that Mr. Gates is so defensive about "top-down" aid. Just as everything from software design to education can benefit from bottom-up crowd sourcing in which elites no longer determine what happens, so surely humanitarian aid can benefit too, however much vested interests in governments and in big agencies dislike this trend.

Likewise, Mr. Gates takes issue with my assertion that the economy of the future will be post-corporatist and post-capitalist. I know that these radical ideas are not to everybody's taste, and he is right that most innovation takes place within existing companies. But it is very striking that some of the most far-reaching innovations over the past several decades have come from driven, visionary outsiders like Mr. Gates, Mark Zuckerberg and Sergey Brin rather than from corporate research and development departments. What is more, these innovations have been achieved with much less capital investment up front than in the days of Andrew Carnegie and Henry Ford.

It is true that there is still a vast amount of work needed to bring ideas to market, and this requires cash and corporate organization. But increasingly, corporations are turning themselves into virtual entities, arranged around flexible networks of suppliers, retailers and researchers, rather than monolithic bodies sitting in fixed plants. That seems to me to make the word "capitalist" somewhat misleading.

Mr. Gates thinks I underplay the role of education, government, patents and science in the innovation that drives economic improvement. Maybe, but I make a carefully argued case that most of the existing commentary overplays the role of these institutions and that innovation is sometimes hindered by these institutions, too, especially by patents and government monopolies.

Am I saying that we should cease worrying about trends that might cause problems? Of course not. I am arguing that we should worry about real problems, including Africa's plight, but that we should do so in the knowledge that we have solved many such problems before and can do so again. I am certainly not saying, "Don't worry, be happy." Rather, I'm saying, "Don't despair, be ambitious"—though I admit it's not nearly as snappy a song lyric.

—Matt Ridley's many books include, most recently, "The Rational Optimist" and "Francis Crick." His website is .

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