ollowing the 7.0 magnitude earthquake that shook Haiti and killed an estimated 316,000 people in 2010, the world has provided over $9 billion in foreign assistance to the Caribbean nation. Immediately after the quake, President Obama was quick to launch what TIME magazine called a “compassionate intervention”, disbursing $100 million of humanitarian aid to Haiti. But three years later, the country remains in ruins. What explains the failure of federal aid to help Haiti?
Perhaps Haiti’s own political dysfunctions are to blame. But such reasoning does not explain why the United States, a well-governed and wealthy nation, witnessed a similar breakdown in rule of law unfold in New Orleans after Hurricane Katrina in 2005. Some argue that the U.S. aided Haiti because Obama hoped to redeem the failure of the federal government to effectively help the people of New Orleans. Ironically, the carefully planned federal assistance failed on both accounts.
A less popular opinion blames the humanitarian aid system itself. In his latest book, Doing Bad By Doing Good, George Mason University professor of economics Christopher J. Coyne does just that. The book revisits domestic and international failures of state-led humanitarian assistance and uses economics to develop a systematic theory that explains why well-intentioned, state-led humanitarian assistance often fails to achieve desired outcomes.
Mr. Coyne guides the reader through the history of humanitarian assistance, which has grown tremendously since World War II and the Marshall Plan without generating much controversy. In the years following the terror attacks on the U.S. in September 2001, the distinction between humanitarian aid, peacekeeping missions, and military assistance has been blurred, resulting in even larger public sector aid budgets. Biennial funding from the U.N. alone rose by 70 percent in the last decade.
Doing Bad By Doing Good provides several case studies, including natural disaster relief in Haiti and New Orleans, as well as post-conflict assistance in Northern Africa and the Middle East, and general perils of development aid. The book scrutinizes forms of bilateral and multilateral aid, as well as the evolution of the Bretton Woods organizations (such as the International Monetary Fund and the International Bank for Reconstruction and Development), the Red Cross, Oxfam, and smaller NGOs on the map, to name a few. Mr. Coyne illustrates how NGO engagements have expanded by 150 percent between 1995 and 2005.
In short, Mr. Coyne finds that humanitarian aid does not always deliver. For example, poor economic decisions reached by aid bureaucrats hinder actions. The present humanitarian landscape is dominated by the state–and that includes “non-governmental” organizations, which rely largely on government funding.
Mr. Coyne’s antagonist is “the man of the humanitarian system.” The term is an allusion to Adam Smith’s notion of the “man of the system”–someone who is believed to be able to coordinate the complex economy. Mr. Coyne explains that the “men of the humanitarian system” have monopolized the aid industry, rendering it as inefficient as the centrally-planned Soviet economy. The reasons for the failures of the two are similar. In the absence of private markets and prices which signal value of output, donors simply have no way of knowing the needs of those on the ground, nor how to properly allocate relief resources to meet these needs.
What is more, state-led humanitarian initiatives can have detrimental adverse effects on private sector relief projects. In post-earthquake Haiti, the “Republic of NGOs” crowded out domestic efforts and Haiti’s private markets. Of the nearly $2 billion disbursed by the U.S. Government to Haiti, less than 2 percent went to Haitian businesses, existing NGOs, and the Haitian government. The good Samaritans of the West unintentionally curbed the local, organic efforts to reconstruct their own country, and in the process bypassing the Haitian government and created a shadow government and economy based on aid dollars.
According to Mr. Coyne, a properly-functioning humanitarian system would rely on entrepreneurship and local knowledge. For a taste of how such private aid would work, recall that in the aftermath of Katrina, companies like FedEx, Home Depot, and Wal-Mart were on the ground ahead of the Federal Emergency Management Agency (FEMA), distributing water, fuel, and other staples. Wal-Mart alone shipped nearly 2,500 truckloads of merchandise to the affected areas in the three weeks immediately following the disaster.
But does Doing Bad By Doing Good demonstrate that state-led humanitarian aid is counterproductive? Post-tsunami Indonesia seems to have benefited from American assistance, as did Japan following its nuclear disaster in 2011. Immediate relief projects can have obvious benefits. While the U.N. failed in restoring access to potable water in Haiti, resulting in 8,000 deaths from cholera, a similar outcome was avoided in post-tsunami Sri Lanka, where such access was restored relatively quickly—in large part because of humanitarian aid.
Because humanitarian aid is likely here to stay, it would be helpful to hear what policy changes would improve state-led humanitarian assistance. On this matter, Mr. Coyne suggests that the U.S. could better aid Haiti by reforming American immigration laws. But opening borders is not enough–trade barriers also need to be relaxed. Copious amounts of relief supplies were kept at Haiti’s border because of burdensome regulations and border control. A 2011 study by the Center for Strategic and International Studies found that short-term humanitarian assistance from the Dominican Republic, a first responder, greatly relieved Haiti, while improving bilateral relations between the two neighbors. If the U.S. wishes to improve its humanitarian assistance, as well as its global partnerships, it should prioritize humane policies, such as free trade, over philanthropic aid.
And that is not all policymakers can do. Mr. Coyne reminds us of the importance of healthy business environments. Haitians do not need aid–they need an open and productive economy. At the beginning of 2013, three-fourths of the Haitian working population was either unemployed or working in the underground economy. Despite the government’s pledges to improve the opportunities for doing business, in 2013 the country still occupies the abysmal 174th rank in the World Bank’s Doing Business report, one ranking lower than its rating in 2012. A feasible solution would have been for the U.S. to employ Haitians in its aid projects. Furthermore, rather than investing in new programs, a better option may have been to invest in existing Haitian initiatives.
Doing Bad By Doing Good brings a number of critical insights to the forefront–most important, the notion that experts cannot calculate how to alleviate human suffering with money alone. With a humanitarian crisis brewing in Western Africa and Haiti still recovering, now is the time for policymakers to take Mr. Coyne’s insights to heart as they consider reform.
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Doing Bad By Doing Good
May 2, 2013
F
ollowing the 7.0 magnitude earthquake that shook Haiti and killed an estimated 316,000 people in 2010, the world has provided over $9 billion in foreign assistance to the Caribbean nation. Immediately after the quake, President Obama was quick to launch what TIME magazine called a “compassionate intervention”, disbursing $100 million of humanitarian aid to Haiti. But three years later, the country remains in ruins. What explains the failure of federal aid to help Haiti?
Perhaps Haiti’s own political dysfunctions are to blame. But such reasoning does not explain why the United States, a well-governed and wealthy nation, witnessed a similar breakdown in rule of law unfold in New Orleans after Hurricane Katrina in 2005. Some argue that the U.S. aided Haiti because Obama hoped to redeem the failure of the federal government to effectively help the people of New Orleans. Ironically, the carefully planned federal assistance failed on both accounts.
A less popular opinion blames the humanitarian aid system itself. In his latest book, Doing Bad By Doing Good, George Mason University professor of economics Christopher J. Coyne does just that. The book revisits domestic and international failures of state-led humanitarian assistance and uses economics to develop a systematic theory that explains why well-intentioned, state-led humanitarian assistance often fails to achieve desired outcomes.
Mr. Coyne guides the reader through the history of humanitarian assistance, which has grown tremendously since World War II and the Marshall Plan without generating much controversy. In the years following the terror attacks on the U.S. in September 2001, the distinction between humanitarian aid, peacekeeping missions, and military assistance has been blurred, resulting in even larger public sector aid budgets. Biennial funding from the U.N. alone rose by 70 percent in the last decade.
Doing Bad By Doing Good provides several case studies, including natural disaster relief in Haiti and New Orleans, as well as post-conflict assistance in Northern Africa and the Middle East, and general perils of development aid. The book scrutinizes forms of bilateral and multilateral aid, as well as the evolution of the Bretton Woods organizations (such as the International Monetary Fund and the International Bank for Reconstruction and Development), the Red Cross, Oxfam, and smaller NGOs on the map, to name a few. Mr. Coyne illustrates how NGO engagements have expanded by 150 percent between 1995 and 2005.
In short, Mr. Coyne finds that humanitarian aid does not always deliver. For example, poor economic decisions reached by aid bureaucrats hinder actions. The present humanitarian landscape is dominated by the state–and that includes “non-governmental” organizations, which rely largely on government funding.
Mr. Coyne’s antagonist is “the man of the humanitarian system.” The term is an allusion to Adam Smith’s notion of the “man of the system”–someone who is believed to be able to coordinate the complex economy. Mr. Coyne explains that the “men of the humanitarian system” have monopolized the aid industry, rendering it as inefficient as the centrally-planned Soviet economy. The reasons for the failures of the two are similar. In the absence of private markets and prices which signal value of output, donors simply have no way of knowing the needs of those on the ground, nor how to properly allocate relief resources to meet these needs.
What is more, state-led humanitarian initiatives can have detrimental adverse effects on private sector relief projects. In post-earthquake Haiti, the “Republic of NGOs” crowded out domestic efforts and Haiti’s private markets. Of the nearly $2 billion disbursed by the U.S. Government to Haiti, less than 2 percent went to Haitian businesses, existing NGOs, and the Haitian government. The good Samaritans of the West unintentionally curbed the local, organic efforts to reconstruct their own country, and in the process bypassing the Haitian government and created a shadow government and economy based on aid dollars.
According to Mr. Coyne, a properly-functioning humanitarian system would rely on entrepreneurship and local knowledge. For a taste of how such private aid would work, recall that in the aftermath of Katrina, companies like FedEx, Home Depot, and Wal-Mart were on the ground ahead of the Federal Emergency Management Agency (FEMA), distributing water, fuel, and other staples. Wal-Mart alone shipped nearly 2,500 truckloads of merchandise to the affected areas in the three weeks immediately following the disaster.
But does Doing Bad By Doing Good demonstrate that state-led humanitarian aid is counterproductive? Post-tsunami Indonesia seems to have benefited from American assistance, as did Japan following its nuclear disaster in 2011. Immediate relief projects can have obvious benefits. While the U.N. failed in restoring access to potable water in Haiti, resulting in 8,000 deaths from cholera, a similar outcome was avoided in post-tsunami Sri Lanka, where such access was restored relatively quickly—in large part because of humanitarian aid.
Because humanitarian aid is likely here to stay, it would be helpful to hear what policy changes would improve state-led humanitarian assistance. On this matter, Mr. Coyne suggests that the U.S. could better aid Haiti by reforming American immigration laws. But opening borders is not enough–trade barriers also need to be relaxed. Copious amounts of relief supplies were kept at Haiti’s border because of burdensome regulations and border control. A 2011 study by the Center for Strategic and International Studies found that short-term humanitarian assistance from the Dominican Republic, a first responder, greatly relieved Haiti, while improving bilateral relations between the two neighbors. If the U.S. wishes to improve its humanitarian assistance, as well as its global partnerships, it should prioritize humane policies, such as free trade, over philanthropic aid.
And that is not all policymakers can do. Mr. Coyne reminds us of the importance of healthy business environments. Haitians do not need aid–they need an open and productive economy. At the beginning of 2013, three-fourths of the Haitian working population was either unemployed or working in the underground economy. Despite the government’s pledges to improve the opportunities for doing business, in 2013 the country still occupies the abysmal 174th rank in the World Bank’s Doing Business report, one ranking lower than its rating in 2012. A feasible solution would have been for the U.S. to employ Haitians in its aid projects. Furthermore, rather than investing in new programs, a better option may have been to invest in existing Haitian initiatives.
Doing Bad By Doing Good brings a number of critical insights to the forefront–most important, the notion that experts cannot calculate how to alleviate human suffering with money alone. With a humanitarian crisis brewing in Western Africa and Haiti still recovering, now is the time for policymakers to take Mr. Coyne’s insights to heart as they consider reform.
