The UN has yet to learn its lesson

COMMENTARY Poverty and Inequality

The UN has yet to learn its lesson

Oct 19th, 2015 2 min read
Theodore R. Bromund, Ph.D.

Senior Research Fellow in Anglo-American Relations

Ted Bromund studies Anglo-American relations, U.S. relations with Europe and the EU, and the U.S.’s leadership role in the world.
The announcement last week that Angus Deaton of Princeton University won the 2015 Nobel Prize in economics offers an opportunity to celebrate the gains the world has made, and to reflect on how we can do better. Unfortunately, the United Nations has not taken that opportunity.

Deaton's research focuses on the use of data from families -- not from surveys of the public at large -- to better understand how economic development works in practice. On one level, this is just good research. But on another level, it's more.

It's treating the world's poor not as a poverty-stricken mass, but as individuals who make decisions. Deaton's work serves the common good, but he's not a do-gooder. He doesn't mistake good intentions for good outcomes.

As a result, he's a harsh critic of foreign aid. Aid, by definition, goes to places that are poor. The theory is that, if we give poor places enough money, they'll be better off. Unfortunately, these places also often have corrupt and ineffective governments.

In normal circumstances, governments have an incentive to protect property, defend economic liberties, and have an honest legal system. The incentive is simple: prosperous economies, where people are free to act on their interests, are more profitable to tax.

But aid gives bad governments another way out. They can live off aid, instead of taxes. Worse, the poorer their people are, the more aid they can request. The problem with aid isn't merely that it's a waste of money. It's that it can create incentives for overbearing, corrupt government.

As Deaton points out, the world's poor are much less numerous than they were a few decades ago. There are two reasons for this: China and India. China's partial economic liberalization in the 1980s, and India's entry into the world economy in the 1990s, lifted millions of people out of poverty.

The UN likes to claim that this is the result of its Millennium Development Goals, which were adopted in 2000 and ended this year. The program does have some advantages -- above all, the goals are based on numeric targets, so successes and failures are easier to assess.

But the program had nothing to do with the reduction of poverty in China and India. Those improvements came from changes made before the millennium goals were devised. Undaunted by this fact, the UN has now adopted its Sustainable Development Goals, which will run through 2030.

The sustainable goals are a disaster. The millennium program had eight goals. The SDGs have 17, with a whopping 169 targets. Many are merely politicized aspirations, such as the SDG calling on nations to "strengthen efforts to protect and safeguard the world's cultural and natural heritage."

The UN estimates the SDGs will cost $3 trillion a year, a wasteful bill that will fall heavily on the United States. Progress toward those vague 169 targets can't be measured with Deaton's careful research.

And worst of all, the SDGs don't acknowledge that the reason why development has stalled in too many nations isn't a lack of aid, or a shortage of pious wishes. The problem is bad governments.

The antidote to poverty is simple: growth. And growth, as China and India have demonstrated, comes when governments do a few things right -- above all, as Deaton implies, treating people as individuals who have the ability and the right to make decisions for themselves.

The UN's sustainable goals program will encourage governments instead to rely on aid, and to indulge in political rhetoric. The beginning of wisdom, Deaton implies, is recognizing that we need good government based on freedom under law. It's a lesson the UN hasn't learned.

This piece originally appeared on Newsday