Especially in a democracy, even trying to divorce foreign aid spending from "donor government’s strategic goals" is a mistake. First, it's a dereliction of the fiduciary duty of elected officials to look out, first and foremost, for the interests of their own voter constituents. Additionally, right out of the gate it reduces the size of the potential domestic coalition that might support a given item in the aid budget. For example, people who might not care much, per se, about sending their tax money to improve the lives of rural farmers in Central America or anywhere else might nonetheless support aid to Central America if they see it as supporting a national strategic goal of bringing Mexico and it's southern neighbors up the economic level of the US and Canada, whether for purposes of competing with China, of solving the immigration or drug smuggling problems on the border, or some other strategic purpose.
In short, it's just better all around, smarter politics and smarter policy, if the foreign aid budget is designed from the ground up to kill two or three birds with one stone.
Generally true, but that just suggests that MY's approach is sound (pay for results) but the target should be areas where materially improving health or economic outcomes locally advances American strategic interests. Like, it would make sense to find the most effective program to help in Central America, or in X African country (which has lithium deposits or uranium deposits or a strategic location or is at risk of becoming too much of a success story for Chinese aid) vs. Y African country (which doesn’t/isn’t).
AIUI this is currently the part of the immigration "Laffer Curve" that Central America is on right now - economic improvement actually translates into more resources to get out of Dodge. Obviously that trend stops eventually, at least, with enough economic improvement.
Not many countries are at risk of becoming successful through Chinese aid.
Chinese companies are very good at building large infrastructure projects but when the projects are also funded by Beijing, they're often sloppily designed or poorly chosen. And they aren't really "aid", since they usually involve loans at market interest rates.
Poor countries would be better off thinking of the China relationship as purely commercial, in which case the roads and power plants can be very beneficial if they're carefully planned.
Agree, as with Central America, aid to certain African countries, such as those on the Gold Coast, has multiple potential domestic constituencies and supporters, from those who see it as a form of slavery reparations to those who see it as national security imperative to extend NATO southward into an all-Atlantic alliance. Those different groups may each have their own reasons for supporting the aid, but they can still work together in coalition around a common goal and outcome that serves the national interests of the United States while helping people in the recipient countries.
I think you’re overrating the level of interest Americans have in helping the US government achieve its strategic policy goals and underrating the interest in just helping people.
I’d rather know my tax money was being spent preventing children from dying of malaria or whatever than making sure we have access to an oil well or something.
I think there is a widespread but very 'shallow' level of public support for the feel-good humanitarian stuff.
Public support for US self-interest is likely much more durable.
That's why oil prices and their economic impact have significant political impacts, but we could nix all foreign aid overnight and most Americans would -really- care all that much.
That is really not the problem. The problem is we don't know HOW to reduce the governmental disfunction that leads poor Central Americans to try to immigrate to the US.
That was 69 years ago. Granted, we've messed too much with Central America in the meantime, the Guatemalans have had plenty of agency in those ensuing seven decades.
Same for the claims that Iran is what it is now because how the CIA messed with Mossadegh in 1953.
Yes, but we don't know how to fix the governmental dysfunction regardless of if it was caused by us or not. Wish that we did though because many people are suffering there.
We know how to specifically destabilize a government - and should probably generally avoid doing that. But we don't know how to stabilize a government - see for example Venezuela where even if the US hadn't applied sanctions, would have likely mostly collapsed anyway under the weight of its own mismanagement.
Conscientiousness is not efficacy. The conscientious worker over-engineers work processes to avoid errors and scandals. The effective boss pushes back against this hard and implements production quotas that crush low impact refinements.
Poor children in the developing world have very simple needs. Whoever can get rice, beans, vaccines and de worming drugs to them at the lowest cost deserves an “unseemly” profit.
People complain about those things too. For example, recently we are seeing people claim (mostly incorrectly) that companies are gouging customers under the "excuse" of inflation.
I think it's worth asking what is the "product" in the case of a donation. Is it the benefit to the end user or the sense of self satisfaction of the donor? In either case though, if the value is relatively low to the cost, people will be less inclined to "buy" it.
Agree with the objective here, but what would the mechanism be on the government side that would allow for (reasonably) quick and accurate verification that the development had been achieved? A mistaken payment would reap huge political backlash, but an overly cautious process that takes forever to pay out wouldn't necessarily get many takers, or result in the same players as today filling the new space.
I think that the pay-for-results contracting could be helpful in a limited number of circumstances. But you need clearly measurable results that cannot be easily gamed, because clearly there would be attempts to game them.
My thought as well. Puts me in mind of standardized testing too: assessment accuracy of student knowledge/ability is critical to maintain and the reason we do it in the first place, but legibility and consistency of evaluation is arguably implemented at a level even lower than that.
I don't think Matt's piece (which overall I thought was quite well argued) necessarily overlooks this aspect - after all, among the classes of grant discussed are those for "Phase 4. Evidence Generation" -- and it's such an obvious corollary of an evidence-based results regime that I'm sure he's cognizant of it. So I don't think we're quite in "assume a can opener" territory with evaluation, but I think it does behoove grant writers to think about assessment capacity, methodology and reliability from the get-go if they're going to try evidence-based grants. Ideally in such a way as to make it resistant to Goodharting and Goodhart-adjacent subterfuge where it turns out the best way to get USG cash is to just bribe the assessors.
Serious question, Matt: Do you see this at all different from the problem of domestic non-profits sucking up government funding and delivering nothing?
The way I read this post, Yglesias is saying there's overlap here but the issues are not exactly the same. Disfunctional and ineffective domestic non-profits (and some non-domestic ones) are a piece of the problem with foreign aid but the problems with foreign aid extend beyond just those associated with the non-profit industrial complex.
The government-contracting issues are far from unique to the foreign-aid space. There are a lot of companies in many industries whose primary expertise is getting government contracts, not getting any particular real-world results. One especially obvious place I have seen this phenomenon is when companies market that they are "veteran owned" or "women owned" more prominently than they market whatever it is they actually do.
They are generally far from cost-effective but they deliver more than nothing. There’s a real loss of benefits in ending these programs so they’re not going away until there are highly credible substitutes, not just hypothetical ones.
Not always. Sometimes money, time and effort spent by nonprofits bring a result that simply a waste of time and money that could be spent on something else. See "La Sombrita" for a recent mild example.
PEPFAR seems to have achieved major results with GiveWell charity-like cost effectiveness. What differentiated it from some of the other less effective aid programs?
This is all great and I'll resist the temptation to tell war stories from Afghanistan.
The only thing I'd add to Matt's comments is that progressives need to stop thinking of the needs of poorer people in poor countries as fundamentally different from the needs of poorer people in Europe or North America. The way to lift people out of poverty is to set up well-functioning national welfare states, not to send money across borders.
Elites in poor countries don't want to hear this because it would mean paying higher taxes. Western aid workers don't want to hear it because it implies they should be working themselves out of a job. But if cash transfers and health care are the two main things poor people in the Third World need, then the role of aid in anything but an emergency setting should be to help Third World governments organize effective systems of UBI and national health insurance. Rwanda's government understands this, which is why they have universal healthcare.
"needs of poorer people in poor countries as fundamentally different from the needs of poorer people in Europe or North America. The way to lift people out of poverty is to set up well-functioning national welfare states, not to send money across borders."
I suppose I am out of the loop but do these organizations really disagree with this? I always presumed if you asked them directly they'd give some version of "in a perfect world we would not be needed" and then sort of in the background incentives push them to self preservation because we're human (and also the self stated goals do in fact seem very hard regardless of anything else).
I think the basic problem is this. The two most effective ways to alleviate poverty in poor countries are:
- for poor-country governments to achieve more economic efficiency and faster growth
- for poor-country governments to be more redistributive
But when you use aid as an incentive to change another country's policies in either of those ways, you're trying to alter or overrule the status quo, which was produced by its existing political system. Obviously there's going to be pushback to that.
It's very tempting to say to India: "Why don't you have universal free school breakfast and lunch so kids learn more and aren't malnourished? Why don't you create more unskilled jobs by deregulating the textile and apparel sector? If you haven't done either of those things, isn't the aid we give to poor Indians just a substitute for what you could have done without our help?"
But the big advantage of free money from abroad is that it doesn't create those sorts of conflicts with elites or vested interests. So it becomes the path of least resistance.
The state department has a report on Rwanda and I'll note that the president won election to a third term with 99% of the vote ... That's a huge red flag for me that makes me inclined to support a skeptical outlook.
Currently they do seem to be delivering stable economic growth, but I think it's right to be at least a little concerned.
Yeah, it is a concern. Non-participatory systems are inherently unstable even when they're generating good growth and equity outcomes. I saw this happen in Ethiopia, which was doing very well under an authoritarian regime until 2018. At that point mass protests forced the government to liberalize politically because people were dissatisfied in spite of all the GDP growth, and since then the country has gone completely to hell.
This is how the system used to work (article published a few months before the old government resigned):
Rwanda could certainly go the same way. And China could have gone the same way over the past four decades... but it didn't. Sometimes authoritarianism does succeed, and I don't think anyone knows how to predict whether it will succeed in a given case.
I would’ve thought the top priority in poor countries would be to have more money total rather than distributing it better. Since you’re starting from a much lower base and to some extent can copy rich countries.
I think there's a clear relationship, both in timing and in general outlook, between the left's increasing emphasis on human rights and "liberalism that doesn't build". It started in both cases as a healthy reaction against the earlier left traditions of statism and Stalinism (I suspect a lot of fellow-travelers admired Robert Moses) but it introduced dysfunctions of its own.
When penalizing governments for human rights abuses begins to correlate with penalizing governments for high state capacity, things have gone too far.
Hasn't Modi emphasized redistribution as well as growth, though?
When I was in Delhi a few months ago he gave a public speech in which he stressed that the way to prevent discrimination was to make sure social programs were fully extended, with no waitlisting. And I understand the BJP has rolled out its own version of universal health coverage (something Thaksin's government in Thailand did as well).
So I can't help but note that the "cost-plus" contracting formulation sounds a hell of a lot like the failed vision of technocratic education reform from yesterday and that "paying for results" sounds much more like an effective voucher program.
Except I assume in a "paying for results" program the money is given after at least some of the results have been achieved. Not all up front like a voucher.
Yea, my version of Ed reform would be vouchers + strong assessment/tracking/certification/diplomas. The Feds/DoE should be developing valuable credentialing opportunities for students while letting them go out and use tax dollars to pursue them in whatever setting works for them as individuals.
Worked for a big government aerospace and defense contractor in their schedule management department for 3 years during and right after college. I can confirm from experience that cost-plus contracts had little to no urgency to finish on time or in budget, because of the two factors MY mentioned - cost-plus means that these orgs are getting their profit no matter what and the barriers to entry for many government contracts are so high that organizations aren't worried about losing work if they consistently deliver late and over budget.
There's a spectrum from cost-plus to what MY is talking about (Firm Fixed Price or FFP), and sometimes project are more appropriate to operate under something of a hybrid than a FFP model, which can lead to projects being scrapped mid-way through if they become unprofitable, but cost-plus is truly never the right way to go. Honestly though, and this is anecdata from my experience in one company in one sector, the RFP process is more important to reform than the contract structures. The government contracting process is set up so thoroughly to discourage new entrants. The requirements for RFPs are unnecessarily onerous, the process involves a lot of personal relationships (again, at least on the defense/aerospace side), and the government does not emphasize past performance enough (for example, when a contractor has been late and over budget 10x in a row, they should stop giving them bids).
"Redirecting the money that’s currently being spent toward better programs could do a lot of good in the world. And my general inclination about a lot of categories of spending — from aid to mass transit and beyond — is that if the money was delivering more visible results, that would improve the politics."
This is probably correct but I'm not sure there's any foreign aid-related result that would be visible enough to get voters to really care about this. It's simply not a topic that's usually in the forefront of people's minds; they'll write their check to their favorite charity and then not think about it again for several months.
Interesting post but I don't see it happening anytime soon as the politics of "foreign aid" have always been more about domestic concerns and foreign policy than Give Well type goals. Like there's no rational reason from a human suffering or development standpoint for the US to still give massive amounts of aid to Israel...but it totally does make sense from a domestic politics standpoint. You could make similar points about Egypt, Columbia etc etc
It’s pretty frustrating to me that there are AFAIK no national governments funding GiveWell in significant size. They’ve attracted a fair amount of private sector money.
I guess as Matt says the public sector process is just too rigid and wasteful to notice this great opportunity. It makes me very skeptical of the left-wing idea that we should try and replace all philanthropy with taxes.
Another issue is that governments don’t care much about people who aren’t their citizens. Maybe this is correct, but I think we should try and spend at least a little of our resources in a country-agnostic way because between-country differences are so large (eg median Americans are literally 100x richer than the poorest people in the world).
One concern I had about Obamacare is that it essentially turns health insurance companies into cost plus providers by requiring carriers spend at least 80% of premiums on medical costs or return the excess. This seemed like it would turn carriers from a market force pushing against rising health care costs (that they are ultimately required to pay) into one that wants higher costs so their 20% goes up with them.
It does appear that the ACA bent the cost curve, so maybe my worry was misplaced, though I've never really looked into whether the cost curve bent because of or in spite of this rule.
Does just giving people money really scale that well? I would think that at some point you're just causing inflation rather than an increase in living standards
For additional context, the other contract type is called "lump sum" typically. "Lump sum" contracts entail a fixed cost to achieve the goal and I think that's what Matt is advocating for. Some public sector entities (like many cities and municipalities) do use lump sum contracts. Unfortunately, large public sector entities like major utility districts and DOTs use cost-plus contacts. As a consultant, I unabashedly prefer lump sum contacts because they give us much more flexibility.
The Republicans’ debt ceiling hostage taking should never be described as anything but a huge, completely dishonest graft. It won’t result in a new park getting built or any other good thing being done efficiently. It’ll just be ten-millions of dollars of profits for everyone who knows a day in advance which markets to short, to profit from whatever the rightist thieves decide to do. This includes the so-called “blind trusts” that politicians erect to maintain the pretense of not doing this.
Many of these same arguments could be applied to the community development finance industry in the US. A whole industry has sprung up over the past 40 years for investing more capital in underserved neighborhoods. This has taken the form of community development financial institutions (CDFIs) and various tax credit programs such as LIHTC , New Markets Tax Credits, and Opportunity Zones. The industry has, no doubt, directed a lot more capital to building affordable housing, health centers, charter schools, and other community facilities than otherwise would not have been built. But it's time to ask whether there now may be more efficient ways of investing in those communities (e.g. direct transfers.)
Especially in a democracy, even trying to divorce foreign aid spending from "donor government’s strategic goals" is a mistake. First, it's a dereliction of the fiduciary duty of elected officials to look out, first and foremost, for the interests of their own voter constituents. Additionally, right out of the gate it reduces the size of the potential domestic coalition that might support a given item in the aid budget. For example, people who might not care much, per se, about sending their tax money to improve the lives of rural farmers in Central America or anywhere else might nonetheless support aid to Central America if they see it as supporting a national strategic goal of bringing Mexico and it's southern neighbors up the economic level of the US and Canada, whether for purposes of competing with China, of solving the immigration or drug smuggling problems on the border, or some other strategic purpose.
In short, it's just better all around, smarter politics and smarter policy, if the foreign aid budget is designed from the ground up to kill two or three birds with one stone.
Generally true, but that just suggests that MY's approach is sound (pay for results) but the target should be areas where materially improving health or economic outcomes locally advances American strategic interests. Like, it would make sense to find the most effective program to help in Central America, or in X African country (which has lithium deposits or uranium deposits or a strategic location or is at risk of becoming too much of a success story for Chinese aid) vs. Y African country (which doesn’t/isn’t).
I feel like we Americans benefit in stability when any random other country becomes more stable, and stability tends to come with health and wealth?
Maybe. Probably. But it is a very weak and diffuse effect.
And sometimes, poor countries becoming marginally better off just means that they send more economic migrants/'refugees' our way.
AIUI this is currently the part of the immigration "Laffer Curve" that Central America is on right now - economic improvement actually translates into more resources to get out of Dodge. Obviously that trend stops eventually, at least, with enough economic improvement.
https://www.vox.com/policy-and-politics/22404000/foreign-aid-biden-central-america-migration-root-causes
Not many countries are at risk of becoming successful through Chinese aid.
Chinese companies are very good at building large infrastructure projects but when the projects are also funded by Beijing, they're often sloppily designed or poorly chosen. And they aren't really "aid", since they usually involve loans at market interest rates.
Poor countries would be better off thinking of the China relationship as purely commercial, in which case the roads and power plants can be very beneficial if they're carefully planned.
Agree, as with Central America, aid to certain African countries, such as those on the Gold Coast, has multiple potential domestic constituencies and supporters, from those who see it as a form of slavery reparations to those who see it as national security imperative to extend NATO southward into an all-Atlantic alliance. Those different groups may each have their own reasons for supporting the aid, but they can still work together in coalition around a common goal and outcome that serves the national interests of the United States while helping people in the recipient countries.
I think you’re overrating the level of interest Americans have in helping the US government achieve its strategic policy goals and underrating the interest in just helping people.
I’d rather know my tax money was being spent preventing children from dying of malaria or whatever than making sure we have access to an oil well or something.
I think there is a widespread but very 'shallow' level of public support for the feel-good humanitarian stuff.
Public support for US self-interest is likely much more durable.
That's why oil prices and their economic impact have significant political impacts, but we could nix all foreign aid overnight and most Americans would -really- care all that much.
That is really not the problem. The problem is we don't know HOW to reduce the governmental disfunction that leads poor Central Americans to try to immigrate to the US.
That was 69 years ago. Granted, we've messed too much with Central America in the meantime, the Guatemalans have had plenty of agency in those ensuing seven decades.
Same for the claims that Iran is what it is now because how the CIA messed with Mossadegh in 1953.
Yes, but we don't know how to fix the governmental dysfunction regardless of if it was caused by us or not. Wish that we did though because many people are suffering there.
Yes and no???
We know how to specifically destabilize a government - and should probably generally avoid doing that. But we don't know how to stabilize a government - see for example Venezuela where even if the US hadn't applied sanctions, would have likely mostly collapsed anyway under the weight of its own mismanagement.
No defense of toppling Arbenz (or Mossadegh), but plenty of countries have managed to be dysfunctional without our help.
A simple proposed axiom: governments should spend the least amount necessary to get the best *desired result* possible.
Conscientiousness is not efficacy. The conscientious worker over-engineers work processes to avoid errors and scandals. The effective boss pushes back against this hard and implements production quotas that crush low impact refinements.
Poor children in the developing world have very simple needs. Whoever can get rice, beans, vaccines and de worming drugs to them at the lowest cost deserves an “unseemly” profit.
People complain about those things too. For example, recently we are seeing people claim (mostly incorrectly) that companies are gouging customers under the "excuse" of inflation.
I think it's worth asking what is the "product" in the case of a donation. Is it the benefit to the end user or the sense of self satisfaction of the donor? In either case though, if the value is relatively low to the cost, people will be less inclined to "buy" it.
Noooooo - we're not allowed to talk about porn here! 😂
Agree with the objective here, but what would the mechanism be on the government side that would allow for (reasonably) quick and accurate verification that the development had been achieved? A mistaken payment would reap huge political backlash, but an overly cautious process that takes forever to pay out wouldn't necessarily get many takers, or result in the same players as today filling the new space.
I think that the pay-for-results contracting could be helpful in a limited number of circumstances. But you need clearly measurable results that cannot be easily gamed, because clearly there would be attempts to game them.
Probably worth doing as a Pilot.
My thought as well. Puts me in mind of standardized testing too: assessment accuracy of student knowledge/ability is critical to maintain and the reason we do it in the first place, but legibility and consistency of evaluation is arguably implemented at a level even lower than that.
I don't think Matt's piece (which overall I thought was quite well argued) necessarily overlooks this aspect - after all, among the classes of grant discussed are those for "Phase 4. Evidence Generation" -- and it's such an obvious corollary of an evidence-based results regime that I'm sure he's cognizant of it. So I don't think we're quite in "assume a can opener" territory with evaluation, but I think it does behoove grant writers to think about assessment capacity, methodology and reliability from the get-go if they're going to try evidence-based grants. Ideally in such a way as to make it resistant to Goodharting and Goodhart-adjacent subterfuge where it turns out the best way to get USG cash is to just bribe the assessors.
Serious question, Matt: Do you see this at all different from the problem of domestic non-profits sucking up government funding and delivering nothing?
The way I read this post, Yglesias is saying there's overlap here but the issues are not exactly the same. Disfunctional and ineffective domestic non-profits (and some non-domestic ones) are a piece of the problem with foreign aid but the problems with foreign aid extend beyond just those associated with the non-profit industrial complex.
The government-contracting issues are far from unique to the foreign-aid space. There are a lot of companies in many industries whose primary expertise is getting government contracts, not getting any particular real-world results. One especially obvious place I have seen this phenomenon is when companies market that they are "veteran owned" or "women owned" more prominently than they market whatever it is they actually do.
They are generally far from cost-effective but they deliver more than nothing. There’s a real loss of benefits in ending these programs so they’re not going away until there are highly credible substitutes, not just hypothetical ones.
Disagree. The substitutes are literally anything else. Even defense spending would be less wasteful than many of these non profits.
I’m not saying it’s wise but, because the benefits are non-zero, that’s the bureaucratic and political reality.
Not always. Sometimes money, time and effort spent by nonprofits bring a result that simply a waste of time and money that could be spent on something else. See "La Sombrita" for a recent mild example.
Amen. I normally defend shit like that on ideological grounds, but the fiscal expense is just un-fucking-acceptable.
I don't
PEPFAR seems to have achieved major results with GiveWell charity-like cost effectiveness. What differentiated it from some of the other less effective aid programs?
This is all great and I'll resist the temptation to tell war stories from Afghanistan.
The only thing I'd add to Matt's comments is that progressives need to stop thinking of the needs of poorer people in poor countries as fundamentally different from the needs of poorer people in Europe or North America. The way to lift people out of poverty is to set up well-functioning national welfare states, not to send money across borders.
Elites in poor countries don't want to hear this because it would mean paying higher taxes. Western aid workers don't want to hear it because it implies they should be working themselves out of a job. But if cash transfers and health care are the two main things poor people in the Third World need, then the role of aid in anything but an emergency setting should be to help Third World governments organize effective systems of UBI and national health insurance. Rwanda's government understands this, which is why they have universal healthcare.
"needs of poorer people in poor countries as fundamentally different from the needs of poorer people in Europe or North America. The way to lift people out of poverty is to set up well-functioning national welfare states, not to send money across borders."
I suppose I am out of the loop but do these organizations really disagree with this? I always presumed if you asked them directly they'd give some version of "in a perfect world we would not be needed" and then sort of in the background incentives push them to self preservation because we're human (and also the self stated goals do in fact seem very hard regardless of anything else).
I think the basic problem is this. The two most effective ways to alleviate poverty in poor countries are:
- for poor-country governments to achieve more economic efficiency and faster growth
- for poor-country governments to be more redistributive
But when you use aid as an incentive to change another country's policies in either of those ways, you're trying to alter or overrule the status quo, which was produced by its existing political system. Obviously there's going to be pushback to that.
It's very tempting to say to India: "Why don't you have universal free school breakfast and lunch so kids learn more and aren't malnourished? Why don't you create more unskilled jobs by deregulating the textile and apparel sector? If you haven't done either of those things, isn't the aid we give to poor Indians just a substitute for what you could have done without our help?"
But the big advantage of free money from abroad is that it doesn't create those sorts of conflicts with elites or vested interests. So it becomes the path of least resistance.
Hmm. I hadn't heard about this so looked into it.
The state department has a report on Rwanda and I'll note that the president won election to a third term with 99% of the vote ... That's a huge red flag for me that makes me inclined to support a skeptical outlook.
Currently they do seem to be delivering stable economic growth, but I think it's right to be at least a little concerned.
Dang it, this was meant to be a reply to frigid wind below.
Yeah, it is a concern. Non-participatory systems are inherently unstable even when they're generating good growth and equity outcomes. I saw this happen in Ethiopia, which was doing very well under an authoritarian regime until 2018. At that point mass protests forced the government to liberalize politically because people were dissatisfied in spite of all the GDP growth, and since then the country has gone completely to hell.
This is how the system used to work (article published a few months before the old government resigned):
https://www.nytimes.com/2017/11/05/world/africa/ethiopia-government-surveillance.html
Rwanda could certainly go the same way. And China could have gone the same way over the past four decades... but it didn't. Sometimes authoritarianism does succeed, and I don't think anyone knows how to predict whether it will succeed in a given case.
I would’ve thought the top priority in poor countries would be to have more money total rather than distributing it better. Since you’re starting from a much lower base and to some extent can copy rich countries.
Yes, and if aid can do that by improving the economic policies of national governments, that's also worthwhile.
I think there's a clear relationship, both in timing and in general outlook, between the left's increasing emphasis on human rights and "liberalism that doesn't build". It started in both cases as a healthy reaction against the earlier left traditions of statism and Stalinism (I suspect a lot of fellow-travelers admired Robert Moses) but it introduced dysfunctions of its own.
When penalizing governments for human rights abuses begins to correlate with penalizing governments for high state capacity, things have gone too far.
What is more important?:
- democracy
- liberalism and human rights
- economic and material well being
It's difficult to prioritize all three, let alone achieve all three.
Hasn't Modi emphasized redistribution as well as growth, though?
When I was in Delhi a few months ago he gave a public speech in which he stressed that the way to prevent discrimination was to make sure social programs were fully extended, with no waitlisting. And I understand the BJP has rolled out its own version of universal health coverage (something Thaksin's government in Thailand did as well).
sorry, what does PMC stand for?
So I can't help but note that the "cost-plus" contracting formulation sounds a hell of a lot like the failed vision of technocratic education reform from yesterday and that "paying for results" sounds much more like an effective voucher program.
Except I assume in a "paying for results" program the money is given after at least some of the results have been achieved. Not all up front like a voucher.
Yea, my version of Ed reform would be vouchers + strong assessment/tracking/certification/diplomas. The Feds/DoE should be developing valuable credentialing opportunities for students while letting them go out and use tax dollars to pursue them in whatever setting works for them as individuals.
Worked for a big government aerospace and defense contractor in their schedule management department for 3 years during and right after college. I can confirm from experience that cost-plus contracts had little to no urgency to finish on time or in budget, because of the two factors MY mentioned - cost-plus means that these orgs are getting their profit no matter what and the barriers to entry for many government contracts are so high that organizations aren't worried about losing work if they consistently deliver late and over budget.
There's a spectrum from cost-plus to what MY is talking about (Firm Fixed Price or FFP), and sometimes project are more appropriate to operate under something of a hybrid than a FFP model, which can lead to projects being scrapped mid-way through if they become unprofitable, but cost-plus is truly never the right way to go. Honestly though, and this is anecdata from my experience in one company in one sector, the RFP process is more important to reform than the contract structures. The government contracting process is set up so thoroughly to discourage new entrants. The requirements for RFPs are unnecessarily onerous, the process involves a lot of personal relationships (again, at least on the defense/aerospace side), and the government does not emphasize past performance enough (for example, when a contractor has been late and over budget 10x in a row, they should stop giving them bids).
"Redirecting the money that’s currently being spent toward better programs could do a lot of good in the world. And my general inclination about a lot of categories of spending — from aid to mass transit and beyond — is that if the money was delivering more visible results, that would improve the politics."
This is probably correct but I'm not sure there's any foreign aid-related result that would be visible enough to get voters to really care about this. It's simply not a topic that's usually in the forefront of people's minds; they'll write their check to their favorite charity and then not think about it again for several months.
Interesting post but I don't see it happening anytime soon as the politics of "foreign aid" have always been more about domestic concerns and foreign policy than Give Well type goals. Like there's no rational reason from a human suffering or development standpoint for the US to still give massive amounts of aid to Israel...but it totally does make sense from a domestic politics standpoint. You could make similar points about Egypt, Columbia etc etc
It’s pretty frustrating to me that there are AFAIK no national governments funding GiveWell in significant size. They’ve attracted a fair amount of private sector money.
I guess as Matt says the public sector process is just too rigid and wasteful to notice this great opportunity. It makes me very skeptical of the left-wing idea that we should try and replace all philanthropy with taxes.
Another issue is that governments don’t care much about people who aren’t their citizens. Maybe this is correct, but I think we should try and spend at least a little of our resources in a country-agnostic way because between-country differences are so large (eg median Americans are literally 100x richer than the poorest people in the world).
They’re not going to fund GiveWell directly but they do fund, to a limited degree, efforts that attempt to mirror some of GiveWell’s successes
One concern I had about Obamacare is that it essentially turns health insurance companies into cost plus providers by requiring carriers spend at least 80% of premiums on medical costs or return the excess. This seemed like it would turn carriers from a market force pushing against rising health care costs (that they are ultimately required to pay) into one that wants higher costs so their 20% goes up with them.
It does appear that the ACA bent the cost curve, so maybe my worry was misplaced, though I've never really looked into whether the cost curve bent because of or in spite of this rule.
Does just giving people money really scale that well? I would think that at some point you're just causing inflation rather than an increase in living standards
My guess is it would depend on initial money supply.
For additional context, the other contract type is called "lump sum" typically. "Lump sum" contracts entail a fixed cost to achieve the goal and I think that's what Matt is advocating for. Some public sector entities (like many cities and municipalities) do use lump sum contracts. Unfortunately, large public sector entities like major utility districts and DOTs use cost-plus contacts. As a consultant, I unabashedly prefer lump sum contacts because they give us much more flexibility.
The Republicans’ debt ceiling hostage taking should never be described as anything but a huge, completely dishonest graft. It won’t result in a new park getting built or any other good thing being done efficiently. It’ll just be ten-millions of dollars of profits for everyone who knows a day in advance which markets to short, to profit from whatever the rightist thieves decide to do. This includes the so-called “blind trusts” that politicians erect to maintain the pretense of not doing this.
Many of these same arguments could be applied to the community development finance industry in the US. A whole industry has sprung up over the past 40 years for investing more capital in underserved neighborhoods. This has taken the form of community development financial institutions (CDFIs) and various tax credit programs such as LIHTC , New Markets Tax Credits, and Opportunity Zones. The industry has, no doubt, directed a lot more capital to building affordable housing, health centers, charter schools, and other community facilities than otherwise would not have been built. But it's time to ask whether there now may be more efficient ways of investing in those communities (e.g. direct transfers.)