A contender for the most effective development program in history | Hacker News Reader

A contender for the most effective development program in history

chrisblattman.com

44 pointsnols19 comments

The program sounds great, but, in order to call it the most effective program, it would be nice if he compared it to other projects.

How much does building a well in a village give in return? How much did this program actually give in return? While it spawned more companies than not giving out money, do these additional companies produce more wealth, than was spent on the program?

It doesn't have to be either-or. There is room to support entrepreneurship programs and direct cash aid to the poorest and antimalarial nets and civil society programs. The one lesson the past century of international development efforts should have taught us is that there is no single silver bullet. A complex web of measures, not all of them spectacularly successful, may not fit in a blog post or a TED talk, but neither does the world and its complexities.

The west has given $23T in aid since the 1970s. The bullet isn't even made from water, let alone silver.

One reason, according to William Easterly in his book "The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good" it is because the aid tries to meet the goals of the givers, not the recipients.

This kind of scheme is more of the solution Easterly proposes, just give people money and see what they come up with, rather than creating schemes that attempt to implement a solution dreamed up in a nice office or by Bob Geldof shouting "do something"

[1] http://www.independent.org/publications/tir/article.asp?a=63...

While it's not perfect(hasn't reached the "perpetual utopia" the author describes as the goal), to suggest that all of the foreign aid going into Africa and other developing regions has done "little good" is simply ignorant.

I don't know what a reasonable cash burn rate is for a Nigerian entrepreneur, but is it possible that $50,000 simply lasts three years? I expect not but can someone put my mind at rest?

Average monthly salary of middle class Nigerians is ~500-700 USD[0].

0. http://www.howwemadeitinafrica.com/nigerias-middle-class-how...

Counterpoint - Ory Okolloh explains why Africa can’t entrepreneur itself out of its basic problems http://qz.com/502149/video-ory-okolloh-explains-why-africa-c...

> But 7000 people earning $7 a day they might not have earned otherwise—that is something.

That's actually 17 mil per year, or a little less than the original 60 mil after 3 years. So far it's the typical communist economy: pay people to work, based not on their market value but on some other criteria (ideology? a scoring scheme?).

Is the math right?

7000 (new jobs) * $7 (salary per day) * 365 (days per year) = $17,885,000

So that's 18 million dollars. You spent 60 million dollars to create jobs that pull in 18 million dollars per year?

That's optimistically assuming those are full time jobs where the worker spends every single day of the year working AND that those jobs would not be created otherwise.

Yeah but 93% those businesses survived after 3 years. Presumably they grew as well. If you gave me 60 Million dollars today, and I gave you 17.8 Million dollars every year for the next couple of years, you've made your money after 4 years even if there is no increase.

The thing about creating wealth is that you need to view it as an investment. Your not going to get overnight returns.

The salaries are spent, and the workers accumulate skills, contacts, etc.

The guy is an expert in his field. Do you think he is going to read your comment and think, "Christ, why didn't I think of that?"

> Do you think he is going to read your comment and think, "Christ, why didn't I think of that?"

He should. He's an expert in statistics. And on paper everything is OK, but in reality 99% of this new "companies" are frauds. See my other top level comment.

Part of the reason why socialist bureaucracies always look great on paper, but fail miserably in reality is there are small lies, big lies, and statistics. And bureaucracies care only about statistics.

No, but he should have explained why spending $8,500 per job created is a good deal.

The guy is an expert in his field.

Yeah, but the field is foreign development aid. He'd have more credibility if he were an astrologer or a patent attorney.

How can one not see how much bullshit that is?

The very same program in European Union is called "Innovative Economy Programme" (website of it's Poland implementation):

http://www.poig.2007-2013.gov.pl/english/Strony/Introduction...

It was just one huge fraud-fest. You apply for a grant, making something completely useless, but with enough bullshit, that government minion can't tell. You make it "online" (a website), so it's "innovative". Bullshiting the grant is the hardest part - takes time, and creativity to write a good bullshit story. But! there are whole companies that do it for your, with a lot of experience how to bullshit government. Typical examples of projects are: social website for cat owners, something for e-commerce. Essentially just simple PHP websites with fancy names, and jargon to confuse the government.

You get free money ($50k and more), you buy yourself TV, new PC, HD projector, and all the stuff you want. You put it into company expenses, but use to play games in your free time. You hire a CS student to make the actual website for like $1000. You pay yourself a nice salary for "maintenance" and fake statistics of usage. After 5 years, when the government is off your back, you close the "company".

Or you have your normal company, you open a "fake one" with a grant, and suck all the resources into your normal company, keeping the fake company afloat for just couple of years to close it eventually due to lack of profitability.

It's not even hard to cheat like this, as government does not care. They want the stats to look good, so they can pretend like they're "helping the economy". Last thing they want is the stupidity of such program to be exposed. There are other programs: for mothers returning to workforce, for people with disabilities, etc. etc. And there are all just one big transfer of public money to fraudsters.

So yeah, I'm sure in Nigeria it was sooo much different... and it really boosted the economy. Now, back to email conversation with Nigerian prince that wants to share some inheritance with me...

Do you have proof that this type of fraud is occurring? We hear this a lot in the United States about our welfare programs. They find one or two "welfare queens"[1] and claim that the whole system is fraudulent. It turns out that while there are some (sometimes spectacular) bad actors, the majority of recipients are not fraudsters.[2]

[1] https://en.wikipedia.org/wiki/Linda_Taylor [2] https://en.wikipedia.org/wiki/Welfare_fraud

It's different than "welfare fraud", as there are people who really need welfare, while if there was a business that would be profitable without government grant, it would already exist. So grants like this by definition support fraud or otherwise uneconomical businesses.

Here, have an example, check-out famous: "the world of cats": http://swiatkotow.pl/ (see UE logo at the bottom) .

Government page about the grant: http://www.web.gov.pl/bazy-wiedzy/4_32_135_1353_swiat-kotow-... . Total UE grant: 790 600,00 PLN ($210k) .

I was talking personally with people who had projects using this scheme. I know countless examples. There were whole web pages tracking the stupidest and most daring grants.

Obviously, I don't have a proof about Nigerian program, but my Nigerian prince suggests that Nigerians are as clever (if not more) as Polish people, and it will work just as "well".

Reminds me of the Start-Up Chile program...

That makes Ayn Rand and her followers sad. I for one think it's great if all that is reported is true. Some places in the world need that extra nudge to help them on the right economic track.

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