Hard Choices

Tarun and I had an argument about democracy and foreign aid, and I thought I would spell out our positions and defend mine. This was a while ago, so I might not remember everything perfectly.

I was arguing for a "big push" in which international donors concentrate a lot of effort on one recipient state or region. I wouldn't want this to come at the expense of existing aid arrangements, although actually some existing aid could probably be cut without very much pain. Rather, I would like to see increases in the aid budgets of rich nations. These increases need not be large as a share of GDP. A few billion dollars a year from each contributor should be ample for my purposes (less from smaller donors).

Tarun opposes this idea entirely, and I can write about that another time, but for now I'll discuss one thing in particular that Tarun didn't like about my formulation: I would rather spend aid money in democracies rather than authoritarian regimes. Now, aid money need not go directly to the government of the recipient nation, so in this discussion I'm including money that goes to NGOs etc. Tarun would agree, I presume, that it's not often wise to give money directly to dictators. He would argue that in those cases we should spend the money directly on aid projects.

As a quick aside, totalitarian governments seldom allow broad civil rights, including the rights to property and free movement. In the absense of these rights, the value of purportedly independent projects can be expropriated by the government. So for instance, say you're building a bridge to help poor people. The government can block your workers and materials and thus extort money. Once the bridge is built, the government can charge a high toll. This doesn't make the project useless, but it makes dollars spent on it less effective, probably much less effective, than they would be in a liberal democracy.

Tarun's position (if I remember correctly) is that people can't help what kind of government they live under, so it's improper to favor democracies over authoritarian governments. He might have qualified this by limiting it to cases in which a dollar spent in an authoritarian regime is as effective as a dollar spent in a democratic regime. I think this exception will swallow the rule, but we'll come back to that.

My basic contention is that democracies are better than authoritarian regimes and we should encourage them. I don't think Tarun disagrees in general, although in particular cases (China) he might be more tolerant of totalitarianism than I am. The real disagreement is whether aid makes a difference in stabilizing or encouraging democracy.

I think the answer is a pretty clear "yes," although it's a complicated question. The classic example is Weimar Germany, which was humiliated and drained of wealth as "reparations" for WWI. This weakened and discredited the democratic government and led to the rise of national socialism. I think it's highly plausible that a Marshall Plan after WWI would have led Germany down a different path than the one it followed. Now, the Nazi regime was uniquely evil, and I don't contend that comparable evils await every feeble, cash-strapped democracy. Still, the tendency is clear, and I think we should do a lot to bolster democratic governments around the world.

This wouldn't support my argument very much if nations switched easily in both directions. In other words, if authoritarian regimes naturally progressed to democracies as wealth increased, we could basically ignore political structure. Some countries would slip back into dictatorships, some would emerge as democracies, and it would be relatively unimportant because damage would be temporary. In fact, though, many authoritarian regimes are brutally stable, while new democracies are often fragile. Authoritarian regimes do not automatically switch over to democracies when they reach a certain wealth (see China and the oil states), and the governments often clamp down hard enough to destroy a lot of wealth in the first place (see Burma). In this situation, we should carefully guard poor democracies until they have the institutions and wealth to preserve themselves. Otherwise we will end up with more undemocratic regimes, and once they are in place they will be very difficult to dislodge.

Technically, this doesn't defeat Tarun's argument. Tarun could say, "Sure, but all of this just means that aid to democratic governments tends to be more effective, all things considered. We should still give money without regard to the form of government, with an exception for those cases in which aid is less effective in totalitarian states."

As I said earlier, though, the exception will rapidly swallow the rule. It is like a rule that we should treat slavery the same as free, compensated employment, with an exception for those cases in which slaves are worse off than free laborers. This is fine as an abstract formulation, but as a matter of policy it's silly. We shouldn't tell policymakers to ignore a highly relevant variable simply because the variable isn't conclusive in every single case. Often it's the best, most accessible variable upon which to base a decision, and we are not wrong to use it.

In practice this means that we should prefer democracies when we are doling out aid. This isn't fair to people who can't help living in totalitarian countries, but then we also don't transplant organs into people who are about to die, even if it isn't their fault. We have the somewhat gruesome task of allocating scarce aid money in a way that will do as much good as possible, which means that unfairness is inevitable. What is not inevitable is that money will be wasted on projects that mostly benefit dictators, while democracies go begging. That is entirely avoidable, if we are willing to take democracy into account in our aid decisions.