Sunday, September 25, 2005

Is Debt Relief the Right Way to Help?

"A deal to forgive up to $56 billion in debts owed by poor nations cleared an important hurdle Saturday, winning the endorsement of the International Monetary Fund's steering committee." This is from a story in Wall Street Journal, read on.(Subscription required)

But is that really the right way to help poor countries around the globe?

A commentator characterizes the current approach to help poor countries on the part of the rich world, including the debt relief plan mentioned above, utopian. Following are what the commentator believes as the problems inherent in this approach to helping the world's poor countries: "It is promising more than you can deliver. It is seeing an easy and sudden answer to long-standing, complex problems. It is trying to solve everything at once through an administrative apparatus headed by "world leaders." It places too much faith in altruistic cooperation and underestimates self-seeking behavior and conflict. It is expecting great things from schemes designed at the top, but doing nothing to solve the bigger problems at the bottom."

No, the commentator is not Hayek, he is Bill Easterley at New York University, read on. If you find Bill's comments sensible, learn more about the subject from his justly famous book "The Elusive Quest for Growth" and preorder his forthcoming one here.

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