The Smartest People in the Room

I'm a person of simple pleasures. For instance, I count any day a success when I have the opportunity to use the word "eviscerate." Take Thursday. That was the day when I wrote this blog post about Presidential Study Directive 7 (PSD-7). In additional to employing the word "eviscerate," the post expresses considerable enthusiasm for the direction of the global development rethink currently going on at the White House.

Yesterday NYU development luminary Bill Easterly had the kindness to not only take notice of the post but also to point out to me that I managed to misrepresent a blog post by Aid Watch staffer Laura Freschi as one by the Maestro himself. (Arrghh. Guilty! Though, in my defense, how was I to know that anyone under the age of 50 could so persuasively convey the jaded air of a veteran development insider? Easterly trains his people well!)

It turns out that Easterly is considerably less sanguine than I am about the potentially transformative potential of PSD-7:

Professor Auerswald (sorry for my teasing you in this post), you do seem to have a theory of social change in which promises about government intentions to someday change priorities are a major force. My experience of many years of observing such statements is that they are more like New Year’s resolutions that are repeated every year.

My rebuttal to this? My counter-attack? None whatsoever. Easterly is right. My last post is probably mostly wishful thinking. What is the likelihood that awareness of the exigencies and opportunities of the moment will be enough displace entrenched bureaucracies and transform decades-old habits of thinking? What is the likelihood that an esoteric administrative exercise like PSD-7 will turn out to have made a difference in the lives of actual human beings? Even people like me who were actually born in Washington DC (yes, some of us exist) recognize the obstacles that stand in the way of such outcomes.

As Easterly is, I believe, aware from any one of my six previous posts calling into question the coherence--indeed the very existence--of his own theory of social change (1, 2, 3, 4, 5, and 6), I do not in fact hold the view that the United States government (USG) is likely to be a "major force" in global development. If anything, I would say that the causality is reversed: the point of my post, and a core point of this blog, is that global development will almost certainly be the major force affecting the United States in the next quarter century, whether the USG plans effectively for this eventuality or not.

So what was it about Freschi's post that motivated me to drop deadlines on that particular day and go on the offensive? It's pretty simple: I find it more than a bit depressing when The Smartest People in the Room refuse to leave the room in which they are the Smartest People. For instance, from Easterly:

I vaguely remember that I was invited to a meeting with a US government big shot on development whose name I’ve forgotten, to take place in Washington. I failed to do my patriotic duty, using the lame excuse that the meeting was two days before Christmas, and I unreasonably treat the days around Christmas as belonging to Family Zone.

After a lifetime working on development, might not Easterly have made it a priority to influence the most sweeping review of priorities in global development undertaken by his country's government in a decade, if not longer? After all, the government of the United States may not be much to Bill Easterly, but it's got more resources at its disposal than he does. No way to find an alternate time? Schedule a call? Write an email? Post a direct Tweet? Undertake a pinkie lift?

No. None of the above. Just not worth the time.

(Note: Bureaucrat appears to have been working two days before Christmas. Not everyone has the benefit, as Easterly and I do, of living by the academic calendar.)

In any process that involves difficult decisions with uncertain outcomes, those seeking solutions should welcome, even celebrate, the views of astute critics (in this case, Easterly). But when critics hold themselves apart from engagement in anything that might resemble positive action, one is sorely tempted to make sausage of their studied detachment.

Step 1: Eviscerate...

What it Means to "Elevate Development"

The White House process aimed at redefining U.S. development policy for the 21st century (known internally as Presidential Study Directive 7, or PSD-7) is coming to a close. Earlier this year some colleagues and I had the opportunity to offer input to Gayle Smith in the National Security Council, who was tasked with leading PSD-7, which we did.

On Monday Foreign Policy blogger Josh Rogin leaked a copy of the document that is coming out of PSD-7. Item one on the proposed new agenda for global development policy, as advanced in this draft, is this:

Moving forward, the United States will foster the next generation of emerging markets by enhancing our focus on broad based-growth and democratic governance.

To begin with, consider here what is not listed first on the nation's development agenda: "Poverty alleviation." "Nation-building." "Global threats." "Counter-terrorism." And other code words allegedly relating to "development" that are based alternately about fear & condescension.

Notice further that in this sentence "broad-based growth" is listed before "democratic governance." What does that mean? It means that the people who wrote this draft get it: expanded economic opportunity precedes democratic change. Both together lead to increased prosperity. That is development. (Elaboration here.)

Now as a counter-point, Bill Easterly [actually, Aid Watch staffer Laura Freschi, see below] offered his comments today. He focused on administrative structure:

The most significant change in the draft is the creation of interagency committee reporting to the President to run US development policy.

He wants to know what it means to “elevate development” as a “key pillar of US foreign policy.”

Here's my attempt at an answer to that question. "Development" today refers to the process by which the majority of the world's population is joining the global economy. It is a process whose momentum is going to overtake and obliterate puny debates about "aid" (pro and con) and eviscerate stale discussions about donor coordination and accountability.

"Elevating development" means taking (at least some!) decision-making away from those alleged development experts who pay no attention to entrepreneurship and global business (the actual drivers of development) and instead continue to devote their energies to making failed approaches less failed. (Yes, I am talking about pretty much every "development economist," Easterly included.)

It means that people who have not been accountable or serious about advancing actual development may potentially lose their authority, and then their jobs, because this is too big an opportunity for this country to be entrusted to people not determined to make the most of it. It is not only too big for one agency. It is also much too big for the entirety of the U.S. federal government--which, incidentally, will have succeeded if manages to remain relevant to global development in the next quarter century, much less dominant.

That is what this process is about. That is what the draft PSD-7 memo from the White House is about.

Now if you don't care about the role of the U.S. government in the world today, don't read this memo. If you do, its message is worth considering carefully. There is not an organization in this country that would not benefit from its own PSD-7 process, and that wouldn't also be moving forward if it similarly found a way to "elevate development" in its strategic planning.

Correction: ... Ummm ... well... as it turns out Bill Easterly didn't quite exactly write the post that I attribute to him in this blog post. As kindly pointed out to me by Bill, the post was actually written by Aid Watch staffer Laura Freschi. Apologies to Bill... and to Laura!

Speaking of Scarcity...

Bill Easterly has a blog post today titled "Who gets the Last Seat on the Plane? Why Aid Hates Economics." He's right again. But his argument could be extended. For example, there is another scarce resource not mentioned in this post whose allocation matters for development: The talent of development economists, like Easterly.

Take, for example the Aid Watch blog itself, whose motto is "Just asking that aid benefit the poor."

Now (bear with me for a moment here!) let's say you're back in the historical paradise of planning, namely the Soviet Union. Everyday, you have to eat the same old cr&p food...

photo credit

You're sick of it, but you can't find a way out.

Then one day, a leader arrives, with a banner that reads "Just asking that the food not suck!" You cheer! You hoist your comrade on your shoulders! At last, you are fighting back against the system. The battle for better cafeteria food is on!!

But what is the opportunity that is missed here? What is the thing you really need, that you're not going to get from the "Just asking that aid benefit the"--I mean, the "Just asking that the food not suck" campaign?

What you're not getting, and what you really need, is some new restaurants!! Yes, that would be just the thing. Some options. You would like another place to go to eat.

There is a general rule here: What really drives change isn't protest, but genuine competition driven by consumer choice. (Back to dining for a moment: Think about food in airports twenty-five years ago, if you were alive then. All Sodexo monopoly. Uniformly terrible and expensive. Now, with entry and competition for licenses, the food in the airport is at least as good as what you get outside the airport.)

Entry (or threat of entry) doesn't have to be by entrepreneurs in order for it to induce beneficial change. In the U.S., the most significant new entrant in the aid business in the last decade has been the Department of Defense. At his big event at Brookings last month, Easterly ridiculed the assertion by Secretary of State Clinton that the DoD's mission could be aligned with development, saying:

Her big think point was that we can merge defense, diplomacy, and development. And that’s probably one of the worst ideas I’ve heard in my career as a development economist.

Well, what does he think is more likely to stir USAID from its longstanding torpor: (a) the Aid Watch blog, or (b) the threat of being rendered obsolete by the Pentagon? I'd put my money on (b).

So instead of "just asking that aid benefit the poor," how about just asking for some new restaurants?

No, "DOD" Does Not Stand for "Department of Development"

Also relating to my post on Saturday on the topic of U.S. global development policy, here's a reality check on the role of the DOD in development that I got in an email from Gordon Adams who for five years was Associate Director for National Security and International Affairs at the Office of Management and Budget (the senior White House budget official for national security):

1.Such efforts are not central to the DOD/military mission, but by-products of the military role in Iraq and Afghanistan (and a few other countries where counter-terrorist operations are under way). We have government agencies for which development is the mission, notably USAID.

2. The focus of DOD's effort is not development, but meeting near-term mission needs for commanders. The net result is investments that are not oriented toward long-term development, but acquiring "hearts and minds," as part of the military mission. Projects end up not deriving from a country-based view of development needs, and are, as the Special Inspector General for Iraq Reconstruction has noted, often not sustainable in the long run.

3. Empowering DOD for this mission has the consequence of further weakening State and USAID; Congress concludes they are not capable of their mission, with the result that a growing civil-military imbalance gets even worse.

4. In the end, making DOD responsible for development is counter to US national interests, because it puts a uniformed face on US forward engagement, which is not universally appreciated. In turn, this makes further US steps more difficult as other countries and peoples come to see the US forward engagement as military, and driven by US security interests, not development.

And this from a colleague in the Armed Forces, who concurs that DOD is not a development agency, but adds

I still think there is more of a role for the DoD than simply developing technologies. The military also has core competencies in logistics, command and control, monitoring and evaluation, ops research, training, program management, etc, which USAID or other agencies could leverage as part of their development efforts. If nothing else, the military could help USAID and DoS developing these capabilities within their own organizations, or assist when they share a common footprint in various countries.

BTW: Gordon Adams is now a Professor at American University's School of International Service. He and Cindy Williams have just come out with a great book titled Buying National Security: How America Plans and Pays for Its Global Role and Safety at Home.

Anonymous DOD guy is ... anonymous DOD guy.

What Rajiv Shah is up Against (One View from the Inside)

From what I hear, Rajiv Shah is an amazing individual who has what it takes to transform General Moto... I mean, USAID. Still, he has his work cut out for him. That, at least, is the conclusion I draw from this message I received yesterday from a colleague with current, and I expect accurate knowledge, of the situation at USAID, sent in response to my last blog post:

USAID has two main problems as I see it: insularity and ideological group think. These both sort of reinforce each other and bear on several of the practical problems of the agency such as the fact that much of the funding of the agency gets tied to "green development"--as if anyone actually really knows what that means, let alone how to achieve it--and environmental impact statements on development projects. What this really means is that we are going to be pushed out of development by the Chinese who clearly care more about the environment than do we (sarcasm intended).

DoD does not have its hands tied to the same extent as USAID does with all its externally imposed or, frankly, internally imposed, constraints: an accounting system reminiscent of the Army in 1940; a structure in the foreign service that cares more about how long you've been with the agency and who you've pissed off lately than the quality of your work, the projects you've completed, or what expertise you bring to the agency; and worse yet, a promotion system more concerned with time in grade than anything else.

Then of course, they pay talented people like [noun indicating insufficiency], and brown-nosing blow-hards like kings.

There are of course the normal obstacles, like the government's inability to fire incompetent people and a completely dysfunctional human resources division ... but hey, this is what everyone else seems to have to deal with.

The issue of insularity is a problem for the agency because it is completely hostage to the political left, which means it has zero supporters from anywhere else in the political spectrum. That puts the agency's survival in question and undercuts its ability to represent the US population at large--which, after all, is a primary role of a diplomat. The agency's precarious political position also affects it's ability to solve problems, as people on the inside approach things from the perspective of how best to hang on to USAID money rather than how best to accomplish the agency's mission and .... I am afraid, I don't think a new administrator is really going to change any of that.

On a related note, they could also use a real dose of facts about under which administrations and Congresses they have fared better or worse. There is a tendency to obsess about Republicans being their enemies, despite the fact that this technically isn't technically true, since most of the agency's downsizing happened under Clinton (not either Bush or Reagan), and their budget growth in recent years came almost entirely under a Republican president and Congress. This is completely lost on them.

My own view on this last set of points: One of the great things about the end of the Cold War is that it caused an implosion of ideology. If you wonder what this means, go to China (still think it's a "Communist" country? you are seriously missing the point), Vietnam, or India for that matter. Unfortunately, the political leadership in the United States is having a hard time catching up with this global reality. (Business leadership is doing better.)

The concern raised by my colleague here is just a case in point. The global transformation currently under way--what I term the coming prosperity--is far beyond anything that might be pegged as a "liberal" or "conservative" issue. If any of our nation's representatives overseas don't get that, they sure should.

Hillary Clinton on Global Development: The GREAT, the TERRIBLE, and the unspoken

On Wednesday (a decade ago in Twitter time) Secretary Clinton gave two speeches at the Center for Global Development. You may have mistakenly heard that it was one speech, but it was, in fact, at least two.

Here's the GREAT speech the Secretary gave on technology, entrepreneurship, and innovation as drivers of development (the Secretary's actual words, in their logical order as determined by me):

Development is a strategic, economic, and moral imperative -- as central to advancing American interests and solving global problems as diplomacy or defense.

New technologies are allowing billions of people to leapfrog into the 21st century after missing out on 20th-century breakthroughs. Farmers armed with cell phones can learn the latest local market prices and know in advance when a drought or flood is on its way. Mobile banking allows people in remote corners of the world to use their phones to access savings accounts or send remittances home to their families.

There is no limit to the potential for technology to shrink obstacles to progress. And the United States has a proud tradition of producing game-changers in the struggles of the poor. The Green Revolution was driven by American agricultural scientists. American medical scientists have pioneered immunization techniques. American engineers have designed laptop computers that run on solar energy so new technologies don't bypass people living without power.

Because development is indispensible, it demands a new approach. We hope to put ourselves out of the aid business. Rather than helping fewer people one project at a time, we can help countries activate broad, sustainable change.

Private businesses are able to reach large numbers of people in a way that's economically sustainable, because they bring to bear the power of markets. We're exploring venture funds, credit guarantees, and other tools to encourage private companies to develop and market products and services that improve the lives of the poor. We are seeking more innovative ways to use our considerable buying power -- for example, through advance market commitments -- to help create markets for those products, so entrepreneurs can be sure that breakthroughs made on behalf of the poor successfully reach them.

Here's the TERRIBLE speech she gave pandering to folks worried about losing their jobs at USAID (the Secretary's actual words, in their logical order as determined by me):

We also need to ask hard questions about who should be doing the work of development. It's time to rebuild USAID into the world's premier development agency.

The experience and technical knowledge that our development experts bring to their work are irreplaceable. Whether trained in agriculture, public health, education, or economics, our experts are the face, brains, heart, and soul of U.S. development worldwide.

Development projects can be stalled or stymied by too little support from leaders. Our diplomats can help make the difference. They have the access and leverage to convince government ministers to give these development programs their support.

Some of the most transformative figures in the history of development represent the convergence between development and diplomacy. Today, we have many such "development diplomats" working at USAID. They embody the integration between development and diplomacy that, when allowed to exist, can amplify both of these disciplines.

Finally, here's the speech she might have given instead of the terrible one.

I'm here to talk about global development policy. If anyone happens to hear a loud chomping sound outside the door while I'm talking, that's the Department of Defense eating our lunch.

Now the mere fact that the Department of Defense has moved into the development business shouldn't worry you. They're doing it because they have no choice. (As you probably noticed, our political leaders got in the habit for a while of telling them to invade countries without any clear plan of what to do in the event that they "won." So they're trying to fix that.)

What should worry you is that a bunch of farmboys from Missouri are, in more than a few cases, doing a better job figuring out what works than this room of so-called experts. That may be because they have common sense. Or it may be because they don't have cozy relationships to outside contractors whose ability to continue to pay their mortgage depends on their skill in pushing the same Kool-aid (pun intended, of course) that has been toxic to developing countries for fifty years.

What does all of this mean for you here at USAID (because even though I'm at the Center for Global Development, you all know who I'm really talking to)? It means after 30 years of diminishing relevance, you all are now in serious danger of losing not only your jobs, but your Agency.

So this is what I'm going to do. I'm going to set you up with a really smart guy from the Gates Foundation. He's going to be in charge. And I'm going to say a lot of nice things about you for a while. I'm even going to try to get you some more money. And I'm going to ask you all to read and ponder one single four-page essay by President Paul Kagame of Rwanda.

And it that doesn't get you to figure out what actually works in about 24 months, then you're all fired.

Have a nice day.