Angus Deaton wins the 2015 Nobel Prize in economics.

Weak States, Poor Countries

Oct 12, 2015 Angus Deaton

The absence of state capacity – that is, of the services and protections that people in rich countries take for granted – is one of the major causes of poverty and deprivation around the world. Unfortunately, the world’s rich countries currently are making things worse.

This commentary was originally published in September 2013.

PRINCETON – In Scotland, I was brought up to think of policemen as allies and to ask one for help when I needed it. Imagine my surprise when, as a 19-year-old on my first visit to the United States, I was met by a stream of obscenities from a New York City cop who was directing traffic in Times Square after I asked him for directions to the nearest post office. In my subsequent confusion, I inserted my employer’s urgent documents into a trash bin that, to me, looked a lot like a mailbox.

Europeans tend to feel more positively about their governments than do Americans, for whom the failures and unpopularity of their federal, state, and local politicians are a commonplace. Yet Americans’ various governments collect taxes and, in return, provide services without which they could not easily live their lives.

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0 Comments on this paragraph, 48 in all 48 Comments on this article

Franklin Nnebe Oct 16, 2018

After identifying a major problem with poor countries - bad government, the author makes a pathetic conclusion about the need to reduce aid. HELLO??!! How about helping FIX the problem at base? Such as not welcoming illicit transfers of wealth such as the over $100 billion that leaves Africa for Switzerland, London and various offshore destinations? How about cracking down on western companies whose corrupt activities facilitate corruption in many poor states? Example is the recent example of Shell, ENI in the Malabu case in Nigeria.
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Jude Feranmi Dec 1, 2015

One thing that more often than not is not recognized as the bane of poverty and all the bad things that bedevil developing countries especially in African countries is a weak and inefficient government. Most people mention conflict and corruption and ethnic bias while the fundamental problems of weak states and government inefficiency are neglected. If African governments can first admit that their societies will be better off with more efficiency, then may be they would start to look towards that dorection.
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Enrique Woll Battistini Nov 15, 2015

Given the obvious fact that the world as we have known it is coming to an end, the following article seems appropriate to me:

https://www.academia.edu/16929197/OFA_-_At_the_Brink_of_Recovery_or_Conflagration_-_The_World_at_a_Tipping_Point_-_2011111501
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Bruce Steinback Nov 3, 2015

One question if anyone here knows the answer...

One of W's good ideas (he actually did have a couple) I thought was what was called the Millennium Fund, which gave extra aid to (I think mostly) African countries that showed good governance. Any idea what happened with that?
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Wojciech Pasieka Nov 3, 2015

Please note that at the election time the word "democracy" is the key to win, both from the candidates, and also as the organizational, transparent form of voting, supervised by the independent observers. None of those ensures "any quality of the candidates to manage the country". In a poor countries, there is a vast influence of the rich countries, on who will be elected, and this influence should require the candidates to be prepared for the governance. But we only read: "after the 4 years, this PM, who everybody hoped was going to connect all sides of the political change, failed". The same story, again and again. So, maybe we should require a responsibility from the rich countries (donors and lenders) to behave seriously, and to support the candidates who know politics, economics, and governance. It looks like the rich countries are afraid of promoting professionals, because they can take over control. And here comes the IMF, who rightly do not use the words: democracy, freedom, but gets into a details of the country's balance sheet. Learning it is not a rocket science, but 90% of the poor countries leaders would not pass a simple test. It is maybe not so important in a developed economies, where the whole structure of the governance is mature, but in a poor countries, there are often NONE governance structures. And if the leaders do not know absolutely nothing, they simply try to steal as much as they can, before being ousted. Or they change the constitution, to stay at power. And this is the end of the story for the next 15 or 35 years. And all improvements inside of such a dictatorship structure, are made only to keep the country and the dictator alive. With one difference, the citizens are barely alive, and the dictator is enormously rich. Often with the blood on his hands. Knowing that he has to die as a dictator, otherwise he may die next week after the new election. All watched by the rich countries, who support the dictator, because there is "no better alternative". All of this is so silly and naive, that especially in the social media time, it simply gets boring, when reading the lies. The danger here is broader, because the word "boring" turns into "apathy", and the acceptance that neither dictators are held responsible for their actions, nor the rich countries feel responsible for theirs. It is a continuous stream of a contradictory statements. There was hope that the social media will reveal and destroy by the strength of the public knowledge and opinions some flawed governance processes, but they actually legitimated these process, where nobody can be really sure what the truth is. Fortunately a new wave, which will change the world, is coming.
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Enrique Woll Battistini Oct 24, 2015

Dear Professor Deaton,

Perhaps it's time for bold For-Profit action on the part of Private and Public entities having a Causal Effect on Development, Socioeconomic Inclusion, and Environmental Protection on a Global Scale:

https://www.academia.edu/12823841/Mathematical_Model_and_Simulation_for_A_Partnership_for_Development_with_the_United_States_of_America_-_December_1999
- Enrique Woll Battistini Oct 24, 2015
  
  And this is a complementary English/Spanish Global Tax Reform proposal directed at Poverty and Extreme Poverty Eradication through Targeted Redistribution of Consumption:
  
  https://www.academia.edu/13062837/La_Reforma_Tributaria_del_Siglo_XXI_The_XXI_Century_Tax_Reform_-_2011100411
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- Enrique Woll Battistini Oct 24, 2015
  
  This is what I did, beginning in 1993, to further this Comprehensive Development strategy proposal for the American Hemisphere:
  
  https://www.academia.edu/12823884/Some_attempts_at_promoting_A_Partnership_for_Development_with_the_United_States_of_America_-_1997031002
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Mar Introini Oct 23, 2015

I do not agree that “aid undermines…. an effective government”, aid never “undermines” but boost development on the country recipient reassuring the idea of a solidary world in a global context. Good governance is not a matter of foreign aid but its essential for an effective aid. It does not promote corruption but it become difficult to maximize its benefits without a clean and healthy relationship among aid and good governance. Is imperative to develop active mechanisms from donors to follow up process of accountability and transparency. The main reason for failing is the isolated assignation of budget without a close control of the distribution of that funds that finish diverted by corrupt mechanisms of implementation.
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JAMES BECKMAN Oct 19, 2015

After a lifetime of travel, my response to these issues is to look at the history & current culture of various nations. An American, currently in Europe for the past 13 years, I daily see around me governments which work in different ways. The task, therefore, is for each granting nation, organization or individual is to ascertain what works & what does not--moving in the directions most beneficial to our goals. Anthropologists call this "field work", which is what one must practice in order to be both effective & efficient within the options available.
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Grzegorz Lindenberg Oct 18, 2015

How about some data to back up these theoretical arguments? Anybody?
- JAMES BECKMAN Oct 19, 2015
  
  Hi, Grzegorz, I just posted something which partially answers your question: as most international business persons know, every government jurisdiction operates differently, especially with regard to whom you are. In most places, the wealthier the customer relative to government agent, the more service you receive but often at a price. The only exceptions I have found are in determinedly egalitarian places like Denmark.
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Luke Lea Oct 18, 2015

How about reversing the brain drain by encouraging more Anglo-European emigration to countries short of human capital? Since colonialism is out, maybe NGO's are the answer, profit making corporations, or even Christian missionaries. We've got to start think outside the box. Half a century of failure is more than enough. Here are a couple of links with some food for thought:

http://goo.gl/6rwQGe

http://goo.gl/7JVIuY

Realism is the first requirement for moral responsibility in this world. Be brave, be smart, be honest.
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Per Kurowski Oct 18, 2015

Regulators decided that even when banks already look at credit risk when setting interest rates and amounts of exposure, the capital banks should have was to be based on the same perceived credit risk.

Having banks considering credit risk twice has caused these to lend to much to the safe and too little to the risky, SMEs and entrepreneurs… something which obviously is not good for any country’s development.

http://financefordevelopment.blogspot.com/2007/10/are-basel-bank-regulations-good-for.html
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Mr Econotarian Oct 15, 2015

We could jump to the US of 1920, which had an equivalent life expectancy of Niger today (~60 years), although the GDP per capita of the US in 1920 was about 10 times as high as Niger today. US government spending in 1920 (at all levels - federal, state, and local) was only about 12% of GDP, compared to Niger government spending of 23% of GDP.
- Bruce Steinback Nov 3, 2015
  
  Whoops - missed your 12% total, but as the article noted, what the money is spent on counts too. The US in 1920 barely had a standing army, while I'll bet you that a large percentage of Niger's current spending is on the military.
  
  But my other remark stands. Indeed, I looked it up and the world average lifespan in 1920 was under 40.
  
  But most importantly, his article is about GOOD government, not just more government. Yes, you can absolutely have a lot of government and have it be detrimental to development. But you cannot have development without a certain amount of functioning useful government. If you think otherwise, give an example.
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- Bruce Steinback Nov 3, 2015
  
  Um Mr. Econotarian,
  
  Nice try, but I'd bet (too lazy to look it up) that the 60 year lifespan in the US of 1920 was several years above the world norm then.
  
  Also I suspect your 12% spending figure for the US in 1920 was Federal, you're forgetting state and local.
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j. von Hettlingen Oct 14, 2015

Angus Deaton, the 2015 Nobel laureate in economics cannot forget his first encounter with an American cop in New York as a 19-year-old tourist, asking for help. Despite being "met by a stream of obscenities", he still prefers this policeman to other law enforcement officers in many parts of the world. He says in poor countries with weak governments, "police prey on the people they are supposed to protect, shaking them down for money or persecuting them on behalf of powerful patrons."
Many of us in the West may hate our governments, but we can still expect them to be "effective", based on the social contract between us. However imperfect a rich country can be, "we take for granted legal and regulatory system, the public schools, health care and social security for the elderly, roads, defense and diplomacy, and heavy investments by the state in research, particularly in medicine." Deaton points out that "most of the world’s population does not" have access to these public services. But then many poor or weak "states lack the capacity to raise taxes". Indeed, there are some in the West, who prefer a minimal state with a small government to a welfare state with a bloated bureaucracy.
Deaton says even in India, "a middle-come country" and the world's largest democracy, "state capacity" is often hampered by redtape, corruption and opaque politics. It's true that much of the developing world lacks regulation, law enforcement and an impartial judiciary that convince foreign investors and guarantee their financial safety. Economic growth is the only means to "abolish global poverty", requiring an "effective" state that actively involves its own citizens in the process.
While we appreciate a place in the sun, Deaton criticises us for "making things worse" in poor and weak countries. He maintains that foreign aid – however useful - "undermines the development of local state capacity." In Africa foreign aid is often siphoned off by the governments and doesn't reach the poor. He sees "bypassing governments and giving aid directly to the poor?" as a short term "solution", which wouldn't solve the "underlying problem", because even "poor people need government to lead better lives."
Instead of relying on foreign aid to provide for services, Deaton says it's imperative to help poor countries to form "an effective government that works with them for today and tomorrow." The West should stop providing aid and most of all limit "arms trade". By "improving our "trade and subsidy polices" and other services we would at least not "help the poor by making their already-weak governments even weaker."
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Walter Gingery Oct 14, 2015

What do Chinese people in Africa say? In Howard W French's book "China's Second Continent", the author tells us that Chinese in Egypt, for example, attribute the backwardness to two things above all:

(1) A weak state (unlike the state in the Asian nations that have made so much progress, like Japan, South Korea, Taiwan and China -- and like the Philippines, which remains poor), and

(2) Discrimination against women's equal participation in economic and political life.
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Buck Smith Oct 14, 2015

"states lack the capacity to raise taxes" That is because there is not much to tax and they already take most of it, directly in taxes and indirectly in bribes and crony capitalism. The problem is socialist and totalitarian policies in poor countries. Rich countries are not to blame for poor country poverty.
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Philippe Gaeng Oct 14, 2015

In my opinion, one of the most important flow of development policy is the focus on building a society and especially a nation-state on the model of Western Europe in completely different settings.
One has to remember that at the time of colonialism, Europeans were describing the societies they were encountering as uncivilized. Yes this is 100% not politically correct but it worths looking at what this notion of uncivilized means.
For sure, it was an easy way to justify the ruling of vast territories and peoples, and get voted credits from governments who were advocating for freedom, rule of law and/or equality in the motherland (think of France and Britain), but there maybe was something truly genuine there.
Under the world civilization, the Europeans were meaning too the way that people interact with each other (exactly the first paragrath depicted by Pr Deaton), and it is true that in many country they colonized people were not acting in the same "civilized" ways that modern Europe was willing to establish.
This fact remains broadly true in many parts of the worlds and especially in fast and not so fast developing countries.
I live in the Philippines for 7 years (after having travelled Africa and a good chunk of Southeast Asia), it goes without saying that Filipinos have not the same sense of Public Service, Public Space than I do. In many senses, they are not a "civilized" people, not as Europeans. They will serve their clan before they will do their duty as a citizen, clearly. That means, that whatever laws you vote, whatever aid you provide, as long they don't decide to become citizens, they will not be in a position to use the tools of the State to improve their societies.
Therefore, Education is a must, but education of the Elite so they come to understand the needs of the peoples and act accordingly.
We too often forget to remember that the Enlightenment was led by the Elites of Europe and their will for progress, for so long that the Elites of poor countries will think only of their mere interest, progress will not come.

And then, you need to think of democracy.
Democracy was depicted by the ancient greeks as a terrible form of government because it leads to tyranny.
History of countries like the Philippines or Indonesia show that democracy can lead to plundering and countries not progressing as fast as least democratic nearby neighbors (think Singapore). Why?
One of the most reason is that in a democratic country, the struggle for power is constant since elections are always a couple of years down the road AND the leader has a limited time to plunder as much as possible for the wealth of his clan and to campaign for the next election.

Do I have a solution, maybe not, but is electoral democracy one, I don't think so
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jagjeet sinha Oct 13, 2015

A weighty addition to those tipping the balance in favour of State Capacity - Stiglitz, Spence, Skidelsky, Sachs.
Piketty arguments on Inequality seemed driven from the 1 % v 99 % - more Individualized, than State Capacity.
This Nobel Laureate seems closer - Weak State Capacity perhaps more responsible for Poor Economics/ Countries.
While the Author's thesis is predicated on his Crystal ball view of Developing Countries, and not the Advanced Countries.
Nevertheless there are enough examples from within the Advanced Countries to suggest that the epitaph on State Capacity was premature.
In the euphoria over higher efficiencies in the Private Sector, the Public Sector was nearly annihilated.
Notwithstanding the multitude of challenges that only State Capacity could undertake -
The Space Effort that produced the technologies of today,
The Climate Control challenge that only State Capacity multilateralism can undertake,
The Ebola kind of challenges only State Capacity can undertake.

The success of State Capitalism in China especially in Infrastructure Investment is unleashing New interest in State Capacity.
The British Chancellor's recent decision to launch the National Infrastructure Commission, in fact a direct offshoot of Corbynomics.
Jim Corbyn as the New Labour Leader has a devastating yet unconventional mind that has gems already forcing changes.
This latest Nobel Laureate perhaps bound to lend weight to Corbynomics.
Congratulations Professor Deaton - the UK should receive blessings from your mind, much as the World does.
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Paul Friesen Oct 13, 2015

I certainly do not believe that the way to improve government in Africa is to reduce aid. This article does get one thing right, though, with the sentence "In much of Africa and Asia, states lack the capacity to raise taxes or deliver services." Poverty causes the inability of the state to raise taxes. The inability to have an efficient government is one cause of poverty because it discourages industrialization. But it is also caused by the poverty, like many other things that discourage industrialization.
We used to know how to solve this much better than we do today - through large volumes of aid directed at industrialization. Taiwan and South Korea got industrialization going using aid flows that would be on the order of $100 per capita per year for decades. Israel got started with even higher aid flows, around $300-$400 per capita per year. These may not seem like much aid, but they are orders of magnitude higher than what most countries get, and I would suggest that, if directed at industrialization, such aid flows can get poor countries started on the road to development.
- Jude Feranmi Dec 1, 2015
  
  You are forgetting that issues like corruption and misappropriation would ensure it doesn't even get to the real people who need it.
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- Paul Friesen Oct 13, 2015
  
  I should have mentioned that my figures for aid flow have been translated to today's currency, allowing for inflation.
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hari naidu Oct 13, 2015

If you've spend three decades as a professional in global trade and development, you surely accept the wisdom of this Scott. He's reflecting the basic principle that national poverty and illiteracy is a function of a dysfunctional state; Indian subcontinent is a pretty good example of it.

On mainland China, governance inevitably matters for CPC, irrespective of human rights and other problems of governance. Mao's war of liberation was based on the peasantry - origin of current PLA - and united the huge land mass under a single party.

If you observe the current level of global poverty & illiteracy, we've come a long way - South Asia remains high on the list of poor outcomes. I don't think it can be improved without total (!) outlaw of casteism and legitimacy of sovereign equality before the law.
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Mr Econotarian Oct 13, 2015

Do poor people really need government to lead better lives? The US had a higher GDP per capita in 1880 than Niger does today, in a time when there was no federal income tax, there was no government health care (and really not much effective health care at all). The US in 1880 had fairly little regulation on internal trade, labor, workplace safety, etc. Yet it was already a "middle income country" by today's definition.

Even when the US became a "high income country" in the late 1940's, total state and local government spending was only 20% of GDP, less than today's 28% of GDP spending of Niger. And of course in the late 1940's, the US did not have Medicare or Medicaid.

I posit that the way that countries become rich is reduction of regulations on commercial activities, as when India removed much of the "permit Raj" and when China ended total Communism and allowed private companies to compete in the market.
- Curtis Carpenter Oct 13, 2015
  
  You seem to have a very narrow and selective concept of the proper functions of government, and as a palliative it might help to give the preamble to the U.S. constitution a quick read. Then, for a little historical perspective on "regulation," you might find something like Upton Sinclair's novel _The Jungle_ (about the gloriously un-regulated meat packing industry in the late 19th/early 20th centuries) informative.
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- Paul Friesen Oct 13, 2015
  
  HAVE YOU EVER WANDERED AROUND A CEMETERY FROM THE 1880'S AND SEEN THE AGES PEOPLE DIED AT?
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Mr Econotarian Oct 13, 2015

Most poor countries are over-regulated, not under-regulated, as shown in indexes like the World Bank Doing Business or the Heritage Index of Economic Freedom. It is true that this over-regulation leads to widespread corruption as businesspeople pay bribes to try to avoid useless regulations, but it is also true that the threat of regulation keeps business sizes small and inhibits the growth of the formal sector.

Indeed, the high unemployment rates of Mediterranean Europe and France is likely due to high levels of labor regulation, which Germany sidestepped with Hartz reforms around the turn of this century.
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R Richard Schweitzer Oct 13, 2015

Much turns upon how the people of a society look upon one another and on the nature of their relationships with one another.

We can go back to the work of the Banfields in Italy for a case study.

Attempts to substitute bodies of authority (states, etc.) for the basic considerations individuals have for one another may have some initial material success; but, unless it produces more in relationship attitudes there is likely to be more severe stratifications.
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Cary Fraser Oct 12, 2015

A precondition of dealing with both problems - weak states and poor countries - is the investment in human capital. The quality of human capital available to and vested in any society is a critical determinant of its capacity to overcome poverty and create an effective society.
- Cary Fraser Oct 13, 2015
  
  The issue is that part of the development of intellectual capital is the issue of human resource planning - not simply providing educational opportunities on an ad hoc basis . Effective state capacity building needs to be centered around that issue.
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- Paul Friesen Oct 13, 2015
  
  But education without something for educated people to do does not work. Countries need to industrialize to be able to both provide work for educated people in industry and governments that can raise enough taxes to pay for them to work in government. With insufficient industrialization, you get something like the Philippines, which exports educated people all over the world because they can't get work at home.
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- Shoshon Tama-Sweet Oct 13, 2015
  
  Absolutely spot on. And these investments in human capital- we call it education more often than not- can be very successfully be supported and funded externally. IN fact, the basic math of the financial cost of putting just 10% of Africa's youth into university- a precondition fro any real economic growth- is far beyond their capacity to self-finance. Yes, there are arguments to made against aid when it weakens local accountability. But not all, or even most, international aid does this.
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M M Oct 12, 2015

Allow me first of all to congratulate you on your 2015 Nobel laureate in economics. The definitions and interpretations of the words “Weak” and “Poor” can be very contentious. In regards to countries, there is not such a thing as a “Poor Country”. All countries are “Rich” in resources, albeit, human, mineral, etc. and therefore can never be classified as “Poor”, technically bankrupt, may be, but never “Poor”. In today’s times, all States are weak, why, because none of them are “Totally” Immune against “All” eventualities, albeit financial crises, natural disasters, disease etc. Regarding citizens of countries, how can one define “A Poor Citizen”? And for that there are many interpretations, I shall state herein only one example. As a member of a philanthropic organisation, we do a lot of charitable work. On one occasion, we were asked to agree to provide fully furnished housing and maintenance costs to an elderly and homeless woman. All the due diligence work had been performed and the advice that we were given confirmed that she was homeless and with no source of income or of a possibility to earn any income. By accident and after a while, it came to our attention that this person owned a property which her only son utilises and that the fact that she is homeless was of her own choosing. So, how can one classify such an individual? Under “Poor” or under “Rich”? For me the fact that this self-made homeless person is a property owner, debt free and being provided with financial assistance can hardly be classified as “Poor”. The same can be said of some perceived “Rich” people who are heavily indebted (technically bankrupt) but siting on empires all around the world.
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dan baur Oct 12, 2015

Good government is nothing more than an organized society. In that sense sure, the poor need stronger governments.

Reducing aid doesn't fit into the list of otherwise good ideas: "Reducing aid is one, but so is limiting the arms trade, improving rich-country trade and subsidy policies, providing technical advice that is not tied to aid, and developing better drugs for diseases that do not affect rich people". Probably rethinking aid rather than simply reducing it.
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Robbie Jena Oct 12, 2015

We can change the issue including the police encounter and everything to make a poor country resilient and much better….provided some one wants to set up a link to a Government Leadership in those countries to carry forward. I have been trying to do that for the last five years long after advise to China’s Industrial Ecosystems….but no luck…but a lot of talk and books…thank you.
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Michael Public Oct 12, 2015

Donations are often used to buy contracts - not directly of course, but the potential contractors make it clear they will change the donors minds if the contracts are not signed. I am talking big contracts - highways, airports, power plants.
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Mark Eystad Oct 12, 2015

I could easily write a scathing review of this article based solely on it being written from the professors’ lounge at the Ivy League Princeton, but thankfully this website is a compilation of opinions, not actual journalistic news. So here is my opinion about the author's article:
Most citizens of the USA have a healthy skepticism of government in general and our own in particular. Our country was founded on the premise that its citizenry is to be protected FROM its government because government is a necessary evil, not because it what it can provide in services.
As for the poor countries and why they stay poor, it is because their governments are corrupt, often tyrannical, in nature. The author is largely correct in his assessment that government-to-government subsidies rarely benefit the citizens of those governments because those governments are corrupt, some more-so than others. The least corrupt may take food aid for instance and repackage it so that it says it comes from their own government, not USAID. The worst will simply trade/sell the food aid to others and keep the money.
The one thing those people can do (I would argue, their only real long term hope) is to begin or expand free market economic practices, a subject not even discussed in this article, which should seem strange given the author is a Professor of Economics. (Again, see 1st paragraph).
One of the things that is occurring is that NGO's (often faith-based) are promoting economic progress by teaching people the skills necessary to be entrepreneurial and in some instances providing micro-loans to help them start their own businesses. When people become less reliant on their government, the government has much less power over its citizenry.
No other economic system has raised more people out of poverty than has free market capitalism. Capitalism is the scourge of left-wing liberals. Unfortunately, these libs are comparing what has become crony-capitalism here in the U.S. with the democrat-socialist systems of Eastern Europe. Sadly, the difference between the systems gets less and less with every law passed here in the U.S.
U.S. government's main responsibility is to 1) protect it citizen's, not from each other (or from themselves), but from foreign invasion; 2) provide a uniform playing field for economic and social advancement vis-a-vis laws which apply equally to its citizens. While the U.S. has largely accomplished the first, it has completely bastardized the later.
- Curtis Carpenter Oct 12, 2015
  
  I can't help but wonder if your "free market" enthusiasms prevent you from using the public roads, sending your children to public schools, expecting justice in a court of law when your contracts are violated, calling "911" in emergencies, expecting your tap water to be clean (and available), flushing your toilet or going to the police if you get mugged (and not expecting them to mug you too)?
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Femi Awoyinfa Sep 26, 2013

Absence of state capacity in Africa is a symptom of a larger problem. The unwillingness or inability of African leaders to rise to the responsibility, to the challenge of personal example which are the hallmarks of true leadership...is what is lacking. That being said, foreign aid can be helpful and there are classic examples where aid, in the right hands have led to visible progress. However there are many who believe (and rightly so) that absence of aid will force Africa and the developing world to look inwards, plug loopholes, address corruption and live up to expectations. Is that too much to ask?
- Shoshon Tama-Sweet Oct 13, 2015
  
  Governments everywhere, and Africa is no exception, are rarely better than they are forced to be by their citizens or subjects.
  
  Lack of state capacity in Africa can in part be linked by the lack of citizens capacity to force better behavior upon their leaders. But this is caused as much by historical/political/military history as international aid. Does anyone believe that CAR, or Congo, woul dbe better off if just left to itself? That idea is simply not believable.
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Lee Crawfurd Sep 25, 2013

Is there any actual evidence that direct cash transfers from overseas to individuals (www.givedirectly.org) undermine government, or is this just speculation? There are theoretical reasons why aid might undermine governance, but there are also good theoretical reasons to think that aid might improve governance, by modelling what better government service delivery could look like. Ultimately it's an empirical question, and I don't think there is any decisive evidence either way. The one place there is decisive evidence is that giving people cash and healthcare directly improves lives. Should we sacrifice that for an unknown?
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Scott Wolfel Sep 24, 2013

Or is it, "Poor Countries, Weak States"?

I think Professor Deaton is putting the statist cart before the economic horse. Where exactly does the state get resources? Obviously from the economy.

The American government, including state and local governments which deliver most of the government services (as opposed to defense and transfer payments), for example is about 40% of its almost $16 trillion GDP. Without the economic growth that separated it. from the pack over the last couple of centuries (for example the U.S. had similar per capita GDP as China and Latin America 150 years ago), the resources wouldn't have been their for the state to capture.

The strong, large, Leviathan states of developed countries are the result of a few centuries of exponential capitalist growth and a shift to the modern welfare states/social democracies in the decades after the Great Depression. Prior to the Great Depression government spending in the U.S. was 3% of GDP, yet the country experienced some of its most dynamic growth, and became the global economic and geopolitical superpower, in the absence of a strong state.

The causal arrows are backwards and economic history shows that a strong state is neither a necessary nor sufficient condition for strong economic growth and wealth creation. That said, a basic rule of law and protection of private property rights among other factors most likely are.

There is a more fundamental flaw in his argument. There are plenty of examples of strong states throughout history that have killed the economic goose. Current exemplars include North Korea and Cuba among others, but the Soviet Union and Maoist China also come to mind and the list is endless.

While it is probably correct that a certain minimal level of state is necessary for economic development to enforce basic rules of fairness and property rights per John Locke and Adam Smith, more often than not strong states have captured and inefficiently allocated societies' scarce resources often to existing elites, including the state.

Prior to China, which may be a special case, statist development was an abject failure over time, and it has been economic development that has provided the resources for modern state building. If we look at the current economic problems in Europe and throughout the developed world, they are clearly related to an overreach by the state to extract resources from the private economy.

In Africa, while part of the problem may be "weak states," which result from the lack of indigenous economic resources, the bigger problem is corrupt states that help capture those limited resources for existing elites. If you create the conditions for pluralistic economic development in terms of the state setting and enforcing the ground rules for a growing economy, the indigeonous resources will be available for state building.

The right question may not be one of weak state/strong state, but the nature of the state and the robustness of the economy in providing resources for the state to extract.
- Mr Econotarian Oct 13, 2015
  
  Regarding China, we have to remember that it was the removal of absolute Communism that allowed it to grow to be a country of $6800 per capita GDP rather than one that was starving tens of millions of its people to death in the 1950's.
  
  There is no reason why China can't eventually reach the $32,000 GDP per capita level of Taiwan, but I suspect it will require the government moving from an Index of Economic Freedom level of 52.7 to Taiwan's of 75.1.
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- Michael Public Oct 12, 2015
  
  Hi Scott - when you say that basic law and order is needed I find you in agreement with the author rather than in opposition to him - your disagreement may be simply semantics.
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- Curtis Carpenter Oct 12, 2015
  
  Thank you for a thoughtful rebuttal to Professor Deaton's essay. Reading both, it seems clear that the challenge is to put aside arguments about causality -- and focus instead on finding a way to create a constructive dynamic between the government and its people in poor countries. What conditions must be met for the state police to be seen as the people's friends, to follow Deaton's opening example?
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