Bob Geldof has been taken on by David Cameron to advise on aid issues. As with the Zac Goldsmith fiasco, it depends upon which way the advice is running. Sir Bobbo has a long piece in The Guardian explaining the whole Live8 process, most of which I entirely agree with and regard as a massive achievement. However, a couple of things that stand out:

and if you believe that poverty is unnatural in a world of unsurpassed wealth

This slightly depends upon exactly what you mean. If that, some of humanity having escaped poverty it is unnatural that all have not, then perhaps you’re correct. If some have indeed worked it out, then it shouldn’t be too hard to pass that knowledge on.

If, however, the alternate possible meaning is given, that poverty is in itself unnatural (as Nelson Mandela said back at the beginning of the year) then this is completely wrong. Rather, it is the absence of poverty, wealth itself, which is the unnatural thing, that oddity in human history that has really only been created in the past couple of hundred years. For the proof of this have a look at Brad Delong’s paper on historical GDP per capita.

This might sound like nit-picking, and to an extent it is. But at root there lies what I think is a most important point. If we look at Africa and say that this is some puzzling exception, something extra-ordinary, then we’re analysing the problem in exactly the wrong way. Rather, this is how most of humanity has lived and died for most of history, both recorded and unrecorded. It is the escape from this poverty and immiseration which is, in historical terms, the exception. Rather than looking at what has gone wrong in Africa, we should be looking at what has gone right elsewhere.

…and endorsed the core demand of Make Poverty History and the Trade
Justice Movement, that rich nations must not use aid to force African
economies to open up to major multinationals, against whom weak
economies could not compete. This broke new ground.

Of course,
unlike with aid and debt, all of this is verbal piety – and if they
meant it at Gleneagles, why didn’t they do something about it in Hong
Kong, where rich countries served up thin gruel for the poor? Africa
has only 1% or 2% of world trade. It is incapable of competing and
possesses no threat to the other 98%. It should be considered
differently and engaged in an exercise of economic positive
discrimination.

This is simply appalling and howlingly wrong. It’s a resumption of the mercantilist argument. What Africa needs, more than anything else, is exactly those huge multinationals selling and shipping shedloads of goods and services into the place.

As we’ve noticed over the year via series of papers mobile phones by and of themselves create economic growth. A rise in 10 phones per 100 people in ownership is associated with (note, causes, not is caused by) a 0.9% rise in GDP growth (that is, GDP grows by 0.9%, not that the rate of growth does…and I think I’ve remembered that number correctly, it’s somewhere in the archives). Is, for example, Tanzania, to wait for the arrival of the indigenous mobile telephone manufacturing industry to take advantage of this? Or would it be better served by some multinational coming in and building a network. Even, would it be better served by several building competing networks? Unsurprisingly, several competing suppliers, in exactly the same papers, is associated with greater coverage and lower prices.

Should we be recommending the Ethiopian version, with one State owned supplier? Or the Somali, where there are no regulations at all on who may set up a network?

There is also one further point which this argument misses. Possibly one of the great papers in economics in recent years. Seriously, truly astounding. Nordhaus on

Schumpeterian Profits in the American Economy: Theory and Measurement

The basic finding, the one that is so important, is that 97% of the benefits of innovation go to the wider society, only 3% remaining in the hands of the innovators. This has the most stunning impact on this argument about multinationals. It doesn’t actually matter a damn who owns the company or business. Worrying about the 3% part that foreigners might manage to grasp and take away with them is not just stupid, it’s entirely insane, as we’d all be far better off looking at the 97% that flows to the society in general.

As above, this link up with Cameron rather depends on which way the advice is running. If these two basic ideas get into Sir Bob’s head then that would be fabulous. I’m a huge admirer of the man, think he’s done an enormous amount of good and would happily state that a KBE is much too inadequate an honour for him. But if those two errors migrate into Tory thinking that then would be a disaster.

All through the year I’ve been hugely dismissive of the Make Poverty History campaign. Not because I disagree with their aims, for I don’t. I too want Africa, just as I do all of the other impoverished areas of the world, to enjoy the same joys and comforts of wealth that we do. My argument is with the specific means being advocated. Like those loons at Christian Aid and their free trade is akin to slavery argument.

In short, can we not get this man’s energy hooked up to the correct methods of aiding growth in Africa?