This post was mentioned on Twitter by mikegechter_rss: P.T. Bauer, Development Prophet: This post is by Claudia Williamson, a post-doctoral fellow at DRI.
P.T. Bauer .. http://bit.ly/2CLN4V...

And, I’m sorry to say this again, what follows your opening sentence is hardly better.

On the first point, the view that people will all people will become entrepreneurs, will earn profits, invest, watch their business grow is romantic, to say the least. Just see the barrage of criticisms addressed to micro-credit schemes after an initial ‘romance’. How many people really developed genuine firms after having started as poor people. After all, it all depends on why you mean by poor people. Maybe you should read the brilliant paper by Banerjee and Duflo “The Economic Lives of the Poor” to grasp the extent to which the view of the penniless entrepreneur who will turn into a genuine business-owner is romantic or flawed, or both. May I also add that both Bauer and you at least implicitly acknowledge that these people must be helped in order to improve their lives. They do need “external funding”, even if this takes the form of credit from banks, microcredit or foreign aid. I don’t see why, granted that we acknowledge that these people need ‘external funding’, we should make a distinction about the source of this funding.

On the second point: please, have you heard about the Millennium Development Goals? Have you heard about the Human Development Index? The Index of African Governance? The Doing Business Report published by the World Bank Group? Do you REALLY believe that “what matters is to give away money, not actually see results”?

On the third point: you quote a paragraph from Peter Bauer “Foreign aid is demonstrably…..to promote it.” This is the opening paragraph of his paper “Foreign Aid: Abiding Issues”, delivered by the way at NYU in 1996. Now, Bauer is not calling for the end of aid altogether as your comment might suggest. Indeed, the last section of this paper is entitled “The Reform of Aid” and Bauer says that “The most important single reform would be a radical change in the criteria of allocation. These subsidies should go to those governments whose policies are most likely to promote economic progress and general welfare of the peoples through humane leadership, effective administration, and the extension of personal freedom. Such a reform would remove the most conspicuous anomalies of official aid and enable it to make whatever contribution it can to improve the condition and prospects of the poorest.” Bauer is not suggesting that we abandon aid altogether, rather he is arguing in favor of a reform of aid. He is concerned with aid effectiveness like so many other scholars working in this area, including the recent Nobel Prize winner Elinor Ostrom. BTW, I had hoped that the award of the Nobel Prize to her would have dispensed us at least for some time with the cliche “It is because individuals lack property rights that they are poor. ” Do you know how many poor people there are in the US? DO they lack property rights?

I agree that empirical evidence is sharper in the case for property rights. But nevertheless there are/were cases of poor societies with well-defined property rights, and there were/are? cases of rich societies without them. I do not think these cases invalidate the argument for property rights.

By the way, do you really think h(H)istory can “reveal” anything?

It’s a bit early though to measure the World Bank against the results of its interventions in the midst of the financial crisis, as the results will take a few months to show. It’s only normal that their action is measured in volume for the moment. If a year or two from now, it’s still all they have to show, this critique will be relevant. Still, it’s funny that a blog so critical of the Millennium Development Goals should complain that development agencies are not measured on results enough!

Once again, thanks for offering a platform for healthy debates.

I do think case studies are empirical, so thank you for pointing this out. I simply meant that Bauer didn’t rely on pure statistical analysis.

I also did not mean to imply that my response was providing a complete explanation to the cause of poverty. I focus on property rights as a fundamental cause but other institutions and policies matter as well.

I also don’t think reducing the cause of poverty to lack of property rights captures the whole spectrum of reasons why people are poor. Certainly they are a part of it, as are informal norms and culture, but you seem to be assuming that if an incentive exists it will automatically motivate (the desired) behavior. History would also reveal this to be an incomplete and unsatisfying explanation.

To Manuel:
The argument is that the poverty trap is not a binding constraint because history reveals countless individuals and groups that emerged from poverty without outside assistance. It is because individuals lack property rights that they are poor. History also reveals this phenomenon.

No more no less than the mere existence of starving individuals and societies flies in the face of the “primacy of property rights and the importance of informal norms and culture for economic change”.

P.T. Bauer was really a brilliant development economist, and a courageous one. But we will make a disservice to his legacy by suspending our critical abilities when presenting his work.

Claudia, I think it’s beyond that. I think the West wants to give away money and actively does not want to see results. Look at the US reaction to China’s growth from poverty to wealth–it is seen as a threat. When your average third world country opens a factory paying local standards to the workers, it is demonized as a sweatshop in part because the output threatens Western manufacturing jobs. Maybe this is a peculiar pattern to the United States (I am not exposed to European public opinions on these matters), but here in the US the reaction to third world growth is a presidential-level topic of discussion and most of it is about how to protect US jobs from the threat of outsourcing to nasty third worlders who don’t pay US union wages.

No doubt Bauer made some useful contributions, but he seems to be mostly invoked these days as having ‘proved’ that aid doesn’t work, when all this proves is that some people will latch onto any justification they can for not having to give their money to the government or to poor people. Ironically, Bauer’s work itself seems to function as a salve for guilty consciences, this time on the part of those opposed to aid.