Diego Zuluaga // 08.12.2015

Last week in London, William Easterly delivered the Institute of Economic Affairs’ 24th Annual Hayek Lecture. Easterly, a Professor at New York University and Director of its Development Research Institute, is considered an international authority on economic development. His work has often challenged the consensus in the West about foreign aid and the role of developed countries in assisting the growth of less developed ones. His books The White Man’s Burden and The Tyranny of Experts have raised uncomfortable questions about the effectiveness of big aid commitments and the programmes drafted by the World Bank and the International Monetary Fund. By contrast, they have highlighted the role of small-scale, entrepreneurial efforts by the poor themselves to overcome the obstacles they face.

One of Easterly’s most acclaimed insights is the distinction between planners and searchers. The former are typically Western officials in development bodies who, often with the best intentions, come up with long lists of vague ‘targets’ that developing countries need to meet. This category also includes people like Bono, Bill Gates and Jeffrey Sachs, all committed to making the world a better place, but whose focus on grandiose plans and broad long-term goals often leads to ineffective outcomes.

Searchers, on the other hand, are those who eschew the big ideas and instead take a pragmatic, specific approach to development. They include those developing-country officials and NGO staff who come up with local solutions that take the views of the affected people into account and work with incentives to secure the desired outcomes. They also include private entrepreneurs who build profitable businesses to cater to the needs of the poor, creating wealth but also helping to strengthen key institutions such as property rights, respect for contracts and the rule of law in the process. Most fundamentally, searchers are the poor in developing countries themselves, who are best placed to improve their own condition if given the right to decide for themselves and not have decisions imposed upon them.

In instance after instance, Easterly has found searchers to be much more successful in improving the condition of the most vulnerable in developing countries. This goes with the grain of economic thinking. First of all, the objectives are clearer among searchers than among planners, which means that it is easier to identify success or failure. The searcher question “How do I get water to this poor family?” is time-specific and measurable. The planner question “How do I ensure that all poor families in Africa have reasonable access to a well by 2030?” is neither of those.

Secondly, the incentives tend to be better aligned with searchers. If I am an entrepreneur seeking to make a profit by addressing a particular shortcoming in a poor community, I am encouraged to find out the needs and preferences of the people I wish to serve. If I am a poor person myself, the incentive to find effective solutions to pressing problems like malnutrition and inadequate housing could not be greater. On the other hand, and independent of her intentions and wishes, the planner sitting in a comfortable office in Washington, D.C., not only faces weaker pressures to address the challenges of development, but she is also in a bad position to judge what those challenges are.

This is because, as Hayek pointed out, knowledge is dispersed among individuals, and crucial bits of it – the kind of information that would be needed to design an effective poverty eradication programme for a specific community – cannot easily be transferred to higher levels which are removed from local conditions. Hayek’s insight sought to explain why central planning – no matter the planners’ computing power – could never work. And it is equally applicable to the designs of bureaucratic development bodies.

Instead, the key to development, in Easterly’s view, is to give the people in developing countries – the people we are trying to help – the tools to improve their condition. These tools are not primarily financial – although they can include direct, unconditional cash transfers – but rather moral and legal: what Easterly would call rights, or freedoms. The right to own property and decide what is done with it. The right to enter into voluntary contracts with employers, firms and other individuals. The right to elect one’s government without risking losing one’s life or property if one ends up in the minority.

It is those basic freedoms that officials in the developed world should uphold and defend, without exceptions. For the rest, the people on the ground are best-placed to help themselves.