Quotes of the Day

In 1970, six years after its independence from Britain, Malawi had a per capita GDP of around $70. Today, despite nearly half a billion dollars a year in foreign aid, that figure stands at $600 — still among the lowest in the world. And Malawi isn't alone. While most of the developing world's economies have grown at around 4% per year since 1970, a significant number of countries, largely in Africa, are actually worse off now than they were a half-century ago. Even as globalization lifts much of Asia from poverty, these unlucky nations seem caught in a riptide of poverty.

In his new book, A Farewell to Alms, economic historian Gregory Clark notes that the yawning chasm between rich and poor has been widening since the late 18th century. "Hundreds of millions of Africans now live on less than 40% of the income of pre-industrial England," he writes. Clark proposes a wildly contentious explanation for this disparity. By studying wills from England circa 1800, he finds that rich families tended to reproduce far more abundantly than poor ones. As the affluent outbred the poor, bourgeois values like thrift and literacy apparently diffused through English society from the top down, eventually jump-starting the Industrial Revolution, and allowing, for the first time in history, economic growth to outpace population growth. England's exploding prosperity, then, depended on the cultural, and perhaps even biological, transmission of those values. "The triumph of capitalism in the modern world thus may lie as much in our genes as in ideology or rationality," Clark concludes.

That's a bold statement. It's also utterly specious. As every high-school biology student knows, evolution is neither a tidy nor quick process. Even if Clark could somehow prove that prosperity is hereditary — survival of the richest, he terms it — it doesn't follow that genetics, rather than geography or blind luck, caused Europe to industrialize before the rest of the world. Isn't it just as likely that innovations such as the steam engine, and the exploitation of its colonies, made England wealthy? And Clark's social Darwinism doesn't explain why equally stable and sophisticated societies in China and India industrialized at different rates, or how they have managed to become capitalist powerhouses in only a generation. At best, A Farewell to Alms is woefully naive; at worst, willfully reductionist. But Clark is right on a least one point: the industrialized world's prescription for affluence — good government, efficient markets and generous transfusions of foreign aid — has done little to spread prosperity to countries like Malawi. As he writes, "There is no simple economic medicine that will guarantee growth."

In his terrifically readable — and far more convincing — The Bottom Billion, former World Bank research director Paul Collier offers another take on why aid is so ineffective. For one, it's often inefficiently distributed: according to one survey in Ghana, only about 1% of medical aid actually made it to hospitals. And foreign aid is sometimes channeled into military spending — about 11% of the total, according to Collier's best estimate — or squirreled away in Swiss banks by kleptocrats. But Collier primarily blames a phenomenon known in economics circles as "Dutch disease."

In the 1960s, the Netherlands discovered huge deposits of natural gas in the North Sea. A windfall, right? Wrong. The discovery effectively hobbled Dutch industry, since any surge in revenue from natural resources — or from foreign aid, for that matter — tends to drive up exchange rates, making exports less internationally competitive. But thriving export industries, Collier argues, are precisely the reason for Asia's dramatic economic rise. They are also what Africa will need to develop in order to follow the same trajectory. Collier's idea seems to be sinking in: last month, the large international aid organization CARE announced that it would no longer accept subsidized food aid from the U.S. because it was depressing local farm economies in poor countries.

Of course, Collier isn't philosophically opposed to the idea of foreign aid. But his proposed solution to its inefficacy doesn't include celebrity rock concerts or NGO sloganeering — an approach he broadly derides as "the headless heart." Perhaps most controversially, he argues for military intervention in civil conflicts, citing as an example the British army's decisive 2001 rout of Sierra Leone's vicious Revolutionary United Front, which was infamous for recruiting child soldiers and wantonly butchering civilians. These aggressive steps aren't just a moral imperative; they also make economic sense, since, Collier estimates, a failed state costs its neighbors an average of $64 billion in military spending and lost trade, and can spread dysfunction far beyond its borders (for a prime example of the latter, see Afghanistan). These arguments impel Collier to a sobering conclusion: without radical international intervention, the world's poorest states are likely to remain trapped in a cycle of civil war and near-zero economic growth for decades.

• Peter Ritter