Saturday, November 02, 2013

Why Gates Is Wrong & Zuckerberg Is Right About Poverty And Development

[Forbes] The Financial Times has an interview with Bill Gates and the main subject is his attempts to make better the lives of the world’s poor. Such things as the polio eradication campaign and the malaria vaccine. However, I think he rather gets a part of his argument wrong: and Zuckerberg, in this one part of the argument has it right. Or more nearly correct I should perhaps say. None of this is, of course, to detract at all from the fact that Gates is doing both good and noble work: I am simply making the argument that the specific argument that he’s using here is not quite the slam dunk he thinks it is.
I recommend the entire interview but the part I’m interested in is this:

Bill Gates describes himself as a technocrat. But he does not believe that technology will save the world. Or, to be more precise, he does not believe it can solve a tangle of entrenched and interrelated problems that afflict humanity’s most vulnerable: the spread of diseases in the developing world and the poverty, lack of opportunity and despair they engender. “I certainly love the IT thing,” he says. “But when we want to improve lives, you’ve got to deal with more basic things like child survival, child nutrition.”
A central part of this new consensus is that the internet is an inevitable force for social and economic improvement; that connectivity is a social good in itself. It was a view that recently led Mark Zuckerberg to outline a plan for getting the world’s unconnected 5 billion people online, an effort the Facebook FB -0.91% boss called “one of the greatest challenges of our generation”. But asked whether giving the planet an internet connection is more important than finding a vaccination for malaria, the co-founder ofMicrosoft MSFT +0.34% and world’s second-richest man does not hide his irritation: “As a priority? It’s a joke.”I don’t doubt at all that we’ve got to deal with child survival, child nutrition.

Where Zuckerberg is wrong is in thinking that connectivity is a good in itself. No, it’s hugely important, but it’s not the thing itself that we desire. It is the consequences of it that we do.

Then, slipping back into the sarcasm that often breaks through when he is at his most engaged, he adds: “Take this malaria vaccine, [this] weird thing that I’m thinking of. Hmm, which is more important, connectivity or malaria vaccine? If you think connectivity is the key thing, that’s great. I don’t.”
I’ve said before that I think Zuckerberg is wrong in thinking that there needs to be some campaign to ensure connectivity as well: all of the things that he describes as being necessary for someone to do are things that, as he himself points out, people are already doing. So there doesn’t need to be a campaign, nor resources redirected.
And once again let me point out that the work that Gates is doing is just great, no complaints about it at all. However, I still would insist that connectivity is indeed what needs to happen and that it will be vastly more productive to worry about that than about any one other point. Yes, even than malaria vaccines and the eradication of polio, hugely important subjects thought those are.
For the main problem in the world is not disease, nor malnutrition, nor education: it’s poverty. Solve the poverty and all of the other problems become infinitely more malleable, hugely easier to solve. We also need to recall that it is not poverty that is made: no one has caused the poor of the world to be destitute. This is in fact the natural condition of mankind. This is how our own ancestors lived for millennia.
Just to give you an idea Mozambique, Guinea, Togo, the sort of places that we regard as the poorest of the poor these days. GDP per capita of around $1,000 a year. These places are richer than the Roman Empire. As rich as England was in 1600 AD and richer than Scotland or Wales were at that time.
What is made is the wealth to lift people up out of that destitution. Thus the great need of our time is to bring the tools of wealth creation to those places that don’t have it.
The economics literature is full of people arguing about what it is that either allows or causes wealth creation. Jeff Sachs insists that he knows, the socialists insist they do and an awful lot of economists mutter that it’s all very difficult to actually pin down in detail. Could be education, contraception, local ownership, I even know of people who insist that taxing the people who invest in poor countries more will do the trick. But there is one thing that we do know adds considerably to growth. That is the ability to communicate: to be on the network, to be wired up that is.
The effect, for any one technology or action, is huge. One paper insists that for every 10% of the population that gains a mobile phone connection then GDP grows by 0.5% a year. That’s assuming, like all the currently poor countries, that there isn’t already a landline network. Other similar work has been done on the value of broadband (the 2Mbits type that is easy to provide on mobiles) and it is similar. Just the presence of it within the economy boosts growth. Not that this should be all that much of a surprise: trade is based upon having information, an increase in trade is the same thing as an increase in GDP and mobiles, being connected, most certainly increase the flow of information.
So I would argue that absolutely the most important task is indeed to get that other 3 billion connected. It’s rare for us, in economics, to know of one basic enabling technology that has such an effect on growth rates. We happen to live in a time and place where we’ve got that knowledge: we should use it.
None of this means that what Gates is doing is in any manner wrong. Indeed, as above, he’s doing good and noble work. And he’s also doing work that no one else has grasped in the same manner he has whereas there’s hundreds of companies and millions of investors happy to put up mobile phone networks. My argument is only that I think Gates is wrong in dismissing the value of connectivity: from what we know of the economics of development it’s the single most important technology to boost economic growth. And everything else that is wrong with the world becomes a great deal easier to deal with once there is indeed growth. For much of what is wrong with the world is that some one third to near a half is still stuck in the vileness of historical peasant destitution. Deal with that, get growth moving, and we’ll be more than halfway to dealing with everything else.

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