The Economist on the UN reform summit

The Economist magazine - the September 10, 2005 issue has just arrived at my door - has a special report on UN reform: Special Report: The United Nations: Can Its Credibility be Repaired? World leaders are setting about reforming a flawed world body at a time when has been further weakened by the Iraqi oil-for-food scandal. (September 10, 2005, at 30-32.) Read it here - sub reqd.

It also has a very useful article explaining to the uninitiated what the Millenium Development Goals (MDGs) are, here (sub reqd) and the Bolton kerfuffle over them. Note the Economist's conclusion as to the MDGs, and the controversy over Bolton xx'ing them out of the UN reform outcome draft (that appears to have been reversed over the weekend, according to the Guardian):

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September 8, 2005,
The Economist
Aspirations or Obligations?
[The Millenium Development Goals]
JOHN BOLTON, who recently became America's representative to the United Nations, is not over-fond of his new place of work. He belongs to the school of thought that sees the UN not as a temple to international co-operation but as a polyglot talking shop, with exorbitant Manhattan parking privileges.

“The currency of pledges from the international community is by now so severely debased by non-delivery that it is widely perceived as worthless.” That is the kind of sentiment one might associate with George Bush's man in New York, but those are not his words. Surprisingly, perhaps, they come instead from the latest Human Development Report, just published by the United Nations Development Programme.

The report appeared a week before the UN's big summit in New York on September 14th-16th, and five years after world leaders minted a new set of pledges to free their fellow man from “the abject and dehumanising conditions” of extreme poverty. The pledges were translated into eight “Millennium Development Goals” (MDGs), which aim to halve poverty and hunger, enrol every child in primary school, spare mothers and their infants from untimely deaths, thwart infectious diseases, save the environment and forge a “global partnership” in pursuit of development. The first MDG—cutting extreme poverty to half its 1990 level by 2015—may well be met in global terms, the Human Development Report says. But there the good news ends. On present trends, the report concludes, most poor countries will miss almost all the goals, in some cases by “epic margins” (see table). Extreme poverty, for example, will not be halved in any region except East Asia. The report calculates that by 2015 380m poverty-stricken people, most of them Africans, will remain in the condition from which the UN's members promised to liberate them.

If the value of such pledges is debased, how should the world respond? One way to restore the value of a currency is to back it with something tangible. This is what the Human Development Report proposes. It says that rich countries should offer more aid to poor ones (see article) and less to their own farmers. It also urges governments in poor countries to tackle the inequalities within their own societies. Only 40% of Pakistan's primary-school pupils are girls, for example.
But another way to restore the value of a currency is to restrict its supply. This is the route Mr Bolton seems to prefer. In recent weeks he has proposed excising all mention of the MDGs from the final declaration, removing from circulation the pledges the Human Development Report fears are now perceived as worthless.

Mr Bolton's editing provoked dismay. On August 26th, he wrote to his peers at the UN “to eliminate any possible misunderstanding”. America supports the development goals of the Millennium Declaration, he insisted, but it does not support the Millennium Development Goals. Confused? Mr Bolton explains that America signed up to the goals expressed in the 2000 Millennium Declaration—which include most of the headline targets such as halving poverty and hunger by 2015, promoting universal primary schooling, and cutting child mortality by two-thirds—but not to the full panoply of indicators and schedules formulated by the UN secretariat the following year.

The chief appeal of the MDGs is precisely that they convert high rhetoric into hard numbers. But most of the targets are less rigorous than they look. There is, for example, no way of knowing whether several of them are being met or not. In a forthcoming paper in Public Library of Science Medicine, an academic journal, Amir Attaran of the University of Ottawa points out that only one African country (Mauritius) registers births and deaths according to UN standards, and that no country regularly measures how many people are newly infected by tuberculosis. In July 2000, he says, a scientist concluded that it was not possible, in general, to measure the number of new cases of malaria. These shortcomings will prove increasingly embarrassing to the UN, Mr Attaran predicts. As 2015 approaches, people will want to know whether the MDGs have been met, and the UN will not be able to tell them. Indeed, the UN is already quite defensive. Mr Attaran quotes a UN memo, circulated a year ago, which cautioned that next week's summit “should not be distracted by arguments over the measurement of the MDGs”.

One target that can be measured is the 0.7% of GDP which rich countries are supposed to devote to foreign aid. Many donors have promised “efforts” to reach the target, but only five have met it. Mr Bolton does not intend even to try. “The United States has consistently opposed numerical aid targets from their inception in the 1970s,” he wrote to his UN colleagues.
But Jeffrey Sachs, the economist who is the MDGs' chief intellectual sponsor, thinks the 0.7% target now has more than history to recommend it. Suppose, he says, we gave the money needed to reach the poverty line to everyone below it. How much would it take?

Martin Ravallion and his colleagues at the World Bank put the international poverty line at $1.08 per day, measured in 1993 purchasing-power parity dollars. They estimate that in 2001, 1.1 billion people fell short of this line, by $113 on average. Giving $113 a year to 1.1 billion people would cost $124 billion. As Mr Sachs points out, this is little more than 0.6% of the combined GDP of the OECD's 22 donor countries, measured in the same purchasing-power parity dollars. Thus the promise to devote 0.7% of GDP to fighting poverty has a theoretical rationale today that it did not have when first proposed in 1970. With an aid budget that size, the “poverty gap” could in principle be filled.

Mr Sachs's thought-experiment is intended as no more than an “eye-opening” illustration. But it is nonetheless misleading, argues Surjit Bhalla, a former World Bank economist who now runs Oxus Fund Management, a hedge fund. As Mr Bhalla points out, the “dollars” used when measuring poverty around the world are not the dollars given in aid. The first is a unit of purchasing power. The second is a unit of currency, which has varying purchasing power depending on where it is spent and what it is spent on. As Mr Bhalla points out, a dollar earned in America buys much more in Ethiopia or India than in Japan or America itself.

So how many dollars would have filled the poverty gap in 2001? Not $124 billion, Mr Bhalla reckons, but only $25.1 billion. In fact the rich world gave more than $46 billion in aid that year, and has been giving more than enough to fill the poverty gap in almost every year since 1990.
Unfortunately, a victory over poverty cannot be so easily purchased. The rich world cannot pour a given amount of money into one end of an MDG pipeline and expect to see, emerging from the other, a predictable number of people freed from destitution and disease.

The global targets the world set for itself five years ago did not emerge from the bottom up, as the sum of what might be feasible in each poor country. They were instead imposed from the top down. Their fit is thus often rather awkward. Thanks to its rapid economic growth, China has already met the goal of halving poverty, more than a decade early, while sub-Saharan Africa is likely to be generations late. Of course, ambition is a good thing if it encourages countries, rich and poor, to redouble their efforts. But in Africa's case, efforts must be quadrupled or quintupled. That is a promise the international community cannot possibly keep, and so was perhaps unwise to make.