27 January 2005

Third world hunger

A report sponsored by the United Nations, and overseen by Jeffrey Sachs, urges rich countries to spend more on cutting hunger and poverty in the developing world. An article about it appeared (online only) on The Economist website. The online edition of this week's Economist has published my reaction:

Eradicating poverty

SIR - There is more intellectual grunt devoted to marketing a single new laundry product than there is to eradicating poverty in the third world (“Whatever it takes”, Economist.com, January 17th). More money may be necessary, but it will not be sufficient unless it harnesses the ingenuity of diverse, responsive minds and is tied to achieving explicit, verifiable outcomes that are meaningful to real people.

My suggestion is that the rich world auctions freely tradeable bonds that would become redeemable only when a specified social objective has been achieved. These objectives could include conflict reduction, increases in basic literacy, and reductions in disease and hunger. By contracting out the achievement of poverty reduction to the private sector, such bonds would inextricably link rewards to outcomes rather than inputs, outputs, activities or institutions; and they would inject the market's incentives and efficiencies into the eradication of third-world poverty.

Ronnie Horesh
Wellington, New Zealand

No comments: