By almost any measure, the world is better than it has ever been. People are living longer, healthier lives. Many nations that were aid recipients are now self-sufficient. You might think that such striking progress would be widely celebrated, but in fact, Melinda and I are struck by how many people think the world is getting worse. – Bill Gates, 2014 Gates Foundation Annual Letter
Bill Gates is one awesome dude. In addition to inventing Windows, revolutionizing the PC, and making nerds cool, he has thrown $26 billion of his own money toward solving the supposedly intractable problems plaguing the world today. From absolute poverty to child mortality to education, Bill (through his Gates Foundation) continues to bring positive change to the world.
Bill’s 2014 Gates Foundation Annual Letter caught my attention (PDF version). I think it’s worth a read if you have time. If not, I’ll highlight the most important parts here.
Debunking the 3 myths that block progress for the poor
Bill and Melinda wrote the 2014 Letter to debunk these three myths:
- Poor countries are doomed to stay poor
- Foreign aid is a big waste
- Saving lives leads to overpopulation
Myth 1: Poor countries are doomed to stay poor.
This simply isn’t true. Bill takes a look at the changes that have occurred during his lifetime. A single lifetime. 50 years ago the world had three types of countries: developed or first world countries, soviet bloc countries behind the Iron Curtain, and developing or third world countries. Countries that were “developing” back then have now developed!
India, Brazil, and China , with a third of the world’s population, illustrate the point well. In the last 50 years, the real income per person increased fourfold in India, quintupled in Brazil, and expanded eightfold in China. Many other less populous countries have experienced similar successes.
As Bill points out,
There is a class of nations in the middle that barely existed 50 years ago, and it includes more than half of the world’s population.
But what about Africa? It will never amount to anything. Except it has made gains over the last 50 years too. Income per person in sub-Saharan Africa has increased over the last five decades. Since 1998, income per person has increased by two thirds from $1,300 to $2,200. This income level is still paltry compared to the incomes in more successful countries like China, India, and Brazil. But an increase in real income per person is still an increase. It leads to better lives, more opportunities, and further potential for growth and development.
To expand on the successes in Africa, Bill highlights the improvements in the health and education of the populace.
- Over the last 50 years, life expectancy has increased from 41 years to 57 years in spite of the rise of the HIV epidemic
- The number of kids in school has increased from around 40% to 75% since 1970
- Fewer people are starving; more people have good nutrition
If getting enough to eat, going to school, and living longer are measures of a good life, then life is definitely getting better there. These improvements are not the end of the story; they’re the foundation for more progress.
As Bill says, the problems in Africa are still being solved, but life is much better today than it was 50 years ago. And a healthier, more educated populace is more likely to lead to long term economic growth.
Here’s a powerful prediction from Bill:
By 2035, there will be almost no poor countries left in the world. (I mean by our current definition of poor.) Almost all countries will be what we now call lower-middle income or richer. Countries will learn from their most productive neighbors and benefit from innovations like new vaccines, better seeds, and the digital revolution. Their labor forces, buoyed by expanded education, will attract new investments.
Given the improving conditions over the last several decades, Bill might be right. Let’s hope so. What a boldly optimistic sentiment!
In his Letter, Bill does call out some nations, like North Korea, that might not enjoy the same growth in prosperity that the rest of the world will enjoy. Without big changes, that is. War, politics, and geography will still impact the prosperity of some nations, but these countries will be the exception, not the rule.
Myth 2: Foreign aid is a big waste.
As a world, we don’t spend that much on foreign aid. The most generous donor nation, Norway, devotes a scant 3% to foreign aid. In the United States, the budget allocation is less than 1%. That 1% amounts to $30 billion of our taxpayers’ hard earned dollars. Hey, that’s a lot of money, even to a billionaire like Bill Gates.
Bill cites the amount of U.S. foreign aid spent on health initiatives like vaccines, bed netting to protect against mosquitoes, family planning, and life-saving pharmaceuticals. It totals $11 billion per year, or about $30 for every American. Of course it’s half of what we spend on farm subsidies each year and one sixtieth the amount budgeted for the military. When dealing with big numbers, it pays to put amounts in context.
What can $30 buy? We can vaccinate 120 kids against measles at $0.25 per shot.
Bill does some fancy math and figures out each $5,000 of foreign aid has saved one kid’s life. That’s a pretty good return on investment! If you’re thinking “hey, that’s just one more grubby mouth to feed”, stick around for the response to myth #3.
Sure there’s waste, fraud, and abuse. That’s an inevitable part of programs run by humans (instead of computers). I saw enough waste while working in state government to last me a lifetime. That’s not necessarily a reason to abolish state government altogether. If the problem is fraud, waste, and abuse and that forms a small part of the overall expenditures, then the target for reform should be the fraud, waste, and abuse, not the valuable programs in their entirety. Keep the baby, toss out the dirty bath water.
Bill gently lampoons Illinois as the poster child of fraud, waste, and corruption (hey, they are an easy target).
I’ve heard people calling on the government to shut down some aid program if one dollar of corruption is found. On the other hand, four of the past seven governors of Illinois have gone to prison for corruption, and to my knowledge no one has demanded that Illinois schools be shut down or its highways closed.
Well, I’m sure someone has demanded a complete cessation of all government in Illinois. But that’s beside the point. The proper remedy is to keep throwing the bad guys in prison and continue exposing the fraud publicly.
Bill makes short work of the “foreign aid breeds dependency” argument.
[The argument] misses all the countries that have graduated from being aid recipients, and focuses only on the most difficult remaining cases. Here is a quick list of former major recipients that have grown so much that they receive hardly any aid today: Botswana, Morocco, Brazil, Mexico, Chile, Costa Rica, Peru, Thailand, Mauritius, Singapore, and Malaysia. South Korea received enormous amounts of aid after the Korean War, and is now a net donor. China is also a net aid donor and funds a lot of science to help developing countries. India receives 0.09 percent of its GDP in aid, down from 1 percent in 1991.
Foreign aid hasn’t made every country prosperous and self sufficient. Yet. But the trend points toward that goal being met one day (perhaps within two decades as Bill suggests).
Getting back to the question of whether foreign aid is a worthwhile investment, Bill shares how health aid spending is a phenomenal investment.
When I look at how many fewer children are dying than 30 years ago, and how many people are living longer and healthier lives, I get quite optimistic about the future. The foundation worked with a group of eminent economists and global health experts to look at what’s possible in the years ahead. As they wrote last month in the medical journal The Lancet, with the right investments and changes in policies, by 2035, every country will have child-mortality rates that are as low as the rate in America or the U.K. in 1980.
To put it in perspective, a baby born in 1960 had an 18% chance of dying before celebrating their fifth birthday. Today, that figure has dropped to 5%. By 2035, only 1.6% of children won’t make it to age five. That’s about the same child mortality rates experienced in the United States in 1980. Pretty amazing progress within one lifetime (if it can be achieved). Of course the 2035 goal can only be reached with the right investments and changes in policies.
Myth 3: Saving lives leads to overpopulation
At first glance, it seems like a waste of money to save all of these lives in poor countries. We’re just creating more dependents with mouths to feed and bodies requiring medicines and vaccines.
In practice, the opposite is actually true. As child mortality rates drop in a given country, families choose to have fewer children. With high child mortality rates, families have to produce many kids to ensure decent odds of some children reaching adolescence and adulthood.
Melinda Gates (Bill’s wife), in writing the rebuttal to myth #3, explains:
Consider Thailand. Around 1960, child mortality started going down. Then, around 1970, after the government invested in a strong family planning program, birth rates started to drop. In the course of just two decades, Thai women went from having an average of six children to an average of two. Today, child mortality in Thailand is almost as low as it is in the United States, and Thai women have an average of 1.6 children.
This same trend has been observed as far back as the 18th century, when France experienced improvements in child mortality and saw 15 consecutive decades of lower birth rates. Over the intervening decades and centuries, Germany, Brazil, and many other countries all over the world have seen the same relationship between child mortality rates and birth rates.
As Hans Rosling, a professor at the Karolinska Institute in Sweden and one of my favorite data geeks, said, “The amount of children in the world today is probably the most there will be! We are entering into the age of the Peak Child!”
Countries see big boosts to productivity due to lower birth rates.
…[T]he virtuous cycle that starts with basic health and empowerment [of women’s reproductive options] ends not only with a better life for women and their families, but with significant economic growth at the country level. In fact, one reason for the so-called Asian economic miracle of the 1980s was the fact that fertility across Southeast Asia declined so rapidly. Experts call this phenomenon the demographic dividend. As fewer children die and fewer are born, the age structure of the population gradually changes…
Eventually, there’s a bulge of people in their prime working years. This means more of the population is in the workforce and generating economic growth. At the same time, since the number of young children is relatively smaller, the government and parents are able to invest more in each child’s education and health care, which can lead to more economic growth over the long term.
Fewer kids per family means parents and the government can spend more per kid to make them more productive and healthier. The focus switches to quality of children, not mere quantity. This intuitively makes sense. If you have seven kids, with the hope that at least four survive to adulthood, you may end up with seven mouths to feed and seven brains to educate. In contrast, if you have two kids and a 95-97% chance both kids will grow to adulthood, you only have two kids to feed and educate. Limited parental and governmental resources can be more sharply focused if there are fewer kids in the household.
Melinda’s comment sums up the answer to myth #3:
Saving lives doesn’t lead to overpopulation. In fact, it’s quite the opposite. Creating societies where people enjoy basic health, relative prosperity, fundamental equality, and access to contraceptives is the only way to secure a sustainable world. We will build a better future for everyone by giving people the freedom and the power to build a better future for themselves and their families.
Parting thoughts
Bill and Melinda make a compelling case for supporting foreign aid. There are real results from decades of foreign aid. More productive economies and real growth in income per person. Lower child mortality rates. Huge leaps forward in eradicating or reducing preventable illnesses and disease.
But hey, sometimes numbers lie. Statistics can be manipulated to prove many different points. One big piece of evidence to support Bill and Melinda’s thesis as presented in their 2014 Letter? The $26 billion they have donated to their Gates Foundation (which in turn funds other foreign aid non-profits). Warren Buffett heard about Bill and Melinda’s little Foundation and he has been donating billions each year as well. He’s a pretty clever guy, and very focused on efficiency and effectiveness when he deploys capital. I imagine the same can be said of his philanthropic activities.
Time is a precious resource and the stakes are high. In Bill and Melinda’s 2014 Letter, they suggest that some pretty lofty goals can be achieved within two decades (bringing virtually all countries to “middle income” status and reducing child mortality to 1.6%, to name two such lofty goals). Only time will tell whether these goals come to fruition. One thing is certain: without continued focus on improving conditions through foreign aid, these goals won’t be achieved.
In terms of political philosophy, I find myself in favor of the concept of “equality of opportunity” and less concerned with “equality of outcome”. There will always be differences in outcome based on luck and individual effort. But without a little extra help to provide a somewhat even starting point, there is no way some countries can ever climb out of destitution and poverty. It would be a shame if the next Bill Gates never had the chance to create something valuable for the world just because he was born in a place that provided zero opportunity.
If you want to read the full 2014 letter, please do so here: 2014 Gates Foundation Annual Letter
Bill and Melinda, thanks for your eloquent rebuttal to these three myths on aid for poor countries.
Bonus!!: Cool interview from The Economist with Bill Gates on this same topic. Choice quote:
The poor are not getting poorer!
Updated 12/2/2014 to correct the text that implied farm subsidies were twice the $30 billion spent on foreign aid. The farm subsidies (around $20 billion per year, not counting nutrition-related spending like free school lunches, SNAP/food stamps, and WIC) are roughly double the $11 billion spent on foreign aid health initiatives. Thanks to commenter “Daniel” for pointing out this inaccuracy in the originally published article.
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There’s some great TED talks that run through the stats and show the progress that we’ve made on a global scale. Progress moves slow and sometimes you don’t even realize it’s happening. We’ve made great strides so far, but that doesn’t mean there’s not more work to be done. It’s similar to Louis CK’s stand up routine about “Everything’s amazing and nobody’s happy”.
I know what you mean. You look at so many of the poor countries and they seem very static. It’s like a slowly rising tide. There are ebbs and flows, but over time things are slowly improving.
I was thinking of that exact Louis CK line when I heard Bill Gates say “The poor are not getting poorer!”. They might still be poor but they are way less poor than they were 20, 30, 40 years ago.
Yes this reminds me of a YouTube video about the move away from high child mortality rates and how it correlates with a lower birth rate. Some Scandinavian guy if I remember but haven’t got the link now. It’s totally counter intuitive at first but when you think about it, it makes perfect logical sense.
The only thing that slightly worries me is a few studies that have come out recently that are saying a lower birth rate is actually damaging growth yet again. It seems we need to hit a happy medium once countries become developed. Again I have no sources for that… Pretty useless on that front today. It’s Friday so give me a break 🙂
This data is great to hear and very heartening! Hopefully situations will continue to improve as Bill suggests they will!
Thanks for this post, Justin. One of the better ones I’ve read lately, and will be sharing it. The perspective is welcome, as I often get caught up in my own day to day stuff, which is nothing to worry about, ever, really.
I agree. It’s refreshing to get some perspective, both to our personal lives but also to the world in general. I love the optimism in Bill Gates letter. Thanks for sharing this, Justin!
Yeah, it puts our relative wealth here in the US in perspective. A billion people are still in pretty rough poverty today.
I am glad my parents (of 8 kids) didn’t listen to this quack. People are an asset, not a liability. Imagine if we missed out on the next Einstein due to a family in India having 2 kids instead of 5?
Your parents (presumably) chose to have eight kids and are plenty happy with the choice. Here in the U.S. it’s still easy enough to have a large family and get by just fine.
In many parts of the world, there is no choice for women (or men!) due to lack of birth control or cultural/governmental/religious prohibitions against family planning. And with high child mortality rates, families must have extra kids to ensure a certain number will survive. That’s where the problem comes in – the choice to have exactly the family you want (whether it is zero kids, 2, 5, or 8) is taken away due to lack of options or high child mortality rates. Ensuring kids get proper nutrition and a good education is a big enough struggle in poor countries with just a few kids. Having 7 or 8 kids means sacrifices somewhere (or everywhere).
I see your point, and I agree kids are awesome (I have 3!). However I couldn’t imagine having 7 or 8 kids and trying to provide for them in the same manner I do my own kids here in the US. Especially if I was a subsistence farmer or even a white collar worker in one of the poorer countries.
Well done Justin for such a calm and measured reply. And Wow… What a ridiculous comment.
First of all, you are taking your one, tiny, insular experience of size of family and using that to attempt to override the logic of enormous studies of millions of people. And secondly by your final piece of logic everyone should have as many children as physically possible in case they manage to produce a genius?! The world would be completely, with all due respect, fucked, if everyone took that attitude.
I see his point, and think it would be wonderful for everyone on earth who wants 8 kids to be able to have 8 kids. In my household, we could comfortably raise 8 kids. However we have significant financial resources and are probably in the top 10-20% or so for households here in the US (looking at income and wealth). And the US is the 13th richest country in the world (yay #13!). For families in developing countries with more limited resources, I don’t know how they can raise that many kids (assuming raise kids = proper education and good nutrition and medical care at a minimum).
True story.. I lost a friend permanently a while back because she always talked about her kids (had to be of her loins, adoption was terrible because you never knew what you were going to get..blah..blah..blah). I would always listen and try and hold my anger in check, but l just had to let her have it one day. I reminded her that she wasn’t the smartest cookie and neither was her fiancée. I told her l was positive the world could do without her spawn that was going to become the next Einstein. I am not even sure why everyone thinks their kids are geniuses.
I can see what you mean about people choosing to have less kids. I am one of 12, but my siblings have like 2-3 apiece. Now their kids are stopping at 1. They want to have their lives too. We are always going to have the corrupt governments etc..but people are making headways. Nice article Justin. Sums it up nicely. Bill and Melinda Gates are doing fantastic work, and let’s not forget that rich as they are, they have 2 kids. So does Warren Buffett right?
Here is the basic problem with this type of thinking: We are defining exactly what is and isn’t worth living. Just because someone doesn’t receive proper nutrition/education/medical care, doesn’t mean their lives are meaningless or devoid of life. The world has developed for tens of thousands of years without first rate medical care/education/nutrition. One standard of living doesn’t need to apply to everyone. Life isn’t meaningless just because you might fit into the “substandard” category. Life is beautiful and needs to be encouraged.
Truthfully, I think the trend of rich countries to have fewer and few kids shows a moral decline within our culture. I think the source of this trend is that people become a bit self absorbed,spoiled, and materialistic. Examples (“how on earth could I afford my lifestyle, with x kids”, “how could I retire at age 35 with x kids”, “I won’t have time for all my hobby’s activities, with x kids”,”how will I give my children everything, with x kids”). I know the number of kids isn’t the same for everyone, but the overall trend to less kids is not something to be celebrated, especially in places that have more than enough wealth for more.
Personally, I am young and only have one kid thus far. It has been one of the biggest blessings of my life (right up there with the wife). My wife and I both came from big families and are very excited to start and build our own. I honestly don’t know why people shun away from nurturing bigger families. Growing up in a large family of 8 kids was an absolute blast for me. Stuff was always happening and the love shared between so many people is something I can’t really describe. Each one of my brothers and sisters has something unique and special to add to the mess that is our family.
“I honestly don’t know why people shun away from nurturing bigger families.” I think the key word here is “nurturing”. In the US and most developed countries, it isn’t that hard to nurture a big family. Our social welfare states make it easy. The vast majority of kids enjoy access to healthcare, food and education (even here in the US!).
That isn’t true in the poorer countries. How can you nurture your kids when you can’t provide food for them? Can’t immunize them against common childhood diseases? Can’t provide clean drinking water? Can’t send them to school?
It’s a tricky question in the poorer countries. Is it better to have eight kids that can “enjoy” a really crappy standard of living (limited food, frequent hunger and malnutrition, lots of illnesses and suffering, no education and therefore limited opportunities) or 2-3 kids that can be fed, immunized, educated, and if sick, treated? You and I might have different answers to that question. And that’s okay. All I’m saying is “hey, let’s let the people in the actual situation decide for themselves!”. If some people want to have eight kids, go for it. If some choose to have just a few kids, great! Both sets of parents will be content.
Since fertility rates decrease when the material standards of living increase and child mortality decreases, I would say the people in these poor countries, when confronted with this major life choice of “how many children to have”, are finding the choice to have fewer children appealing for many (completely moral) reasons. You suggest we shouldn’t impose our “developed nation” standards on everyone around the world. I’m not suggesting we define that for everyone across the globe. Let’s let them decide for themselves how many kids they want to have.
I am from a family of five kids. Yes, I love being from a big family. Along with a few kids from the neighborhood we were able to have a sports team and we had a blast, loving life… in America. My family moved here to America when I was seven and we are very grateful. I can tell you all the childhood happiness here in America (even though we were very poor by American standards – seven people sharing a two bedroom house).
However, prior to coming to America I don’t remember much. I was born in the jungles of Thailand and then we moved around to a few refugee camps. My family was poor, I was constantly ill and on my death bed a few times which is why I can’t remember much of my early years in Thailand (being young is also a factor of not remembering much). My parents told me I used to sit outside a local village shop and hoped the owner would give me a piece of candy. Apparently, that was my joy. I only remember the traumatic events and one or two happy events in my early life. I remember going fishing and hooking a kid’s arm with a rusted hook, wishing my mom was with me more at the hospital (I was there for a few weeks), my dad carrying me from the hospital (can’t afford vehicle), and crying because some bully took my rubber bands (my favorite and only toy). The happy time I remember was when an older white man came to the village and passed out bananas and other food for the locals – foreign aid. I wouldn’t consider constantly being sick and almost dying from malnourishment a happy life. I barely remember that life.
What is a “happy life”? Seeing your children starving and dying, feeling helpless and knowing if you just had the money your child can be saved? However, I am grateful my parents had me but only because I am now in America living a ‘healthy’ life.
My family is fortunate (and an outlier) since everyone survived. My aunt and her family lost two or three children (or more, we can’t remember) from infant mortality and malnourishment. My mom and dad lost a few siblings from the same fate. They are all from a big family (8+ kids). All of our family and relatives grew up in rural Cambodia and rural Thailand (not Bangkok, Phuket, or Chang Mai) and continued to have kids until they couldn’t or until they moved to America where they had a choice to stop. They love all their kids. However, there was a lot of suffering and grieving over a lack of simple necessities which we (even the poor) in the developed countries take for granted every day.
Wow! Is there anything Bill Gates can’t do? I’ve always been a “personal economy” guy. I completely understand differing opportunities, but am frequently encouraged and reassured that positive movement is possible by studies like this and individual stories of success.
You did a better job than the Houston Chronicle on providing a useful summary of the annual letter, however I must take a bit of issue with what I think is misinformation. I would love to believe that emerging economies are doing well, and on the road to becoming first world, but there is so much corruption and funneling of newly minted wealth that I wonder if Gates is being transparent in what he sees. I am nowhere near as worldly, but the Philippines, Russia, and India seem to be struggling just as much as the 1990’s. I am encouraged by Myth #3, this is the saving grace to the Gates foundation, that rising incomes do actually lead to lower birthrates. If the parents can live an exciting, fulfilling, rewarding life due to making a trade-off of less children needed to ensure their future for a better present, it’s easy for people to choose. But myth #1 is questionable, and myth #2 still not quite so cut and dry… Anyway, I appreciate people that absorb and evaluate what the Gates and Buffet philanthropies try to achieve. They need a feedback loop from the educated and fiscally / temporally wealthy peers.
First off, welcome to Root of Good! I’m glad I’m just a little better than the Houston Chronicle. 🙂
In regards to your comment, where is the misinformation? I didn’t double-check the facts presented in the letter, but just to take an example – India. Since 1960, real per person income has quadrupled (to $3,800). Today, the Philippines has an even higher per person income than India. I would guess that many of the gains in per person income have gone to the emerging middle class, but the fact that the middle class emerged at all is a success. Positive change has to start somewhere.
Some countries do better than others, and there will always be hiccups on the path to economic growth. But overall, the picture is pretty clear. The poor countries have mostly grown wealthier and more prosperous within a lifetime.
As for myth #2, foreign aid is a waste – yes, corruption exists. One of the interesting things about the Gates Foundation is that they actively research and analyze how effective different approaches to foreign aid are.
With more technology, it gets easier to run audits on all these different programs that provide aid. Corruption is just one inefficiency, and corruption isn’t limited to foreign aid (it’s in our own government). The problem is the corruption (which should be addressed), not the programs themselves.
When you look at the improvements to quality of life, number of lives saved, and improvements to economies, it’s hard to argue things aren’t getting better. I can see the “correlation doesn’t equal causation” argument however. It could be that foreign aid spending has had a muted impact on health and education and overall economic growth.
stepping away from the annual letter, this was something I came across a while ago: http://www.econtalk.org/archives/2012/03/acemoglu_on_why.html
I’m an amicable skeptic, but 1960’s America could also look poor to modern day Americans. I take my hat off to Gates and Buffet for their philanthropy, they are like the Lewis and Clark of our age, inventing their own tools to optimize progress, but it is also our job as skeptics to provide criticism. Thanks for taking this on, I appreciate hard work, and I look forward to what is possible if work becomes a temporary condition and philanthropy can dominate, for an even larger part of our lives.
Enjoyed the post. I am curious as to the source of the data supporting your comment that the $30B spent on aid is half of what is spent on farm subsidies each year?
Nothing I have found supports this. In fact, the CBO estimates the farm portion of the “farm bill” will cost an average of $20B over the next 10 years.
http://agriculture.house.gov/sites/republicans.agriculture.house.gov/files/documents/CBO_AgriculturalAct2014.pdf
You’re right, Daniel, and thanks for pointing that out. I was relying on the letter from Bill Gates and it looks like I misinterpreted the part that said farm spending is double what we spend on foreign aid. Farm spending ($20 billion) is actually almost double what we spend on foreign aid for healthcare initiatives ($11 billion). I corrected the text of the article to reflect this.
Although depending on how you count “agricultural subsidies”, I bet they might rise to the $30 billion figure or more. Free and reduced price school lunches that force kids to consume milk whether they want milk or like milk is a good example of a subsidy for agricultural producers. Absent the tens of millions of cartons of milk consumed daily in our nation’s public schools, there would be less demand for milk. Just an example. Your point stands though, that direct farm subsidies are less than total foreign aid.