What should South Sudan do? Banerjee and Duflo weigh in (and I dissent)

David Leonhardt asks how the new government of South Sudan can best improve the lives of their citizens. (h/t MR and Ezra Klein)

Duflo:

First of all, I would try to convince them that a key priority would be to invest enough money and talent in running good quality social services for the poor, including free access to good schools, preventive medical care, and hospitals…

Second …I would like to advise them to always keep some margin to experiment, in order to find the best programs to reach those goals.

Banerjee:

…A small universal cash grant to everyone over 12, based on biometric identification. This guarantees that no one has to face the humiliation of being totally indigent, and from our evidence, makes people more productive as well. Making it universal is important, so that they do not attempt to identify the poor (which is very difficult to do effectively in poor countries).

Second, a free universal health insurance policy that covers catastrophic health events, which allows people to go to private or public hospitals. Catastrophic health shocks do enormous damage to families both economically and otherwise, and are easy to insure, because nobody gets them on purpose.

I’m going to be provocative and say: these would be my last priorities for the new government.

If Leonhardt had asked, “How best to relieve poverty today?” Banerjee and Duflo might be exactly right–there are no better poverty experts alive. But South Sudan is no Uganda or Bihar. It is an entirely different animal. I would follow their recommendations, but in 2021 rather than 2011.

Today, South Sudan is a state in name only. The long term welfare of its citizens means sustained stability and security and order. Without it, all the anti-poverty impacts, no matter how great, will evaporate in months.

In fact, huge and expensive anti-poverty programs could be counter-productive. Trying to build a 21st century welfare state (or even a 19th century welfare state) in a new and fragile nation, with virtually no legislative or bureaucratic capacity, may be a burden too great. Ignore for a moment whether vast aid flows would distort or corrupt, since those aid flows will happen anyways. I think an anti-poverty push would be a distraction, possibly an existential one.

States, like people, have attention problems, only more extreme. The new government may only accomplish one or two big things in their first five years. If, fifty years hence, we want the poor of South Sudan to prosper, paradoxically the last thing we need to do is push for the Millennium Development Goals today.

I know too little about Sudanese politics to give specific recommendations, but here’s a sample of suggestions based on what I think I know:

1. Build compacts, possibly unequal and unsavory ones, with warlords and other big men, giving them a stake in continued peace, even if it means they control crucial ministries or development organs.

2. But for goodness sake try not to give up the ministries or development organs. There are non-pecuniary ways to buy people off. And spread it out so you get petty barons rather than oligarchs. They’ll be easier to deal with in 20 years when you have the strength.

3. Next, give every incentive for elites, especially the ones apt to war, to invest in fixed assets whose value depends on stability and growth. Make them entrepreneurs. Oil rigs don’t count. Property in Juba does. So do plantations and small factories, even if they need subsidies to operate at first. This is hard, and will require attention and dedication.

4. Aim for minimal corruption in twenty years, not two.

5. Create a minimally competent police force, one that is less criminal than the criminals. And a court system, with particular attention to the places where ethnic groups repeatedly clash over land or rights or respect. Target programs to these hotspots to buy some measure of content.

6. Train and educate the military like the bejeezus, and at all costs do not let it slip into factions.

7. Roads, roads, roads. Not only are they good for growth, they are good for exerting state control and building a sense of nation.

With these accomplished, I’d next aim for economic growth. Which may or may not involve pro-poor transfers. Given the choice between three big resource firms and 1000 microenterprises, I’d choose the firms. (And remember: I work on fostering post-conflict microenterprises for a living.)

You may argue: it’s not a zero sum game, we could do both. I say you’re partly right: we can do a little poverty reduction, but it’s a zero-point-one sum game, and there are some hard trade-offs to be made this decade.

You may argue: but relieving poverty reduces the incentives for people to revolt! I say balderdash. This was a plausible but naive theory of conflict that has turned out to be mostly wrong. Poverty is a third or fourth or fifth order factor in a decision to revolt.

You may argue many more things, and I am eager to hear them. Dissents from my dissent?