Duncan Green puts the bailout in an international perspective:
To put the proposed Wall Street bailout into perspective. $700bn:
- Would clear the accumulated debt of the 49 poorest countries in the world ($375bn) twice over
- Is almost 5 times the annual amount of extra aid needed to achieve all the Millennium Development Goals on poverty, health, education etc ($150bn a year)
- Is about 7 years of current global aid levels ($104bn in 2007)
- Is enough to eradicate all world poverty for over two years (UNDP calculates it would take $300bn to get the entire world population over the $1 a day poverty line).
On the other hand it’s:
- only a quarter of the cost of the Iraq war ($3 trillion on Joseph Stiglitz’ calculation )
- a half of annual global military spending ($1339 bn)
I’d also like to note that it would buy me 20 million research assistants and allow me to fill the AER and APSR with articles until the next Ice Age.
It’s just a thought.
Meanwhile, the World Bank’s AfricaCan blog charts the impact of the crisis on Africa. Dani Rodrik recently requested that the new Growth Blog tackle the same question for developing countries more generally. Let me add my vote to Dani’s.
10 Responses
i am appalled to see the extent of insensitivity towards the third world as reflected in the comments here… is this a representative sample of usa econ grad population?
it is ironic how the belief in market mechnism that underlie some of the comments (such as in context of adverse selection, inflation etc) is not even tad unsettled at the face of this financial crisis…
further, guess it was just a way of puting into perspective the amount of money concerned… blattman never even mentions the manner of spending that would be necessary… because he is not actually suggesting an alternative way of spending… he is just making apparent the broken window fallacy (see bastiat)…
and get a life people… aid is a huge oppressive thing… it is the wonderful aid-donors who put into place the ‘tin-pot dictators’ and make sure that ‘megaprojects’ are taken up so that the technologies and hardwares are bought from the donor’s own country… just another way of subsidizing the firms that donated the greater shares in the presidential race…
Would clear the accumulated debt of the 49 poorest countries in the world ($375bn) twice over
So the tin-pot dictators that run them can quickly borrow the countries back into ruin to enrich themselves.
Is almost 5 times the annual amount of extra aid needed to achieve all the Millennium Development Goals on poverty, health, education etc ($150bn a year)
Wow. Five whole years. Unfortunately bailouts like this only seem to happen… once… in the history of the Western economy. I guess we can’t really make it part of our budget planning, then.
Is about 7 years of current global aid levels ($104bn in 2007)
Of course, if the Western economy were to collapse (the alternative, i.e.) there would be no aid for poor countries at all. Ever.
Is enough to eradicate all world poverty for over two years (UNDP calculates it would take $300bn to get the entire world population over the $1 a day poverty line).
You know what they say – “Give a man a fish and he’ll eat for a day. Dump $700B worth of fish onto him and the effect of inflation would ruin everyone around him, to say nothing of the smell of rotting fish.”
You could buy everybody in the world a bicycle — and most people would have two.
Math is here:
http://mikekr.blogspot.com/search/label/World%20Bicycle%20Relief
This would have these advantages:
In the poorest countries (e.g. in Africa) transportation would improve.
In the richest countries, obesity would go down, and urban design would be changed forever — or maybe scrap metal dealers would get a bonanza.
To quote the author: “On the other hand it’s:
* only a quarter of the cost of the Iraq war ($3 trillion on Joseph Stiglitz’ calculation )
* a half of annual global military spending ($1339 bn)”
Instead of focusing on defense, which by the way is one of the few items specified in the constitution as a role of government…
You could focus on the money sent to Health and Human Services or the social security administration, both of them are larger than money to the defense department.
The money spent on the Iraq war is 1/13th the money spent on entitlement programs (Social Security, Medicare, Medicaid, unemployement, etc…)
These entitlement programs make up nearly 50% of all federal budget expenses. Stop blaming defense for the shortfall.
And I could eat a whole lot of poutine.
With 700 billion I might be able to bribe a decent PhD program to take me.
A similiar post you might enjoy:
http://www.worldchanging.com/archives/008797.html
Allow a poor academic his fantasies.
Truly, the biggest impediment to you filling the AER and APSR with articles is the availability of 20 million research assistants?
I must say, I’m impressed.
or maybe it would only result in greater adverse selection in the aid market, resulting in even more overpriced and underperforming megaprojects, and richer bureaucrats and consultants.
i put a higher probability on this outcome than i do on eradicating poverty for two years.