Who does more for development: bankers or ‘aid workers’?

An interesting debate on Radio 4’s Today Programme this morning about who can do the most good in tackling poverty: aid workers or bankers. The argument, put forward by Will Crouch, a DPhil student at Oxford University’s Uehiro Centre for Practical Ethics, is (in its most simplistic form) that high earners can do more good, because through private philanthropy their earnings can achieve more good (saving lives, improving education, etc) than can the work of an individual aid worker. Leaving aside the rather worrying vagueness of the term ‘aid worker’ (also described as ‘charity worker’ and ‘charity sector’ in the Today Programme’s piece) is there anything in this?

Crouch has written an interesting paper on this, but as he requests for it not to be cited without permission, I’m basing this on his interview with the BBC, and Oxford University’s press release, neither of which do justice to the ideas, so do have a look at the paper.

Speaking to the BBC, Crouch said:

“The direct benefit a single aid worker can produce is limited, whereas the philanthropic banker’s donations might indirectly help 10 times as many people.”

It seems to me that there are a few obvious criticisms of the logic behind this argument.

Firstly, we have to look at the context in which the high earnings that underpin the philanthropy were made. To use the example of the banker: whilst bank profits are not necessarily a zero sum game – the gain of the bank being the inevitable loss to an individual or community – the growth and profits of the banking sector (and through this the high earnings to individuals in that sector) have not benefited all, and have been to the cost of some. This might be direct costs (those encouraged to borrow too much and unable to pay back, or deliberate fraud by banks in encouraging debt); or indirect (the closure of sure start centres, libraries, lowered inflation-linked increases in benefits, etc, following the economic crisis brought about in large part by the banking sector in pursuit of its high profits). If you want an example whereby economic crisis is literally endangering lives, look to the crisis in the Global Fund right now, where ongoing programmes look increasingly likely to close due to the failure of donors, experiencing their own financial pressures, to deliver on commitments.

Secondly, why is there an assumption that philanthropy itself inherently has a positive impact? It will if it is put to good use through effective programmes, but one of the characteristics of philanthropy is that there are fewer control and accountability mechanisms over dispersal – it is at the discretion of the owner of that wealth. The history of private philanthropy has shown that the pursuit of an individual’s ideals, beliefs and convictions about the way the world works through philanthropic giving has had both disastrous and positive outcomes. The Gates Foundation may be a particularly successful model (although it is not unproblematic), but it is not necessarily typical of what philanthropy has achieved. Moreover, what has made Gates successful is his willingness, his insistence even, that those engaged in work and research in the areas he funds (many of whom would fall under the category of ‘aid workers’) are central in deciding how and where the money is spent. Gates provides the money, and the overall direction to which his philanthropy is guided, but the success of the institution rests on so much more than that. It is not Gates’ alone to claim, and nor (I suspect) would he try to do so.

Thirdly, Crouch’s argument that because jobs in the aid sector are in demand they are easily replaceable (so that the individual’s ‘difference’ would simply be made by someone else, not adding anything in value), whereas the philanthropic-minded high earning banker is not so replaceable, doesn’t quite stack up. Not all aid workers are equally successful in the impact they make. They are not automated workers, implementing schemes without thought. The difference they make reflects not just their individual work (which, in theory, might be more replaceable), but their knowledge, their skills, their experience, their understanding of the particular contexts in which they are operating, their commitment to shared values and principles (which is surely not so easily replaceable). The argument ultimately rests on a deeply flawed understanding of development processes, one which focuses more on the money than on the type and impact of the interventions themselves.

This all reminds me of Oscar Wilde’s ‘The Soul of Man’. Private charity, he writes, ‘is not a solution: it is an aggravation of the difficulty’:

“It is immoral to use private property in order to alleviate the horrible evils that result from the institution of private property. It is both immoral and unfair.”

This is not the place for a dissection of philanthropy itself, but a relevant thought nonetheless to this debate.

The paper from which the argument is drawn is not, to be fair, a reflection on development itself, but an interesting argument in challenging commonly held notions of morality and ethics in relation to jobs. And it does present some interesting ideas. But as a commentary on the value of philanthropy, or the value of ‘aid’ sector interventions, it doesn’t quite stack up.

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About Mike Jennings

I am a Senior Lecturer in Development Studies at the School of Oriental and African Studies (SOAS), London. My work is on the history and politics of international development in sub-Saharan Africa. Research areas include: - The history of development in Africa, from the late nineteenth century to the current day - Politics of East Africa (Kenya, Tanzania and Uganda) - the role of non-state providers (NGOs, FBOs and self-help groups) in welfare service provision - Social aspects of health, including HIV and AIDS, and malaria
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One Response to Who does more for development: bankers or ‘aid workers’?

  1. Ben Todd says:

    Dear Mike,

    I can’t do full justice to your criticisms of Will’s arguments, but I’ve got a couple of points that you might find interesting.

    “we have to look at the context in which the high earnings that underpin the philanthropy were made”
    First, it’s worth pointing out that Will’s argument applies to any high-earning job, not just banking. Although banking, in some cases, might harm the community, it’s doubtful that all high earning jobs (in which you could earn enough pay to pay for more than one 3rd sector worker) are harmful. It also applies to any good cause you could potentially take work in order to advance, not just being an aid worker.

    Second, even if banking jobs are harmful, it might still be the case that becoming a banker is not harmful. That’s because if you don’t become a banker, someone else will (since it’s highly competitive). Assuming your replacement would cause roughly as much harm as you would, then the net effect of you becoming a banker is zero. (There are lots and lots of complications to this argument, but it seems to be roughly right).

    “why is there an assumption that philanthropy itself inherently has a positive impact?”
    Will and I don’t believe that philanthropy has an inherently positive impact. In contrast, we believe it’s vital to do careful research in the best charities, due to their huge differences in effectiveness. Will points out that his argument only holds if the philanthropist funds a charity that is roughly equal or more effective than the one they would have worked for.

    “Not all aid workers are equally successful in the impact they make.”
    This is obviously true. But the point of the argument is that since a high earner can earn considerably more money than they would have earned as a 3rd sector worker, they can afford to pay for someone else (or several people) who is considerably better qualified than they are to take the 3rd sector job. So, unless the philanthropist would have been an exceptionally good aid worker, it seems they can have more impact through philanthropy. This holds whatever the character of the work carried out by aid workers.

    Meanwhile, if you don’t take the aid worker job, someone else would take the job instead, since they are highly competitive. Of course you’re right that this person will be different from yourself. The most likely thing is that they’ll be slightly less effective than you would have been (since you could have beaten them in the applications process). So, by becoming an aid worker, you have a small positive effect (the difference between what you do and what your replacement would have done), but it’s much less than it first seems.

    “Private charity…is not a solution”
    Of course we agree. The argument is not about complete solutions to the world’s problems, it about what we, right now, can best do to help other people.

    All the best,

    Ben
    (80000hours.org MD)

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