Category: Current Affairs

Here is more Scott Alexander on aid and overhead.

First, on overhead Scott is still promulgating various confusions, for instance making the simple mistake of mixing up “Mercatus” and “Emergent Ventures.”

When it comes to overhead (rather than aid), the substantive point in question is whether the affiliated NGOs, and also the various government aid bureaucracies, have significant excess overhead, and there is a hefty body of theory and evidence from public choice economics suggesting that is the case.  Scott seems unwilling to just flat out acknowledge this, instead insisting there is no magic path to much lower overhead.  Cutting overhead expenditures is that magic path, and plenty of institutions both private and public have done it, especially when forced to.

Scott also holds the unusual view that overhead as measured on a 990 is a relevant metric.  Typically not.  A lot of the actual noxious overhead shows up as program expenditures.  A large number of wasteful, poorly run non-profits can get their 990 numbers down to normal levels without engaging in outright lying.

On aid more generally, Scott would avoid a lot of trouble and misunderstandings (much of which still persist) and unproductive anger if he simply would use the MR search function to read my previous posts (and other writings) on a topic.  He does not cite or link to those works.  (Especially after 22 years of posts, I do not feel the need to each time repeat all views and clarifications when it is all so accessible.)  The result is that he has created a Jerry Mahoney-style “dialog,” pretended I am in it, and then expressed a mix of anger and bewilderment at my supposed views and supposed lack of clarifications.

It is not that I expect anybody, much less someone as busy as Scott, to read everything I have written on a topic.  But if you have not, it is better to write on “aid and overhead,” rather than “Tyler Cowen on aid and overhead.”  (Imagine if instead you were writing on “Ricardo and rent.”)  That is typically the more constructive and more relevant approach anyway.  Instead, Scott has thrown the biggest fit I have ever seen him throw over a single sentence from me that was not clear enough (and I readily admit it was not clear enough in stand alone form), but made clear elsewhere.

On rhetoric, call me old-fashioned, but if you publicly refer to a class of people as scum, and express a hope that they burn in hell, you should retract those words and also think through why you might have been led to that point.  I am not persuaded by Scott’s sundry observations to the contrary, such as noting that the president is (sort of) protected by the Secret Service.  Scott cites my use of the term “supervillains,” but in fact (as Cremiaux repeatedly retweets) that was part of a desire not to cancel people with differing views, not a desire that they burn in hell.  It was expressly stated as a plea for tolerance.

Scott also writes:

This has been a general pattern in debates with Tyler. I will criticize some very specific point he made, and he’ll challenge whether I am important enough to have standing to debate him. “Oh, have you been to 570 different countries? Have you eaten a burrito prepared by an Ethiopian camel farmer with under-recognized talent? Have you read 800 million books, then made a post about each one consisting of a randomly selected paragraph followed by the words ‘this really makes you think, for those of you paying attention’?”

Scott does not link to my post here, which was extremely polite and respectful.  Nor does he quote that post (or any other), as it would not support his assertions.  Instead he makes up words for me and puts them in quotation marks.  I have never criticized Scott for not reading enough books, to cite another misrepresentation.  (I do not pretend to know, but I am under the impression he reads a lot of books!?).  I have linked to him and praised his analysis repeatedly.  Nor have I challenged whether he is “important enough” to “debate.”  I am well known for having a large number of interchanges with people who are extremely uncredentialed.  Furthermore, earlier I invited Scott to do a CWT with me, for me a mark of real interest and respect.  He declined.

At least in this last passage it is evident that the real problem is, at least for the moment, in Scott’s head.

Scott Alexander claims “I often disagree with Marginal Revolution, but their post today made me a new level of angry…”  The topic is US AID.

I think when Scott is angry (much less “a new level of angry”) he does not think straight.  First, someone should tell him that Emergent Ventures overhead is typically two percent, five percent for dealing with screwier banking systems.  (That is one reason why I won the recent Time magazine award for innovation in philanthropy.)  I am well aware there are various ways of calculating overhead, but there are now more than one thousand Emergent Ventures winners, and all of them can testify to how radically stripped-down the process is.

This sentence is also wildly off:

But it [o3] estimated that if the federal government gives a dollar of research funding to Mercatus, about 40% would go to combined university and Mercatus overhead – higher than the average USAID charity.

For one thing, Scott could have simply asked me how it works.  It is also the case that we do not receive or seek federal government research funding, but if we did the overhead going to GMU would be zero (are you listening o3?).  Depending on the exact source of the funding, very likely we would make a lot of money on such grants because we would receive significant “overhead” payments for what would not be actual overhead expenses.  That is one big problem with the system, I might add.  We at Mercatus have made the judgment that we do not wish to become institutionally/financially addicted to such overhead…and I wish more non-profits would do the same.

Scott takes me to be endorsing Rubio’s claim that the third-party NGOs simply pocket the money.  In reality my fact check with o3 found (correctly) that the money was “channelled through” the NGOs, not pocketed.  Scott lumps my claim together with Rubio’s as if we were saying the same thing.  My very next words (“I do understand that not all third party allocations are wasteful…”) show a clear understanding that the money is channeled, not pocketed, and my earlier and longer post on US AID makes that clearer yet at greater length.  Scott is simply misrepresenting me here.

There was an earlier time when US AID did much less channeling through American third party NGOs.  That was in my view a better regime, though of course Congress wanted to spend more money on Americans, and furthermore parts of the Republican Party, often in the executive branch, viewed the NGO alternative as more flexible and also more market-friendly.  That created a small number of triumphs, such as PEPFAR, and a lot of waste, and I am happy to clear away much of that waste.  Doing so also will improve aid decision-making in the future.  It is right to believe that US AID can operate on another basis, and also right to wish to stop a system that allows spending on ostensible “democracy promotion.”  I find it a useful discipline to have an initial approach to the problem that starts with this question “if you can’t find poverty-fighting domestic institutions in a country to fund directly, with sufficient trust, perhaps you should be giving aid elsewhere.”  I also find it plausible that doing a lot of initial and pretty radical clearing away of NGO relations is the best way to get there, though I agree that point is debatable.

When I read from the well-informed Charlie Robertson that “My data suggests US AID flows in 2024 were equivalent to: 93% of Somalia’s government revenues, 61% in Sudan, just over 50% in South Sudan and Yemen” I get pretty nervous.  Don’t you?  I do see this can be argued either way (can we really countenance immediate collapse?), but I am hardly shocked or outraged by the skeptical attitude of the American people here.  I say spend the money where it can be put to good use, and also where those uses are politically sustainable.  I do understand that this will reallocate aid toward what are on the whole wealthier countries.  In those places you still can do a great deal of good for poorer people.

Scott writes: “When Trump and Rubio try to tar them [US AID] as grifters in order to make it slightly easier to redistribute their Congress-earmarked money to kleptocrats and billionaire cronies, this goes beyond normal political lying into the sort of thing that makes you the scum of the earth, the sort of person for whom even an all-merciful God could not restrain Himself from creating Hell.”  Is that how the rationalist community should be presenting itself?  In a time when innocent Americans are gunned down in the streets for their (ostensible) political views, and political assassination attempts seem to be rising, and there even has been a rationalist murder cult running around, does this show a morally responsible and clear thinking approach to the post that was published?

More generally, I wonder if Scott ever has dealt with US AID or other multilaterals, or the world of NGOs, much of which surrounds Washington DC.  I have lived in this milieu for almost forty years, and sometimes worked in it, from various sides including contractor.  A lot of people have the common sense to realize that these institutions are pretty wasteful (not closedly tied to measured overhead btw), too oriented toward their own internal audiences, and also that the NGOs (as recipients, not donors) “capture” US AID to some extent.  As an additional “am I understanding this issue correctly?” check, has Scott actually spoken to anyone involved in this process on the Trump administration side?

There are a bunch of other things wrong with Scott’s discussion of overhead, but it is not worth going through them all.

I am all for keeping the very good public health programs, and yes I do know they involve NGO partners, and jettisoning a lot of the other accretions.  That is the true humanitarian attitude, and it is time to recognize it as such.  Better rhetoric, better thinking, and less anger are needed to get us there.  It is now time for Scott to return to his usual high standards of argumentation and evidence.

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