On Oct. 17, 1989, a major earthquake with a magnitude of 7.0 struck the Bay Area in Northern California. Sixty-three people were killed. This week, a major earthquake, also measuring a magnitude of 7.0, struck near Port-au-Prince, Haiti. The Red Cross estimates that between 45,000 and 50,000 people have died.<\/p>\n
This is not a natural disaster story. This is a poverty story. It\u2019s a story about poorly constructed buildings, bad infrastructure and terrible public services. On Thursday, President Obama told the people of Haiti: \u201cYou will not be forsaken; you will not be forgotten.\u201d\u009d If he is going to remain faithful to that vow then he is going to have to use this tragedy as an occasion to rethink our approach to global poverty. He\u2019s going to have to acknowledge a few difficult truths.<\/p>\n
The first of those truths is that we don\u2019t know how to use aid to reduce poverty. Over the past few decades, the world has spent trillions of dollars to generate growth in the developing world. The countries that have not received much aid, like China, have seen tremendous growth and tremendous poverty reductions. The countries that have received aid, like Haiti, have not.<\/p>\n
In the recent anthology \u201cWhat Works in Development?,\u201d\u009d a group of economists try to sort out what we\u2019ve learned. The picture is grim. There are no policy levers that consistently correlate to increased growth. There is nearly zero correlation between how a developing economy does one decade and how it does the next. There is no consistently proven way to reduce corruption. Even improving governing institutions doesn\u2019t seem to produce the expected results.<\/p>\n