Development Economics

The Role of the Celebrity Activist

Aaron Burr vs. Alexander Hamilton.  Nas vs. Jay-Z.  And now, Easterly vs. Bono.  In an attack reminiscent of Jon Stewart’s epic takedown of the sheepish Jim Cramer after the financial crisis, Bill Easterly, a well-known development economist who favors bottom-up approaches to development rather than top-down technocratic solutions, uses the Read more…

Development Economics

Product (RED) and the Dishonesty of Cause Marketing

There is a good blog post on Aidwatch, Big Willy Easterly’s cynical aid-takedown machine, about the role of celebrities in promoting development and their relative benefits.  This post is just Bill being Bill, railing against the status quo.  In this post, two guest bloggers, Lisa Ann Richey and Stefano Ponte, who have just authored a book about the topic, titled Brand Aid, discuss the problem of "cause marketing":

In the book, we examine what happens when aid celebrities unite with branded products and a cause. The resulting combination—what we call “Brand Aid”—is aid to brands because it helps sell products and builds the ethical profile of a brand. It is also a re-branding of aid as efficient and innovative, based on “commerce, not philanthropy.” In the case study of Product (RED), a co-branding initiative launched in 2006 by Bono, we show how celebrities are trusted to guarantee that products are “good.” Iconic brands such as Apple, Emporio Armani, Starbucks and Hallmark donate a proportion of profits from the sale of RED products to The Global Fund to finance HIV/AIDS treatment in Africa. In essence, aid celebrities are asking consumers to “do good” by buying iconic brands to help “distant others” —Africans affected by AIDS. This is very different from “helping Africa” by buying products actually made by Africans, in Africa, or by choosing products that claim to have been made under better social, labour and environmental conditions of production. In Product (RED), celebrities are moving attention away from “conscious consumption” (based on product information) and towards “compassionate consumption” (based on emotional appeal). To us, this is even more problematic than the risk of negative media attention that celebrities bring to development aid.
This reminded me of an article in the New York Times from 2008 about Project (RED), which revealed this tidbit of information about the project:
In its March 2007 issue, Advertising Age magazine reported that Red companies had collectively spent as much as $100 million in advertising and raised only $18 million. Officials of the campaign said then that the companies had spent $50 million on advertising and that the amount raised was $25 million. Advertising Age stood by its article.
I remember not being so surprised when I read this, but still a little ticked off.  My take on corporate social responsibility is that it can often be disingenuous, dishonest, or, as worst, deliberately misleading.  I like the idea of money in development that is not politically-motivated, which is also, frequently, dishonest and disingenuous.  I also like the idea of profit-oriented businesses with not much tolerance for wasting money allocating resources to some of these causes.  But I think it masks some of the real problems, which are systemic and global, and provides a cover for the perpetrators of those problems.  “Cause branding” is a relatively low-cost and easy investment for a business to make, without actually having to produce the results it needs.  For Starbucks, a $100 million campaign is pocket change, and to raise only $18 million to the Global Fund – an organization that has been recently skewered in the press for corruption and waste – is a travesty.  (My intention is not to villify the Global Fund, which has seen much of its funding put on hold because $34 million, or 0.3% of the total, was potentially lost due to corruption - which is pretty damn good considering the track record of other projects). (more…)

Development Economics

The Aversion to Government-Run Development Programs

Andrew Sullivan of The Altlantic writes a popular blog about politics, economics, culture, and anything else he finds interesting or relevant at the moment.  With 20-30 posts today, it has the depth of a traditional blog and the breadth of a link aggregator. The relative exposure he gives a subject depends on how much he likes the people who are writing about it.  He is a fiscal conservative and likes the idea of market-driven, bottom-up development.  Over the past year, international aid and economic development have been getting a lot more play after he discovered Aidwatch and Texas in Africa, two popular blogs written by development economists.  Most recently, Sullivan linked to an article in the NY Review of Books by William Easterly, author of the former blog, about the misuse of aid dollars to generate political support:

Human Rights Watch contends that the government abuses aid funds for political purposes—in programs intended to help Ethiopia’s most poor and vulnerable. For example, more than fifty farmers in three different regions said that village leaders withheld government-provided seeds and fertilizer, and even micro-loans because they didn’t belong to the ruling party; some were asked to renounce their views and join the party to receive assistance. Investigating one program that gives food and cash in exchange for work on public projects, the report documents farmers who have never been paid for their work and entire families who have been barred from participating because they were thought to belong to the opposition. Still more chilling, local officials have been denying emergency food aid to women, children, and the elderly as punishment for refusing to join the party.
This is a bit like saying that Miss Lippy's car is green.  This dynamic is not new, and it is certainly not undocumented.  Easterly has been arguing for years that foreign aid in the hands of the local government is misdirected.  But this is on Andrew Sullivan's blog, which is generalist, and it may well be a new concept, or at least a new example, to his readers.  But this is a concept I have seen in action and heard anecdotally often.  Two cases, in particular, come to mind. (more…)