This summer, I am taking a graduate class in Sustainable Development at the University of Maryland. We read Glynn Cochrane's book, Festival Elephants and the Myth of Global Poverty. It gave a good insight on how broken the current system is - and why most development money is wasted on spending for economists and grant writers and NGOs, not the poor. If such schemes were tried domestically, the operators would be arrested for fraud.
This is not to say that we should not do development. Indeed, we must - especially as climate change displaces hundreds of millions of people on the rim of the Indian Ocean. The method I am advocating can also be done here. Those who follow my Center for Fiscal Equity site or our submissions to Ways and Means and Finance will find them familiar.
If we want real development, we need to build more apartment houses with classrooms and clinics on-site. There are ways to do passive air conditioning that are ancient involving the creation of air currents. We can recycle water. We can do energy from solar panels and wind. We can install dehumidifiers to make the tropics habitable. We can do hydroponics and greenhouses (and grow worms to turn black water waste to soil).
How do we build such things? The newest development in housing - which can be done in Africa, Indonesia or Philadelphia - is stackable prefabricated tiny homes. These can be built in country or imported.
Unless we pay people to get educated, they will have opportunity costs that get in the way. This is true in South and Central America, Mexico, the US inner city, the Reservation, Africa, South Asia, Ukraine, Syria and anywhere that housing and education are subpar.
Where do we find the people (who would staff these apartment/schools). Train teachers, maintenance and nurse practitioners and have them pay back the education through paid service (pay them to go to school too). This can happen in the US or any other developing nation - and yes, given how empty it is and its inequality - the United States is a developing nation.
For some jobs, like fixing dehumidifiers, an expert trains an apprentice while working, then the apprentice works as a journeyman then becomes a master to train new apprentices (and going from complex to complex).
How do we pay for this? We can both redirect aid from the World Bank/IMF/USAID/NGO complex - as well as from TANF and SNAP and pay people to get remedial education (including ESL) and pay the rent from these stipends. For the long term, we propose that in both the United States and the developing world, funds for education, family support (a child tax credit) and healthcare be raised using a subtraction value added tax.
Any operation with employees would pay this tax, although for some employers, such as development projects above, the tax would be akin to a negative income tax. For this reason, in the developing world, this tax should actually raise money from all other employers, governmental and international governments and agencies. A local value added tax would also be levied - but with no tax exemption for government or development agency employees. For more information on these taxes, see the Center for Fiscal Equity web page backgrounder on Consumption Taxes.
One final thing, and this also goes for road building and water development, give GRANTS, not LOANS. Forgive the outstanding loans and turn any related bonds into US and other donor country debt - to be paid back by increases in progressive income taxes. In the US, EPA gives grants for water projects and the Army Corps of Engineers does not require repayment to build dams. Why is this not standard all over the world? We can do one of two things - make states take out federal loans for such facilities or quit giving loans to the developing world.
The Golden Rule works in development too. Indeed, it is the only way not to turn poor nations in Africa and Asia into Chinese client states.
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