Thursday, December 11, 2003

Comments on 'A day at the hospital'

There were a number of comments from readers on the post entitled A day at the hospital. This excert is typical of the negative responses:

> $10,000 times 1 billion is $10 trillion dollars, or
> approximately the GDP of the entire United States.
> So if all economic activity in the U.S. were
> magically showered on the third world, you could
> lift one billion people into mild poverty instead
> of extreme poverty, for a year. Next year, you'd
> need to do it again. And there would be another
> billion people who you hadn't even touched.

This is mathematically correct. As the author points out, this solution does not accomplish anything beyond year one. Therefore, this is not a good solution, and we reject it. That does not mean that there is not a good solution available.

Here is a different way to think about the problem. Look at the process we are using today in Iraq. All told, we will end up spending $200 billion (probably more) in Iraq on the war and reconstruction. Iraq has about 24 million people. If we round things off, we are spending about $10,000 per person.

$200+ billion is our expected total investment to free, reconstruct and democratize the country. Having made that investment, we expect Iraq to become self sufficient. We do not expect to spend $200 billion in Iraq every year for eternity. The goal is for Iraq to develop a self-sustaining economy from a one-time investment of $200 billion. We expect democracy and capitalism to take root, and for Iraq to turn into a free and prosperous nation.

Iraq has been an extremely inefficient process because it is the first time we have tried to comprehensively transform a nation's government and economy. We've made a lot of mistakes, but we have also learned a lot. As we gain experience, let's say we can lower the cost of transforming a nation and its economy down to $1,000 per citizen. In that case, we could invest $200 billion and completely transform the lives of 200 million people in the third world per year. In just 15 years, the third world problem would be well on its way to extinction. Three billion formerly-impoverished people would be living in transformed economies that mirror the successful economies of the world's developed nations. In addition, we would be increasing the size of the world economy dramatically by turning three billion impoverished and unproductive people into middle class citizens. Everyone would win. The process would not be instantaneous, but we would be well on our way to a true solution.

Transforming the lives of three billion people who are currently living in abject poverty would be a significant accomplishment. It is not impossible. We should take up the challenge.

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