How local democracy can save the world

In the past couple of years, the sheen has begun to come off the aid industry. Books such as Dead Aid have pointed out that aid, in general, doesn’t tend to promote prosperity. Rather, it squeezes out private enterprise and so helps keep people in poverty. The aid industry also has another, much less-discussed, PR problem: its continued willingness to work with “scoundrels” despite the end of the Cold War. William Easterly has argued in a recent piece in the New York Review of Books that “the nations and organizations that donate and distribute aid do not care much about democracy and actively support dictators”. He points out that dictators have received around a third of international aid expenditures since 1972. The proportion of aid received by democracies, meanwhile, has remained stuck at about one fifth.

Why? Well, there’s an argument that supporting “effective” dictatorships works. Speaking on the World Service this week, best-selling author John Naisbitt mounted a robust defence of China’s authoritarian “vertical democracy” (whatever the hell that is) that has “allowed China to change in 30 years from a nation of poverty and backwardness to become the third largest economy of the world”. The £10 billion that has poured into increasingly authoritarian Rwanda since the genocide in 1994, meanwhile, has resulted in infrastructure that puts most other East African countries to shame.

This is, of course, a sham. There’s nothing benign about any dictatorship. Easterly notes that that a new Human Rights Watch report has shown how aid money has been used by dictatorships to trample on dissent. One farmer told HRW that “[village] leaders have publicly declared that they will single out opposition members, and those identified as such will be denied…access to fertilizers, ‘safety net’ and even emergency aid”.

But maybe that’s a price worth paying? Well, that’s not really true either. As Indian businessman Raghav Bahl has pointed out, the efficiency of dictatorships is generally a fiction. It takes half as much effort to create a unit of GCP in democratic India than it does in autocratic China. Or take Chicago, which was until recently a corrupt one party state (it’s still very much a one party state, but corruption levels have fallen). In the 1990s, activities from union corruption to drug trafficking were uncovered in the City Hall that led to the conviction of 18 individuals.

How, then, could aid agencies change their policies to make a positive impact? It’s clear that reducing, or indeed suspending, aid to dictatorships and directing it on democracies instead wouldn’t be a bad start. At the moment, aid money is giving authoritarian leaders access to a revenue stream that is independent of tax returns (rather like petrol dollars). This gives them no incentive to invest in the capacity of the people that they represent. Cutting the money would provide a powerful incentive for governments to reform (or, depressingly, go cap in hand to the Chinese). In those countries where dictators cling to power, aid agencies could focus their money on local communities that have a democratic model of governance (whether that’s formal or informal matters not).

That’s not to say, however, that working at a more local level should only be the goal of aid agencies in the most authoritarian regimes. The LGiU would argue, and indeed this government seems to agree, that central government never really had the answers anyway. Functioning, well-organised local communities, not a powerful central state, is the vital pre-requisite for any meaningful improvement in people’s health, well-being or educational attainment. Doubters are advised to consult the failure of the last government’s well-intentioned, but ineffective, top down target-driven approach.

Local government is the only organisation that has the capacity, mandate and staying power to support the creation of healthy local communities. UK councils as politically diverse as Newham and Hammersmith & Fulham are succeeding in empowering residents to take their future in their own hands. Of course, aid agencies can’t go around setting up levels of government in the developing world. They can, however, make local politicians their principal focus and help empower local people to hold them to account. With recent constitutional changes in Kenya that devolves power to localities, now might be the ideal time to strike.