Saving Poor From Barbara
by John Goodman
Issue 103 - March 12, 2008
 My definition of a Hollywood liberal is someone who believes you can
solve all the world's problems without knowing anything about
economics. (After all, who needs graphs and mathematical
symbols, when all you really need is love?) Unfortunately, there are way too many people in health policy who think exactly the same
way. They not only resist the economic way of thinking, they are
actually resentful if anyone injects it into the discussion.
Barbara Streisand is always trying to help the poor in Africa with good intentions and bad policies. A little economics could actually help save the poor from her goodwill.
Consider health care spending in Africa and suppose we had only $1,500
to spend. How should we spend it? Health economist
estimate $1,500 would:
- Treat 1 HIV positive person for one year.
- Prevent 75 people from contracting polio, diphtheria,
pertussis, and tetanus.
- Treat 150 people with tuberculosis for one year.
- Prevent 500 people from contracting tuberculosis each year.
- Treat 1,500 people with intestinal worms for one year.
- Treat 1,500 people with malaria for one year.
How can we choose among these alternatives? A common technique
employed by health researchers is to measure the payoff from health
care spending in terms of "years of life saved," which is
the number of extra years of life the health intervention produces.
Sometimes the measurement is expressed as "quality adjusted life
years" or "disability adjusted life years" (DALY) in
recognition of the fact that the goal is not simply to keep people
alive, but to keep them alive and functioning as healthy human beings.
If we want to maximize health and well-being in Africa, we certainly
would not start out focusing on AIDS treatment. Consider the
anti-retroviral (ARV) drug treatment for AIDS - currently so
popular among rock stars and politicians. According to the World
Health Organization (WHO):
- The cost of ARV drug treatment for AIDS is $1,500 per DALY.
- Yet if this same amount of money were reallocated to
immunizations we could save 214 years of life instead of one
year for an AIDS patient.
Two and one-half times as many Africans die from other preventable
diseases as die from AIDS, including measles, respiratory infections,
malaria, tuberculoses, diarrhea and others. Yet AIDS treatment
competes against these other health care needs. And in drawing
health resources away from areas where they are more productive, AIDS
treatment programs can cost more lives than they save.
If you're disappointed on the health front, this is only the tip of
the iceberg. In http://www.john-goodman-blog.com/africaaids/,
I noted that over the past five decades, the developed countries of the
world have given less-developed countries $2.3 trillion in foreign aid.
What difference has all this spending made? International Monetary
Fund chief economist Raghuram G. Rajan and Arvind Subramian have done
comprehensive testing of a broad array of theories and found that
there are no significant effects (either positive or negative) of
foreign aid on economic growth. Specifically:
- It apparently does not matter what aid is used for (health,
social sector, technical assistance, etc.).
o It apparently does not matter who gives the aid (multilateral
donors, bilateral donors, good donors, bad donors, etc.).
- It apparently does not matter to which countries the aid is
given (those with good policies and institutions, those with
bad ones, etc.).
- It apparently does not matter when the hoped for impact is
supposed to take place (short term, long term, etc.).
So given this incredibly sad and depressing record of massive failure
on the part of government bureaucrats, what's the next step for
Hollywood?
Give the bureaucrats complete control over the US health care system,
of course. How could you possibly doubt? John Goodman is president of the National Center for Policy Analysis
John Goodman is President of the National Center for Policy Analysi
PS. Here are four must-read books on aid to Africa:
William Easterly, The White Man's Burden
Gregory Clark, A Farewell to Alms
Paul Collier, The Bottom Billion
Jeffery Sachs, The End of Poverty
The Sachs book represents conventional - and almost certainly
wrong - thinking. I include it only for balance. These
books are summarized along with other material in John Goodman, "Message to Debaters" and
Christa Bieker, "Topic Overview"
at the NCPA's high school debate site.
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