Ivan Gayton was formerly mission head at Doctors Without Borders. His interview (60 mins, transcript here) with Elizabeth van Nostrand is full of eye-opening anecdotes, no single one is representative of the whole interview so it’s worth listening to / reading it all. Here’s one, on the sheer level of poverty and how giving workers higher wages (even if just $1/day vs the local market rate of $0.25/day “for nine hours on the business end of a shovel”) distorted the local economy to the point of completely messing up society:
[00:06:07] Ivan: I had a real moment when I had this construction crew that was rebuilding a wing of the hospital and there were 30 people on this construction crew. And at some point, my boss, the project coordinator says to me, “Ivan, why are you just so obsessed with the construction crew always working? Constantly working and, and you know, never lacking for something to do.” And I’m like, “well, because you know, you have a whole crew of 30 people, it’s terribly expensive if they’re doing nothing, I mean, if they sit there and do nothing all day, that costs, oh wait, $30, huh? Maybe I’ll just relax about that.”
’Cause you know, my last gig I’d been a forestry project manager, crew of 75 people who cost $450 a day each. So if they, you know, lose an hour of productivity, that’s like huge money. A day of productivity is unthinkable.
(Aside: I’m having trouble believing the $450/person-day cost for forestry crew back in the late 90s and early 00s, isn’t that $90k/year or $155k today?)
[00:06:56] Ivan: So I bring that to this, you know, African construction crew and the construction crew themselves are kind of exhausted. Like, good lord, this guy’s nuts. but that realization that… 30 people on the business end of sledgehammers and shovels and travels cost way less than one hour of my time for an entire day. Wow. That was shocking.
And we were paying more than the local market rate for unskilled labor. I mean, at that time, this is 2003, the, the local market rate for nine hours on the business end of a shovel was a shiny new quarter, 25 cents. We were paying a dollar. So we had this huge lineup of people to work. I kind of rotated through all the villagers, to give as many people as possible a chance for the real unskilled labor. I think the head construction crew guy was getting two bucks a day.
[00:07:52] Elizabeth: yeah, so maybe let’s get into the economics of this. On one hand, it seems very generous to pay people four times their normal wage, and it’s, you know, a trivial cost to MSF. On the other hand, that does distort the local economy.
[00:08:07] Ivan: distort is putting it mildly. It just completely messes up the local society. I mentioned that I had done this back in the envelope calculation that we were 75% of the local economy. I mean, what that actually means is we destroyed and distorted the local economy completely; as development practice that would’ve been utterly and completely unethical.
The only justification for doing something like that is an acute emergency, which it was, it was nigh on a hundred thousand people with literally no access to healthcare whatsoever. The amount of avoidable suffering and death that was going on that we could actually alleviate was something that, you know, in sort of humanitarian practice, I guess we arrogate to ourselves the idea that we can, in a sufficiently emergency situation, justify doing things that would be unethical development practice.
[00:09:06] Elizabeth: Do you think the village was worse off for having the hospital located in their village?
[00:09:11] Ivan: oh yeah. Because we obviously brought this flood of money in, but where does the money go? The doctors and nurses, they’re not even local. They’re from the capital city. So you’re bringing in people from the capitol who then lord it over the local people, price of food jumps up, price of accommodation goes insane. The trickle down opportunities are to be sex workers and cleaners and, you know, servants for these, for these newly created royalty.
[00:09:46] Elizabeth: you might hope that if the price of food goes up, but their wages are also going up because they’re working for the hospital or tangentially, then that would compensate?
[00:09:54] Ivan: Well yeah. For the people who are already, you know, have access to the labor market and are already able to sort of get in on that. Sure. I mentioned that I actually, I deliberately kind of rotated through the villagers to give lots of people a chance, but still, if you’re not one of the people who gets a chance or even ever had a chance, or was somebody who’s, you know, on the outs with the local powerful people, then we, as these foreigners providing these jobs, we never even see those people.
They don’t even get to apply for a job with us. We never even know of their existence. So those people, now, the price of everything is jumped. There’s a bunch of newly, much more wealthy people around them, and they’re excluded from that. They don’t see any of the benefit and all of the harm. So it’s, it’s terrible.
Yeah this rhymes with everything I’ve seen. I have a deeply unpopular opinion built on years of experience that NGOs generally pay people way too much. Wrote about it (quite poorly) a whopping 8 years ago!
The thing that makes me doubt my opinion is that I’m yet to find a local Ugandan who publicly agrees with me, and most privately disagree with me too. “More money coming in is better” seems to be the common sense line, despite the inflation (my town Gulu is the most expensive in the country), distorted education system and dragging the best people to less important jobs.
Its not only NGOs, but also means good business ideas can fail because of high salary bills, when they could have worked and grown to employ hundreds/thousands more if the foreigner just paid market rates not 3x....
I think better to just give people money give directly style rather than pay more. It doesn’t distort the economy much.
It’s a really tricky one emotionally and intellectually, and I find it very difficult to manage when I’m the one with the power to pay more
Ivan Gayton was formerly mission head at Doctors Without Borders. His interview (60 mins, transcript here) with Elizabeth van Nostrand is full of eye-opening anecdotes, no single one is representative of the whole interview so it’s worth listening to / reading it all. Here’s one, on the sheer level of poverty and how giving workers higher wages (even if just $1/day vs the local market rate of $0.25/day “for nine hours on the business end of a shovel”) distorted the local economy to the point of completely messing up society:
(Aside: I’m having trouble believing the $450/person-day cost for forestry crew back in the late 90s and early 00s, isn’t that $90k/year or $155k today?)
Yeah this rhymes with everything I’ve seen. I have a deeply unpopular opinion built on years of experience that NGOs generally pay people way too much. Wrote about it (quite poorly) a whopping 8 years ago!
https://ugandapanda.com/2017/04/17/ngos-part-1-pay-your-workers-less/
The thing that makes me doubt my opinion is that I’m yet to find a local Ugandan who publicly agrees with me, and most privately disagree with me too. “More money coming in is better” seems to be the common sense line, despite the inflation (my town Gulu is the most expensive in the country), distorted education system and dragging the best people to less important jobs.
Its not only NGOs, but also means good business ideas can fail because of high salary bills, when they could have worked and grown to employ hundreds/thousands more if the foreigner just paid market rates not 3x....
I think better to just give people money give directly style rather than pay more. It doesn’t distort the economy much.
It’s a really tricky one emotionally and intellectually, and I find it very difficult to manage when I’m the one with the power to pay more
This was great, thanks for the link!