The Millennium Development Goals represent a well-meaning but extremely misguided attempt to assist emerging economies in their development efforts. The recognition by the industrialized and wealthy constituent countries of the UN that their developing counterparts are in dire need of assistance is the first step towards a meaningful strategy for a holistic development program. However, the next step in this endeavor has perennially proved difficult, for the simple reason that donor –countries, and lending institutions have consistently addressed the problem of underdevelopment, poverty, malnutrition, and debilitating diseases from two damaging policy approaches: one informed by charity, the other by the properties of Ricardian-style free trade economics. The former stems from the ‘good-neighbor’ impulse that compels developed nations to offer humanitarian assistance to other countries in need; a commendable gesture, but one that should be implemented only in times of emergency, and for a limited period. The latter is based on a false economic premise that free trade amongst nations, regardless of their respective stages of development, would lead to a higher standard of living for all. The following discussion is designed to contextualize the Millennium Development Goals, and show why they do not conduce to development.

How Countries Achieve Sustainable Development

Beginning in 1485 in the reign of Henry VII, England ushered in the industrial revolution, and quickly realized the benefits of manufacturing goods — it confers increasing returns to investment through continual decrease in the cost of production. In mechanized mass production, the first unit is the most expensive to produce; its duplication in massive quantities entails ever smaller marginal cost, and hence larger profit margins. It is the accumulation of such profits over a period of time that creates the collective wealth of a nation, which in turn makes development sustainable. This shift from a purely agrarian economy to one with a strong manufacturing base complemented by a diversity of productive sectors gave rise to England’s remarkable economic growth — —large profits from manufacturing activities made higher wages for workers possible, which in turn fueled higher levels of consumption, and productivity. But England, in this period of industrialization, did not engage in ‘free’ trade with other nations; instead it used tariffs and customs’ duties to regulate imports and exports. This enabled its ‘infant’ industries to gain strength and expertise over time, and once well established, they became well positioned to compete effectively with foreign competitors. The same procedure was followed by the US under the guidance of Alexander Hamilton in the 1780s, and for more than 150 years the US engaged in protectionist trade practices that protected its industries from harmful foreign competition. This practice of ‘first industrialize and then protect the home industries’ can be traced to all developed and wealthy countries in Europe, North America, Japan, and Korea. Simply put, countries become developed through industrialization, which requires a complete shift from an agrarian or commodity-based economy to one properly diversified. Through patents and tariffs, developed countries are able to protect knowledge (know-how via patents), and determine where production takes place (effects of tariffs).

Why Countries remain underdeveloped and Poor

Agrarian economies —production of agricultural commodities, and raw materials—depend on the availability of a fixed input, land. As a consequence, and by operation of the properties of physics, the fixed capacity of land means that agrarian production is invariably subject to diminishing returns to effort after a certain point. This necessarily imposes a limit to growth, and because the commodities produced are universally ‘identical’, producers have no control over prices received for their products. They must rely on demand and supply to determine how much their products would fetch in the market; this is the essence of what economists call perfect competition, where under free and unmonopolized market conditions, competition in identical commodities lead to the lowest prices possible. With diminishing returns to effort, agrarian economies cannot improve their collective lot through higher sustained effort beyond a certain level; this is their biggest handicap, and when compelled to engage in unrestrained international trade, the market further depresses their level of income through broader competition that includes countries with advanced industrial base. The result is lower income, and, when coupled with population growth, abject poverty.

The only way out of this depressed state of affairs is to emulate developed and wealthy nations, which is to put in place a systematized policy of industrialization, and regulated trade. For no country in the world’s history has ever achieved sustained development, and high-income levels without going through the industrialization phase, and then affording its infant industries adequate protection from foreign competition until such time that they are able to compete effectively.

Effects of Millennium Development Goals

The objective to halve the number of people living on less than one dollar per day, achieve gender parity in education, improve the environment, eradicate diseases, significantly reduce infant mortality, and the number of people living in hunger is remarkably humane. The problem with this massive undertaking is that it is a stop-gap measure with palliative effects in the short-run; the long-run consequences, however, are inhumane for they tend to erode the will for self-sufficiency and conduce to dependency. It leads ultimately to what has been described as ‘welfare colonialism.’ By not emphasizing industrialization as a component of the overall objective, by which countries are helped to put in place complex mechanisms for diversity of productive activities that include a strong manufacturing presence, fundamental structural problems would remain unresolved. But worse, the achievement realized by way of education, and other investment in human capital would be lost through emigration of skilled workers to developed countries due to lack of adequate employment opportunities at home (the infamous brain drain).

Thus, the UN can insist all it wants on gender parity in education, eradication of diseases, and on all the other noble goals for developing countries, but so long as the countries in question lack the requisite industrial background necessary for development and economic independence, poverty, diseases, high infant mortality, and hunger would continue to define the fate of targeted countries. The effects of welfare colonialism is to keep developing countries perpetually dependent on the good-will of developed countries, and to serve as the source of cheap raw materials for industrial production in developed nations. The US history provides good instances of this phenomenon. Prior to 1776, the British forbade industrial production in the US save for the manufacture of mast, and used the US as a primary source of raw materials for England; industrialization was discouraged for obvious reasons. Prior to the US civil war, the southern states were heavily invested in agriculture, while northern states invested their efforts in industrialization; the consequent disparity in income, and development remain visible today. The state of affairs of American Indians in reservations provides ample testimony of the dangers of palliative policies that create dependency; a similar fate awaits developing countries in the path of UN MDGs, unless corrective measures are put in place to abort foreseeable long-run consequences.