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Friday, June 10, 2005

Aid to Africa

Nathan kindly pointed out a post on a site that I don’t regularly read that covers a topic I was going to attack later today if I had the chance: foreign aid.

Hey, who isn’t in favor of helping poor people? 

But here’s the thing:  there’s a big difference between helping people, and merely throwing money at them. I’d love to see real change in Africa—an area going on its 3,750th consecutive year of bad government—but “more money” won’t fix the African and Mexican problems.  Only a real, and substantial, change in government policy will change the African and Mexican problems.  Sending them a boatload of money will produce precisely the opposite effect—it will ameliorate the effects of the failed policies in place, and reduce the apparent need for change.

Of course, my obsession with Africa was going to inform my focus, but the points made by Mr. Henke match my thoughts well. What was it that set me off? This article from Salon (Salon infomercial alert) that started out with this little tidbit of information (which could also be referred to as a lie):

Bush declines to increase U.S. aid for Africa as a new U.N. report reveals the expected toll in child deaths from the failure to reduce global poverty.

Given that the Bush administration revealed that it planned to increase aid by nearly three-quarters of a billion dollars, the “Bush declines to increase US aid for Africa” bit is simply untrue. It is true that Bush balked at the seven billion dollar increase that Blair was asking for, but that isn’t without good reason.

Direct foreign aid from the United States alone last year, as the largest donor in the world, ended up being 3.2 billion dollars--according to the Christian Science Monitor, this was about triple the amount given in 2000. The Bush proposed increase would take that number to nearly 4 billion dollars--not precisely small numbers and a good deal more than any other nation on the planet. Further, that doesn’t count the aid from private organizations and individuals.

Africa isn’t steeped in poverty because there isn’t foreign money to help, because people don’t care (although, like all things, the focus of the caring follows trends), or because the continent is resource poor. Africa is poor because nearly all of the governments are unstable, the markets are centrally controlled, and most of the nations never properly industrialized or developed their agricultural potential following independence.

Let’s deal with a few concepts on the subject that shape my opinion on expanding aid to African nations.

1. Money Does Not, By Itself, Eradicate Poverty
It seems either painfully obvious or completely counter to reality, depending on which point of view you take, but here’s the truth: money does not equal wealth. If you don’t believe it, try this:

Give a pigmy from a central African nation a check for one million American dollars (just to ensure that the money itself has value in contrast to, say, one million Zimbabwean dollars which might buy you a Coke) and see how it changes his life. He has relatively few places to spend the money, relatively few products to purchase with it, the complete inability to buy significantly better health care because it simply isn’t available, and little capacity to improve the lives of his children because education opportunities are almost as limited as health care.

In fact, the best thing he could possibly do with the money is take himself and his family somewhere where there are educational opportunities, better health care, jobs, and things to purchase--but packing up all of the impoverished people in Africa, giving each family a check for a million dollars, and sending them to live in the West is kind of missing the point, isn’t it?

In communist Russia, at the height of the Cold War, it wasn’t uncommon for people to have great stores of cash and absolutely nothing to spend it on. Food was scarce, purchasing a car could take years of being on a waiting list, moving into a new apartment wasn’t just a matter of making a new contract with someone else, but of going through a central authority that would approve of the move and assign new quarters.

Money, by itself, doesn’t kill off poverty. Economic opportunity, education, healthy infrastructure, availability of food, a robust health care system, markets not completely controlled by the state, and stable, open governments are all ingredients that help stave off poverty.

What does this prove? This proves that, when considering foreign aid, focusing on dollar amounts is really missing the point. A quote from QandO fits well here:

Americans shouldn’t simply send more money to Africa and invest more money in Mexico because money won’t solve the problem...it merely hides the consequences.  In fact—and this is where liberalism can go from naive to dangerous—by addressing the consequences instead of the problem, we prop up the failed policies and block the demand for change. 

2. This isn’t a New Marshall Plan
The Marshall Plan has been mentioned over the last few weeks in relation to the plan that Tony Blair has for aid and African development--and, I suppose it’s the best point of reference possible, but, amazingly, the Marshall Plan was a much smaller task than the job needing to be done to pull Sub-Saharan Africa out of poverty. The Marshall Plan was merely a rebuilding plan, but what most of Africa has nothing to rebuild.

What is needed is to drag a continent through a few hundred years of economic, educational, and political development over the next decade. Close your eyes, sit back, and think a moment about what that really means, because there are only a handful of South Africas and a whole raft of Central African Republics. That isn’t to day that a development plan is a bad thing--in fact, a reasonable, long-term plan is an absolute requirement in deciding what relief to provide. But the plan needs to be honest about the difficulties, the reasons for failure in the past, and the prospects for the future; my opposition to calling this a “Marshall Plan for Africa” is that it fails to address the true enormity of the job.

Some of the advantages that Europe had over Africa in digging itself out after World War 2:

  • Industries to be rebuilt. Europe was widely industrialized, but many African economies are based on subsistence farming and foreign aid.
  • A well-educated populace. Education exists in many forms, and not all of it is based on the ability to read, write, and do arithmetic--although those all play a part in making it possible for a citizen to interact with the government and the media. That is, in Europe, there was an experienced bureaucratic class, a base level of education for most of the citizens that included an understanding of how to function in a modern economy and political environment, and an unspoken cultural buy in on the compact that exists between a government and the governed.

    Africa, in contrast, has a poorly educated populace used to wildly unstable governments, little concept of civic duty or nationalism, and a tiny bureaucratic class that is less focused on stability than on short term gains in personal power.

If anything, I might actually be understating the case since that bedrock nationalism is so absent from most of African politics. Parts of Africa (namely South Africa) seem to be moving into a sort of post-post colonial period where this kind of development makes sense, where politics aren’t mired as much in personal gain as in national development. But corruption, violence, and poor political participation are still the rule in most nations.

3. Debt Relief is the Expansion of Foreign Aid
Debt cancellation is often mentioned in a way that might make you believe that it is something other than a handout; we just magically cancel the debt and it saves Africa billions of dollars a year just in interest payments. The debt that is cancelled has to be paid for somehow, though; when we stop asking Africa to pay for it, it doesn’t miraculously disappear from the books as if the debt had never existed. Just how that debt cancellation will be financed is still being debated.

The figures? Sub-Saharan Africa reportedly shoulders some quarter trillion dollars in debt to outside sources and pays 12 billion dollars annually in debt servicing.

When a deal does come over debt cancellation--and a deal will come--it will probably only include a smaller number of the poorest nations and the number will likely be perhaps 10% of that total debt. Of course, that’s only a guess in the same way that it would be pure speculation to name a final method for the funding of that debt.

What will debt cancellation mean for those poor nations? It will, in an ideal world, mean that they would have more freedom to build up the services that a government provides its people--education, infrastructure, and health care--that help create an environment for financial self-sufficiency. In the real world, it might mean some of that, it might mean more palaces for the ruling class, it might mean more military spending. The cancellation will likely come with strings attached; that is, for us to fund organizations writing off the bad debt, we have expectations of what will happen with the extra funds available.

But many African nations have shown a remarkable talent for letting graft and corruption exist quietly while making all the right noises so that donor organizations and nations don’t cut them off from their allowance. Any expectation that the extra economic freedom will translate directly into better lives for the citizens of the poor nations is naive. Again, money does not, in and of itself, create wealth.

4. More Money isn’t the Cure, Better Use of Current Aid Might Be
If the question is how do we eliminate poverty, the answer might be that we can’t. There will always be poverty in the world. So, maybe a better question is how do we effectively combat poverty?

And here’s the cliffhanger for the day. This post has gone on too long, so it’s time to wrap things up. Feel free to drop your ideas and suggestions in the comments or via email, and I will tackle part two of this next week and hopefully find a few answers.

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