Category: Public Policy

Bono and the One Campaign want us to sign a petition encouraging the government to spend 1 percent of the U.S. budget for aid to developing countries. The One Campaign states that this would “transform the futures and hopes of an entire generation of the poorest countries.”

Now I admire the intentions of Bono to fight against poverty and he puts his money where is mouth is. But how do we know that increased aid will make a difference? How will the money be spent? Billions of dollars of aid have poured into developing nations, often with minimal if any positive results. Why does increasing something that really hasn’t worked going to make it better. I would understand and support it if we saw results that aid really makes a difference in providing a foundation for sustainable growth that would enable developing nations to lift themselves out of poverty, but this has not been the case. Aid often goes to the hands of corrupt leaders or gets squandered away. Further it is too often connected to ideology that has little or nothing to do with development or poverty, e.g., population control. How many millions of dollars a year go into population control programs despite little or no evidence of a causal relationship between increased population and poverty? In fact, population can often be a positive element for economic growth. See Jacqueline Kasun’s book The War Against Population or Julian Simon’s the Ultimate Resource.

But what if the problem is not insufficient aid, but something else?
According to Hernando de Soto the problem is the Mystery of Capital. There are billions of dollars of “dead” assets in the developing world. Assets that cannot be turned into capital and thus can’t be an engine for economic growth. There is also a lot of saving in the developing world. De Soto writes:

Even in the poorest countries the poor save. The value of savings among the poor is, in fact, immense—forty times all the foreign aid received throughout the world since 1945. In Egypt, for instance, the wealth that the poor have accumulated is worth fifty-five times as much as the sum of all direct foreign investment ever recorded there including the Suez Canal and the Aswan Dam. In Haiti, the poorest nation in Latin America, the total assets of the poor are more than one hundred and fifty times greater than all the foreign investment received since Haiti’s independence from France in 1804.

He then writes:

If the United States were to hike its foreign aid budget level to the level recommended by the United Nations—0.7% of national income—it would take the richest country on earth more than 150 years to transfer to the world’s poor resources equal to what they already possess.

Because these assets are not properly documented with legal title etc, they cannot be turned into capital to start businesses and create wealth like they are in the developed world where we do this every time an entrepreneur mortgages his house to start a business. Now DeSoto’s work is not a panacea, but it addresses some serious problems that need to be addressed. It also recognizes that rule of law, private property, and economic and entrepreneurial opportunity are needed for development.

The One Campaign is exciting, and it is supported by host of cool people. But although it feels good it doesn’t mean that it is the answer. The problem is a lot more complex than the One people make it out to be, but their way has been tried and tried to little avail. Maybe government aid isn’t the answer after all.

Blog author: jballor
Monday, March 6, 2006
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In her Townhall.com column this week, Dr. Jennifer Roback Morse, Acton senior fellow in economics, takes Linda Hirshman, a retired professor at Brandeis University, to task.

Hirshman has been making the news circuit touting her claims about negative trends among working women. She says that educated women who become stay at home moms will create the future result that “expensively educated, upper-class moms will be leading lesser lives.”

According to an ABC News article, Hirshman views this as “a tragedy not only for the mothers, but ultimately their children and women as a whole.”

Morse’s piece is a pretty direct point by point rebuttal of Hirshman’s claims, and it is worth reading in its entirety. She writes, “I learned from experience that the kinds of claims Hirshman makes are simply untrue.” Read the rest here: “A duel in the mommy wars.”

. . . Or so claims Robert Newman in this article in The Guardian from February 2. It makes a great subject for a game of “Find-the-Fallacy.” Newman’s breezy inferences are reminiscent of The Communist Manifesto, edited to conform to trendy deep ecology. Here’s my favorite line: “Capitalism is not sustainable by its very nature. It is predicated on infinitely expanding markets, faster consumption and bigger production in a finite planet.” Well, I guess somebody has to shoot fish in a barrel: He’s obviously ignoring the very possibility that wealth is created, and apparently forgetting that the Earth isn’t an isolated planet in the void of space.

It might be tempting to dismiss articles like this. But Marxism mixed with deep ecology, unfortunately, leads to some strange and ominous claims, like this one: “To get from here to there we must talk about climate chaos in terms of what needs to be done for the survival of the species rather than where the debate is at now or what people are likely to countenance tomorrow morning.” What needs to be done for the survival of the species regardless of what people are willing to accept? This looks to me like a thinly veiled justification for all sorts of atrocities. Let’s hope Mr. Newman never finds himself in the position to impose his misanthropic vision on the rest of us.

Here’s a brief note about a recent National Bureau of Economic Research working paper, “Service Offshoring and Productivity: Evidence from the United States.”

According to the NBER digest, “service outsourcing is doing more than fueling an economic boom in the tech-savvy provinces of India. It is also playing a major role in one of the big economic stories of the last decade: the surging productivity of American manufacturing firms.”

For more on this, check out Anthony Bradley’s commentary, “Productivity and the Ice Man: Understanding Outsourcing.”

Richard Longworth

An interesting news story on local Grand Rapids television last night concerning the long awaited closing of an Electrolux plant. While the story was fair and optimistic, I got a bit of a kick out of soundbite from Chicago writer Richard Longworth who said: “A wonderfully decent way of life is now just being undermined by productivity, by the global economy.” Now, losing a job can be a terrible thing (its worth noting, though, that one of the workers in the story seemed glad to have the chance to “do something new” with his life–so sometimes change can be good as well). But regarding the idea of lives being undermined by globalization, I couldn’t help but thinking of the insight of former President of El Salvador Francisco Flores, who will be featured in our next issue of Religion & Liberty:

Francisco Flores

[S]ome people say that they’re against trade because they will be losing jobs. What these critics don’t realize is that the choice is not between giving a job to a Salvadorian or giving it to an American citizen. That’s not the choice. The choice is whether you will allow your enterprises to survive or not. If you allow your enterprises to create a more efficient division of labor and become more competitive by creating alliances throughout the world, then your corporations will survive. If you keep them closed in, then what will happen is that other corporations throughout the world will construct these alliances, you will lose the competitive edge you have, and you will not only lose jobs, you will lose the companies.

Stay tuned for more from Flores and others in this quarter’s R&L.

Blog author: jballor
Friday, March 3, 2006
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In the latest issue of Science & Spirit magazine, Acton director of research Samuel Gregg is interviewed about the ethical aspects of the genetic engineering of food. In “God and the New Foodstuffs,” author Trey Popp writes about the opposition to such endeavors:

Some scientists and environmentalists fear GM crops may have unforeseen consequences. Many organic and small-scale farmers see the new crops as an economic threat; there have been cases in which GM corn has contaminated nearby fields, ruining the market value of neighboring crops. Some social justice activists assert that a precious few wealthy companies reap the benefits of GM crops at the expense of farmers and consumers.

But Gregg offers a counter to the opposition from a variety of perspectives. “There’s an imperative in Christianity in particular, but also in Judaism and Islam, of helping the poor and dealing with questions about poverty and hunger. Hunger is something that afflicts the developing world in particular. Genetically modified food has the potential to radically transform that situation,” says Gregg.

I have written a theological/biblical exposition of the case for genetically modifying plant life with respect to crop yields, nutrition supplementation, and other aspects of improvement in “A Theological Framework for Evaluating Genetically Modified Food.” My basic point is that the primary created purpose for plantlife was that of providing sustenance for beings with the breath of life. Having a primarily instrumental created purpose, therefore, I’m in agreement with Gregg that the use and “alteration” of plants on a genetic level can be a proper fulfillment of stewardship mandate.

What isn’t always made quite so clear in the article is the biblical distinction between plants on the one hand and beings with the “breath of life” (animals and humans) on the other. So, for example, Calvin DeWitt, president of the Au Sable Institute of Environmental Studies, opposes GM foods on the basis of his interpretation of the flood narrative. “There is not much concern for individuals when Noah is asked to put animals on the ark two by two. The emphasis is on lineage. And although, at the time that was written, there wasn’t the terminology to say that these are genetic lineages, they in fact are, of course. These lineages are creations of the Creator, and they are…gifts to the whole of creation,” he says.

But the relevance of his observation is not immediately apparent. The parts of the flood narrative that DeWitt is talking about concern animal life, not plant life (see my post here about ways in which the Noahic covenant is misinterpreted and applied to environmental issues).

I think there it is much tougher to make a theological case for the genetic modification of animals than it is for GM crops. For more on the genetic modification of animals, especially with regard to the creation of human-animal chimeras, see my forthcoming article in the premier issue of Salvo magazine.

An interesting piece in Tuesday’s Financial Times (registration req.) by Jagdish Bhagwati, economist at Columbia University. In the form of a letter to U2 front man Bono, Dr. Bhagwati offers a (I think) stinging criticism of attempts to save Africa through appeals for more governmental spending. (This is especially interesting since Bono plays off the songsheet of another Columbia economist Jeffrey Sachs.) If you can find a copy of the article, I highly recommend it, but in the meantime, here is a sample:

But, if you have erred in allying yourself with the development experts who wrongly focus exclusively on aid spending in Africa itself, a greater folly is to have tied your initiative to the aid target of 0.7 per cent of GNP. This target goes back to 1969 and has not been met except by a tiny fraction of donors, essentially the Scandinavian countries. The problem is that the target relates to government spending. Fiscal spending is subject to what economists call “hard budget contraints.” There are always many demands on the government. The US, for instance, has just had a colossal increase in spending on the Iraq war and on Hurricane Katrina relief and reconstruction…

How, then, are we to translate the enthusiastic altruism that you have generated, dear Bono, into larger, sustained flows of aid? Surely the answer is to go after personal, rather than governmental, flows…

So, if you take seriously the estimated audience for Live8 concerts at 2bn, halve it for those who were there for a lark or are impoverished themselves, and halve it again for those who attended the concerts twice, you would have half a billion who could sign up for an average pledge of $50 a head as a supplement to their normal giving, yielding a net sum of $25bn outright. The money would be worth almost twice that amount in actual aid, since they would be grants wheras most aid consists of loans that must be repaid.

This would mean abandoning some of your current allies. But you can do nothing less if your efforts are to yield results. In a recent interview, you said that you expected your music would endure forever but poverty would have ended in a hundred years. I wish you good luck on your music. But not even a hundred years would suffice to end poverty if you fail to correct your course.

Blog author: jballor
Thursday, March 2, 2006
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Yesterday I recommended Professor Plum’s EducatioNation, and I’ll do so again today.

Here’s a tidbit from a recent post titled “We Need More Unions” on Prof. Plum’s blog: “Once again, America’s teachers unions reveal that all their blather about being child centered, about being stewards of America’s children, and about social justice and diversity, is nothing but a disguise for their real interest—which is self-preservation via monopolistic control of the means of education.”

Prof. Plum, who daylights as a master’s level education professor at a large public university, certainly knows how to turn a phrase. Read the rest, including a link to and text of an OpinionJournal article (with Plum’s commentary included!).

Washington lawmakers are falling all over themselves to pass legislation aimed at curbing corruption in high places. But, as Kevin Schmiesing points out, the most effective solution to the problem has been known for hundreds of years: limited government and moral restraint.

Read the full commentary here.

Bono and Sachs: Does The Edge feel left out?

Although I am a year behind here, I have just started reading Jeffrey Sachs’s The End of Poverty: Economic Possibilities for Our Time, paperback just released by Penguin (with a foreword by Bono!). I’ll avoid the urge to comment on everything that strikes me this or that way in the book–and I most certainly am not going to try to go head to head with Sachs on economic matters. But, being a student of language, I would like to point out a subtlety some might consider benign, but I suspect is of relevance. It exists in the following passage from the Preface to the Paperback Edition: (more…)