The Detroit News published a new column today by Acton president and co-founder Rev. Robert A. Sirico:
Faith and Policy: Free markets, not aid, will help poor nations best
Rev. Robert Sirico
At the recent G8 and G20 meetings in Toronto, a hue and cry was raised by nongovernmental organizations and other activists about the failure of industrialized countries to make good on promises to raise aid to the developing world.
Instead, the activists should have called for a summit of African and Asian leaders and others who are calling for expanded trade, not more dependency in the form of foreign aid.
It has not been aid, after all, that has lifted hundreds of millions of people out of poverty in China and India but the move to market-oriented reforms, freer competition and the unleashing of the creative, entrepreneurial spark in the human person. In a recent book, one of India’s former finance ministers put it this way: “We got more done for the poor by pursuing the competition agenda for a few years than we got done by pursuing a poverty agenda for decades.”
The poverty agenda ignores, for the most part, market mechanisms in favors of huge grants to government leaders, who often pocket large chunks of the aid. The market makes room for the free interactions of people pursuing their own limited economic goals, in an almost infinite number of daily interactions. The market economy, despite the superficial appearance of chaos, ends up creating a larger social or common good for the largest number of people.
When we speak of the idea of the common good, we need to also be mindful of the political and juridical institutions that are most likely to bring it about. The answer is not to be found in the “commonality of goods” but in the very institutions that the socialists worked so hard to discredit. Let me list them: private property in the means of production, stable money to serve as a means of exchange, the freedom of enterprise that allows people to start businesses, the free association of workers, the enforcement of contracts, and a vibrant trade within and among nations (with benefits that would ultimately flow to Michigan) to permit the fullest possible flowering of the division of labor.
In an interview with Der Spiegel published this month, when Rwandan President Paul Kagame was asked a question about Africans complaining of exploitation, he responded that it was the wrong question: “Why don’t we talk about how we can get on our feet on our own? We do not always want to be the victims and to serve as a battleground for foreign interests.”
The market economy moves Africa and other developing nations away from dependency and offers the hope of real growth, a growth that provides vastly improved conditions for all.
Our gifts are to be put to work for the common good, and as such our talents and our wealth need to be put into action — not reduced to a line item in some aid bureaucrat’s master plan.
In addition to my review of Blind Spot, this issue includes a host of noteworthy items, including Wilfred McClay’s essay, “The Soul & The City,” and a review by HBU provost Paul Bonicelli of Dead Aid: Why Aid is Not Working and How There is a Better Way for Africa, by Dambisa Moyo. Bonicelli, formerly an assistant administrator for USAID, discusses how his own experience as a “foreign aid official” coheres with Moyo’s depiction of the state of affairs in international development.
“I saw the same people doing the same things over and over again,” writes Bonicelli, “heard the same mythical references to the power of aid to transform a society, and of course observed the same people and institutions ignoring the history of aid-giving–all things are made new once the cycle begins again with new tranches of money because a new program or leader is now in place.”
This issue of The City, which is available in hardcopy via a complimentary subscription, is the first to be fully available in digital format. This is worth consideration because this is a publication that I used as an example in a post exploring the state of magazines and print journals in the digital age. At that time editor Ben Domenech sent me a note discussing the journal’s desire to appear in full form online.
While searching for the right venue the editors seem to have settled, at least for now, on Zmags, which uses a browsable form that imitates the print version as well as providing the option for a full PDF download.
Saturday is World Malaria Day, which each year draws attention to the scourge that malaria is to millions of people throughout the developing world. An estimated 1-3 million people die of malaria each year, and many of these are children. But even when people don’t die, malaria is debilitating. Malaria reduces the red blood cell count to low levels, which in addition to all of the other symptoms, drains energy and saps creativity. In response to this, the thing large multinational aid organizations have focused on are bed nets. Now bed nets can be helpful, but they are a short-term fix. Fortunately, after years of false ideology preventing the use of DDT, the world is starting to come back to its senses. Acton has been promoting this for several years.
Today, NRO’s The Corner quoted malaria expert Richard Tren, who argues that a bed net is a potentially useful but overemphasized tool in the war against malaria, with DDT and, surprisingly to some, economic freedom having greater promise for pushing back the scourge of malaria over the long run.
And if bed nets or any other foreign interventions are to do significant and lasting good, charitable enterprises will need to rediscover the importance of subsidiarity, of humans on the ground in relationship with other human beings, as opposed to government-to-government aid transfers that often do more harm than good.
One person who speaks forcefully to this issue is Rwandan Anglican Bishop John Rucyahana, a leading force in the reconciliation in Rwanda and a key partner in Bridge2Rwanda and the P.E.A.C.E Plan. In an interview we conducted with Bishop John near his orphanage in Rwanda last fall, he commented on why U.N. bed net programs often fail, and why the P.E.A.C.E. plan is succeeding:
We have a percentage of people, thank God, the number is getting less, but we have a great percentage of people who don’t read and write. And you give them a mosquito net; you scare them to death. You need to tell them that the mosquito net would prevent mosquitoes from biting them, and they need to trust you’re not telling them a lie. You’re not trapping them with that mosquito net. They’ve been deceived for too long. They need to have people who trust them, and they trust. And the people who love them; and the people they love. So Rick Warren has it deadly right to say that the church is needed to be employed into the economy, into the health and the social recovery of nations.
Churches have the life-giving hope of the Gospel, Bishop John explains, and they are embedded locally.
The church is out there with the people. You know I’m hugging and I’m shaking hands with every one of these children because I’m with them all the time. They know who I am, and they know I am there for them. During the aftermath of the genocide, many people ran away from here, and I stayed with them. All of these individuals giving the aid ran away from here. And I stayed. Churches are here. And we know how to approach them.
In preparation for the G8 summit in Japan in July, the Catholic bishops’ conferences of the respective G8 nations have collaborated and released a joint statement to their political leaders. I mean to diminish neither the importance of the topics addressed nor the respect due to the bishops’ teaching by saying that such statements are usually rather bland and predictable. This one, however, contains some interesting language concerning, in particular, global warming. “We urge you,” the bishops exhort, “to deepen your commitments and actions to reduce global poverty and address global climate change.”
And later, this:
The costs of initiatives to prevent and adapt to the harmful consequences of climate change should be borne more by richer persons and nations who have benefited most from the emissions that have fueled development and should not unduly burden the poor.
At the risk of reading too much into this language (one must assume, after all, that it was carefully chosen), consider the terminology: “reduce” poverty, “address” climate change. Not “stop” climate change, or even “reduce” it, but “address” it. Combine that formulation with the later passage concerning the consequences of climate change for the poor. Admittedly, this could be read in several ways, but one possible way to read it is this: If rich nations are going to take measures to address climate change that have economic costs, rich nations need to bear those costs, not impose them on other nations.
In sum, although the statement devotes much space to the issue of climate change—which is comprehensible in light of its importance as a topic for the G8—the emphasis is almost exlusively on climate change’s impact on the poor, including the impact on the poor of efforts to stem climate change. In light of the ongoing debate about what the effects of climate change will be (good or bad) as well as whether human action can significantly influence it one way or the other, this seems to me exactly the right approach to take.
It has also to be noted, however, that the bishops continue to press for increased foreign aid to developed nations. Made in the context of the G8, one must assume this means government aid. It is too bad that they do not display some awareness of the increasing evidence that government aid has been largely ineffective (arguably, counterproductive) in this cause. To their credit, they do stress that “the poor must be empowered to be drivers of their own development.” Wouldn’t it be refreshing if they also said something along these lines?:
“We urge the governments of the wealthy nations to promote the development of poorer nations by taking the following measures: 1) refuse to dispense aid to or through any government or agency that has a record of corruption; 2) foster the activity of private foreign aid agencies through deregulation and tax benefits; 3) abolish tariffs on foreign goods and subsidies to domestic production.”
International aid groups have criticized the EU and many of its member states for falling behind their promises to step up foreign aid to 0.5 per cent of GDP by 2010 and 0.7 per cent by 2015.
On the one hand, these groups are right to expose the accounting tricks governments use in order to promote themselves as saviors of Africa. On the other hand, the aid groups should consider very carefully whether their focus on state aid is really the key towards future development in poor countries.
The problem that they indicate is that the EU and its members classify some expenses as aid although these are only indirectly related to development. This includes debt restructuring and payments to cover housing of refugee claimants in Europe.
The aid groups say that in 2007, EU nations spent around €8 billion in such non-aid items. They conclude that “on current trends, the EU will have given €75 billion less between 2005 and 2010 than was promised.”
This kind of creative accounting should not be very surprising since politicians like to claim that they are helping the poorest countries in the world but also know that it is more difficult to tell taxpayers that they have to foot the bill. In such circumstances the most convenient thing to do is to artificially inflate the aid budget with non-aid expenses.
The question remains: Is state-to-state aid the most effective way to promote development? Prof. Philip Booth explained at a recent conference organized by the Acton Institute in Rome that government aid has failed on countless occasions and has even entrenched underdevelopment on some occasions.
Booth made clear that “at the empirical level, there appears to be a negative relationship between aid and growth. This does not imply cause and effect of course, but it should make us pause for thought. After the late 1970s, aid to Africa grew rapidly yet GDP growth collapsed and was close to zero or negative for over a decade from 1984. GDP growth in Africa did not start to pick up again until aid fell in the early-to-mid 1990s. In East Asia, South Asia and the Pacific, one also finds that, as aid reduced, national income increased rapidly.”
It is important to note that Booth criticized government-to-government aid and not charity in general. Whereas transfers between governments have often resulted in rent-seeking and the strengthening of dubious regimes, private initiatives do not suffer from the same problems: “None of the points I have made relate to the exercise of charity. It is important to point out that we should not wait for a just ordering of the world or good governance in recipient countries before supporting charitable relief.”
Aid groups such as Oxfam and Christian Aid would do well to turn their focus away from pressuring governments to spend more on aid and instead strengthen their efforts to encourage private initiatives.
The NYT editorializes today that Venezuelan president Hugo Chávez is, at worst perhaps, a necessary evil given the current political climate: “if it takes Mr. Chávez’s demagogy to spur Washington toward more enlightened policies in the Americas, so be it.”
Oh yeah, and more US foreign aid to Latin America equals “social justice.”
“Mr. Bush deserves praise for doubling the assistance to Latin America, to $1.6 billion a year. But much of this has been for security programs in Colombia. A lot more will be needed if promoting social justice is to be more than a sound bite.”
In any case, I think it may in fact be true that President Bush’s “reputation in the hemisphere [is] nearing its modern nadir” if in a comparison of Bush and Chávez the latter comes off looking favorably. Or maybe it says more about the discernment of those making such judgments than it does about Chávez’s objective quality.