Posts tagged with: global poverty

Ecumenical News International (ENI) relates the launch last month of a new initiative in Africa, designed to “to mobilise a strong African voice in development.” The effort is called African Monitor and is led by the Anglican Archbishop of Cape Town, South Africa, Njongonkulu Ndungane.


Anyone who spends much time at all looking at the economic development situation in Africa quickly realizes the lack of independent, nongovernmental, native voices. As African Monitor states, “This African civil society voice can thus be seen as the too often missing ‘fourth piece of the jigsaw’ alongside existing stakeholders of donor governments and institutions; their African counterparts; and donor-based NGOs and civil society.”

African Monitor’s mission is to begin to fill this need: “African Monitor is an independent body, acting as a catalyst within Africa’s civil society, to bring a strong African voice to the development debate, and to raise key questions from an African perspective.” The initiative represents a truly unique and much needed enterprise, since before the creation of African Monitor “there was no existing pan-African network that can provide such a catalyst across the sub-Saharan region, and taking a perspective across aid, trade, development and financial flows.”

In his address before the opening of the group, titled, “Let African Voices speak out for effective action on Africa’s development,” Archbishop Ndungane emphasized the need for accountability and true follow-through on the part of donors and developed nations: “We saw that Africa’s grassroots voices, currently marginalised and fragmented, could be harnessed to pursue these ends, and that faith communities, the most extensive civil society bodies on the continent, could provide the backbone of networks to bring these voices into the public arena.”

The Acton Institute has long supported the claim that African civil society needs to take a leading role in the development of the African continent. See, for example, the conversation with Rev. Bernard Njoroge, bishop of the diocese of Nairobi in the Episcopal Church of Africa, and Chanshi Chanda, chairman of the Institute of Freedom for the Study of Human Dignity in Kitwe, Zambia, about the issues of debt cancellation the moral nature of business (video clips, .wmv format, available for Rev. Njoroge and Mr. Chanda).

Blog author: jballor
posted by on Monday, May 15, 2006

John Stossel has made an excellent and noteworthy journalistic career by going where the evidence takes him. He possesses an intellectual honesty and curiosity that is refreshing, especially when compared to the banal talking head syndrome which dominates most main stream media.

As co-anchor of ABC’s 20/20, Stossel has negotiated a deal which allows him to do special reports on whatever interesting and controversial topics he chooses. His latest was a special aimed at debunking popularly accepted myths, tied to the release of his new book, Myths, Lies and Downright Stupidity.

Here’s Stossel’s #1 myth: More foreign aid will end global poverty. (You can view video of the segment here.) Stossel points to Bono and Jeffrey Sachs as examples of people who perpetuate this myth, with their advocacy of the ONE campaign and emphasis on increased foreign aid.

Stossel relies in part on June Arunga and James Shikwati of the Inter Region Economic Network to explode this myth: “Arunga grew up in Kenya, and she wonders why Americans waste money on foreign aid to Africa … when many politicians just steal it.”

“What’s holding down Africans is actually the bad governments, the bad policies that make it difficult for Africans to make use of their own property,” Shikwati said. “What the aid money is doing to Africa is to subsidize the bad policies that are making Africans poor.”

The Acton Institute has worked on exposing the false assumptions of this myth a long time, and with the help of Arunga and Shikwati as well. Arunga wrote a letter from a WTO meeting in Cancun in 2003, first published by the Acton Institute (PDF) and subsequently carried in the Philadelphia Inquirer (October 6, 2003). James Shikwati authored an Acton Commentary that same year, “The WTO and the Voice of the Poor.”

For more information about Acton’s work in these areas, check out our special Aid to Africa section, which brings together a number of important and related resources, including conversations on debt relief and the moral nature of business with the Rt. Rev. Bernard Njoroge, bishop of the diocese of Nairobi in the Episcopal Church of Africa, and Chanshi Chanda, chairman of the Institute of Freedom for the Study of Human Dignity in Kitwe, Zambia.

You can also visit Acton’s award-winning IMPACT ad campaign, aimed at raising awareness about the complexity of global poverty and the Solutions video, which addresses failures of governments first, governments only proposals.

And for more of John Stossel, check out the 2 CD set of his address at the Lord Acton Lecture Series on October 20, 1997, in which he deals with the pervasiveness of government and the nature of self-interest in the free economy.

An snippet from Ecumenical News International:

Presbyterians invest $1 million in church ‘bank’ that helps poor

New York (ENI). The Presbyterian Church (USA) has invested US$1 million in Oikocredit, an organization established by the World Council of Churches that assists people in poor countries start small businesses. The investment is the largest in Oikocredit over more than a decade, the church announced earlier this week, making the 2.4-million-member US denomination the second-largest investor in the institution set up in 1975. The largest is the Church of Sweden.

I’ve looked a bit at the Oikocredit organization, and in generally this does not fit my normal expectations for an initiative by the left-leaning WCC. To be sure, Oikocredit does employ the rather vague criteria of “socially responsible investing” when deciding which groups to fund.

But in general, the microlending approach is much more economically viable and informed than many ecumenical attitudes towards global poverty. Started over thirty years ago, Oikocredit has a track record, and “was created for groups that need credit to develop their productive enterprises, but have difficulties receiving credit through conventional financial institutions, because they simply lack collateral.” For a personal story of how microloans can be a part of the solution (along with property rights, the rule of law, and so on), see this commentary by Rev. Jerry Zandstra.

Despite its shortcomings, Oikocredit on the whole is probably a good thing. And again, when compared to what you typically see from ecumenical groups, it’s positively refreshing.

In this week’s Acton Commentary, “The North American Church and Global Stewardship,” I note that blessed with extraordinary material riches, Christians in North America are increasingly viewing their stewardship responsibilities in a global context. I look at one school in British Columbia and how their local building project also raised funds for a school in Sierra Leone.

Dennis DeGroot, principal of Fraser Valley Christian High School, writes and informs me, “The money keeps coming in for the school project. The students have far exceeded their goal. The total now at $36,000 and money still coming in.” He also says, “My long term vision for this is that all Christian schools would find partnerships like ours in the developing world; true partnerships where we learn from each other where real wealth lies.”

For some background, you can read my brief column in The Banner, “Building on the Tithe.”

Blog author: jballor
posted by on Monday, March 20, 2006

I was intereviewed for this article in yesterday’s New York Times, but I apparently didn’t make the cut. Nevertheless, in “Fair Prices for Farmers: Simple Idea, Complex Reality,” Jennifer Alsever does an excellent job bringing to light some of the dangers that are inherent with external and artificial adjustments to the price mechanism.

In the case of the fair trade food movement, the price floor is set artificially at a certain amount, determined to meet or surpass the subsistence needs of the local farmer. For coffee, this is currently set at $1.26 per pound by the fair trade community.

Alsever writes, “Despite good intentions, most consumers who shop according to their social convictions don’t know how much of their money makes it to the people they hope to help. Critics say too many fair trade dollars wind up in the pockets of retailers and middlemen, including nonprofit organizations.”

The problem is that the fair-trade certification organizations themselves, and also the retailers, can add several layers of increase into the price of a fair trade commodity. We might say that the fair trade consumer, who is presumably already willing to pay more than the market price, has a greater level of acceptable price elasticity.

TransFair USA, the certifying body in the US, “generated $1.89 million in licensing fees from companies that used the logo. It also spent $1.7 million on salaries, travel, conferences and publications for the 40-employee organization.”

“Farmers often receive very little,” said Lawrence Solomon, managing director of the Energy Probe Research Foundation, a Canadian firm that analyzes trade and consumer issues. “Often fair trade is sold at a premium, but the entire premium goes to the middlemen.”

Of course, these are the self-professed middlemen who cut out the layers of middlemen under a market based, free trade system. Those were the “bad” middlemen, while TransFair apparently represents the “good” sort of middleman.

One other aspect of this tinkering with the price mechanism is that the fair trade movement does nothing to recognize the reality reflected by purchasing power parity (PPP). So, writes Alsever, “a price that is fair in one country may not be in another. In Brazil, ‘$1.26 per pound for coffee is a fortune,’ said Kevin Knox, a coffee consultant in Boulder, Colo. ‘In the forest in the mountains of Mexico, the money barely is enough to justify doing it. Their yields are small, and the costs of production are higher.’”

These are just a few of the problems that arise when people try to artificially manage the price mechanism. When it is allowed to do its job, the market price of something provides a lot of good information. It can tell us, for example, that the supply of coffee far outstrips the demand, and so some coffee growers should think about getting into another product or industry. It would be in their best interests to do so, and the best interests of all of us, so that the world doesn’t end up with too much coffee and too little of something else.

The economic ignorance behind the fair trade movement leads me to believe that it really is just a sort of passing fad, especially popular among naïve church groups, which will at some point be replaced by far more effective methods of alleviating poverty around the world, such as micro-enterprise development (for more on this, see groups like Five Talents, Opportunity International, and Kiva). It’s hard to see real staying power behind a movement that thinks the answer to the reality of poor coffee farmers is simply to subsidize the production of commodities of which we already have an oversupply.

For more on some of the emotional and psychological reasons people are willing to pay more for fair trade items, see “Absolution in Your Cup: The real meaning of Fair Trade coffee,” by Kerry Howley. The fair trade movement currently lack the ability to enforce their pricing schemes through the coercive power of the state, so they must rely on other tactics.

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.

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…)

I was watching my favorite rerun on TV Land the other day, Bonanza. If you don’t know Bonanza, you should. It’s perhaps the classic TV western, and I was watching episode #68 from Season Three, “Springtime.”

One of Ben Cartwright’s friends, Jedidiah Milbank is injured during a roughousing mud-wrestling match between Adam, Hoss and Little Joe. As reparation Ben volunteers the three boys to take care of Milbank’s business for him. It just so happens that there are three tasks, so each of the boys gets one.

Adam Cartwright gets the final task and it is to evict a family from a ranch for non-payment. It seems that Milbank had set up an arrangement for the family to pay for half of the ranch up front, and the rest in monthly installments. Well, the family was a number of months behind, and Milbank was eager to foreclose.

The eldest Cartwright brother dutifully rides off to the ranch, and happens upon a pleasant but beleaguered clan. It seems that the family had tied up most of their capital in a prize bull, who had been mauled by a bear before it could sire more than a few calves. And all but a handful of those calves were drowned in spring floods. When the water pump broke so they could no longer irrigate their crops, the family was left without any source of revenue.

That’s the situation when Adam arrives. The pieces of the pump need to be repaired, but one necessary part must be purchased new and costs $200. The family just doesn’t have it. Instead of foreclosing on the home, Adam, who shares his father’s “strong moral code,” decides to help out the down-and-out family. They aren’t poor because of the lack of effort or work, but simply because of circumstances and poor decisions such as tying up capital in the risky move to buy the stud bull.

So what does Adam do? He helps the father fix the pieces of the well that can be repaired and comes up with a plan to use the pump to double the land that can be irrigated. This will potentially double the family’s crop, helping them to get their heads above water again. The family will need to sell the few remaining calves from the stud stock to pay for the expensive replacement part for the water pump. In the meantime, Adam loans the family the money to get current on their debt to Milbank, averting the disaster of eviction.

Why am I talking about this episode?

I believe it is a great example of how compassion can work within the capital market system. Certainly Milbank filled the role of the archetypal greedy capitalist, but the Cartwrights themselves own a 1,000 acre ranch and are incredibly wealthy by the standards of the day. The difference between Milbank and the Cartwrights is in how they used their wealth and power. By the letter of the law and justice, Milbank had a right to foreclose. By contrast, it was compassion that motivated Adam.

The Heidelberg Catechism, a traditional symbol of Reformed Christianity, notes that one of the reasons we work is so that we can be good stewards of our wealth. It reads, “I faithfully labour, so that I may be able to relieve the needy” (Q&A 111). That’s exactly what Adam Cartwright was doing with his wealth.

And he did it in such a way that it was oriented toward the family regaining their own financial independence. He loaned them part of the money, as a sort of nineteenth-century version of a micro-capital investment, but also made sure they had to invest what they had in their own future by selling the remaining calves.

There’s a lesson to be learned in all this. The United States is in an analogous situation with respect to the developing world as the Ponderosa and the Cartwrights were to that struggling family. We can choose to embody the “cowboy compassion” of the Cartwrights or the craven greed of Jedidiah Milbank.

A great way to invest in the future economic development in poorer nations is through micro-loan investment. Very often it is difficult to get reasonable long-term or even short-term capital loans in these countries, because of the volatility of the currency and government corruption (for more on banking and corruption, see these two issues of the Christian Social Thought Series: Banking, Justice and the Common Good and A Theory of Corruption).

Here are some groups that do micro-loans in developing economies that are worth checking out: Five Talents, Opportunity International, and Kiva.


Blog author: jballor
posted by on Thursday, February 23, 2006

If you’re looking for more insight on, or perhaps simple confirmation of, the economic agenda of the ‘ecumenical’ movement (the World Council of Churches [WCC] the World Alliance of Reformed Churches [WARC], et al.), here’s an insightful little tidbit from Ecumenical News International:

Pacific islanders are a source of hope for other Christian communities seeking a culturally-based communal economy based on sharing and cooperation, participants at a global church gathering have heard. During the 14-23 February ninth assembly of the World Council of Churches some participants have identified Pacific island communities as an alternative to the type of economic globalisation that happens under regulations adjudicated by the World Trade Organization (WTO). [523 words, ENI-06-0186]

For more on the WARC view of economics, check out this article I co-wrote awhile back, “Ecumenical Economics: Confessing against the Empire,” about the ultimately abortive efforts by radicals to get the alliance to declare a status confessionis regarding the global economy.

Blog author: jspalink
posted by on Monday, February 6, 2006
“Stop sending us your used clothes”
“Why 30 grams of fat is good for the poor”
“Look closely and you’ll see the Virgin Mary in this tortilla”

Acton is wrapping up a three-month project that had print advertisements running in several publications: WORLD, Crisis and the Michigan Catholic. The idea is to get people thinking about the economic consequences of trade policies and the power of entrepreneurial creativity. We’ve received a lot of feedback on this project, most of which was highly positive — with a few critical zingers. (Thanks to those of you who allowed us to use your names in the comments.) If you haven’t had a chance to see the ads, please visit the special Web page we built around this campaign for more information. We’d like to get your insights. Please email us at home [at] acton.org

I fully agree with your underlying point/message. I liked the “used clothes” ad very much. But… As a non-Catholic, I am uncomfortable with the tone of your “Virgin Mary” ad (though it might play well in media markets with a large proportion of Catholics). The “30g of fat” ad also sends mixed messages — while I agree that the appearance of McDonalds is a sign of a degree of stability, protection of private property & investment, and openness to foreign direct investment and other commerce (all very good), I don’t think that American fast food is much of a blessing to the world, least of all the underdeveloped world. Freer markets and protecting the lives/property of agriculturalists would certainly help feed and enrich these people better than new McDonalds branches in major cities would (these countries are far too heavily urbanized as a result of welfarism and statism).
~ Steve Daskal

I think your ads are tremendous. As you know, I’m sure, the provision of food aid to Africa also is detrimental to the local food production market, in the same way as the sending of used clothing. Thank you for these!
~ Philip Sawyer

Great ads. They communicate a difficult concept in a respectful manner. It makes me want to know more about Acton. Keep up the good work.
~ Name withheld

Thank you for the ads. I especially identified the one titled “Stop Sending Your Used Clothes.” As a Kenyan I witnessed how the used clothes market wiped out all the three textile industries that were located in my city, Thika. Even though the used clothes were cheaper and allowed poor people to afford more clothing, it increased poverty in the area because as each industry closed down, unemployment went up impacting many families. Many of these textile industries had hired a lot of women workers. This meant that when these women lost their jobs they could no longer support their families. Many of these women were forced to either depend on men or turn to prostitution. The city began to witness an increase in the AIDS epidemic. There is a high correlation between AIDS and poverty. Poverty does not only strip off people of their dignity but it also makes it difficult for people to make good moral choices. AIDS will only be fully! eradicated when poverty, particularly among the most vulnerable,(women and children) is eradicated.
~ Name withheld

You are doing good work. You are exactly correct with the ad message. I hope they are well heard.
~ Larry Spears

As a student of both moral philosophy and economics, I have been greatly encouraged to see your ads. They are professional, research based, and just the type of thing to make a liberal’s jaw drop. They challenge some fundamental assumptions made by liberals that are completely false. After years studying under a very liberal faculty, I rejoice every time I see a relevant, timely message encouraging free market ideals. The beautifully designed posters are much more effective than some of the lame and unprofessional “research” I have seen from other organizations. Thank you!
~ Name withheld

Quite honestly, I think they are disgraceful, sinful, anti-Catholic and an abomination if one knows anything about charity and economics at all. But I suspect you really don’t care what people think.
~ Name withheld

I think this is a long overdue and an excellent way to start educating Catholics about vital essentials of economics! Keep up the good work!
~ Name withheld