Posts tagged with: poverty

International aid has come in for a lot of criticism recently and with the debate on the federal budget just beginning, U.S. funding for aid is on the chopping block.  With a rising deficit, and a struggling economy, many are asking why the United States chooses to continue funding international, or foreign, aid. People of faith are often caught in the middle of the debate on whether international aid should or shouldn’t be cut, along with the role the state should play.

In International Aid and Integral Human Development, Philip Booth, Editorial and Programme Director at the Institute of Economic Affairs, addresses the problems with international aid, the role the state should play in funding it, and how international aid should be funded to most effectively benefit those who receive it along with ensuring that the aid is founded on the correct moral principles.

Booth articulates that aid needs to focus on true development, which can be understood as a more well-rounded development.  Aid that fosters true development will encourage moral development, will ensure that those benefiting from the aid will not become slaves to consumer goods, presents an opportunity to own property and save, respects openness to God, the natural world and human rights.

In this new monograph, Booth explains why he thinks that our current structure of international aid is failing.  He offers a timely example:

Estimates of the size of the fall in the number of very poor in China over the last two decades or so range from 50 to 400 million, and other Asian countries such as Vietnam  have also seen astonishing declines in absolute poverty.  Such Asian countries account for the greats share of the reduction in absolute poverty in recent years, yet they are not among the top thirty recipients of U.S. foreign aid between 1996 and 2006.

Later in his monograph, Booth discusses the problems with the current top-down process of international aid.  He conveys how aid currently benefits the governing elite who have used their power to keep their people poor.  Corrupt governments prevent the aid from going to those who need it the most.  Booth also says that, “Aid changes the lines of accountability in government.  Governments become accountable to those from whom they receive aid—either through other government or institutions—and not to their own people.”  From his evaluation, Booth explains history has proven poor countries can develop without aid, and countries that receive aid do not tend to develop.

In a recent article appearing in The Telegraph, Booth further expands upon his ideas laid out in International Aid and Integral Human Development by showing that fair trade is not the answer to solving poverty. Instead, we should be looking towards free trade. In order to truly help a country, he argues, we must make sure they develop a sound economy that does not rely on aid. Booth explains in his column that fair trade is not the answer and is counter productive to its goals:

Fair trade is supposed to bring better working conditions to poor producers, together with higher prices and better social infrastructure. Questions have been asked about whether monitoring in the supply chain is sufficiently robust, and examples of unsatisfactory practice have been found. Furthermore, there are costs for producers. Poor farmers have to pay considerable sums to join up and often have to organise their businesses in particular ways: it is not suitable for all producers, especially in the poorest countries.

Booth later demonstrates how “fair trade is not capable of pulling 400 million people out of absolute poverty as free trade has done.”

In his monograph, Booth goes on to explain basic preconditions that are necessary for countries to develop, and where direct aid is appropriate. He brings in principles from Catholic social teaching, and explains that the common good requires basic conditions for humans to be able to flourish.  In International Aid and Integral Human Development, Booth gives very timely advice, and provides insightful recommendations for international aid while still abiding by the principles founded in Catholic social teaching.

International Aid and Integral Human Development by Philip Booth is available through the Acton Bookshoppe.  Booth’s article in The Telegraph can be found here.

An interesting report in The Economist on the rise of flashy and free spending entrepreneur “gazillionaires” in India and China and how they are perceived:

In much of India, life is getting perceptibly better each year. Wealth per person has vaulted by 150% in the past decade, from $2,000 to $5,000. Many Indians think the nation’s entrepreneurs deserve some of the credit. In Dharavi, a slum outside Mumbai, an illiterate mother called Aruna sits in her tiny one-room flat, which is home to ten people. Asked how she feels about the rich, she says: “They have worked hard. And we must work hard, too.” Her eldest daughter has a job entering data at a bank. The next one is studying diligently. The family may be near the bottom of the ladder, but it sees a way up.

But this in China:

The perception that commercial success often depends on political ties makes inequality in China more galling. In the mid-1980s Chinese incomes were more evenly distributed than India’s—hardly surprising, since China was nominally communist and India is afflicted by a caste system. But now China is less equal than India, with a Gini coefficient of 0.4 to India’s 0.37. China has 800,000 dollar millionaires, but also 400m people who live on less than $2 a day.

Blog author: jcouretas
posted by on Monday, December 13, 2010

Jordan’s post on hunger raises a timely question, on a day when First Lady Michelle Obama was on hand to watch the president sign the $4.5 billion “Healthy, Hunger-Free Kids Act” at a Washington elementary school. Despite the media coverage and White House spin that points to this in part as a hunger fighting piece of legislation, the measure is really about obesity. Because in America, the real problem with food is superabundance and waste, not scarcity and hunger.

As Bloomberg noted today:

Almost 20 percent of 6- to 11-year-olds were considered obese in 2007-2008, according to a study by the Atlanta-based Centers for Disease Control and Prevention. Obese children are more likely to have health issues like Type 2 diabetes and high blood pressure according to the CDC.

A study published last year estimated the cost of treating obesity-related ailments in 2008 at $147 billion. The study, noted the Washington Post, “compared medical costs for normal-weight people to those for obese people, suggests that curbing the obesity epidemic is key not only to ensuring a healthier future for Americans, but also to reining in health costs.”

The Centers for Disease Control helpfully suggests that schools should be located “within walking distance of students’ homes and making it easier for people to get access to healthful foods.” Of course, these tips largely will be ignored, as will most other nanny state directives on eating healthy diets and exercising that have been around for decades. Walking to school? That’s what minivans are for.

Now, you can argue that poor people are consuming too much bad food. You can argue that government farm subsidies foster production of the wrong kinds of food. All that is debatable and subject to honest differences of opinions as to causes and solutions. What doesn’t seem obvious is that millions of Americans are going hungry. This is what we get constantly from the religious left and the U.S. hunger lobby, which sees expansive government welfare programs as the inevitable answer. (more…)

Blog author: jwitt
posted by on Tuesday, November 16, 2010

There’s a story that I heard, of a miner, a family down in– it was in the Appalachia area and the church there really thought that they were doing a great deal because they would go in, they said they would pick the poorest families and they would take them Christmas gifts and turkeys and that sort of thing. So they did. They went to this family and they presented them with all the gifts and gave them to them and all the children had gifts; they had a hot meal on the table. The church was so pleased with what they had done, and then they left. And the husband just broke down and cried because he said, “You mean in this community, we are thought of as the poorest family in the community?” The shame that came with that, with the charity that had been given so lovingly out of the best of intentions, but it absolutely shamed him and it destroyed his life. I heard it from his son. He said, “It destroyed my father because he said he was so shamed in front of the rest of the community because they didn’t think that he was a person of worth that they had to take care of his family for him.”

C. Neal Johnson, from an Interview Oct. 8 at a Partners Worldwide Conference in Grand Rapids.

I’ve just returned to Rome following our Lisbon conference on Catholic Social Teaching, Free Enterprise and Poverty. Judging from the crowded auditorium and the lively comments from the audience, it was a very successful event. Here I’ll mention a few of my personal highlights from the event:

– Bishop Filippo Santoro gave an excellent presentation on the errors of using income transfers to achieve a more equal society, and especially the dependency the poor develop on the state.

– Professor Raúl Diniz reminded us that there is no particularly “Catholic” model of economics and that more Catholics should heed the advice of free-market or “liberal” economics in our time.

– Fr. João Seabra offered a spirited defense of Pope Pius XI’s anti-communism, which sadly still needs to be recalled twenty years after the fall of the Soviet Union.

– Paul Atkins explained to our Portuguese audience how decades of well-intentioned policies carried out by the US government to promote home ownership lead to the recent financial crisis and the lessons concerning regulation that should be drawn by developing countries.

– Samuel Grottis spoke about how successful businesses are not just profit-making but transformational.

– Professor João César das Neves exploded the myths surrounding the Chinese economy, calling it a seductive form of Marxism. (Apparently his PowerPoint presentation was quite a hit as well, but I couldn’t see it from where I was seated as the moderator of his panel. Perhaps the good professor will kindly share it with us on the PowerBlog.

There were many other intriguing points raised by the speakers and during the Q&A session about the challenges of capitalism to Christianity and the conference could have easily lasted another day or two. The viewing of the Poverty Cure trailer was especially well received.

On a side note, the Saturday before the conference, there was a large protest of public-sector employees against the Portuguese government’s austerity plans. From what I could tell from my meanderings through the streets of Lisbon that day, even the slightest reduction in benefits will meet with stiff resistance from the public-sector unions, which should put paid to the idea that government workers are somehow more concerned with the common good than private-sector workers.

All in all, it was an auspicious beginning for what many hope will be a continuing fruitful relationship between the Institute for Political Studies at the Catholic University of Portugal and the Acton Institute. Mui obrigrado to all who made this a great conference.

I’m currently in Lisbon ahead of Acton’s fourth conference in the seven-part series Poverty, Entrepreneurship, and Integral Development. Entitled “Catholic Social Teaching, Free Enterprise, and Poverty”, it will take place on Tuesday, November 9 at the Catholic University of Portugal. Click here for more information or if you happen to be in the Lisbon area and want to join us.

Tuesday’s conference was designed to focus on the Portuguese-speaking world, primarily because of its inter-continental scope and close connection to the Catholic faith, and to discuss the challenges posed by extreme poverty in developing countries and what can be done to address them. As often happens with our conferences, the reality of current events has a way of stressing the importance of principles that support a free and virtuous society.

I was still reeling from the news that the U.S. Federal Reserve will print $600 billion of new money upon my arrival yesterday when I read that the Portuguese prime minister criticized “speculative movements” for the country’s high bond yields.

Later in the day, I learned of the recent election of the left-wing Dilma Rousseff in Brazil, and her desires to continue her predecessor Lula’s economic reforms towards an environment of inflation targeting and broad fiscal responsibility. Rather surprising coming from a former guerilla fighter whose tendencies should be to distrust markets and increase the size and scope of the state.

And finally, the United Nations published its 2010 Human Development Report, which shows that developing countries have become much wealthier and healthier in the last 40 years, which not coincidentally is more or less when many of these countries have opened themselves up to the benefits of free markets, both domestically and internationally. The UNDP report’s central thesis that “people are the real wealth of a nation” echoes, of course, Pope John Paul II’s 1991 social encyclical Centesimus Annus and its proclamation that “man’s greatest resource is man himself” (n. 32).

What current events such as these are telling me is that while poorer countries have adopted free markets in order to improve the living conditions of their people, it is the developed world that has forgotten the lessons of wealth creation and free enterprise. The former colonials now have much to teach their former masters! Quite a remarkable shift that, in my mind, looks poised to stand for some time to come.

These and other delicious ironies of the day will certainly make for a stimulating event on Tuesday.

Blog author: jcouretas
posted by on Thursday, October 7, 2010

In the “Wealth Inequality Mirage” on RealClearMarkets, Diana Furchtgott-Roth looks at the campaign waged by “levelers” who exaggerate and distort statistics about income inequality to advance their political ends. The gap, she says, is the “main battle” in the Nov. 2 election. “Republicans want to keep current tax rates to encourage businesses to expand and hire workers,” she writes. “Democrats want to raise taxes for the top two brackets, and point to rising income inequality as justification.”

This is a constant refrain from the religious left, which views the income or wealth gap as evidence of injustice and grounds for reforming political and economic structures. In the video posted here, you’ll see Margaret Thatcher, in her last speech in the House of Commons on November 22, 1990, brilliantly defending her policies against the same charge.

Furchtgott-Roth zeroes in on a recent interview with Robert Reich, Secretary of Labor for President Bill Clinton and now a professor at the University of California, Berkeley.

[Reich said:] “Unless we understand the relationship between the extraordinary concentration of income and wealth we have in this country and the failure of the economy to rebound, we are going to be destined for many, many years of high unemployment, anemic job recoveries and then periods of booms and busts that may even dwarf what we just had.”

Mr. Reich is wrong. He and other levelers exaggerate economic inequality, eagerly, because they rely on pretax income, which omits the 97% of federal income taxes paid by the top half of income earners and the many “transfer payments,” such as food stamps, housing assistance, Medicaid and Medicare. This exaggerated portrait of inequality undergirds the present effort by the Democrats to raise income tax rates for people with taxable incomes of $209,000 a year on joint returns and $171,000 a year on single returns.

A more meaningful measure of inequality comes from an examination of spending. On Wednesday the Labor Department presented 2009 data on consumer spending, based on income quintiles, or fifths. This analysis shows that economic inequality has not increased, contrary to what the levelers contend.

Much of the discussion around this issue from the left uses the data to portray America as a heartless land of haves and have-nots. Here’s a quote from a Sept. 28 AP story on new census data, including income figures:

“Income inequality is rising, and if we took into account tax data, it would be even more,” said Timothy Smeeding, a University of Wisconsin-Madison professor who specializes in poverty. “More than other countries, we have a very unequal income distribution where compensation goes to the top in a winner-takes-all economy.”

Here’s an amazing statistic: The average 2009-10 faculty salary at Wisconsin Madison was $111,100. But the median household income for all Americans in 2007 (a roughly parallel comparison) was just over $50,000. Isn’t something out of whack here? Isn’t this evidence of severe economic injustice demanding structural reform? Sounds to me like the Bucky Badger faculty has been helping itself to second and third helpings at the “winner-take-all” buffet.

The faculty at Prof. Reich’s school do even better on average income: $145,800. I suspect some celebrity professors might even be … above average.

This is from “Capitalism: The Continuing Revolution,” an article by Peter Berger in the August/September 1991 issue of First Things. Emphasis mine.

… recent events have added nothing that we did not know before or, more accurately, should have known as social scientists or otherwise as people attentive to empirical evidence. The crucial fact here, of course, is the vast superiority of capitalism in improving the material standards of living of large numbers of people, and ipso facto the capacity of a society to deal with those human problems amenable to public policy, notably those of poverty. But, if this fact had been clear for a long time, recent events have brought it quite dramatically to the forefront of public attention in much of the world, and by no means only in Europe. It is now more clear than ever that the inclusion of a national economy in the international capitalist system (pace all varieties of “dependency theory”) favors rather than hinders development, that capitalism remains the best bet if one wishes to improve the lot of the poor, and that policies fostering economic growth are more likely to equalize income differentials than are policies that deliberately foster redistribution.

[ ... ]

to opt for capitalism is not to opt for inequality at the price of growth; rather, it is to opt for an accelerating transformation of society. This undoubtedly produces tensions and exacts costs, but one must ask whether these are likely to be greater than the tensions and costs engendered by socialist stagnation. Moreover, the clearer view of the European socialist societies that has now become public radically debunks the notion that, whatever else may have ailed these societies, they were more egalitarian than those in the West: they were nothing of the sort. One must also remember that, comparatively speaking, these European societies were the most advanced in the socialist camp. The claims to greater equality are even hollower in the much poorer socialist societies in the Third World (China emphatically included).

Robert Joustra, writing on the website of the Canadian think tank Cardus, has published a thoughtful review of Jordan Ballor’s Ecumenical Babel: Confusing Economic Ideology and the Church’s Social Witness. The reviewer understands that when,

… controversial social science infiltrates ecclesial confessions, twin dangers emerge: compromising the integrity of the Gospel, and splitting the church on political and economic issues. Ecumenical superstructures claiming to speak with ecclesial authority on technical matters worry me, even when technical experts are enlisted. The point is not just that expertise can be limited in these cases—it’s that different institutions have differing spheres of authority and competency.

How, then, should the church speak? Ballor provides good signposts by talking about churches preaching justice, rather than prescribing policy. The environment, for example, must be stewarded and protected, certainly. But does that specifically mean cap and trade or renewable energy investment? Should the church as denomination really have an opinion on these particular issues? Wouldn’t such an opinion violate its own sphere of authority and uncomfortably blur lines with the task of government and public policy? Accountability on principles is one thing; policy advocacy is quite another.

Joustra weighs in none too soon. Over the past few days, Christian ecumenical organizations have been busy issuing press releases and official statements in and around and following the UN summit on the Millennium Development Goals (MDGs) which took place in New York on Sept. 20-22.

Typical of the language employed by the ecumenical-industrial complex (Jordan’s apt phrase) are these lines from a letter sent by World Council of Churches general secretary Rev. Dr Olav Fykse Tveit to UN Secretary-General Ban Ki-moon:

In pursuit of just trade, churches have specifically called for international regulations to end agricultural import dumping which has displaced and impoverished millions of small farmers. Just trade also means addressing declining terms of trade faced by developing countries by establishing international commodity agreements setting stable base prices for products.

[ ... ]

Insofar as nation-states have the responsibility for upholding peoples’ economic, social and cultural rights, the MDG Review Summit must put in place binding mechanisms and accountability frameworks to ensure that commitments are met and the maximum of resources are made available for the MDGs.

You would think from reading this that ending global poverty was simply a matter of the UN master minds “regulating” the global economy and dumping more money into the MDG programs. Fortunately, no such power is vested in the UN.

Read the Joustra review. He warns that “a tyrannizing ecumenical agenda fashioned from all-too-controversial political and economic assumptions stands to do more harm than good.” Is it too much to hope that Ecumenical Babel gets a reading at the UN or WCC?

Blog author: kjayabalan
posted by on Wednesday, September 1, 2010

Forgive the blunt title of this blog post, but the point needs to be made in no uncertain terms.

The Zenit News Agency has interviewed John Medaille, author of Toward a Truly Free Market: A Distributist Perspective on the Role of Government, Taxes, Health Care, Deficits, and More, which calls for a direct if brief (more later, perhaps – I have yet to read the book) response from this Catholic defender of the market economy.

Whether or not Pope Benedict’s Caritas in Veritate is a boon to “alternative economics” as the Zenit interviewer claims, the market economy has come under attack from just about every corner since the global financial crisis of 2008. It’s easy enough to kick a system when it’s down, even when there’s plenty of blame to go around. Some critics, however, have been suffering through many decades of capitalist triumphalism to get their revenge. Among these are the distributists.

As I’ve noted in some recent blog posts, distributism has its origin in the writings of G.K. Chesterton and Hilaire Belloc who, for the brilliant Catholic apologists they were, seem to have known very little about economics. As the Zenit interviewer remarks, “many are skeptical, and believe distributism is simply romantic agrarianism, or worse, just an aesthetic sensibility, without any real practical solutions.”

Identified as a “neo-distributist,” Medaille wants to make up for the deficiencies of his fathers. He takes economics more seriously and argues that distributism is the “truly” free-market system compared to capitalism or socialism, though it should be remembered that Chesterton and Belloc also supported distributism in the name of economic liberty, private property and less interference from the state. Be that as it may. The question is ultimately whether distributism, neo- or paleo-, lives up to its claims as an “alternative” or “third-way.”

Medaille starts by critiquing the related notions that economics is a physical, rather than a human, science and that economics has nothing to do with ethics, especially justice. I don’t know who he is debating here. When I studied economics as an undergrad at a large secular university and worked as an international economist for the U.S. government, I may have come across such types, though no one was so brash to say that ethics didn’t matter. But it definitely does not describe those of us who appreciate Austrian economics and promote a Catholic understanding of the market economy.

More to the point, the question is how economics as a human science is to “practice” justice. How exactly can an economic system ensure justice between a buyer and a seller who come to a common agreement? Doesn’t the virtue of justice require just persons? And isn’t legal justice the purview of the state that legislates against force, fraud, theft, etc.?

For an example, Medaille says that, in matters of trade, foreign financing of domestic consumption is impoverishing to both parties and presumably unjust. While I could be convinced of its imprudence or undesirability in certain situations, I fail to see why or how such financing is always and everywhere unjust and therefore deserving of a blanket condemnation.

Medaille then states his case for distributism as the truly free-market system compared to capitalism and socialism. He makes the obvious point that any system that concentrates power is bound to leave individuals worse off and less free. Socialism is clearly guilty as charged but does capitalism necessarily lead to greater concentrations of economic power? The problem of concentrated power mainly occurs when corporations and the state work together – a.k.a. corporatism – which hardly describes a market economy worth defending and may even resemble the distributist model.

A truly free-market economy must allow free competition; it is only when capitalists collude to restrict competition that power is concentrated and freedom restricted. Yet this is precisely what guilds seek to do. Or have the neo-distributists distanced themselves from Chesterton and Belloc’s defense of guilds and critique of competition and advertising? I cannot tell.

Medaille is on firmer ground when he reminds us that the government should be doing less and that government interference often leads to the concentration of power. But he then ruins his case by looking to the state and trade associations to collude, which seems to be acceptable so long as it all happens at a local level.

Medaille explicitly proposes using tax policy, property law, licensing authorities and other political means to the advantage of some over others. But how is local government somehow exempt from draconian or overly restrictive interference? In fact, the history of republican government is full of such examples, especially in cases where an obstinate minority asserts its rights against the majority. The concentration of power often begins “small”, “locally” or “popularly” and grows from there; see Hayek’s The Road to Serfdom for a well-known demonstration of the phenomenon.

In the end, I am left wondering just what the distributists think is so good about economic freedom. As far as I can tell, it is not about using our God-given skills and talents through the division of labor for the benefit of all, and I see absolutely no mention of poverty reduction, longer life expectancies, medical and technological advances, the social virtues encouraged by commerce, and other goods brought about by economic freedom. The distributist vision of economic liberty and private property seems to feed a misguided notion of self-sufficiency and pride that is as antithetical to Catholic social teaching as materialism and consumerism.

Furthermore, the neo-distributist case for free markets is riddled with the same contradictions and problems that plagued its predecessor. Making the case against socialism and a mythical laissez-faire state of affairs is simply not good enough these days. Instead of urging serious Catholics and others who take ethics seriously to seek new economic models or “lifestyles,” why not encourage them to understand how markets work and what moral freedom and responsibility require from us as citizens and in the marketplace?

On his recently launched Ambiguorum Blogis site, Fr. Michael Butler is reviewing Elizabeth Theokritoff’s Living in God’s Creation: Orthodox Perspectives on Ecology (St. Vladimir’s Seminary Press, 2009). Fr. Michael, who joined us for Acton University 2010, examines the author’s exhausted earth meme, beginning with this quote from the book:

It is hard to escape the conclusion that with an ever-growing human population, it is not enough for humanity as a whole to do more with less; individually, we must also learn to do less with less (Theokritoff, p. 21).

Fr. Michael comments:

This statement is astonishing. It is a call to reduce our quality of life, and I find it hard to square with her concern for the poor and the weak, for whom learning “to do less with less” is a recipe for catastrophe. She says, on p. 19, “most environmental problems take their toll on the poor and weak long before they affect those who can afford to live far from the landfills, upwind of the factories or power plants, and well above sea level”. If the poor and the weak suffer in our current economy, their suffering in a reduced economy will be unspeakable. A vibrant economy helps everyone; poverty in the United States, for example, is incomparable with poverty found elsewhere in the world. The poor and weak will not be helped by making everyone else poorer and weaker.

The author spends some time describing a “culture of control,” which is “a way for us to arrange the world for our own convenience, with no reference to some higher will for the world or for us” (p. 22). She goes on,

Many people regarded it as quite normal, for instance, to have strawberries to eat in mid-winter, relax and a cool house in mid-summer in a subtropical climate, or sit on a well-watered lawn beside the swimming pool in a semi-desert. (Theokritoff, p. 23)

I freely disclose that I eat strawberries in midwinter. My winter strawberries come from Mexico and Chile. What is for me an “indulgence” (Theokritoff’s term) is probably not an indulgence for the Latin American farmers who grow the strawberries and depend upon their sale for their livelihood. Taking to task people who live in the South for air-conditioning their homes strikes me simply as mean-spirited. She might as well take northerners to task for presuming to heat their homes in the winter. I don’t have a swimming pool, so I won’t comment on that part.

Fr. Michael has been a priest in the Orthodox Church in America for more than 15 years in Michigan and Ohio. See his bio and scholarly interests here. And put him on your blog roll and newsreader today.