Problems, Benefits, and Reform for U.S. Foreign Aid

A recent post reviewed the three proposed Stoa policy resolutions, including this one on reforming foreign aid:

Resolved: The United States federal government should substantially reform its foreign aid.

All three proposed topics are foreign-aid related, since much U.S. foreign aid is allocated to advancing various international environmental and infectious disease goals (these are the other two proposed resolutions).

Conservative critics of foreign aid who think current aid spending is a significant portion of the federal budget are surprised to learn it’s just one percent. See Guess How Much Of Uncle Sam’s Money Goes To Foreign Aid. Guess Again!  (NPR, February 10, 2015). The article cites a foundation poll showing:

Only 1 in 20 knew the right answer: less than 1 percent of the $4 trillion federal budget goes to foreign aid. The average respondent estimated that 26 percent went toward assisting other countries.  

Of course 1% of a really big number is still pretty big: $40 billion in this case.

The referenced Kaiser Family Foundation study is relevant to the international infectious disease resolution as well (as a subset of global health aid):

When asked about U.S. spending on global health, the public is more supportive than when asked about spending on foreign aid more generally.

The Kaiser study goes on to profile U.S. foreign aid view by political parties:

Democrats are more likely to say the country is spending too little than too much (34 percent vs. 18 percent), whereas Republicans are more likely to say the country is spending too much than too little (36 percent vs. 14 percent).

The NPR story and Kaiser study argue that when people learn the U.S. government spending on foreign aid and global health are such a small part of the federal budget, their views tend to shift to support increasing government funding for both. (It’s not clear if survey questions used the actual numbers, for example: “The U.S. spends $40 billion each year for foreign aid. Do you think that is too much, too little, or about right?”)

So debaters concerned that their average judges will tilt toward reducing foreign aid may find they shift toward supporting more aid as debate rounds progress.

In any case, government spending for foreign aid is similar to government spending on education. It matters less how much is spent than whether the spending is effective. Everyone supports education but not everyone, especially in conservative and homeschool communities, favors current or expanded government education spending.

New York University’s William Easterly, along with many other development economists, is deeply skeptical of foreign aid. Easterly’s many journal articles and books draw from his twenty years experience at the World Bank to illustrate reasons why top-down foreign aid usually fails.

Easterly’s intense and sometimes heated exchanges with Columbia University’s Jeffrey Sachs offer students a nice back and forth about the claimed benefits and harms of foreign aid (which Sachs helped expand with his popular book The End of Poverty).

Sachs is critical of Trump Administration proposals to cut foreign aid in his Boston Globe article linked from this March 13, 2017 post :The ethics and practicalities of foreign aid.

See also the Intelligence Squared debate on the resolution: Aid to Africa is Doing More Harm Than Good:

Despite decades of foreign aid for development and humanitarian programs in Africa, access to basic nutrition and health care is still widely unavailable and government corruption is rampant. Does African aid actually contribute to quality of life gains for people in need? Or does foreign intervention foster instability, dependence, and political corruption?

Jeffrey Sachs’ 2015 book, The Age of Sustainable Development is relevant to the Stoa resolution on international environmental conventions, and is described as:

A bold and engaging intellectual synthesis on how modern societies can develop economically, equitably, and sustainably while preserving Earth’s ecosystems and biodiversity.

A Columbia University page has more on the book  including a series of “Companion Pages” for each chapter:

Two of the most important attempts to protect biodiversity have been through international treaties: the 1992 Convention on Biological Diversity (CBD) and the 1973 Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).  Companion for Chapter 13, pdf, near the end)

Who Benefits from U.S. Foreign Aid?
U.S. foreign aid programs and policies are influenced by the organized interests that benefit from these programs and policies, but not much influenced by taxpayers providing the funds or those in poor countries supposed to benefit. But that’s not unusual for government agencies and programs.

Public school students and parents don’t influence state and federal education programs and policies. Teachers unions, textbook publishers, education bureaucracies, and major foundations do because they are concentrated and organized and profit greatly from government spending and regulations.

Foreign aid programs and environmental groups (Non Government Organizations or NGOs) still include population control agendas. The Stanford University Millennium Alliance for Humanity and Biosphere (MAHB) provides an example in this February 1, 2018 article: A Proposal for a United Nations Framework Convention on Population Growth. The post begins:

Recently, an international assembly of scientists from 184 countries endorsed an article published in the journal Bioscience entitled “World Scientists’ Warning to Humanity: A Second Notice”. As the warning states, “We are jeopardizing our future by not reining in our intense but geographically and demographically uneven material consumption and by not perceiving continued rapid population growth as a primary driver behind many ecological and even societal threats. By failing to adequately limit population growth, reassess the role of an economy rooted in growth, reduce greenhouse gases, incentivize renewable energy, protect habitat, restore ecosystems, curb pollution, halt defaunation, and constrain invasive alien species, humanity is not taking the urgent steps needed to safeguard our imperilled biosphere.” 

Environmental and population control programs draw from various outdated theories about ecology and economic development. More on this claim in a future post. For a preview on population control see: A reverse ‘Handmaid’s Tale’ is just as horrifying — get the facts straight on population growth. (USA Today, April 24, 2018)

Poverty, Inc. and Poor Economics
Back to general foreign aid, often earmarked for economic development. There is wider awareness now of damages caused by well-meaning but often misguided foreign aid programs. But there are positive developments as well.

William Easterly highlights the difference between the Planners and the Searchers. Foreign aid funds spent by planners depend on their theories about economic development coupled with their limited local knowledge. Searchers on the other hand are the local entrepreneurs who act as local problem solvers looking for ways to make money offering people services they want and are willing to pay for.

The Poverty, Inc trailer and video mentioned in earlier post gives an overview of critics of both government, church, and foundation aid in developing countries. 

“I see multiple colonial governors,” says Ghanaian software entrepreneur Herman Chinery-Hesse of the international development establishment. “We are held captive by the donor community.”

The West has made itself the protagonist of development, giving rise to a multibillion dollar poverty industry.

From TOMs Shoes to international adoptions, from solar panels to U.S. food aid, the film challenges each of us to ask the tough question: Could I be part of the problem?

https://www.youtube.com/watch?v=yPmawWgpX0s

• • • • • • • • • • •

A foreign aid approach very different from top-down development planning are programs inspired by the research of MIT’s Clark Medal-winner Esther Duflo presented in the 2012 book and on the website Poor Economics. Here is beginning from Chapter 1: Think, Think Again

Poverty and development can sometimes feel like overwhelming issues – the scale is daunting, the problems grand. Ideology drives a lot of policies, and even the most well-intentioned ideas can get bogged down by ignorance of ground-level realities and inertia at the level of the implementer. In fact, we call these the “three I’s” – ideology, ignorance, inertia – the three main reasons policies may not work and aid is not always effective.

But there’s no reason to lose hope. Incremental, real change can be made. Sometimes the change seems small, but by identifying real world success stories, facing up to real world failures, and understanding why the poor make the choices they make, we can find the right levers to push to free the poor of the hidden traps that keep them behind.

Esther Duflo’s 2010 TED talk “Social experiments to fight poverty” is here.

Okay! Lots to think about. Hope these notes, links, and videos are helpful for students and others thinking about ways to reform U.S. foreign aid policies.  And again, I’ve written more in earlier post looking at all three Stoa resolutions proposed for 2018-2019. There is also more  in the Economic Thinking study guide Africa: Freedom, Prosperity, and Public Health (pdf) — Greg Rehmke