As usual with my topics I could just start this debate with a very straight-forward question, but it may benefit from a little background rhetoric to make things interesting.

Alms for the Poor
I'm a very think big person, so the idea of an end to extreme poverty appeals to me as a realistic goal.

It always amazes me how many can see the necessity in spending billions in Iraq (which I do) and then not see the benefit is stabilizing an entire continent which has been a proven breeding ground for terrorism.

The kicker is that the US, among other nations, has consistently refused to live up to its agreements on foreign aid.

and finally

Poverty's point man

That's a start at this enormous issue.

So...


Should the US fulfill its promises made back in 1970 and reaffirmed in the Monterey conference in 2002 to raise Foreign aid to 0.7% of National Income?

How can donors be encouraged to fulfil pledges?

Should the US (and other nations) cancel the debt of impoverished African nations?

Is the US policy on international policy reduction a good one?

Will Wolfowitz encourage commitment to aid pledges as head of the World Bank

Should the US fulfill its promises made back in 1970 and reaffirmed in the Monterey conference in 2002 to raise Foreign aid to 0.7% of National Income?

Not necessarily. While I concede that ameliorating poverty in other countries, particularly very poor countries, can and should be counted as part of the General Welfare, if nothing else to reduce terrorist attacks and outbreaks of pandemics, I think that throwing money at the problem is not the answer.

Even if the money is explicitly used for something good, like improving fresh water sources, or irrigation, without changes in those countries economic systems, the benefits will largely accrue to a small, already relatively wealthy, subset of their societies.

The natural resources of a country say arable land, fresh water, a sea port, etc., give a benefit to their owners. Their owners can rent, or sell those resources to others for income, with no effort on the owners part. Especially when the alternative is starvation, the owner can, and probably will, raise the rent on these resources until the tenant ony keeps enough produce to barely avoid starvation. The tenant has no incentive to produce more from the land, as it will merely be taken in rent by the landowner. It's pretty much what happened to the Irish during the famine, when the English landowners EXPORTED grain from Ireland.

Here's an example from India.

I also think that a good alternative to monetary foreign aid, would be a global Carbon Tax (or other group of air pollutants). Perhaps 20,000B tons worth of permits each year could be granted, by population, to the countries of the world, to be used or traded as needed. Of course enforcement would be difficult, but not as difficult as getting the U.S. to agree to it.

Should the US (and other nations) cancel the debt of impoverished African nations?

Some of them, yes, some of them, no. In the worst cases, the debt should be absolved, and the moneylenders should take heed to perform better due diligence. In the better cases, the debt should continue, and the moneylenders should take heed to continue making loans.

That being said, in most cases, it is not a lack of money keeping these people on the edge of starvation, it's a failure to share the natural resources of their country. These countries do not need hydroelectric dams, or massive ports, or even, really, modern hospitals. These countries need the rule of law, and an economic means of dividing up the land so that each smallholder farmer can literally make a living off of the land, without excluding the landless generations to come. That comes first, then, with progress and specialization, comes the leisure time to become educated.

I was under the impression that farming in Africa is not dominated by tenant farming at all. Isn't agricultural production nationalized in many of these countries?

In other there are farming cooperations just as there are in the US.


I don't think there is a problem finding more money. The problems is getting countries to pay the paltry sum they have already promised




Pardon, the most disease-ridden nations in the world are not in need of modern hospitals?

Education can wait for millions of illiterate people?

..and yet we expect ignorant, dying people to elect good governments?

The effects of malaria and AIDS on African economies are enormous, certainly health care and access to clean water is a huge part of the problem.

The rule of law cannot be established if the governments do not have the means to enforce it.
Edited to Add:
Even that is a generalization, many of these impoverished nations have what are considered to be good governments by the World Bank...

Isn't agricultural production nationalized in many of these countries? I have no idea, but this is not what I'm asking for. I'm of the camp that nationalized industries tend to be less than optimal for production. The produce of the nationalized industry still goes to those who control the nation.

I don't think there is a problem finding more money. The problems is getting countries to pay the paltry sum they have already promised
Who benefits? A rising tide raises all boats? Or the rich get richer and the poor get poorer. I'm of the opinion that such transfers tend to have the effect of taking money from poor people in rich nations and giving it to rich people in poor nations.

Pardon, the most disease-ridden nations in the world are not in need of modern hospitals?
Correct. The most disease-ridden nations in the world are in need of sanitation, immunizations, prophylactics, and education. None of which require a hospital.

Education can wait for millions of illiterate people?
..and yet we expect ignorant, dying people to elect good governments?
Education and democracy can only exist where the basic functions of survival are not just taken care of, but exceeded. We in America had the advantage of having a frontier through our most formative years. Few people HAD to work for substinence wages, as they could move to the frontier (originally further west in Virginia), claim a plot of land, and have better wages, paid in agricultural produce and what can be bartered for, than working for someone esle. It did not require a mass migration of workers to effectively raise wages for those who remained east. Such wages, paltry though they were, allowed families to have enough leisure time to become literate, develop industry, and more important, develop the seeds of true democracy.

Hungry uneducated people elect their own despots. As long as there is no free land to work, people are at the mercy of the landowners. One option is to take land from a neighbor. Another, preferable option, is to collect the portion of income derived solely from the ownership of land, called economic rent, and nationalize that.

The effects of malaria and AIDS on African economies are enormous, certainly health care and access to clean water is a huge part of the problem.
I don't doubt this. But even an instant cure for AIDS doesn't solve the problem. Preventing the spread of AIDS is relatively easy. Providing access to clean water is relatively easy. But doing either one of them doesn't solve the problem either. Every one of these steps in progress, and I do agree that they are among the first steps, will go to enrich African landowners, while barely improving the lot of the landless.

I'm not sure how land laws work in Africa, but if it were my money, and I believe it is, I'd want it to be used to purchase land which would then be rented out to tenants, with the income of the land used to buy improvements in water, sanitation, disease prevention, and education.

The rule of law cannot be established if the governments do not have the means to enforce it.
I don't believe that the rule of law is derived from the government, but rather from the people's desire to be governed. All laws originally derive from the desire to protect property. While I believe that no one can truly own the land, I believe that a man owns his labor, and the products of his labor, including irrigation ditches, retaining pools, tilled soil, etc. The concept of property was pretty universal among 'primative' people, no one owned the land, but tools, beads, even produce in the field, could belong to someone.

Even that is a generalization, many of these impoverished nations have what are considered to be good governments by the World Bank... I'm no fan of the World Bank....

One thing we could do to help developing countries is to end the protective subsidies and tarriffs we have on domestic agriculture, raising the wages of agricultural workers worldwide.

A few links on geo-classical thought in Africa:
Who owns Africa's water supply?
Towards a new Political, Social, and Economic Structure for Africa Mali, long
The Challenges of Democracy...Nigeria, long
Land Reform in South Africa

I do not know what can be done about the poverty reduction, but do know that the comments about poverty being one of the root causes of terrorism is totally false.

Most terrorist acts are not carried out by poor Africans, or Indians either for that matter.

Should the US fulfill its promises made back in 1970 and reaffirmed in the Monterey conference in 2002 to raise Foreign aid to 0.7% of National Income?
Not until we get our economy back on track

How can donors be encouraged to fulfil pledges? That I haven't a clue

Should the US (and other nations) cancel the debt of impoverished African nations? If we do then we should never ever loan them any money ever again.

Is the US policy on international policy reduction a good one? Don't know yet

Will Wolfowitz encourage commitment to aid pledges as head of the World Bank That we can be fairly sure of.

Should the US fulfill its promises made back in 1970 and reaffirmed in the Monterey conference in 2002 to raise Foreign aid to 0.7% of National Income?

No. Wealth distribution programs simply do not work. It doesn't work to cure poverty in the United States and it will not work to cure poverty in the Third World.

That is not to say that individual projects and aid in individual countries are futile. The fact remains that most nations that are poor are in that condition because they are poorly run, not because they do not have resources. The corruption in these countries needs to end. Since I doubt anyone advocates that the US kick out the communists and thugs in these countries, the change needs to come from within.

I also highly doubt that poverty in Africa is the main cause of global terrorism. Perhaps the case can be made for the rich-poor gap in the Middle East, but the Middle East is not considered a group of poor countries for the most part. Countries in Africa have less than $1200 per capita GDP.

How can donors be encouraged to fulfil pledges?

They shouldn't, since the pledges were made decades ago. The political leaders in all countries involved have changed. The politics of the third world have changed. Who decides where this money would go, anyway? The UN? The World Bank?

If new pledges are made, they should be fulfilled. I hope such extravagant promises are never doled out. You realize, of course, that 0.7% is $82 billion? That would be on top of what we consider to be required "targeted" aid. That's a huge sum of money to fork over to some international bureaucrats (more than the GDP of New Zealand, just as a comparison).

Should the US (and other nations) cancel the debt of impoverished African nations?
Absolutely not. It would only encourage further defaults in the future. What they should do, as any lender should do, is work with the debtor to create a fair, reasonable plan for repayment. If they do forgive the debt (equivalent to bankruptcy) than future aid grants should be heavily scrutinized before being approved.

Is the US policy on international policy reduction a good one?

It is better than a blanket "give x% of our national income to some international agency" plan. The US expects certain criteria to be met before aid is given. It monitors the recipients. It expects reforms. Anyone who believes that "more of the same" management plus more money will result in better living conditions simply has blinders on.

Will Wolfowitz encourage commitment to aid pledges as head of the World Bank

From this interview, he seems sincere. I have no idea how successful he will be.

Even in the case of reformed African countries? The World Bank noted Senegal and Madagascar as example of well-governed nations.

In any case nationalized industries need not be less efficient. Certainly the first link you posted noted the possible problems with privatization.

Who Owns Africa's Water?


I would say that's off on both ends

Most Western nations have progressive taxes which take more money from the rich. As for the receiving end, no one is handing out blank checks. The mony is funneled through targeted programs on purposes pre-determined before the money ever leaves the bank.


Fair enough, though hospitals would help a great deal. Nevertheless the other points you mentioned could all be improved with targeted foreign aid. this would in turn ensure a healthy, skilled workforce.

What was all that about teaching a man to fish?



That first one has been tried (Zimbabwe), it didn't go over too well. Perhaps the second could work, but I doubt such a radical economic change is necessary.

You argument assumes that the only option for these people is agricultural work. Much of Africa has industrial potential, which doesn't require workers to by large plots of land. Even the current mass farming techniques used in the US don't require every worker to own a piece of the farm.


The "landowners" don't necessarily own the water. Many of Africa's water sources are easy accessible by the poor, they are also filthy. Building sanitation facilities (even small-scale ones) would not depend on the landowners.


What about protecting life and health? I can think of a few laws derived from that concept.

That I agee with, or at the very least offer some exceptions for impoverished nations.


Who's calling for a wealth distribution program?

that is exactly what the Monterey agreement (which the administration still claims to uphold) is all about. The problem is the funds are not sufficient.

Well there are ways we could help (think Kyrgyzstan) but that is beside the point.

Not all of these countries are poorly run, a number of them are democracies. Corruption is not the entire problem, nor is it really the greatest component.


A collaborative effort between the two came up with the Millennium Development goals. Let's not pretend either of these is an entity unto itself, US interests are very well represented in both. Heck, or Deputy Defense Secretary is about to head the World Bank.

Yes, is is a tiny fraction of what we spend on health in this country or what we are spending in Iraq. Our administration certainly though it was feasible when they signed up.

If that is what it cost to stop some of the poorest countries in the world futilely paying interest on a never-ending debt while millions die needlessly, you don't think it's worth it?

Many of these countries, including some such as Mozambique that the US government has pointed out is well governed have so little to spend on health services that no amount of reform will help.

I don't care how well you manage it, if you only spend $10 per capita on health it's not going to work.

Privatization doesn't have to mean ownership by an external rich corporation, either.

I could disagree with that statement, but that's a topic for another thread.

Teaching a man to fish only has a benefit if the man has access to the sea. That is the theme of my argument: with access to natural wealth (through nationalizing or partially nationalizing returns to natural wealth) a man, or a group of men, or a whole nation, can become self-sufficient.



My argument has been largely confined to agricultural work, though the argument about nationalizing (or at least partially naturalizing) the economic returns to land is still effective when considering industry. Industrial processes must still be located on land, and they each derive their input materials from land, or a combination of land & labor. In any case, the absolute 'minimum wage' is the altermative each worker has when land is available: go to the best piece of open land and work for yourself. When you nationalize the return to land, there is no point in holding land unless you are going to use it, which means that somewhere out the hinterlands is a piece of land that no one wants, because noone wants to pay the miniscule tax on it. If our potential worker can go out there and have better life working the land, he will; which forces the industrial employer to pay at least the equivalent in wages.

While the techniques used in the US are valid for emulation, the overall economic system associated with agriculture here is not.


I tend to disagree, though I don't know the specifics. They either own the land around the water, or possibly, the rights to the water itself. Regardless, even if a thousand clean new water sources could be created, the value of such would generally go to the owners of land with access to the water. Likewise, any sewerage plant would require land, and would benefit the owners of land.

Stepping out of the social/philosophical/economic room and into the engineering room: Wastewater can generally be treated with small-scale non-chemical treatment. A settling tank / pond, an algae pond, and perhaps an engineered wetland. Algae from the pond can be converted to biodiesel and animal feed.

I would contend that self-ownership is the root of all property laws. I own myself, and therefore I own my labor. I therefore own whatever I trade my labor for: wages, or payment in kind. No human ever labored to create land or natural wealth.

Well, you can't really offer an exception for a subsidy given to a Fortune 500 company like Archer-Daniels Midland, can you?

That is a pretty giant if, land ownership is not really the problem in much of Africa. Even if a farmer owned the land he or she (interestingly enough most African farmers are women) would still need the resources to exploit it.

On the one hand is the problem of degraded soil on the other is the problem of cultivating non-degraded soil. Both require equipment that foreign aid could supply to would be farmers.

...and I still don't see the preoccupation with the option to start the family farm being the ultimate economic freedom. African workers have a better shop at gaining wealth through becoming skilled employees at the industries which could exist given foreign investment.

Many "village wells" are just that, common property of those in the village. This mind-set is a rather fortunate holdover to what Americans would feel is a bygone era.

I'm not sure I caught your meaning here. Certainly if they wanted to Western nations could drop tariffs on good from impoverished nations.

I'm not saying that Africa should strive to become a continent of smallhold farmers. What I'm saying is that, as long as the option exists, it is effectively the minimum wage. When the best free lands left are barren, it's a pretty low minimum wage. When all the lands are claimed, the only option is what the employer will pay, which, when there are no other options, tends towards substinence.

When all the best lands are put to work, as in by charging rent for them, or, if owned outright, charging a tax nearly equal to the unimproved rental value of the land, the best remaining land would be better than when such a tax is not collected. Therefore, the 'minimum wage' required to attract employees is higher.

When the umimproved market rental value of land is collected, the owner will either pay the tax, sell or pass the land to someone who will, or forfeit the land to the government. If the owner pays the tax, he will recoup the tax, and more, by improving the land by cultivation or construction.

In all these, and all my posts, the landowner may well be the tenant.

In each of these countries, there are things people want: clean water, food, clothing, shelter, education, medicine, entertainment. With the exception of medicine, none of their wants are particularly capital intensive, though capital would make their labor more efficient. For much of the rest, basic hand tools, labor, and land can combine to create capital. No loans or gifts required. To encourage higher-tech capital, and perhaps foreign investment, low or no taxes on capital should be levied.

In each of these countries there are people who want things and people who want employment. What is needed is some means to link the two. Literal and virtural markets serve this purpose. People trade what they have for what they want. At the least, people have some labor. To maximize employment, no taxes should be collected on labor or income, or, at worst, an income tax progressive enough to exempt the majority of the population.

Trades are facilitated by money, which allows the two halves of a trade to occur at different times and different places. To facilitate such trades, no sales taxes should be collected. Scrip serves this purpose. For internal commerce, scrip, in limited quantities to provide a steady value, can be printed and circulated as money, as long as the taxing government accepts it. Exports should require a stable foreign money for payment, and imports will probably require payment, probably in the currency of the country of origin.

I just looked in the CIA world factbook, at the poorest country I could find, landlocked Burkina Faso. Roughly 15% of the country is arable land, and according to their embassy, only 1/3 of that is used. The lowest 10% of their population subsists on less than $215 a year. A small family can typically handle at least a 10 hectare farm, and sorghum typically yields at least 4 tonnes/ha. Sorghum prices are high, but usually are around US$115/tonne. This family would make the equivalent of $4600. I can imagine the opportunity to do so would be quite favorable for the large portion of the population that travels to neighboring countries for seasonal employment.

Agriculture would not be the recommended pinnacle of industry, however as efficiency in agriculture improves, so then can labor and industry. Fewer people will be required to provide food and agricultural goods, and more can be employed in industrial work, or alternatively they can spend their leisure time becoming more educated. Surplus agricultural goods can be traded for capital goods unable to be manufactured domestically. These capital goods can then be employed by labor to produce more capital, or can be used to produce finished goods.

The rent and other taxes collected by the government can then be used to build water works, roads, schools, clinics, railways, or even a basic income grant; these public goods will then improve the rent available from the land, which can then be used to build....

turnea,

I feel bad that you seem to be the only one defending your side of the issue.

You claim that mismanagement and corruption are not the main reasons behind the poverty in Africa.

First, a look at the GDP per capita of Africa: Map & Graph: Africa: Economy: GDP - PPP (per capita) (Top 50 Countries)

At the bottom, we have:


Yet if we look at the worst cases:

Congo, Democratic Republic of the
Government: dictatorship.

Sierra Leone

Of course, the problems in Sierra Leone are well known. Although nominally a democracy, the same President has been in place for the last 10 years.

We could go down the list, but the fact remains that civil war and strife, along with dictatorships account for the vast majority of the problem here.

As for aid, we can look at what percentage of each country's GDP comes in the form of aid: Map & Graph: Economy: Aid as % of GDP (Top 50 Countries)



Notice the bold nations? The same ones with the lowest GDPs in the world? These countries ALREADY receive a huge percentage of their GDPs from foreign aid. It doesn't seem to be making them into paradises. Because aid is not the only factor. There are huge internal problems that would take immense resources to solve from the outside.

That being said, I am not forwarding that we should impose order on these countries. They themselves need to demonstrate that they are ready to take the next step. They need to have stable governments. They need to demonstrate that the aid they are already receiving is being put to some good. Otherwise, the aid money will continue to be poured down the drain.

You mention Mozambique as being "well governed". It already receives almost a quarter of its GDP from foreign aid, to the tune of over $600 million in foreign aid (in 2001). How much more does it need? Enough to get the job done? When is that? Can we help everyone achieve a New York City standard of living?

How much is enough aid? The answer is: no amount is enough. Because no amount of aid will bring these people's standard of living up to a decent one. Complete reforms are needed, reforms that perhaps will never come.

I am with Amlord in this matter. Too many of these countries have major management issues. Many of them are very rich in resources, but little gets to the people in need.

Throwing more money at the problem will not solve these issues. Telling the countries that a continuation of aid is going to be determined on how much reform that they have in the issue of the distribution in the current aid. The money that has been sent has not gone to help those that it was intended for, and the World Bank it to blame for that. When the leadership diverts the aid monies to other endeavors then the people that it was intended for still need the assistance and the leaders that diverted the money have no incentive to do anything besides keep on diverting the aid money.

We need the World Bank to take a large step back and demand a totally accounting for the monies already delivered. And a realistic plan for any further aid, before another cent of aid is given.

Heh, I seem to have a knack for that. No real problem though, it just means more time between posts as I'm the only one on my side researching.


I think you'll find these countries were impoverished before their civil war even more than after.

The violence is not the cause though it may well be a symptom.

The civil wars are destructive, but in many of these countries the wars ended years ago. Meanwhile millions of people are dying yearly without a shot being fired.

That puts any war to shame.

AIDS and Malaria, the latter 100% treatable and largely preventable the former which could benefit greatly from education, both in dire need of funding.

Meanwhile about that list...

Of course foreign aid does not make a country a paradise. I know you don't intend to belittle the issue but it often seems to me that people have let the hyperbole take full control of any mention of African poverty.

The Millennium Challenge goals are not the work of unexperienced dreamers, they were framed by some of the best economists and development experts the world over.

That said, many of these countries that receive so much foreign aid, such as Mozambique and Ghana, are seeing significant improvement because of it.

I'll include a link to a number of progress reports, sadly many are in French but the nations I noted are in English.
Millennium Development Goals

The growth is not satisfactory because:

1. It's not enough, these numbers are a huge percent of the nations income, that is because the nations income is so tremendously low.

2. It's not going to the right places, simple disease prevention steps seem to be skipped over and projects that will help to start vibrant economies (education, farming equipment, etc) are still underfunded.

The money is simply funneled into stop-gap emergency food aid short-term publicity and a lack of long term benefit.

This is the fault of donors, they decide where the money goes. It is our policy that needs reform.


Why do you seem to think that the reforms needed are largely one-sided.
Result are not impossible, many Asian countries have seen tremendous growth despite concerns over corruption and the like.

I have already noted that the aid is doing some good and as I said before effective management of insufficient funds is impossible.

..and to harp on the debt a little more for many of these countries the interest on the dept is higher the the countries entire income.

Isn't is reasonable to stop putting the lives of millions at risk just to collect on a debt which cannot be repayed?

Again, we could go nation by nation and discuss the problems that they have. For the most part, it involves the local governments. These colonies were prosperous under European empirical rule. Why isn't that true today? Many of these countries have vast resources. Those at the top are starving those at the bottom.

When you say that the problem is with us, and not with the recipient nations, I wonder...

Does that mean these nations are completely incapable of solving their problems without external intervention? Would they be capable of solving them if their debts were forgiven today? Just as bankruptcy does not solve an individual's financial problems and only treats the most obvious symptom, debt forgiveness of these nations is unlikely, by itself, to lead to much good in the long term. The attitudes and leadership must change.

The answer is not always more money. As a matter of fact, it is rarely more money. Money is only a stopgap, a crutch which will only hamper these nations in the long run.

I am not clear on how donations to these impoverished nations are handled. I can't make a determination on whether or not we are targeting the money to the wrong areas. I think it is certainly possible. But a lot of charity work is done in these nations as well, charity which is not controlled by central authority somewhere. It targets such things as mosquito nets and feeding the indigent. This money is certainly not mistargetted. Is it?

I am shocked when I see that the poverty line in these countries is $0.40 a day. 40 cents a day. I am further shocked that I make more money is two weeks than the average African (even fairly well off nations) makes in a year. But I realize that giving money away is not the answer. The money is simply stolen, embezzled, or just plain wasted.

Africa report demands aid boost This article (even though the title is a bit abusive) sheds some light on the issue. After some politically correct mumbo jumbo (we need to give more, we have a dysfunctional relationship blah blah) we find:



Ending misrule. Hey, I've heard that somewhere before .

Perhaps we should cancel debts, but I guarantee you that this will only harm these countries in the long term. Banks lend money to countries just like they lend it to individuals: on a risk-reward basis. If the risk is too great (i.e. the nation was "forgiven" large debts in the past) then future loans will not occur when needed. It also harms those countries who have tried to repay their debts (or have repaid their debts) for doing the right thing. Why repay when the debt may be forgiven? It's a terrible dis-incentive for these countries to do the right thing.

Here is another article which discusses things other than aid that can help.


I'm not sure that I completely agree with all of that, but it's a starting point. Notice the fleecing of dictators shows up again? A sense a trend. The US certainly needs an agriculture industry and some subsidies are important, although not all, so that isn't the complete answer.

There are other things we can do rather than simply pouring money into the problem.

Here, here, Amlord. It is absolutely imperative that this question be addressed. For those arguing in favor of the proposed initiative, if you cannot address this question you are essentially in favor of throwing our money away. As with Amlord, I am not in favor of imposing our will on these countries, nor of outright abondoning them. I am, however, asking for some evidence that the money contributed is well spent. That doesn't seem too much to ask, does it? As with a similar thread on this topic...this is the onus of the receiver to prove. If they don't have a good plan for what they're going to do with the money, and that plan can't be measured to ensure its being followed...then they're not really indicating they want the money, are they (or, more likely, they're indicating the purpose of the money was always to line official's pockets).

Should the US fulfill its promises made back in 1970 and reaffirmed in the Monterey conference in 2002 to raise Foreign aid to 0.7% of National Income?

No. We have budget problems of our own, and throwing more money at a problem does not solve it. There are systemic issues that need to be solved. Just as the poorest person in world can grow richer by spending a penny less than he earns, the poorest nations can become richer if the economic, political, social, and cultural restrictions on them can be identified and removed.

How can donors be encouraged to fulfil pledges?

By demonstrating actual improvement ("bang for their buck").

Should the US (and other nations) cancel the debt of impoverished African nations?

I don't know. It seems logical to me that to do so would only encourage future default, but it is also logical that poor nations cannot become wealthy while paying off debt. Since debt earns interest, why not instead of direct contributions of say $2 million to a country, we reduce their debt by $2 million? The overall effect on the nation is much greater because future interest payments also do not have to be paid.

Is the US policy on international policy reduction a good one?

What IS US policy? I'm not sure I know.

Will Wolfowitz encourage commitment to aid pledges as head of the World Bank

No idea.


I recently finished an interesting book, Adventure Capitalist by Jim Rogers, a man who made a huge pile of money by investing internationally, about a three year road trip he took around the world. He looks at the world from an investor's eye... which my intuition tells me is probably the best point of view when it comes to real progress in the developing world.

His recipe: forgive all debt, and stop all aid payments.

One story he tells, while travelling through Ethiopia, is of the problem with handouts. Because of the well publicized famine, the UN has been delivering a lot of free grain. In addition, many charity organizations donate used clothing from the US. This has the effect of putting most of the farmers and clothing-makers in the country out of business. They can't compete with free stuff. (Actually, the dontated clothing is not given away... by the time it reaches the country, it is sold, but at a much lower price than locally manufactured clothes.) So what has the aid and charity accomplished but not only put people out of work, but also remove incentives for younger people to learn these trades?

This does not surprise me at all... in fact, it is the obvious response to expect.

Two other problems he cites. One, foreign aid organizations are not accountable to anyone but UN bureaucrats. No one checks to see where the money is going, how it is spent, and what is being wasted. Two, a problem in many more developed countries is that there is too much regulation. For example, just to get his car through some countries required several days of filling out paperwork, getting stamps, and often outright bribes. All these things prevent the free exercise of commerce which is the foundation of real progress.


My 2 cents....

I would like to see the developed world do two things.

One, focused aid, through private charity organizations, for projects that though small in scope will have large benefits to society. For example, creating a non- or for-profit desalinization plant, employing local workers, in arid parts of the country to provide clean water. Or opening small local schools that teach basic literacy and civics. Not everywhere. Start small, start someplace.

Two, I am inclined to believe that these poor nations would do a whole lot better if we got off their backs entirely. These nations have vast, untapped natural resources and young populations. I would bet the legacy of colonialism, carried on through NGOs, the UN, and externally imposed regulations like "sustainable development" are what is really keeping them from progressing. The corrupt, cleptocratic governments would not survive long if not for foreign aid.

Finally, on the subject of democracy, I think we should emphasize prosperity first. I think it is arrogant to try to impose our ideas of government, regulation, and society, and that if we let them develop naturally, it will happen a whole lot quicker.

These countries were prosperous under colonial rule. Who was prosperous?

Not the majority of Africans just those who chose to participate in the system of legalized theft.

Vast resources without the means to exploit them, both in infrastructure and labor, do no good to anyone.


Bankruptcy does not merely treat the symptoms either on a personal level or national one.

Come now Amlord you know as well as I that the point of bankruptcy is to free up the money spent on an unpayable debt, in this case that money could be used to save the lives of millions of people.


If money is a crutch then fit me up for crutches. The analogy betrays you, in most cases crutches are beneficial in the long term because they remove pressure from a skeletal structure with cannot support it, this gives the bone time to heal.

The same can be true of foreign aid, the internal services of these countries are broken and cannot support the load. Foreign aid can provide that temporary support if it is sufficient, one wouldn't build crutches out of cardboard for instance.

Money is usually the answer in an economy, the question is where it comes from, where it goes to, and how much.



I am aware that not all of the money is mistargeted, but most of it is.

We ignore the most common adage in our spending, we keep handing out fish. The Millennium Development goals want us to hand out rods and fishing manuals.

Sure these items cost more, but in the long run they are more beneficial.


Again, no one is considering handing out blank checks. Foreign aid gets results, that is undeniable. We watched it in Asia, Latin America, even parts of Eastern Europe, what is needs is a rational plan rather than give-as-you-will random spending.


There is no one solution, in parts of Africa, misrule is the key in others it is not. I'm not the one saying this, the Bush Administration commissioned the study to find recipient nations they can trust. Well they found some, why not follow through with action?


The debt relief will make the economies of these countries stronger, given sufficient progress they will be much safer to lend to then ever.

Again, there is a reason we have bankruptcy. Some companies and even nations can come bank from bankruptcy stronger than ever.


Yes, but it's not an all-or nothing choice, we can do these things in addition to well targeted aid.

It is larger the donor country that decides were aid money goes, corruption can only absorb a fraction.


These nations have had many good plans, they have simply been turned down due to lack of funds.

Do you seriously believe that none of these nations are making a sincere effort to escape poverty?

It is the rich countries of the world that are not making a sincere effort to end it. We promise money, but it's always empty words.

It's time we stopped lying about or intentions either follow through on our pledges or admit we don't care.

It's really time we stop living in the land of make-believe where it doesn't take investment to create an economy.

It doesn't take external investment. Almost without exception, the poor nations have the raw materials, and they certainly have the labor, to provide for the needs and most of the wants of their citizens.

Of course, it's hard for Africans to make a successful investment in agriculture or industry when the very things they need and have the means to produce: food, water, clothing, etc. have to compete with cheap donated imports.

As for trying to skip a few generations and jump right in with major industrilization, I ask, what out there has unmet demand? Do we need another car factory? The only way to know is to allow for the market to decide.

Another geo-classical solution for African nations:
http://www.cooperativeindividualism.org/ab...al-justice.html

Not really, although they do have the land they need fertilizer to make it viable and equipment to cultivate it.

The supply of labor is highly unstable, with millions of people dying of AIDS and malaria and most having no formal education at all.

Then there is the matter of getting to the job. Very few roads in Africa are paved. This also poses problems with shipping goods out of the country in large amounts.

Here in the US we can load up a truck and send it over the freeway. Nothin' doin' in most of Africa.

The basic infrastructure is not something the private sector has interest in funding, they have more lucrative markets to attend to.

Foreign investment is crucial, domestic investment is extremely limited (The per capita GNI of Senegal is 550 bucks, what investment?)

China has learned this to great effect with it's trade zones.

First the market must gain access to something it can work with, a starving, ignorant, dying population isn't an attractive partner.

I'm sure African nations can find markets for their goods, the oil especially. But diamonds, gold, wheat, textiles, etc. aren't going out of demand any time soon.

Edited to aid:

A foreign aid doens't mean cheap imports of manufactured goods, rather it calls for targeted programs to offer health suport and build infrastructure.

I've always been, and probably always will be a proponent of real free trade. I think that truly free trade benefits both partners, however what we call 'free trade' is not at all free.

Of course what proponents of 'Fair Trade' isn't free either, and does not give poor countries the opportunity to develop their economies either.

Anyway, here's an interesting link from
OXFAM, detailing the effects of rich country subsidies and trade barriers.

...despite any benefits brought about by free trade (and I agree that trade barriers help to kill hundreds of thousands yearly) like most complex problems, poverty does not have a simple solution.

The market can't fix this one because it can't even get a foot in the proverbial door. Trade would help, but trade is crippled by the poor health and education of laborers and a lack of basic infrastructure.

I found a more clear articulation of the point I was getting across about the myth that Africa could escape poverty without increased aid if only corruption would cease.

Frequently asked questions

Then, the question is...Can Africa escape poverty with increased aid? The millenium project has been going for several years. Poverty in Africa has increased during this time. In fact, over the last decade (according to their own tables), the rates have increased in Europe and Central Asia, the Middle East, North Africa, and Sub-saharan Africa. The only areas of improvement are in parts of Asia where populations are high and those have obviously been due to foreign direct investment, not ODA handouts. Where is the proof that ODA has helped in any way? A decade of payments has shown no clear results whatsoever. Quite the contrary, in fact. Why will giving them more generous donations improve the situation when past donations have not improved it at all?

Mrs. P, I think you hit the nail on the head.

It is almost counter-intuitive to some, but the only way to get out of poverty is to work your way out. Hand outs are very counter productive in some instances.

Look at the earlier cited example: local cotton farmers and garment producers cannot compete with incoming free clothing. The real way to build up the economy is to start at the bottom: produce goods locally.

Let's face it, one of the greatest resources that these nations has is cheap labor. No labor market, however, can compete with free give-aways. What these nations need is a way that they can utilize their cheap labor. They need to be able to buy the goods that they can produce locally, which means rejecting some types of goods being imported.

Again, I am not against cutting these nations off altogether. We must be smart about what types of aid we give in order to jump start these nations. I know the rebuttal to this will be "we aren't doing that" but we must not simply dump these nations with cash. We need to do it in a way that uses the local population's labor force and the local resources, wherever possible. Giving them stuff is simply counter-production.

A couple of points:
Number one I'm not so sure one can so easily say the that the reasons for poverty level declines in Asia and South America are due to foreign investments rather that assistance.

In fact, as I've been trying to point out, the assistance is needed to give foreigners something worth investing in. The private sector is not about to built roads through Africa and yet it won't invest without road to ports in place.

One example is Bangladesh which received hundreds of millions in aid and has been steadily improving poverty and life expectancy.

I agree foreign investment is important, but foreign direct investment has been around longer than the Millennium goals and does not suffer as much from mealy-mouthed donors....

and yet it has not solved the problem.

Second point is that although the talk over the Millennium pledges has been going on for a decade most of the world's richest nations (our's included of course) have yet to meet the pledges they signed on to.

Part of the reason we aren't seeing results is because we are not seeing action.
I mentioned before that the health budget of some of these nations is less than $20 per capita. Efficient management aside that is point-blank not enough.

Efficient management of insufficient resources is simply an exercise in futility.


That sounds nice, but sadly it is completely divorced from reality.

In a nations built on loans and credit I find it amazing that people can't seem to understand that working is not always sufficient to escape poverty. Have you ever needed a loan?

In college I see a lot of students who were it not for loans and pell grants and the like would have to kiss a shot at a degree goodbye. In my case, minus the scholarship it's bye bye Turnea.


This is missing the point. These are the Millennium Development goals. The point is not nor has it ever been to hand out support money or to flood the country with cheap imports. Although such emergency aid has saved millions of lives, the long term perspective is to build infrastructure.

You are right, these nations need ways to utilize their labor... though it is likely more realistic to focus on their ability to make good for export rather than domestic sales, better markets....

In any case the point of development aid is to make this possible. Right now AIDS and Malaria make the labor supply highly unstable. This combined with a lack of education makes skilled labor, the kind that actually leads to a rise in living conditions, very difficult.

A dead worker is not a productive worker.

If the US lost millions yearly to preventable disease our economy would be in a bit of a lurch too, work ethic or not.

Heh. We look at these African nations, and we make our weighty pronouncements. We say they should be able to work it out from within, that it is only work which ends poverty, all grand thoughts indeed.

How did the U.S. become a wealthy nation? In a word, protectionist trade, and an early realization that lots of money must be spent on the military, and that that military must be used as a tool to protect and expand American corporate power.

African colonies were prosperous only in the sense that they were basically large plantations. At the end of the Colonial era in Africa, we had adopted a whole new way of thinking about international trade. These countries became free, and then most of them were immediately strangled by the misguided policies of the neoliberals, by the SAPs of the IMF and the World Bank.

Debt forgiveness is an important first step. The type of capital flight which occurs when multinational corporations get their "trade" dreams fulfilled must also be ended. If we are serious about wanting African and Southern nations to rise out of poverty, we must allow, even encourage, some protectionist measures on their part. We need to base our relationships with the various Southern nations more on transparency and freedoms, than on resource-raping expediency.

Since responsibility is important, we need to recognize our own culpability in the Southern mess. Centuries of colonialism, topped off with decades of SAPs, decades of supporting crooks who happened to be anti-Communists, decades of supporting corruption because of sweetheart resource deals, years of capital flight, it's no wonder Africa is a mess.

But, boys will be boys. We can always pretend we had no part in making the mess; just remember this: in the long run, the breeders will win. The South is growing much faster than we are. The quicker we help countries out of poverty, the faster their birth rates will decline, and the better off everyone will be. I have to think long term on this - a small sacrifice now, or global revolution in 50 years? If you don't think the choice is that clear, visit Rio or Mexico City or Calcutta or Lagos or Nairobi.

We don't need to throw our money away, but we need to do something and we need to do it now. We could do more by regulating multinationals than we could by giving cash money, but that isn't as sexy.

Quarkhead, I agree with your long view on the global south.

I would disagree on your view about protectionism. Being able to purchase wealth & capital cheaper than it can be made at home is an advantage, not a disadvantage. The industries that need to develop, are the ones that can take advantage of the local 'comparative advantage', in most cases, cheap labor & some natural resources. What is important, is that the use of those natural resources (even if the resource is direct equatorial sunlight) goes to the benefit of the many, and not the few.

In the few countries that I researched on my previous posts, countries had a net inflow of money or capital, in that they received more aid than they spent on debt service.

I still maintain that the best thing we can do with these countries is 1) to eliminate our agricultural subsidies and tarriffs, 2) encourage these countries to establish their own, stable, debt-free currency, and 3) raise their own revenue from natural resource taxes to make public improvements in sanitation, public health, education, rail, roads & ports.

Food aid, in absence of a crisis, is detrimental to a country who's best able to produce their own food. I'd be more inclined to make a donation of quinine, water purification, or prophylactics.

The neat thing about raising money from land (and natural resources) taxes is that when you build a railway, the land becomes more productive, and it's value increases. You then have more tax revenue to make further improvements.

If you do the same thing by taxing people, or businesses, you have a similar effect, but you also have a tax base that can leave, or choose not to be productive.

If protection were the key to economic development, history would show that the centers of commerce and industry would be those places most removed from the rest of the world: distant islands and remote mountain valleys. History has shown otherwise.

Sometimes yes and sometimes no, particularly when considering luxury items. Then Tariffs become added revenue to be used for more essential services. I believe temporary protectionism can do a lot to help a developing economy. The boost provided to a particular developing industry by tariffs should be used to build up the industry to the point were it could compete on a level playing field with the rest of the world. Once this is accomplished, or looks like it may never be then by all means away with the tariff.

Targeted tariffs are a proven economic tool however. I think the bad history of tariffs is because many government use them as political carrots and to prop up industries that simply cannot hope to ever compete. That does not always have to be the way.


I agree that food aid is not sufficient for development, as do supporters of the Millennium Development goals. In fact, it is our current foreign aid policy that focuses too much on food rather than development.

I believe that dropping tariffs and debts are a large part of the strategy, but so is increased development aid in order to stabilize and educate the labor force in these countries.


The key is temporary protection. Protection for the infant, competition for the adult.

More on the third question:

I see that US aid policy is flawed not only in it unwillingness to participate in proposed large scale-development but also in smaller-scale "can't-miss" issues.

Malaria control through mosquito nets and agricultural training for farmers are things that don't even have to be managed through recipient governments.

Kenyan Village Serves as Test Case in Fight on Poverty

Again, those calling for an increase in aid are not simply ideologues who believe in mass charity for charity's sake. The approach is being tested and is based on historic achievements.

At some point the US position will have to become more clear.

Do we refused to increase aid because it won't work or simply because we don't want to spend any more on saving the lives of millions of the world's poorest people?

Perhaps what they really need is some middle ground. Neither debt forgiveness nor an end to aid.

I look around at the situation and most of those countries in question are in dire need of reform and help. Just giving them more aid or forgiving their debt is not going to cut it. Nor will cutting them off from further aid do anything to help them.

We might think about freezing payment of the debt and all interest while this process proceeds. Giving them time to get their reform programs in place and operating. Then we can either look at means to repaid the accrued debt or offer partial forgiveness until the debt can be paid.

It would be the best of both worlds. Giving the countries the time they need to restructure and leave them with the incentive to keep on track.

Some of the situations require radical changes in governance before development can occur.

Others, however are in need of more help than reform.. Giving them more aid and stopping them from paying on an unpayable debts while millions die from preventable disease may well "cut it."


Incentive? Are you referring to millions in debt owned to world's richest nations as "incentive"?

The incentive is the starvation, disease, ignorance, chaos and death. The debt is merely a hurdle to ending all of this. Freeze if we cannot cancel, but just like in Iraq cancellation is the best course.

Time is not all that is necessary, starting an economy takes money, money that many of these countries don't have.

Well I agree that radical changes need to happen, but most countries are not willing or able to make a single leap.

Incentive is to keep them from stealing all the aid, yes incentive is the correct term. Most of those countries have the money in resources, but we will never find out if their leadership keeps stealing or mismanaging it.

As for forgiving Iraq's debt, that was a huge STUPID mistake. Iraq is more capable than any of the African countries and we should never had done that. No cancellation needs to very selective and only after the reforms have been proven to real and lasting.

Okay, but is it fair to saddle the Iraqi people with debts run up by Saddam Hussein? Especially as that money would have gone towards Saddam maintaining his hold on Iraq.

Surely we should be disincentivising lenders who lend to dictatorial regimes by saying 'if you lend to a dictator, don't be suprised if the debt gets cancelled should regime change occur'.

Sure as heck is fair. The Iraqis have a very far way to go before we reward them for non-occurring actions. Lets see if democracy prevails first then we can consider rewards. We are much too quick with the carrot, they haven't done much yet.

If we disincentive lenders too much, they aren't going to lend money to anybody at all. Why the heck should they? They can make more money in other areas that are safer investments.

I was looking at this thread and figured I should give turnea some help.

The complaints about foreign aid I have read in the above posts seem to take quite extreme views of the world. Some people say that aid never helps anything. Some say it is never needed. Still more say it is always spent badly. While these criticisms would have truth if made more moderated, in their extremist form they are untenable.

Some imply that if aid has not solved all the problems of a developing country it must be useless. This does not make sense because you have not shown any basis for deciding how much is enough. Say 25% of a country's budget is foreign aid. What basis do you have for deciding whether this is "enough" or not? None. There is clear empirical evidence, however, that aid helps. One recent study found that every dollar in growth-oriented aid added $1.64 on average to the incomes of recipient countries. Aid has been particularly sucessful in countries like South Korea, Taiwan, Botswana, Uganda, and Mozambique.

On the other hand, some people say that it is not needed. There is some other good way to bring growth to the economy, such as a land tax or a reduction in corruption. It is true that aid is not the only way to help, but it helps. You cannot magically fix these economies. Ask any economist why some nation has been a sucess, and you will hear a large number of different policies it employed, and perhaps some essential ones are not even mentioned. If we can find any policy tool which works for development in any way, we should use it. Only when these countries are developed can we say that we no longer need any help we can get. Of course, policies which are counter-productive are not helpful, but anything we have reason to believe helps, even if it is just a little, should be employed.

Furthermore, people worry about how the aid money will be spent by recipient governments. From the way they talk, every developing country is run by Kim Jong-il. This is simply not the case. Governments run on a continuum of good governance. Obviously we should first aid those governments which have shown they have used aid well in the past, and with less trustworthy governments we should try to keep track of the money as much as possible. Most governmental leaders do want their countries to develop. They might misallocate some of their budgets, but with enough oversight then can spend most of it relatively well. Maybe sometimes the wealthy will benefit more than the poor, but the poor will be helped. Sure, irrigation projects do not benefit everyone in the country equally, but that doesn't lessen the value of helping some.

Of course, this criticism ignores aid which is not channeled through governments. Microfinance projects completely independent from local governments have provided low-interest credit to the poor all over the developing world, helping them improve farm productivity and start small-scale businesses.

In short, criticizing aid is an extremist position, not taking into account the complexity and the subtlety of the real world. A more defensible position would be criticising the way aid is currently given, recognising that while there are enourmous mistakes there are also quality programs, and some programs are good but could be better. That is something I could definately get behind.

No, I don't...which is why I'm not against such programs. I just think it important to note the difference between throwing money at the problem, which is doomed to failure, and funding real, functional, measurable plans. Heck, we seldom do that domestically (to our detriment)...so to assume that most of these countries already have such plans in place is ludicrous, IMHO. In fact, there is already funding for such things...one reason countries don't go that route is precisely because these other sources demand fairly strict regimens that go along with the funding.

Further, we do have a vested interest in the success of these plans...more prosperous countries are more prosperous markets. However, countries which make poor use of such funds probably end up in worse overall shape than they were before, which does no one any good (other than the corrupt politicians who profited from it).

Forgiving debt is not a reward, it is more akin to a lack of punishment for recipient nations. For lender is is a punishment for lending to dictatorial regimes, a well-deserved one.

To be more general: Countries that cannot repay debt are point-blank categorically unsafe investments for lenders. Lenders aren't going to loan any money to these countries now.

Canceling the debt won't put them is a worse position regarding further lending, these countries have already hit rock bottom. The struggle to pay part on the interest, they'll never touch the principle.