American Elephants

Let’s talk about Global Poverty and the Democrats. by The Elephant's Child

Here is someone you should know.  James Shikwati , a Kenyan libertarian economist, is director of a Kenyan Think Tank, Inter-Region Economic Network (IREN).  He burst upon world attention in 2005, with an interview in Spiegel Online, entitled For God’s Sake, Please Stop the Aid!”

SPIEGEL: Stop? The industrialized nations of the West want to eliminate hunger and poverty.

Shikwati: Such intentions have been damaging our continent for the past 40 years.  If the industrial nations really want to help the Africans, they should finally terminate this awful aid.  The countries that have collected the most development aid are also the ones that are in the worst shape.  Despite the billions that have poured in to Africa, the continent remains poor.

SPIEGEL: Do you have an explanation for this paradox?

Shikwati: Huge bureaucracies are financed (with the aid money), corruption and complacency are promoted, Africans are taught to be beggars and not to be independent.  In addition, development aid weakens the local markets everywhere and dampens the spirit of entrepreneurship that we so desperately need.  As absurd as it may sound, development aid is one of the reasons for Africa’s problems.  If the West were to cancel these payments, normal Africans wouldn’t even notice.  Only the functionaries would be hard hit.  Which is why they maintain that the world would stop turning without this development aid.

SPIEGEL: Even in a country like Kenya, people are starving to death each year.  Someone has got to help them.

Shikwati: But is has to be the Kenyans themselves who help these people.  When there’s a drought in a region of Kenya, our corrupt politicians reflexively cry out for more help.  This call then reaches the United Nations World Food Program — which is a massive agency of apparatchiks who are in the absurd situation of, on the one hand, being dedicated to the fight against hunger while, on the other hand, being faced with unemployment were hunger actually eliminated…and before long, several thousand tons of corn are shipped to Africa…and at some point, this corn ends up in the harbor of Mombasa.  A portion of the corn often goes directly into the hands of unscrupulous politicians who then pass it on to their own tribe to boost their next election campaign.  Another portion of the shipment ends up on the black market where the corn is dumped at extremely low prices.  Local farmers may as well put down their hoes right away; no one can compete with the UN’s World Food Program.  And because the farmers go under in the face of this pressure, Kenya would have no reserves to draw on if there actually were a famine next year.  It’s a simple but fatal cycle.

It’s a stunning interview, and do read the whole thing, by clicking on the link above. In another essay, Mr. Shikwati emphasizes that what the developing world needs is trade, not aid, to help the poor.

This is pertinent, not only because of the failure to pass the Free Trade Agreement with Columbia, but because of the Democrat Congress’s reasons for voting against the bill.  American Unions have been losing membership and influence in recent years, and they have been ardent supporters of the Democrat Party.  They are now calling in the debt.  The unions want to force other countries throughout the world to adopt their union rules and environmental rules, and to refuse any trade agreements that do not contain those requirements.

Over the past several decades, in contrast to the claims of Democrats, remarkable progress has been made against poverty around the globe.  According to data from the World Bank, the number of extremely poor people has shrunk to fewer than a billion in 2004 from about one and one half billion in 1981.  Most of this has been accomplished through increased free trade.

Mr. Shikwati’s comments are also pertinent because the developed world’s rush to put farm crops into their fuel tanks has disrupted the world food supply, and rising energy prices are also harming poor countries. There is both a short-term and a long-term problem.  Robert Zoellick, President of the World Bank points out that food prices have risen 83 percent since 2005 “threatening to drive over 100 million people into extreme poverty”.  Such a move, he added, would “reverse the gains made in overcoming poverty in the last seven years”. Yet we must make sure that we are enacting policy changes that assure that emergency relief will not be required next year and thereafter.

Senator Barack Obama has sponsored a “Global Poverty Act” that would require the United States to increase foreign aid by approximately $65 billion per year.  If the Senate passes the bill, it would be Mr. Obama’s first significant legislative accomplishment. Derived directly from the UN’s Millennium Development Goals, the idea has been for donor countries to devote 0.7% of their GNP to aid.

The idea of making the goal of international development aid by rich countries 0.7% of their national income, rather than of any demonstrated need by developing countries or evidence that any such aid could be used effectively is illogical. Nowhere in the world can we point to a country that has escaped poverty through foreign aid, in spite of more than $2 trillion of foreign aid spending so far. The correct question is: How do countries develop economically?  What actually works?

The answer is foreign investment and increased trade. If rich countries would open their markets to developing countries, those poorer countries could work their way out of poverty and wouldn’t require foreign aid.

The latest report from the United Nations indicates that the goal, of cutting in half the proportion of people worldwide who live on less than $1 per day between 1990 and 2015, was already 80 percent achieved by 2004, 11 years before the deadline. As The Heritage Foundation reports:

US contributions to this goal are substantial. The U.S. is the largest source of foreign direct investment in developing countries, the largest recipient of developing country exports, and the largest provider of development and humanitarian assistance to developing countries.  In a world economy that is increasingly market-oriented and globalized, unprecedent levels of resources are flowing to developing countries.  The share of these resources coming from the private sector, primarily through the mechanisms of trade, investment and remittances, dwarfs official aid flows.

Democrats are always anxious to solve problems by taking money from taxpayers to give to those with the problem.  But problems are most often not so simplistic that they can be solved by simply throwing money at them.  The socialist idea that “redistribution” is the answer and the problem is “rich people” doesn’t meet the most elementary logic test. If we have already met 80 percent of the goal eleven years ahead of time, maybe we should keep on with what we have been doing: Increasing trade, increasing investment,  and sharing knowledge.

But that requires looking into what is actually being done, and what the results have been; rather than attempting to grandstand with a bill to solve world poverty to enhance one’s resume.

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