How to make poverty history
Let me put it bluntly. The demands of those running the Make Poverty History campaign will do nothing to relieve dire poverty in Africa. The campaign demands the following: trade justice, debt relief, more – and better targeted – aid, extra finance (imposing new taxes in the developed world to generate increased aid revenue), reducing the strings attached to aid monies, increasing funding to combat AIDS, tackling corruption and striving for a united EU approach to these issues.
Depending on which of the aforementioned they are asking for, celebrities like Bob Geldof and Bono place either complete faith or complete blame on western governments. In reality, the fault for Africa’s poverty lies squarely in the hands of African governments.
At first I thought trade ‘justice’ meant they support complete free trade. After all, free trade is fair trade, with everyone competing on an equal playing field without subsidies, tariffs, quotas – what could be fairer? I was wrong. To the organisers, western countries are “forcing poor countries to open up their markets to foreign imports and businesses” and asking them to “sell off public services like electricity… They’re also banning poor countries from supporting vulnerable farmers and industries, while wealthy nations continue to support their own.”
Since when does persuasion and tied aid amount to ‘banning’? Since when does one evil (westerners subsidising their agricultural industries) justify another evil (African governments shoring up support and wasting taxpayer money by subsiding farmers)? If anything, western nations subsidising their export industries are engaging in an aid transfer; consumers in poorer nations can now buy the same goods cheaper. ‘Dumping’ is good for consumers.
Nevertheless, they are correct in pointing out that the views of rich nations dominate international organisations. This is not necessarily a bad thing, because rich countries know what policies lead to increased wealth. So these global organisations prescribe smaller government and freer markets.
The organisers assert that “Rich countries used trade rules to protect themselves as they developed - which is how they got where they are now.” Really? That is interesting. If true, India (and a host of poor nations) should have been filthy rich by now. I might have to change my views and go back to being a socialist!
But it’s not true. In 1991 when India’s economy was in shambles and the government was in need of bailing out, the World Bank outlined the agenda for microeconomic reform – privatisation and regulatory liberalisation. I consider that to be the most positive thing to ever happen for India’s poor, and anyone who suggests otherwise has no understanding of the misery pre-1991. Conditionality of this sort is a good thing.
Yet poor countries don’t need bureaucratic organisations to help their people. Unilateral free trade is easy. Lowering taxes is easy. Cutting spending is easy. Well, actually, it’s not. No government wants to voluntarily give up power or influence. No government wants to voluntarily reduce its reach, because that would mean fewer opportunities for corruption and nepotism. Damn.
I agree that the problems are largely caused by poor governance. However tackling corruption is hardly incompatible with better governance. And I think that if aid money is to be given then it should be better targeted. I think it is important that general awareness of these issues is raised and Bono etc certainly achieve this.
If your cause is the ellimination of poverty in Africa it makes sence to dig for funds where the money is. This may make you an enemy of freedom in the west but it is pretty rational. And we certainly have a long term interest in containing the spread of HIV. I have a lot more time for this crowd than for the local welfare lobby that now think a TV set is an essential item and that you are in poverty if you don’t have one (see Ross Gittens article in SMH today). That is not to say they have got it entirely right.
Comment by terje (say tay-a) | November 29, 2006
Aid is often fungible, and giving aid lessens pressure on African governments to reform, or else.
Comment by Sukrit Sabhlok | November 29, 2006
Bono, who demands governments give taxpayer funds to aid programs, yet keeps his own money in tax shelters. Arsehole
Comment by Tex | November 29, 2006
Holland is hardly a tax shelter. However I would agree that he is a hypocrit as is anybody that wants the government to do things for them (eg give charity) that they are more than capable of doing for themselves, but don’t.
He may be an asshole also. I don’t know much about him. However if every hypocrit is an asshole we are really in the shit, because they are everywhere.
Comment by terje (say tay-a) | November 29, 2006
Whats the point of giving foreign aid ? What does it get us in return ? Does it really give us anything more than a feelgood sensation ?
Does it encourage Africans to develop commerce and trade with the outside world ? Where will they be when the foreign aid taps are turned off ?
Probably worse off.
Comment by Jono | November 29, 2006
Relative to personal charity it does not even give much of a feel good benefit.
Comment by terje (say tay-a) | November 29, 2006
Foreign charity may be linked to humans instinct for fairness, such as the Ultimatum Game, in which individuals will reject an anonymous cut of a sum of money that they consider unfair in preference for receiving nothing. I would go so far as to say that once poverty has been eliminated and peolpe live comfortable (even luxurious) lives, the selfish instinct loses some of its influence over our behaviour. People get a sense of unfairness over the lot of poor arse Africans and want to do something, even if that something is irrational, such as fair trade.
I have no problem with individuals making poor economic choices such as buying over-priced coffee, what I do have a problem with is the state raising trade barriers and donating tax funds to foreign states. Better charities might be linked to education and perhaps even military training, so that when the state sponsored death squads turn up on their door with machetes, peasant farmers are trained and armed to protect themselves and their property, rather than have your state arming and training a foreign army. Sponsor a gun today!
Comment by Brendan Halfweeg | November 29, 2006
‘I have a lot more time for this crowd than for the local welfare lobby’
We would all like to help the poor. The most effective thing we can do, however, is to start at home. Australia should end all subsidies to producers and aim to completely dismantle trade barriers. If there is any economist that disagrees, they should ignore the economics and focus on the (much stronger) moral reasons for this view.
Their intentions are good but they know absolutely nothing about how to achieve their objectives. These people want to introduce a tax on airline travel that will go towards increasing aid. These are probably the same people who also want to place taxes on industries they hate to curb global warming. It’s also possible they have other ideas on how to make the world better that require taxing us more. In their present mindset, they make me fearful.
Comment by Sukrit Sabhlok | November 29, 2006
Brendan,
I used to give money to amnesty until I read about the gun control that they advocate.
Regards,
Terje.
Comment by terje (say tay-a) | November 29, 2006
I used to give money to amnesty until I read about the gun control that they advocate.
Terje,
That Amnesty lot give me the creeps, I can’t support single issue organisations.
But they are good at raising their profile and we could learn from their PR campaigns.
Unfortunately, I’ve personally found a correlation between AI supporters, Green Peace supporters and other general statist leaning people. People can’t decide whether they want the state messing with their freedoms or not.
Comment by Brendan Halfweeg | November 29, 2006
The average IQ in Black Africa is around 65. At this level people aren’t really able to function in a modern economy. The only way to get the quotient up is to improve childrens’ diet. At the very least the west may able able to help on this score through proper food aid.
Comment by JC | December 1, 2006
Little bit acquainted with intellectual testing in Australia would hardly suggest that IQ reflects real ability of people to fit a working place.
What is poverty? I do not know my IQ, but simply suggest that this is limited available access to goods and services.
Will any of such Australian public transport users putting fit on opposite sits and a beer can on nearby one to occupy all free places in a segment share cheerfully space to experience even a shadow of inconvenience caused eventually by a new customer?
Are these meetings emphasized on making good for poor or keeping status quo, that is a pressure of the poorest countries in different forms on first world activities by just unsubstantially steaming down some issues?
Comment by M.Kerjman | December 1, 2006
Brendan,
If Amnesty stuck to the single issue of publicly exposing abuses of government power and lobbying for an end to such abuse then they would still get my money. However when they turn the tables and start advocating that governments disarm the population they have in my view crossed over to the dark side and have joined the enemy. Thats when the funds should dry up.
Regards,
Terje.
Comment by terje (say tay-a) | December 2, 2006
“The average IQ in Black Africa is around 65. At this level people aren’t really able to function in a modern economy.”
Is there science behind this, JC? If there were, and it were good, it could explain much. But is it and does it?
Comment by Rob | December 10, 2006