Roger Thurow - Outrage and Inspire - "Reality Check"

REALITY CHECK

As the budget battles intensify, a reality check is in order: Slashing foreign aid targeted for boosting development in poor countries will hardly make a dent in the deficit.  The savings will be negligible, but the consequences would be huge.

A perception exists, even among those who should know better, that foreign aid consumes a huge chunk of the U.S. budget.  In a Chicago Council survey in 2008, respondents were asked: Just based on what you know, please tell me your hunch about what percentage of the federal budget goes to foreign aid.

The mean percentage was 24.35%.  The median was 20%.

In a survey conducted late last year by the Program for Public Consultation, affiliated with the School of Public Policy at the University of Maryland, a similar question was asked.  The mean percentage was 21%, the median was 15%.

Hardly.  The reality is that foreign assistance for international development is about 1% of the budget.

Now, get this.  The Council survey also asked: What do you think would be an appropriate percentage of the federal budget to go to foreign aid, if any?  The mean percentage was 13.34%.  The median was 10%

The Program for Public Consultation, asking a similar question, came up with a mean percentage of 11% and a median of 5%.

If only.  This means that if members of Congress were truly listening to the wishes of the public, they would increase spending on foreign aid.

Perhaps the outsized perception of foreign aid comes from the fact that it is such a bogeyman for those seeking to reduce the budget and the role of the government.  They hear about foreign aid in times of disaster, and they wonder why those poor people or their governments can’t help themselves; or they ask, what about all those who need assistance in our country?  Or foreign aid makes headlines when repressive governments are toppled and hidden stashes of money are found in Alpine or offshore banking accounts and they assume that’s where our aid ends up.

It would be great if the outsized perception of foreign aid reflected its outsized importance.  For development assistance can have a multiplier effect; it not only fulfills a moral obligation but it can also save and improve lives, boost foreign economies, create opportunities for American business and foster a healthier, more secure world.  Successful foreign aid projects are in the interest of the giver as much as the receiver.

It would be wonderful if there were so many success stories being told that people naturally figured that the U.S. must be spending a lot of money on foreign aid to make it all possible.

Rather, the sharp knives poised to attack foreign aid are encouraged by a noisy chorus repeating the refrain that development assistance doesn’t work, that it is a waste of money, that places like Africa would be better off without so much of it so that the local private sector could flourish on its own.

Of course, there is plenty that has been wrong with foreign aid.  There is too much waste on things that don’t improve lives and economies, too much duplication, too many white elephant projects conceived in the rich world that are ill-suited to the conditions in the developing world and thus doomed to fail.

The main problem is that too much of the foreign aid has been misdirected.  Primarily, it has been directed away from agriculture, away from assisting the area where most Africans work, away from eliminating the one problem – hunger – that undermines all other development efforts.

Agriculture development aid and investment from the rich world to the poor dramatically declined in past decades, slumping from $8 billion a year in the 1980s to less than $3 billion several years ago.  The rich world philosophy was that food was abundant and cheap; if anyone is hungry we’ll feed them, they don’t need to feed themselves.  The U.S. decline was particularly severe; the percentage of American foreign aid going to agriculture fell from 25% in the 1980s to only one percent by 2008.

So what the chorus of aid detractors demands has actually happened in African agriculture.  If they are correct, African agriculture should be thriving.

But, alas, the opposite has happened.  Want to see what happens when foreign aid is withdrawn?  Go to most any rural area in Africa.  Look at the state of the farms: the women farmers still digging in the soil, sowing seeds that haven’t been improved for years, depending solely on rain, literally stuck in the ruts of dirt roads, storing their harvests in their bedrooms, struggling to find a decent price on an efficient market.  The local private sector hasn’t mustered the strength to provide for all these needs so a modern farming life could develop.  And, as a consequence, the farmers are struggling to feed their families with a diversified, nutritious diet.

In the past couple of years, international development has corrected its course and has begun re-investing in agriculture.  The decades-long neglect of the farming sector is being reversed.

And now comes the budget-cutting threat to foreign assistance spending.  Now, when food prices are rising to new highs.  Now, when increased food demand is placing strains on the global food supply.  Now, when agriculture economists say global food production needs to double by 2050.  Now, when agriculture development expertise in the U.S. Agency for International Development and the U.S. Department of Agriculture needs to be expanded, not gutted.  Now when seed and soil research needs to be intensified, not weakened.  Now, when the Obama administration has made a priority of reducing hunger through agriculture development with its Feed the Future initiative.

A resolution being debated in the House of Representatives seeks to significantly cut the U.S. development assistance budget, slashing 40% from the president’s request for fiscal year 2011.

The perception is that foreign aid needs to be severely cut.  The reality is that little will be saved, much will be lost.

Comments

[george clark]

Maybe the agricultual policies of most african governments have most to do with the situation.
AID without sturctural change is meaningless.

[Clay Ogg]

During budget crises, Europe and the U.S. may find it easier to eliminate biofuel programs rather than increase foreign aid. This also would provide much larger and quicker response to the urban food crisis in poor countries. The U.S. burns about 40 percent of its corn crop, while Europe and Brazil, the two other largest producers of key crops, burn biofuels on a similar scale.

Unfortunately, the Federal bureaucracy is charging ahead in the wrong direction. EPA just raised the limit for mixing ethanol with gasoline from 10% to 15%, ignoring the food crisis. And the Department of Energy invests immense amounts of money on research aimed at producing biobutanol and other biofuels that would get around this “blend wall” entirely. If they succeed, and if the price of oil remains high, our entire corn crop could easily become a biofuel.

Europe’s vegetable oil fuels require large subsidies, so eliminating their biofuel mandates and subsidies solves the budget, hunger, inflation, and political unrest problems that Europe is causing. In the U.S., eliminating the biofuel subsidy only addresses the budget problem because corn ethanol is competitive with oil at today’s oil prices, even without the subsidy. The U.S. would need to cap the use of food for fuel or allow states to do so. Fortunately, over 99 percent of Americans are not crop farmers, and we prefer lower grocery bills. It is just a matter of overcoming special interest politics.