13 May Global Development Aid: Does Private Giving Count?
The U.S. is commonly denounced as stingy in economic development circles for failing to donate more foreign aid. Although the U.S. government spends about $19.7 billion a year in foreign aid, more than the next two countries combined, this amount is small relative to the size of U.S. GDP.
One response to this criticism is to point to private U.S. donations. According to the recently released Index on Global Philanthropy, private donations from the U.S. to foreign countries totaled $71 billion in 2004 (hat tip WSJ$). The majority of this $71 billion comes in the form of individual remittances from immigrants in the U.S. (legal or illegal) sending money home to their families.
There is a lot to like about using private foreign aid over public foreign aid. Private foreign aid has fewer transaction costs and, more importantly, is directed by private choices rather than in pursuit of a particular government policy. For instance, about $6 billion in U.S. aid goes to Israel and Egypt for political rather than economic development purposes.
But could private giving really supplant official government aid programs? Probably not. Although the improvement in worldwide information transfers has made it easier for private donors to choose how to allocate their money, no doubt there are worthy projects out there not getting funding. Still, I think it is fair to “count” private giving in some sense. It may not be U.S. government policy, but it is probably accomplishing as much if not more than most U.S. government development policies.
‘But could private giving really supplant official government aid programs?’ Absolutely not. Show me the compelling evidence that private giving is having a timely, measurable impact on the global reduction of poverty and I’ll reconsider. And please don’t infer from this any disparagement of private giving as such. It is clear that the affluent nations of the North have disproportionately benefited from the present geo-political and economic order and that those in the Southern hemisphere (and some regions in the North) have have proven vulnerable to the decision-making of elites in the North. And it won’t do here to cite the futility of addressing this topic in the dim light of the situation of countries in the ‘failed states index’ (i.e., it’s their problem, so they bear the lion’s share of responsibility). As Thomas Pogge has stated,
‘[W]e share responsibility not only for the damage authoritarian rulers can do to the interests of “their” people in international negotiations, but also for authoritarianism and corruption being so widespread in the developing world. In this vein it is often mentioned that our governments have instigated the violent installation of many oppressive rulers in the developing world, are selling juntas and autocrats the weapons they need to stay in power, and have fostered a culture of corruption by permitting our firms to bribe foreign officials and by blessing such bribes with tax deductibility. Still more significant…are the resource and borrowing privileges that our global order confers upon those who manage to bring a country under their control. Such rulers are internationally recognized as entitled to sell natural resources and borrow money in the name of the country and its people. These international privileges facilitate oppressive rule and greatly encourage coup attempts and civil wars in the developing countries.’
That private giving ‘is probably accomplishing as much if not more than most U.S. government development policies’ is appalling and shameful. At the very least, the US and other highly developed countries need to financially demonstrate their commitment to the Millenium Development Goals first articulated in 2000 at the UN’s Millenium Summit. As the former President of the World Bank, James Wolfensohn said,
‘Ours is a world out of balance. Of the six billion people living in the world today, one billion receive 80 percent of global income, while more than one billion barely survive on less than a dollar a day. And, while developed countries spend $600 billion a year on defense, and incur $300 billion in direct and indirect agricultural subsidies, they offer only $56 billion a year in aid to developing countries.
Over the next 25 years, 50 million people will be added to the population of rich countries. But over the same period, about one and a half billion people will be added to the population of poor countries. Today, more than 2.9 billion people—nearly half the world’s population—are under the age of 25. Many of these young people will experience poverty and unemployment. Disillusioned with what they will see as an inadequate global system, many will leave their homes, and often their countries, to find work.
The world is moving—but still too slowly— to address these issues. In 2000, world leaders gathered at the Millennium Summit to assess the future. They committed to cutting poverty in half by 2015—the foremost of a broad set of targets called the Millennium Development Goals. The other targets to be met by 2015 are achieving universal primary education; obtaining equality for girls and women; reducing child mortality; improving maternal health; combating the spread of HIV/AIDS, malaria and other diseases; protecting the environment and fostering a global partnership for development.
The global community can rise to meet the challenges presented by the Millennium Development Goals if the considerable progress of recent decades serves as a guide.
Over the past 40 years, life expectancy in developing countries has increased by 20 years—about as much as was achieved in all of human history prior to the middle of the 20th century. Over the past 30 years, adult illiteracy in the developing world was nearly halved to 25 percent from 47 percent. Over the past 20 years, the absolute number of people living on less than one dollar a day has for the first time begun to fall, even as the world’s population has grown by 1.6 billion people. Over the last decade, economic growth in the developing world has outpaced that in the developed countries.
However, at current rates of progress, only the Millennium Goal of halving poverty is likely to be met by 2015. Thanks in particular to poverty reduction efforts in China and India, the proportion of people living on less than one dollar a day by 2015 is projected to decrease to just over 12 percent from more than 28 percent, bringing half a billion people out of poverty. Unfortunately, in parts of South Asia, the poverty reduction picture is less promising. In Sub-Saharan Africa, the number of people living in absolute poverty is actually projected to increase. On many of the other Millennium Development Goals, progress is lagging in virtually all regions.
Extraordinary efforts are required by developing and developed countries if these targets are to be met. In the past two years, global leaders at meetings in Monterrey, Doha and Johannesburg agreed on a course of action to meet these goals.
Developing countries agreed to strengthen governance, create a positive investment climate, build transparent legal and financial systems, and fight corruption. Developed countries agreed to support these efforts by increasing aid and better aligning it to national strategies, opening their markets more to trade, and offering more generous debt relief. Poverty reduction strategies or national development plans now provide the framework for the actions of countries and their partners to come together in accelerating progress towards the Millennium Development Goals. While this is a promising beginning, even more and better aid, greater market access and deeper debt relief are still needed.’
The World Bank, IMF and WTO have together been part of the imposition of a global economic order that has often directly harmed the poor rather than helped them (see, for instance, Thomas Pogge’s World Poverty and Human Rights, 2002; Christian Barry and Thomas Pogge, eds., Global Institutions and Responsibilities: Achieving Global Justice, 2005 and some of the essays in Thomas Pogge, ed., Global Justice, 2001). There are some signs that this is beginning to change, and that we can still alter this global economic order on behalf of those literally unable to flesh out the thinnest notion of human flourishing. But encouraging reliance on ‘private giving’ as a tenable alternative to globally coordinated poverty reduction and development strategies is simply moral evasion and naive in extremus, amounting as it does, to our further acquiescence in world poverty (see the introduction to Pogge 2002 above on why this is so).
It seems we need reminder of Robert Goodin’s succinct formulation of the Principle of Group Responsibility:
‘If A’s interests are vulnerable to the actions and choices of a group of individuals, either disjunctively or conjunctively, then that group has a special responsibility to (a) organize (formally or informally) and (b) implement a scheme for coordinated action by members of the group such that A’s interests will be protected as well as they can be by that group, consistently with the group’s other responsibilities.’ [this assumes Goodin’s previous articulation of the ‘first principle of individual responsibility’]
Which brings us to Goodin’s Second Principle of Individual Responsibility:
‘If B is a member of a group that is responsible, under the Principle of Group Responsibility, for protecting A’s interests, then B has a special responsibility:
a. to see to it, so far as he is able, that the group organize a collective scheme of action such that it protects A’s interests as well as it can, consistently with the group’s other responsibilities; and
b. to discharge fully and effectively the responsibilities allocated to him under any such scheme that might be organized, insofar as doing so is consistent with his other moral responsibilities, provided the scheme protects A’s interests better than none at all.’ [from his Protecting the Vulnerable: A Reanalysis of Our Social Responsibilities, 1985]
As Goodin concludes, ‘the state should become responsible whenever there is no one with primary responsibility, or whenever those with primary responsibility are unable or unwilling to discharge it,’ keeping in mind here of course that the state has the ‘deepest pockets.’
John Stuart Mill called it ‘the great error of reformers and philanthropists… to nibble at the consequences of unjust power, instead of redressing the injustice itself.’ Indeed.
Well, I’m now late for my part-time (weekend) landscape maintenance job, but I think it was worth it.
As a companion to the comment above, I’ve assembled a reading list (for summer!) of around 100 titles: ‘The Ethics, Economics & Politics of Global Justice: An Introductory Bibliography,’ that I will send (as Word doc.) to anyone who requests it. Be forewarned, it has a ‘Liberal’ (as outlined by a Stephen Holmes* or Gerald Gaus**)/’Leftist’ (as understood by the sociologist Richard Flacks***) orientation.
* See Holmes’ The Anatomy of Antiliberalism (Cambridge, MA: Harvard University Press, 1993), and his Passions and Constraint: On the Theory of Liberal Democracy (Chicago, IL: University of Chicago Press, 1995).
**See Gaus’ Value and Justification: The Foundations of Liberal Theory (Cambridge, UK: Cambridge University Press, 1990), Justificatory Liberalism: An Essay on Epistemology and Political Theory (New York: Oxford University Press, 1996), and Contemporary Theories of Liberalism (London: Sage, 2003).
***See Flacks’ Making History: The Radical Tradition in American Life (New York: Columbia University Press, 1988).
Finally (I promise), I might have mentioned how controversial the World Bank’s criterion (a money/income metric) for determining the poverty level is (so, for instance, surviving on two dollars a day may still be indicative of severe poverty), as it may grossly underestimate real poverty on a global scale. Please see the excellent article by Ingrid Robeyns, ‘Assessing Global Poverty and Inequality: Income, Resources, and Capabilities,’ in Christian Barry and Thomas W. Pogge, eds., Global Institutions and Responsibilities: Achieving Global Justice (2005), pp. 29-47.