Reason for a New Age

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    What you will expect to see here are discussions of politics and tangentially economics. This blog will do its best to present a rational look at the world of today, how the modern world came into place, and the issues that are currently being discussed in the public realm.
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Propping up a Three-Legged Table

Posted by publius2point0 on 2010/02/27

There was a website some time ago that had an interesting way of displaying statistics. If you looked up “exports” or “life span” or whatever other statistic, it would morph the map of the world, blowing countries up like a balloon if they were at the high end, or shrinking them down like they’d sucked on a lemon if they were at the low end. The end result of this was a very clear representation that you did not want to be an African. To be certain, each country is unique, with varying levels of any one problem. Possibly some are doing quite well even. But overall it’s just being nitpicky to say anything other than that “Africa” needs aid.

And I suspect that if you were to look at where most of the aid in the world goes, the answer to that question would be Africa. It’s certainly been the poster location for charities since I was a small child, so for at least 30 years, Africa has been the recipient of most of the world’s charity.

But when we say a country “needs aid”, we’re making the presumption that charity is good. In general, people who need aid, need it because they can’t run their own lives themselves. Handing them any amount of money, subsequently, is nothing more than throwing money into a pit.

The obvious response is that the goal isn’t to turn the person around, it’s to keep them alive until they can turn themselves around. In international terms, it would be to keep the people alive until the country reforms itself.

The question becomes, though, whether things reform quicker when they are buoyed or when they must support themselves.

For instance, let’s look at Communism. Cuba, by virtue of proximity to the US, has been receiving billions of dollars every year from Cuban immigrants, and is now perhaps the most stable Communist country in history. The people may not be happy nor satisfied in their lives, but things are not so awful that reform is needed. The USSR, on the other hand, collapsed due to its own inefficiencies and hence had to make the transition to Capitalism. China, realizing that they were going to collapse if they didn’t change, was able to start this transition in a more managed and gentle fashion. If the USSR or China had had a sufficient income from Capitalist countries, would they have made these reforms, or would they still be going?

If aid was removed from all these African nations, it might lead to an immense number of deaths. But at the same time, over a period of 30, 50, or a hundred years, it’s quite likely that far more will die due to poor or malicious governance. In the long run, a larger number of lives are saved by forcing things to turn around than by providing charity and allowing the status quo to continue.

Of course, the argument against this is that reform requires a certain level of financial stability, meritocracy, and so on to lead to anything like success. Plunging a poor nation into even greater poverty might foment the desires to hold a revolution, but without the resources to do so. Without solving issues of tribal differences, you might end up with tribal war replacing centralized, malicious government: Hardly an improvement. On the other hand, one might postulate that as things become dire, the willingness to move into Africa and effect real change, rather than simply providing charity, will rise in the rest of the world. And certainly with that sort of support, change can be effected, if properly managed.

Overall, generally, I worry about the worthiness of charity.

Take for example animal shelters. They capture stray dogs and cats, seeking new homes for them, providing free medical care, and only putting the animal to sleep if all else fails. (Of course, most of the animals do end up being put to sleep.) When people consider getting a pet, quite often you’ll see people telling them to go to the animal shelter and pick out an animal there because otherwise it will be put to sleep, and they will get it for free. They are providing aid to all the poor mistreated animals of the world. On the other hand, if you go and buy a pet from a proper breeder, you’re just killing puppies.

But let’s think of this rationally. A proper breeder makes sure that the animals are healthy, interviews the people receiving the animal, has a contract that limits what the recipient can do–for instance making sure that the animal is spayed or neutered–and makes sure that each puppy finds a home. A non-proper breeder will let brother and sister breed, sells the animals cheap to anyone, with no limitations, and feels free to dump any excess animals in the streets to fare for themselves–so called “puppy farmers”.

Because we have animal shelters which do their best to save strays, we don’t feel a great need to reform the system. There is a “fallback”. We all just conveniently ignore the fact that even with the fallback, an inexcusably large number of animals are put to death.

Charity let’s you feel good about letting problems remain unfixed. The problem isn’t that people don’t get enough pets from the animal shelter, it’s that you don’t have to be registered to sell puppies. You don’t have to follow any guidelines to maintain your pet business. I suppose I don’t know what precise measures would be the most effective, really, but the point is that the animal shelters allow us to feel morally superior at the same time as not having to go in and find a real solution. Personally, I’d rather say that a shelter can’t take in any more strays than they can actually place in a home. They can’t put more than 5% of all those that they catch to sleep. This would be a sane and rational backup for a working system. If you had that in place and this resulted in tons of strays wandering all around our cities, it would force a real solution being enacted. It would, ultimately, save more lives and probably cost less.

IMF Loans

The International Monetary Fund (IMF) is a UN organization that loans out money to developing nations. These nations can than use this money to try and rebuild their country, modernize it, better their infrastructure, or whatever else. The idea being that they will make all this money back and pay off their loan. Of course, the IMF isn’t the only organization to have done this. One of the ills that has beset Haiti is the repayment of loans to the US from when the country separated from France and sought international acceptance, nearly 200 years ago, and still being paid off today.

The problem is that, like I noted in True Economic Ill, if a country or other organization is inherently poor with making plans, has the wrong goals, or otherwise pisses its money away, trying to buoy it up is just throwing money into a black hole. Giving a loan to an inherently ill organization simply adds further burden since, unlike charity, you’re expecting to be paid back later.

Forgiving these loans would be, to the countries that are paying loan fees and haven’t improved due to them, a boon to be certain. But, it would also set a horribly dangerous precedent. Ultimately, I don’t think it’s feasible on that measure.

When a corporation has a primary backer and becomes financially unstable, the backer is always able to force the leadership out and put in their own guy to turn things around. This might not be good so far as the CEO was concerned, but for the backer and all of the employees of the business, it’s certainly a much better option. For an organization set up specifically to give loans to countries that are already financially unstable, to not have a similar ability is foolhardy. No one is being helped.


One Response to “Propping up a Three-Legged Table”

  1. Roberta said

    The other problem with loaning money to undeveloped countries is that most of the money goes into the pocket of many unscrupulous and corrupt leaders — not to the development of the country. You are right that much of this type of ‘charity’ is just money thrown down the drain and not doing anything but getting the people poorer and their leaders richer and more corrupt. As you say, it is a ‘feel good’ type of thing, but not really realistic.

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