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Fix Foreign Aid; The Second Marshall Plan

By Ed ORourke

Created Mar 25 2007 – 19:24

Many people find the idea that more than two billion human beings live in abject poverty ($2 per person per day or less) is not acceptable. Great Britain’s Exchequer, Gordon Brown, Cardinal Oscar Rodriguez of Honduras and former German foreign minister, Hans-Dietrich Genscher are among an increasing number calling for a second Marshall Plan for the world’s poor. There are two European-based groups, and that have been advocating such a plan.

The Global Marshall Plan Initiative in Hamburg and the Network of Spiritual progressives, spearheaded by Rabbi Michael Lerner are sponsoring April 15, 2007 as Generosity Sunday in support of a Global Marshall Plan. The scheduled rallies will challenge the prevailing view that poverty is an inevitable part of the human condition.

Considering that foreign aid, except for the first Marshall Plan, has had an overall mediocre record, it is a good idea to see where foreign aid goes right and where it goes wrong.

Nobel Prize winner, Joseph E. Stiglitz, in Making Globalization Work, describes the World Trade Organization, the International Monetary Fund and the World Bank as organizations that help the transnational corporations and punish the middle class and poor in all countries.

John Perkins, in Confessions of an Economic Hitman, described his foreign aid consulting career as deliberately convincing foreign government representatives to take on projects far greater than the scope of the problem called for. For example, he would recommend a larger than necessary hydroelectric dam that user fees could not possibly pay back the contracted debt. The recipient country would be in perpetual debt to the United States and more compliant in its votes in the United Nations. Since our government has deceived the public about what happened in the Gulf of Tonkin in 1965 and the current Iraq War, I find it plausible that government agencies would lie about less important matters.

Rabbi Michael Lerner. In Left Hand of God: Taking Back Our Country From the Religious Right, calls for a Global Marshall Plan directed by an “international body of internationally recognized spiritual leaders, academics, health care workers, educators and community organizers to supervise the expenditures”. This would provide on-going evaluation that does not exist now.

William Easterly, in The White Mans’ Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good, examines the theory that foreign aid has gone wrong because of incompetence, not malevolence. William Easterly is an economics professor who worked in the developing world and was a senior research economist at the World Bank for more than 16 years.

Easterly maintains that there are two types of people in aid agencies, the Planners and the Searchers. Think of the days of the old Soviet Union when Gosplan, the Soviet planning ministry, organized almost the entire Soviet economy. Then, think of the marketing department of any company. He gave two examples of each.

Treaded bed nets protect people from being bitten by malaria mosquitoes when they sleep. Traditional aid agencies are usually not successful in delivering these bed nets to the poor. They wind up in the black market or used as fishing nets or wedding veils. A Searcher type organization, Population Services International, was successful at getting bed nets to the poor by selling them for fifty cents to mothers at prenatal clinics in the countryside. A follow up survey showed that almost all nets got used for their intended purpose. In contrast, a study of a program in Zambia, where an agency gave away nets whether the people wanted them or not, showed that 70 percent did not use them.

One almost unreported feature of poverty in Africa and many other regions is indoor smoke from cooking, which increases children’s chances of dying from respiratory diseases. Agencies have attempted to solve this by introducing stoves that reduce smoke without consulting the poor on what kind of stove they wanted and would use.

The Shell Foundation, on the other hand, is attempting a market-based approach where hundreds of microenterprises produce and distribute stoves, adopting them to local customer preferences.

A major difficulty is the number of agencies with different agendas and different bosses with little specialization on what they do best. Working in Bolivia now are “…the International Monetary Fund, the World Bank, the Inter-American Development Bank, USAID [US Agency for International Development], the U.S. Drug Enforcement Agency, the UK Department for International Development (DFID), just about every other rich country’s aid agency, multiple NGOs {non government organizations}, and Bono.” When there is a political and economic crisis as there was in 1999-2005, who can determine which agencies have done a good job?

Bureaucratic Planners get little or no feedback from the poor, who get some things they never wanted and usually do not get what they need.

A major difficulty with foreign aid has been to make a utopian blueprint to fix the world’s complex problems. According to Easterly, the Big Answer is that there is no Big Answer. When development comes, the solutions will be as varied as the countries and their complex histories.

Aid agencies would be more effective by specialization, taking on modest tasks (identifiable projects) and independent review.

They should give up the “do everything” approach and not expect big changes in the recipient government’s bureaucracies. An example is that an aid agency would build a road, school or clinic but refuse to pay for the maintenance and supplies with the idea that this is the government’s responsibility. Since recipient governments seldom take on such responsibilities, agencies should plan on furnishing maintenance and supplies and end this frustration and disappointing results.

Easterly believes that aid agencies should help individuals and not attempt to transform societies. He wants to “get the poorest people in the world such obvious goods as the vaccines, the antibiotics, the food supplements, the improved seeds, the fertilizer, the roads, the boreholes, the water pipes, the textbooks and the nurses.”

Reading this book at times reminded me of reading Dilbert cartoons. Could the people at the aid agencies be as stupid and out of touch as he describes them? His recommendations make sense. Hopefully, the people at the aid agencies and Gordon Brown will give them serious attention.

My recommendation for aid advocates is to start a mini Second Marshall Plan now. Pick out two small countries each from Asia, Africa and Latin America to carry out the Big Push. There should be enough support in the European Union to carry this out. Establish a new agency that would incorporate reforms that Easterly, Perkins, Joseph Stiglitz and Rabbi Lerner advocate. Learn from mistakes. Enforce honest performance evaluations. Give up the idea of always dealing with governments. Poor people through their schools, cooperatives and churches may write grant applications and make things happen.

Aid advocates should also look at other ways of helping the poor. Elimination of agricultural subsidies in the rich countries would make their products competitive on the world market. What is illegal to sell in the United States must also be illegal for export and U.S. military use. Prohibition of international arms sales would be almost a big a step as the international prohibition of slave traffic.

Honduras receives used automobile tires, which understandably do not last long in Honduras. Discarded tires collect rainwater and many malarial mosquitoes. This looks like a case for one of Easterly’s Searchers to make some money or an export prohibition.

Aid advocates should address the second Marshall Plan as one of the solutions for the immigration in the European Union and the United States. Give the Mexicans and other hard working people the chance to be reasonably prosperous and they will not cross the southwestern deserts to make US poverty wages.

Establish an international treaty and enforcement mechanisms to obtain minimum working conditions, environmental protections and union organizing rights. Signatory countries would only import goods that would meet the minimum conditions.

Social justice calls for the elimination of abject poverty everywhere.

Ed O’Rourke

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