JHC points out that even if you don't like the motivations for cutting foreign aid, that action is not in fact an "own goal".
What U.S. policy should be with regards to nations that have strategic rare earth minerals to counter what the Chinese communists might do is very different than what was covered here.
As JHC himself put it very well in a different recent post, if such a thing is important, put it in the defense budget!
All I am saying is that failing to counter China could end up being really costly to the U.S.
I am not saying that AID should continue, but I am saying that countering China in some manner should not be overlooked or dismissed out of hand.
We need to have good relations with countries throughout the world in order to counter China.
One small example - There was no reason for the President to make a gratuitous, snide comment about Lesotho during his address to Congress. Why denigrate small countries?
"All I am saying is that failing to counter China could end up being really costly to the U.S."
Well, in your prior comment you actually said and implied a lot more.
On your quoted point I agree with you. But there is in fact little evidence that Trump and his administration intend to do that, and substantial evidence that they intend to do the opposite.
Which is of course far different from suggesting they will get it all right.
And re: relations with other countries, IMO most countries react far more to actual strength vs weakness than they do to mere words.
But if you're going to focus on random comments, and not heed Salena Zito's brilliant 2016 observation about Trump that "the press takes him literally, but not seriously; his supporters take him seriously, but not literally”, then there's nothing that I or anyone else can say that will sway your views.
The throw away dig at Hamas shows Cochrane’s elitist ignorance of the occupation in Palestine and degrades from his genuine expertise in macro and finance. Why of why can’t we have a humble professoriate.
A non-expert can't make the fairly straightforward point that Hamas continues to provide struggle largely because struggle is what its benefactors want?
If you had read and understood the context of the example you would have parked your ideological bug and avoided an offensive comment. but I see that there is always someone ready to defend terrorist organizations, this is a fact and not an opinion.
Ooooh - I was on the fence on whom to side with in this discussion, but this last response makes clear Rexii's is the stronger, most compelling, correct position.
James Tooley was an economist with UK's USAID equivalent. He travelled to India, China, Kenya etc. to promote "free and universal primary education" across these countries figuring out how to spend the UK taxpayers money effectively in these countries.
He was smart and had integrity to quickly realize the money did significantly more harm to education than good. Local population understood importance of not just education but quality education. They spent whatever they could to support private initiative which were much better than government provided education.
However existence of such private schools meant that Government could not push their agenda of fully nationalized schooling system. Tooley's book "The Beautiful Tree" provides more details.
Few years down the line Indian government made it a criminal offense to run many of those private institutions.
The Beautiful Tree is a wonderful book, and is an excellent example of why governments need to get the hell out of the charity business. Everything they touch turns to lead.
This critique of aid isn’t exactly new or groundbreaking. No one with any intellectual honesty reads the Economist as anything more than simplistic propaganda dressed up in intellectualism for meatheads. I wonder what actual development economists- Bannerjee/ Duflo for eg, or more out of left field Susan Athey - think of aid.
Since these kind of articles hope to bring about positive change, wouldn't it be best if us meatheads could better understand the concept and then have a better idea how to vote?
I'm going to go and look up "intellectual honesty"...
Yep, I looked it up and this meathead (me) thinks that handing boat loads of cash to NGO's is guaranteed to enrich all the wrong people. SIMPLE!
I enjoyed Easterly's book, but Robert Calderisi's, Why Foreign Aid isn't Working: The Trouble with Africa, really hit it for me. To see someone so ideologically wed to the do-gooderism of aid just be crushed not only by its ineffectiveness, but harm as well, was eye-opening.
Been going on since the early 1960s. E.g., we financed the Volta River dam in Ghana. Ghana was going to have a great aluminum industry by using the power from the dam. Ghana exports around a million dollars worth of aluminum per year, which does not make it one of the nation's to exports.
Numerous African nations have defaulted multiple time since 1960. Yet the world Bank and others continue to lend, to forgive in part, to reschedule, etc.
I have been studying Africa since 1960. I was such an optimist for a long time. But I became a pessimist the last 30 years and have not been wrong yet.
Bauer looked at the political economy of international transfer, the severing of the information flow between donors and beneficiaries and the blunting of the philanthropic motive in favour of impersonal, need-based advocacy. Much of current interest in a short article!
Bauer was a very great economist. He co-authored a book on economic development with Basil Yamey in which they criticized the popular-in-the -1950’s-and -60’s idea of taxing the farm sector to subsidize industry by quoting a medieval Chinese emperor who stated he was implementing a similar policy to enrich the ruling class. Apparently the same cover story was used—we are doing it to help the poor!
Bauer also pointed out the three axis of freedom—1. Freedom to do and say as you wish. 2. Freedom in the sense of having democratic institutions; and 3. Freedom to buy and sell things at market prices.
There is a recording online somewhere made at Princeton University of a discussion between Milton Friedman and Thomas Sowell about Peter Bauer.
You mention this briefly, but I think it deserves a longer explanation. How can aid destroy local industry/inhibit economic growth for these countries, but subsidized imports to the US are a free lunch? Is causing a “move to export-oriented manufacturing or other higher value industries” really a complete answer? If subsidies are inhibiting comparative advantage, then there’s presumably real losses involved. And then what if subsidies for those higher value industries increase (ditto for manufacturing), would your answer change?
He means that most of Malawi's economy is agriculture so if you crowd out private sector funding and bankrupt the producers they can not easily transition to a higher value industry like you can in the U.S.
The gist of this article is that Barbara Lee is running for Mayor of Oakland based on her ability to attract outside funds to benefit the City. Here's a quote from the article:
“'A mayor has to be able to connect with people outside of Oakland, for Oakland, and that is exactly what a Barbara Lee will,' Lee said, referring to herself in the third person, as she occasionally does, at a debate last week."
And what about not-for-profit healthcare companies? They collect contributions from wealthy donors to build high-cost hospitals and "pavilions" that keep specialists employed but skew healthcare spending away from lower-cost and often more impactful primary and community care.
We are a rich and generous nation, but we need to employ more "tough love."
With reference to the failure of development aid due to the law of unintended consequences, I have a question about China's "Belt and Road Initiative." China provides aid and loans to poor countries for mining projects and other extractive projects. They build transportation infrastructure. China is much more interested in gaining control of natural resources and other goods, rather than promoting the welfare of the average person in these countries. They don't care about unintended consequences.
How should other developed countries work with poor countries in order to counter the Chinese initiatives that are detrimental to the long-run interests of poor countries?
I think your description of the Belt and Road Initiative is accurate. Some of the recipient countries are already running into financial difficulties - Sri Lanka got some publicity a few years ago when their port project couldn't make payments. I'm not sure that China is cannily exploiting poor countries for their resources - they may just be making ill-advised investments with no good economic prospects. I'm sure they get some amount of local political influence, but I doubt they're willing to take a lot of losses in the process.
In any event, this description of the Belt And Road Initiative sounds a lot like the 1970s critique of US investment in developing countries - that it was exploitation of the locals, who were kept in poverty. I doubt that it will lead to long-term benefits for China. Which means there may be no need to "counter" China.
Yes, I think it is very much an open question whether Belt and Road initiative has actually been beneficial to China. It certainly has not succeeded to the point that the Chinese are throwing more and more money at it. I doubt that bankrupting Sri Lanka was a part of the master plan.
The purpose of Aid ought to be policy and institutional reform. Financing infrastructure and embedding it in an institutional structure to finance its operation, maintenance and expansion ought to be pretty easy. It did work in lots of places in the past.
Pretty hard to see how Elon is contributing to this reform.
Reform: That's when I tell you what to do and how to do it. Sometimes that comes with an "or else". That you may have no interest in my concept of how to live matters not.
Aid is interference. Why not be intentional and try to make it positive interference? That’s impossible if your conception of how to live matters not to me.
I write mainly about US monetary policy, US fiscal policy, trade/industrial policy, and climate change policy.
I have my opinions about which US political party is by far the least bad and they are not hard to figure out, but I try to keep my analysis of the issues non-partisan.
Keynes said, “Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”
I agree with everything the good professor (and others, like Easterly and Bauer) are saying.
There is one thing though: Sub-saharan African countries, their people, their voters, their political class, all of them, have to *want* to be developed, they have to *want* to evolve into a modern society. If they do not want it, and if they steal most of the meager budgets they have, and/or engage in perennial civil wars, they will never make it.
Easterly’s book, “The Elusive Quest for Growth,” 2001, was most convincing for me, along with George B.N. Ayittey, “Africa in Chaos” i1998. The World Bank claims, based on cost benefit analysis, to have more success with major cities infrastructure projects. But there is great variability in these results.
I think the case for public health research and assistance is more easily defended, such as the work on Ebola, measles and aids. The loss of the PEPFAR program under AID’s control is a great loss that could be put more directly under the State Department or CDC. In this case the program did not crowd out domestic aids programs because there really were none. Arguably, African probably could replace PEPFAR today, because there is an existing program today. No one is talking about the Millennium Challenge Corporation that had much promise but may have shifted to the more squishy stuff that we hear about from AID.
Thank you John. You have provided insight Beyond the norm, and thankfully beyond the media.
In the days of ossified institutions, your provide an example of what universities and thinking academics, are still capable of doing, and what given the opportunity, and the freedom, will again someday, do.
The America First! orientation of the current administration will result in a number of "Own Goals" by the U.S. to use a Football (Soccer) reference.
Do you have specific examples for your claim?
JHC points out that even if you don't like the motivations for cutting foreign aid, that action is not in fact an "own goal".
What U.S. policy should be with regards to nations that have strategic rare earth minerals to counter what the Chinese communists might do is very different than what was covered here.
As JHC himself put it very well in a different recent post, if such a thing is important, put it in the defense budget!
All I am saying is that failing to counter China could end up being really costly to the U.S.
I am not saying that AID should continue, but I am saying that countering China in some manner should not be overlooked or dismissed out of hand.
We need to have good relations with countries throughout the world in order to counter China.
One small example - There was no reason for the President to make a gratuitous, snide comment about Lesotho during his address to Congress. Why denigrate small countries?
"All I am saying is that failing to counter China could end up being really costly to the U.S."
Well, in your prior comment you actually said and implied a lot more.
On your quoted point I agree with you. But there is in fact little evidence that Trump and his administration intend to do that, and substantial evidence that they intend to do the opposite.
Which is of course far different from suggesting they will get it all right.
And re: relations with other countries, IMO most countries react far more to actual strength vs weakness than they do to mere words.
But if you're going to focus on random comments, and not heed Salena Zito's brilliant 2016 observation about Trump that "the press takes him literally, but not seriously; his supporters take him seriously, but not literally”, then there's nothing that I or anyone else can say that will sway your views.
The throw away dig at Hamas shows Cochrane’s elitist ignorance of the occupation in Palestine and degrades from his genuine expertise in macro and finance. Why of why can’t we have a humble professoriate.
A non-expert can't make the fairly straightforward point that Hamas continues to provide struggle largely because struggle is what its benefactors want?
your a good example of why intellectually honest people don't' bother with 'non-experts'
If you had read and understood the context of the example you would have parked your ideological bug and avoided an offensive comment. but I see that there is always someone ready to defend terrorist organizations, this is a fact and not an opinion.
your moms a terrorist organisation
Ooooh - I was on the fence on whom to side with in this discussion, but this last response makes clear Rexii's is the stronger, most compelling, correct position.
Ah there it is! I knew someone couldn’t resist the ad hominem. You do realize your comments reveal your public education failure?
Perhaps more public aid will fix your dilemma
ok buttinski
James Tooley was an economist with UK's USAID equivalent. He travelled to India, China, Kenya etc. to promote "free and universal primary education" across these countries figuring out how to spend the UK taxpayers money effectively in these countries.
He was smart and had integrity to quickly realize the money did significantly more harm to education than good. Local population understood importance of not just education but quality education. They spent whatever they could to support private initiative which were much better than government provided education.
However existence of such private schools meant that Government could not push their agenda of fully nationalized schooling system. Tooley's book "The Beautiful Tree" provides more details.
Few years down the line Indian government made it a criminal offense to run many of those private institutions.
The Beautiful Tree is a wonderful book, and is an excellent example of why governments need to get the hell out of the charity business. Everything they touch turns to lead.
This critique of aid isn’t exactly new or groundbreaking. No one with any intellectual honesty reads the Economist as anything more than simplistic propaganda dressed up in intellectualism for meatheads. I wonder what actual development economists- Bannerjee/ Duflo for eg, or more out of left field Susan Athey - think of aid.
Since these kind of articles hope to bring about positive change, wouldn't it be best if us meatheads could better understand the concept and then have a better idea how to vote?
I'm going to go and look up "intellectual honesty"...
Yep, I looked it up and this meathead (me) thinks that handing boat loads of cash to NGO's is guaranteed to enrich all the wrong people. SIMPLE!
Simple is about the only level meatheads can grasp. Unfortunately the world isnt simple.
William Easterly's excellent book from 2006 made the same points - and the world didn't listen:
The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good
I enjoyed Easterly's book, but Robert Calderisi's, Why Foreign Aid isn't Working: The Trouble with Africa, really hit it for me. To see someone so ideologically wed to the do-gooderism of aid just be crushed not only by its ineffectiveness, but harm as well, was eye-opening.
Also Easterly's book the Tyranny of Experts.
Been going on since the early 1960s. E.g., we financed the Volta River dam in Ghana. Ghana was going to have a great aluminum industry by using the power from the dam. Ghana exports around a million dollars worth of aluminum per year, which does not make it one of the nation's to exports.
Numerous African nations have defaulted multiple time since 1960. Yet the world Bank and others continue to lend, to forgive in part, to reschedule, etc.
I have been studying Africa since 1960. I was such an optimist for a long time. But I became a pessimist the last 30 years and have not been wrong yet.
The citation of P. T. Bauer in the post reminded me of his 1974 criticism of development aid as “a system by which poor people in rich countries subsidise rich people in poor countries” (https://www.econstor.eu/bitstream/10419/138832/1/v08-i05-a13-BF02927631.pdf#page=4).
Bauer looked at the political economy of international transfer, the severing of the information flow between donors and beneficiaries and the blunting of the philanthropic motive in favour of impersonal, need-based advocacy. Much of current interest in a short article!
Bauer was a very great economist. He co-authored a book on economic development with Basil Yamey in which they criticized the popular-in-the -1950’s-and -60’s idea of taxing the farm sector to subsidize industry by quoting a medieval Chinese emperor who stated he was implementing a similar policy to enrich the ruling class. Apparently the same cover story was used—we are doing it to help the poor!
Bauer also pointed out the three axis of freedom—1. Freedom to do and say as you wish. 2. Freedom in the sense of having democratic institutions; and 3. Freedom to buy and sell things at market prices.
There is a recording online somewhere made at Princeton University of a discussion between Milton Friedman and Thomas Sowell about Peter Bauer.
You mention this briefly, but I think it deserves a longer explanation. How can aid destroy local industry/inhibit economic growth for these countries, but subsidized imports to the US are a free lunch? Is causing a “move to export-oriented manufacturing or other higher value industries” really a complete answer? If subsidies are inhibiting comparative advantage, then there’s presumably real losses involved. And then what if subsidies for those higher value industries increase (ditto for manufacturing), would your answer change?
He means that most of Malawi's economy is agriculture so if you crowd out private sector funding and bankrupt the producers they can not easily transition to a higher value industry like you can in the U.S.
It's not just foreign aid that creates problems. What about domestic aid?
https://eedition.sfchronicle.com/infinity/article_popover_share.aspx?guid=dde6a0d1-fe40-44be-8c49-4228852a4db5&share=true
The gist of this article is that Barbara Lee is running for Mayor of Oakland based on her ability to attract outside funds to benefit the City. Here's a quote from the article:
“'A mayor has to be able to connect with people outside of Oakland, for Oakland, and that is exactly what a Barbara Lee will,' Lee said, referring to herself in the third person, as she occasionally does, at a debate last week."
And what about not-for-profit healthcare companies? They collect contributions from wealthy donors to build high-cost hospitals and "pavilions" that keep specialists employed but skew healthcare spending away from lower-cost and often more impactful primary and community care.
We are a rich and generous nation, but we need to employ more "tough love."
With reference to the failure of development aid due to the law of unintended consequences, I have a question about China's "Belt and Road Initiative." China provides aid and loans to poor countries for mining projects and other extractive projects. They build transportation infrastructure. China is much more interested in gaining control of natural resources and other goods, rather than promoting the welfare of the average person in these countries. They don't care about unintended consequences.
How should other developed countries work with poor countries in order to counter the Chinese initiatives that are detrimental to the long-run interests of poor countries?
I think your description of the Belt and Road Initiative is accurate. Some of the recipient countries are already running into financial difficulties - Sri Lanka got some publicity a few years ago when their port project couldn't make payments. I'm not sure that China is cannily exploiting poor countries for their resources - they may just be making ill-advised investments with no good economic prospects. I'm sure they get some amount of local political influence, but I doubt they're willing to take a lot of losses in the process.
In any event, this description of the Belt And Road Initiative sounds a lot like the 1970s critique of US investment in developing countries - that it was exploitation of the locals, who were kept in poverty. I doubt that it will lead to long-term benefits for China. Which means there may be no need to "counter" China.
Yes, I think it is very much an open question whether Belt and Road initiative has actually been beneficial to China. It certainly has not succeeded to the point that the Chinese are throwing more and more money at it. I doubt that bankrupting Sri Lanka was a part of the master plan.
The purpose of Aid ought to be policy and institutional reform. Financing infrastructure and embedding it in an institutional structure to finance its operation, maintenance and expansion ought to be pretty easy. It did work in lots of places in the past.
Pretty hard to see how Elon is contributing to this reform.
Reform: That's when I tell you what to do and how to do it. Sometimes that comes with an "or else". That you may have no interest in my concept of how to live matters not.
Aid is interference. Why not be intentional and try to make it positive interference? That’s impossible if your conception of how to live matters not to me.
Hi
As you are not already a subscriber, may I invite you to subscribe (for free) to my substack, "Radical Centrist?"
https://thomaslhutcheson.substack.com/
I write mainly about US monetary policy, US fiscal policy, trade/industrial policy, and climate change policy.
I have my opinions about which US political party is by far the least bad and they are not hard to figure out, but I try to keep my analysis of the issues non-partisan.
Keynes said, “Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”
I want to be that scribbler.
Thanks,
I agree with everything the good professor (and others, like Easterly and Bauer) are saying.
There is one thing though: Sub-saharan African countries, their people, their voters, their political class, all of them, have to *want* to be developed, they have to *want* to evolve into a modern society. If they do not want it, and if they steal most of the meager budgets they have, and/or engage in perennial civil wars, they will never make it.
Racist much?
An excellent documentary about the burden of foreign aid on Africans is called "Poverty Inc.".
Paul Theroux
"Dark Star Safari"
Easterly’s book, “The Elusive Quest for Growth,” 2001, was most convincing for me, along with George B.N. Ayittey, “Africa in Chaos” i1998. The World Bank claims, based on cost benefit analysis, to have more success with major cities infrastructure projects. But there is great variability in these results.
I think the case for public health research and assistance is more easily defended, such as the work on Ebola, measles and aids. The loss of the PEPFAR program under AID’s control is a great loss that could be put more directly under the State Department or CDC. In this case the program did not crowd out domestic aids programs because there really were none. Arguably, African probably could replace PEPFAR today, because there is an existing program today. No one is talking about the Millennium Challenge Corporation that had much promise but may have shifted to the more squishy stuff that we hear about from AID.
Thank you John. You have provided insight Beyond the norm, and thankfully beyond the media.
In the days of ossified institutions, your provide an example of what universities and thinking academics, are still capable of doing, and what given the opportunity, and the freedom, will again someday, do.