Frequent readers of the Demarche know that we seldom pass up an opportunity to take a poke at Canada- I mean it is so easy, and even if you do feel a bit tawdry after slugging softballs over the northern border it just has to be done occasionally. At the same time, liberal “stars” that use their entertainment platform to berate the rest of the world drive me batty, too. So in the case of Bono v. Martin it is hard for me to take sides. Both of the key figures are an annoyance to me.
Per The National Post:
Bono 'bewildered, disappointed' by Martin's performance on foreign aidAdd Irish rock star Bono to the list of people Paul Martin has frustrated. In an interview with the CBC yesterday, the U2 front man said he was "bewildered" and "disappointed" by the Prime Minister's decision not to raise Canada's foreign aid goal to 0.7% of the country's gross domestic product by 2015. "This is no time to just turn inward," he told radio host Anthony Germain. "I know there's problems here at home but ... don't lose your focus, Prime Minister, on how history will remember this moment." In a telephone interview from Vancouver, Bono blasted Canada for not living up to its capability, particularly at a time when the country is enjoying a surplus. Bono recited Mr. Martin's telephone number on the air, encouraging Canadians to call and complain.
I find this phenomenon both amusing, and annoying. The last time I checked Bono was Irish. It just seems a little odd to me that an Irish pop star is berating the Prime Minister of any nation other than Ireland about their foreign aid. Critics of foreign aid levels given by “rich” nations to “poor” nations love to use the .7% of GDP yard stick to push for ever increasing levels of aid. While that would be a handy tool if we lived in the perfectly socialist world that many if these critics dream of, the simple fact is that this is an arbitrary target- Ireland gave .39% in 2004 and Canada gave .26%- in actual useful terms that means Ireland gave just over half a billion U.S. dollars, while Canada gave $2.5 U.S. (the United States- always a target for the .16% given rang in at $19 billion)(click here to see the data behind those numbers). I like to refer to this direct aid as the giving of fish- as in "Give a man a fish and you feed him for a day. Teach him how to fish and you feed him for a lifetime."
Of course to entertain this argument one has to believe that foreign aid, in the form of direct cash infusions, actually works. It is my opinion, as expressed on this blog in the past that this type of aid outside of emergency action (such as the tsunami aid) does not work. As The Economist put it in 1998:
Reviewing earlier research and drawing on new work for this book, Messrs Dollar and Pritchett establish, first, that the raw correlation between aid and growth is near zero: more aid does not mean more growth. Perhaps other factors mask an underlying link, they concede; perhaps aid is deliberately given to countries growing very slowly (creating a misleading negative correlation between aid and growth, and biasing the numbers). On closer study of such complications, however, the result holds. No correlation: aid does not promote growth.
The waste revealed by these figures is the result of a pattern of aid that is almost exactly the opposite of what effective reduction of poverty requires. Countries with good policies should get more aid than countries with bad policies. Actually they get less. This would be justified if aid encouraged countries to improve their policies, but on the whole it does not. For every case where aid has promoted reform there is a case where it has retarded it. Aid can keep bad governments in business; and promises to improve policy, made when the aid is first offered, are often forgotten once it has been delivered. The effort to encourage policy reform—if that is what today’s pattern of aid describes—has been made at an enormous cost in terms of unrelieved poverty.
Polling data indicates that most Americans support the idea of combining aid with the development of the receiving countries' economy- in a Program on International Policy Attitudes poll "71% agreed that, "It is important to help poor countries develop their economies so that they can become more self-sufficient." If you accept the idea that policy change and aid must be combined to draw a nation out of poverty the logical question is: where can we look to find an example of aid combined with good policies that has shown results? The suprising answer: Bono’s homeland of Ireland.
After the country hit economic bottom in the 1950s, the government stopped banning foreign investment, cut corporate taxes, made grants to modernize industry and lowered tariffs. More significantly, Ireland joined the European Union (then known as the European Economic Community) in 1974 and began receiving billions of dollars in subsidies and development funds. “The most important impact has been access to the European market that [membership] provides, which in turn has been a major attraction for foreign investment,” says Tony Fahey, a professor at the Economic and Social Research Institute in Dublin. “The real driver of our prosperity is investment by American companies”—nearly 600 at last count, which have invested nearly $35 billion and hired more than 90,000 people—“that wanted to get into the European market,”
Now I realize that Ireland is not Uganda and that there existed even in the worst economic times in Ireland vast differences in the “poverty” there and that found in much of the third world. But this combination of aid and good policy did much more than just relieve poverty in Ireland:
Beginning in the late 1980s, an economic boom known as the Celtic Tiger and fueled mainly by foreign investment propelled the country from an agricultural to a high-tech economy, altogether bypassing any heavy industrialization stage. In what The Economist called “one of the most remarkable economic transformations of recent times,” the country catapulted from one of the poorest in the European Union, on a par with Greece and Portugal, to the sixth-highest, ahead of Germany.
Wikipedia offers an excellent readout of what that means in real terms:
-Disposable income soared to record levels enabling a huge rise in consumer spending. It became a common sight to see expensive cars and designer labels around the nation's towns and cities.
- Unemployment fell from 18% in the late 1980s to 4.2% in 2005 and average industrial wages grew at one of the highest rates in Europe.
- Inflation regularly brushed 5% per annum, pushing Irish prices up to match those of the Nordic Europe. Groceries were particularly hard hit, prices in chain stores in the Republic of Ireland were sometimes up to twice those in Northern Ireland
- Public debt was dramatically cut (it stood at about 34% of GDP by the end of 2001) to become one of Europe's lowest, enabling public spending to double without any significant increase in taxation levels.
Bono may well have missed the Celtic Tiger years- after all that period coincided with U2’s heyday- in 2001 alone the group earned nearly $62 million. One would imagine than that they have donated extremely large sums of money to the cause of reducing global poverty- not billions, of course, but certainly millions upon millions. Perhaps they have- but if so it has been done quietly. A Google search revealed a recent donation of €50,000 and an older donation of €40,000- and note that not all of this was for fighting global poverty.
Neither of those are petty amounts by the average person’s standard to be sure. But is Bono really an average guy? Not only is he taking on the PM of Canada, Bono wants the U.S to pony up another $1 billion to fight aids and what do average people think of his views on how their tax dollars should be spent?
I was wondering if Bono thinks that the money should be taken orally or by injection to cure HIV/AIDS? The US has for years been giving to MS without curing it. Cancer? Yes all the donated money has also cured it, DOH!. Seems that everyone thinks that nothing can ever be accomplished without massive amounts of money being "Given" to them. Research is research..... there is no magic monetary multiplier that will make things happen. But if you can do nothing else, you can always extend out a hand and ask the US for money to fund the project. I believe that, if checked, that the US is at present one of, if not THE largest contributor to AIDS research. Maybe Bono should check the facts before making silly comments made basically to inflame and put the Bono name in the news. Bono is an AIDS research scientist, right? Foanheart, USA
I disagree with bono because as a person who pays a lot of tax every and work hard to earn my pay its ticks me off when St. Bono comes along and comes up with a new idea of taking more cash from heavily taxed Americans, Irish, French or whoever and he doesn't plan to donate any of his own money. So if bono donates half of his fortune maybe then governments should donate some money. What do all the AIDS charities do with the cash they get? Ronan O'D. dublin,Rep of Ireland
I realize that those quote might not have contributed much to the post, but I found them really amusing and so there they are. My point in all of this is that infusions of cash do not work (and the public does not support them)- if they did we would have seen massive decreases in global poverty that to my knowledge has not taken place. The U.N agrees:
The number of people below the international poverty line declined by a mere 1 per cent per year between 1990-99; decreasing from 1.3 billion people to 1.1 billion people respectively. Furthermore, poverty trends for most regions showed little or no progress (diagram 1). The incidence of income-poverty remained largely unchanged in sub-Saharan Africa (SSA), Latin America and the Caribbean (LAC) and in the Middle East and North Africa(MENA. Actually, the number of income-poor in these three regions combined increased by about 7 million people each year between 1990 and 1999. Regional trends show that the decline in global poverty was driven by East Asia (EA) between 1993-96 and by South Asia (SA) in 1996-99. China and India in particular are responsible for the apparent decline in global poverty.
Of course the U.N., Bono and the rest of the liberal “give me your fish to feed this poor man” crowd refuse to ask why India and China, with their massive, and still growing, populations are able to decrease the poverty in their respective nations. I’ll give them a hint: call your software company’s support line and ask the tech who answers where he or she is located, and while you are on hold look at the “Made In” labels of the items within your reach. Poverty was not decreased in India or China by direct foreign aid- investment and development are the keys to success in Ireland, India, China and even Uganda. It is time to stop throwing dollars into the poorest countries on Earth and time to start giving fishing lessons. As for Bono, he can either sing or cut bait for all I care.