Foreign aid – what is it good for?

Wherever you stand on the issue of foreign aid, the White House budget proposal has put the topic back on the table for discussion. And it definitely deserves being discussed.

On the whole, Americans are, apparently, a generous people.  The vast majority say they donate money – 83% according to a 2013 Gallup survey, which also found that 65% volunteer. It is probably safe to say that most Americans believe giving to those in need is a good thing. But should the government be involved in giving to others, especially to people living in other countries? That is a different matter, and the debate over ‘foreign aid’ or ‘development aid’ has been going on for decades now.

American attitudes on this matter are a bit fuzzy. Before we even get to the principle of foreign aid, there is already plenty of confusion about how much the US spends on it. (The short answer is – vastly less than most people think.) However, one group of people has a pretty clear idea on the matter, and it is those working for the current US Administration.

The new White House budget proposal for fiscal year 2018 would see foreign aid, along with State Department funding, cut by almost one third. This is a massive reduction. Remember the budget sequestration of 2013, which cut programs across the board, and how difficult that adjustment was? The current White House budget proposal, which also includes deep cuts to domestic programs, transfers virtually all of the $52 billion in savings to the Department of Defense, increasing the latter’s budget by about 10%.  (Bear in mind that this is not the actual budget, which is up to Congress to draft and pass. But it signals the President’s priorities to Congress and it will exert influence over Congress if there is pushback. It is best thought of as a negotiating position.)

So there it is – the new Administration has signaled the approach it wants to take in order to build “A New Foundation For American Greatness,” the official name of the proposal.  It will be guns, not butter.

How exactly will this budget help America become great? The explicit rationale is that the President will “place America first by returning more American dollars home and ensuring foreign aid supports American interests and values.” Those values, as per the Administration, are pretty much all about security and military prowess.  In evaluation, this is called a ‘theory of change’ or ‘program logic’ – how  specific action will lead to a desired outcome. Naturally, there is much debate about whether the budget the White House is proposing would have the desired effect.

The proposal argues that it will make the Department of State and USAID leaner, more efficient and more effective, although it does not specify how it would do this, aside from forcing the two agencies to operate with considerably fewer resources. Furthermore, it proposes redirecting foreign aid spending primarily to security issues.

What the President’s budget proposal does is open a Pandora’s box of questions.  Whatever you think of it, these questions are legitimate and worth pondering.

Definitions. How is foreign aid defined? What is the money actually spent on? Who ends up benefiting and how?

Effectiveness. How effectively is aid spent? Is it getting the intended results? How do we know?

Amounts. How much does the US actually spend on foreign aid? Interestingly, the average American believes we spend far, far more than we do.  About 20 times more. Not 20% more, 20 times more.

Rationale. What is the rationale behind foreign aid? How valid are the arguments made in its favor, specifically: national security, commercial interests and humanitarian concerns?

Investment vs. cost. What is the chance that “returning more American dollars home” by cutting foreign aid and diplomacy funding will make America great? Is there a cost to spending less overseas? Is aid an investment or just a cost, an expenditure?

Relativity. Is foreign aid spent less effectively than other budget items, such as defense spending, which is targeted to be the prime beneficiary of cuts to aid and many other sectors? Are there different standards of transparency and accountability?

Measurement. How is effectiveness measured? Are random-control trials, expensive experiments which measure the impacts against what-if scenarios, the best way to measure assistance? What about short-term vs. long-term effects of aid? What about the indirect and intangible effects?

Home vs. abroad. Why should one country give to another? Even if you believe there are benefits, how do you balance giving assistance to foreigners vs. giving assistance to your own citizens?

Altruism. How strong is the moral case for giving to strangers in a strange land? Should rich country’s citizens give much more, as long as people are dying of hunger and disease, simply because they can?

Geopolitics. By drawing down its foreign assistance, does the US abdicate its leadership role and reduce the geopolitical influence?

Where it goes. How much of foreign aid does actually end up in other countries compared to how much of it finds its way back to US citizens, US companies and the US budget via contract work and purchase of US goods, services and military hardware?

Typologies of aid. Aid comes in many shapes and forms, and with different objectives. What form of aid has proven to be the most beneficial?  How does aid in the form of investment in infrastructure compare with the transfer and exchange of know-how (referred to as technical assistance)? Most aid is not simply transferred to poor people in developing countries – much of it is in the form of investment and technical knowledge transfer.

Potential harm. Does aid do more harm than good? Even leaving aside aid that goes to foreign militaries with questionable records, there is evidence, and arguments, that aid is not only ineffective, but that it can actually be damaging to individuals and society. What does the record show?

Government’s role. Should the government be in the business of giving? Perhaps aid should be left to philanthropic organizations, and be based on purely voluntary donations as opposed to taxes.

Externally provided assistance. Is there something intrinsically problematic with externally-provided assistance, i.e. efforts to exert change from outside a country?

In a series of upcoming blog posts I’m going to grapple with these thorny issues one by one, not necessarily in order. Let’s see where we end up.