Forward FYI


Pollyanna Meets Cassandra

June 1, 2002
By BILL KELLER

Now that we've all had a good laugh at the spectacle of our fastidious
treasury secretary touring African misery with a middle-aged rock star,
now that we've snorted at Paul O'Neill and Bono in matching Ghanaian
robes and tortured all the obvious U2 lyrics, it's time to ask whether
anything is going on here besides soliciting MTV votes for the
Republican Party.

Before I try to answer that, a caveat. Whenever I set out
to write something hopeful about the current
administration, I hear a cynical voice whispering "Sucker!"
in my ear. And on the subject of compassion, President Bush
has more than the usual burden of proof. You don't need
Ralph Nader to tell you this is an administration that has methodically
exalted corporate power and fortified the obscene gap between America's
rich and poor. So my credulity alarm tingles at the idea that the
administration cares about the far more remote and powerless poor of
Africa.

And yet, something interesting seems to be happening.
Something we've seen before.

In the early 90's an improbable consensus came together on
the issue of America's own poorest citizens. After a period
of fatalism that hit bottom with Charles Murray's classic indictment of
welfare, "Losing Ground," some conservatives shook off the deep
pessimism that had become an excuse for doing nothing and began asking
what would work. Some liberals, in turn, took off their blinders about
the failings of welfare. Bill Clinton brought forth a tough-minded law
pushing welfare recipients into jobs.

Whatever you think of those welfare-to-work reforms, and
most experts agree they did far more good than harm, that
hard compromise changed the politics of poverty. As Jason DeParle, who
covered all this for The Times, points out, the compromise created a
belief that progress was possible, and thus took much of the poison out
of the poverty debate. Suddenly there were serious, competing visions of
how to help the poor - and a shared assumption that this was actually a
worthwhile thing to do.

Is something similar happening to our attitude toward the
rest of the world's poor? Can we do for Congo what we did
for Milwaukee?

On one side you have (to oversimplify a bit) the
conservative Cassandras, defeatists, moral scolds and free-market
zealots who believe that until poor countries get a grip on their own
bootstraps, any amount of foreign aid will be money wasted. This idea
flowered in the Reagan/Thatcher years, and led the major development
lenders to a policy of "structural adjustment": If you want loans,
shrink your government, cut your deficits and tighten your belts. And as
for those people dying of AIDS and malaria - not our problem. This
approach was not only heartless but mindless; countries being eaten
alive by disease, hunger and regional warfare were bad candidates for
tough love. Their failures, of course, simply confirmed the
pointlessness of aid. American donations shriveled, and not just under
Republicans. During the Clinton years, our meager contribution to the
world's poor dropped by nearly half. Nowadays your annual share of our
aid to the 40 most pitiful countries is about the price of a fancy
coffee and a pastry at Starbucks.

If there is a Charles Murray of this debate it is William Easterly, an
apostate World Bank economist who wrote an authoritative book last year
outlining the failure of foreign aid to generate economic growth. His
skepticism has helped stimulate some conservatives to look for new ways
up from despair.

On the other side you have (again, to oversimplify) the
liberal Pollyannas, populists and romantics who regard aid
as a simple humanitarian obligation, even a guilty debt we
owe for our exploitation. Putting conditions on aid is a
form of colonialism - except for conditions that suit a
liberal agenda, such as empowering women or protecting the environment.
Development strategies that feature trade and global business play into
the hands of multinational capitalists. If you just pump in the money,
countries will get better.

What we are seeing now is an awareness among the Cassandras that foreign
misery and chaos breed real dangers to our national interest; and among
the Pollyannas, a recognition that more discriminating aid works better
and does not necessarily amount to big-business imperialism. You have
the Bush administration advocating debt relief and offering a little
more money for the most desperate countries; you have Oxfam talking
about the importance of lowering trade barriers as part of the war on
misery.

It's too early to celebrate a consensus, but it is possible
to see some points that might be part of a compromise
leading to more help for countries in lethal distress.

One new common theme is a large-scale forgiveness of old
debts - in effect, allowing the poorest countries to
declare bankruptcy. This is not the magic bullet the
Bono-ites make it out to be, and in a sense it unfairly
rewards countries that squandered their loans on corruption
and patronage. But the loans are not going to be repaid
anyway. The Bush administration and many liberals embrace
this idea, along with an important corollary: Stop making
these make-believe loans in the first place. Give grants instead, which
don't carry burdensome interest, and save loans for countries that will
actually repay them.

A second possible point of agreement is that we should no longer give
money to governments we know will steal or misspend it. The late
economist Peter Bauer famously described foreign aid as the phenomenon
of taxing poor people in rich countries to support the lifestyles of
rich people in poor countries. Even liberal aid economists, like Jeffrey
Sachs of Harvard, say that as a general rule, aid should go to foreign
governments that are democratic (or at the very least, responsive), that
live by the law and that have more or less free markets. These are the
countries with a hope of turning aid into economic growth, which may
ultimately get them off life support.

The tricky part is judging which countries qualify and,
over time, measuring whether they are making good use of
their aid. Mr. O'Neill talks about "productivity growth" as
the litmus test of whether aid is effective, which sounds sensible in
theory but a little simplistic. James Wolfensohn, president of the World
Bank, notes that Mr. O'Neill seems to be setting a standard of
effectiveness we don't even apply to our own government.

At the same time, there is enormous good that can be done
in failing countries without sending money through their
bad governments. As Mr. Sachs points out, relief agencies
can immunize children even in war zones.

A third area of agreement is that aid should be more nimble
and less bureaucratic. Mr. Easterly counts at least 10
annual reports that every World Bank country officer has to file on
every project - impact on the environment, on indigenous peoples, on
waterways, etc. Now the World Bank and its meaner sister, the
International Monetary Fund, are everybody's favorite scapegoats - to
the left, handmaidens of rapacious multinationals; to the right, an
empire of waste. In fact, the bank does what the big donors, mainly
Washington, tell it to do, and it has already begun some serious
internal reforms. But it could use more competition. Mr. Bush has
announced a $5 billion "Millennium Challenge Account," new grants to
poor countries with good governments. We'll see if the U.S. can teach
the World Bank some new tricks.

A fourth principle should be to separate aid from
geopolitical expediency. We used to give money to corrupt
thugs - Mobutu Sese Seko in Zaire and Daniel arap Moi in
Kenya come to mind - just because they were anti-Communist.
Now we will inevitably give money to some unsavory
autocrats for their cooperation against terror. But let's
at least not do it out of the aid account. Let's put it in
the homeland security budget, or somewhere else.

One other important component of a new middle ground is a recognition
that trade is at least as important as aid. Mr. O'Neill was rightly
chewed out at every stop on his Africa tour because the latest American
farm bill, signed by Mr. Bush, lavishly subsidizes American-grown food
that competes with farm products from the poorest countries. On that
point you'll find Bono and Oxfam singing perfect harmony with the Wall
Street Journal editorial writers. Rich countries spend $350 billion a
year on farm subsidies - six times what they spend on foreign aid.

Will Mr. Bush veto the next farm bill for the sake of free-market
principles and a few million African lives? Not until Ugandans vote in
Florida. So here's an easier compassion test: Once we've got American
aid focused on things that work, let's double it. Then double it again.
That would finally catch us up to France in terms of national generosity
(Qué Bono!) and leave a lot of cynics speechless.

Copyright 2002 The New York Times Company

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