[#] Somehow, we're in last place

Yes, this is more on the aid to Africa thing. I'm blogging about it because it seems to me that all we hear about in this discussion is that there's not enough being done. Greed in the west, says one talking head, is as great a sin as sexual promiscuity in Africa which is leading to the death of millions by AIDS.

Well, yes: greed is the same kind of sin as adultery. No doubt about that. Can we ask ourselves, however, how we define the word "greed" for a minute? For example, is it greedy for a rock star (no one in particular, but any given rockstar) to perform for free at a concert to promote his cause (a performance lasting about an hour, and perhaps it took all day to prepare for that hour), but afterwards fly home on a chartered jet and take his Mercedes from the Airport to his home? No?

I wouldn't say that is greedy, to be honest. I'd say, "that's how Capitalism pans out". If you define the end result of Capitalism as "greed", then of course it's greedy, but if you define the end result of capitalism as "economic justice as arbitrated by the marketplace", then it is not greedy.

Now consider the following chart:

click me to enlarge
It's the ODA assessment chart that the Live8 rock stars were all clamoring about. There are a few salient features about this chart which might be of interest to anyone passing by.

The first is this: the sum of the aid given by these 22 countries in 2004 is $78.566 billion. In case you haven't been following my aid to Africa posts, that is about $2 billion less than the entire debt of the nations the Live8 gang want to see forgiven. And that's what was given in 2004. Nearly the same amount was given in 2003. So in the last 2 years, about double the total debt owed by these countries was given back to them in free, don't-pay-me-back, here's-a-check, aid.

The next thing is this: somehow, the country which has given the most in aid in raw dollars is at the bottom of the list. Excuse me: it’s second-to-last.

Well, of course it is -- because in this list the dollars given is indexed against GDP*. And the country which has given the most dollars also happens to have the highest GDP, so indexing against GDP is the only "fair" way to assess whether there has been any "justice", right? To whom much is given, much shall be required, right? You can't argue with the Bible: the US owes more to the African nations than, say, the French who exploited Africa through colonialism.

Well, it turns out that there is some latitude for the US in this even in the eyes of the beholders here. When we factor in private giving as well as national/political funds, the US goes from #22 on the list to #15 -- and that makes it's total giving not $18.999 billion but in fact $30.873 billion.

Think about that for a second, dear reader: last year the US gave $30.873 billion to Africa – and amount equal to about 38% of their total indebtedness. And the amount of private giving from the US was more than the total governmental giving of 13 other countries combined.

Which leads us to this particular chart:

click me to enlarge

It turns out that the US, in government funds only, gave more than the next 2 countries on the list, and also more than the bottom 14 countries combined. It’s pretty hard to say that the US is “greedy” or “stingy” in its giving when it gave more than 9 Italies or 7 Canadas.

I think it is also pretty, um, staged to say that “God will judge us” for the way we have shown good will in the form of almsgiving to the African continent. To make my final point here, I’m going to reference a formula that the president of every chamber of commerce in America uses to demonstrate the power of investing in a community. The “common knowledge” is that if you spend a dollar in any American community, it has a seven-fold impact on the community. I have no idea where this notion comes from, but they all parrot this as if it is a proven fact. Let’s assume for a minute that the impact is not seven-fold but three-fold. So if somebody dropped $1 billion into your community, if we assume that it would not be gobbled up by local politicians and scam artists, the net impact would be a $3 billion expansion of your local economy.

Now even if we give the benefit of the doubt to this formula and the Africa advocates and say, “and that’s because a viable economic infrastructure already exists”, let’s say that the impact in an African community ought to be dollar-for-dollar. That is, if we drop in $40 billion, the economy should grow by $40 billion.

The problem is that these economies do not grow by $40 billion. In fact, they are documented to be contracting rather than expanding – in spite of an annual infusion of literally billions of dollars. Billions.

The problem is not a lack of money: it is a lack of stewardship. That is to say, somehow the people we are giving this aid to are not spending it on things. They can’t be. If I had $1 billion, and I spent it all on bubblegum, a bubblegum industry would pop up. If I had $1 billion and I spent it on a castle, an explosion in construction employment would occur. If the money were being spent on things – which is, in the most objective sense, what money is for – then economic development would happen. Something else is happening to the money.

And in that lies the problem with the argument the aid for Africa folks have fronted up.

*Some of you, if you are like me, are thinking, “ah. GDP. Right. Exactly ... um ... what is GDP again?” “GDP” stands for “Gross Domestic Product”. We love Wikipedia here, but rather than make you click through, GDP is defined as the total value of all goods and services produced within that territory during a specified period (or, if not specified, annually, so that "the UK GDP" is the UK's annual product). GDP differs from gross national product (GNP) in excluding inter-country income transfers, in effect attributing to a territory the product generated within it rather than the incomes received in it. The standard GDP formula is expressed as:

GDP = private consumption + government + investment + net exports

I’m sure that clears it up for you. :-)