The New Alcohol Economy And World Development

One of the last places a camera crew and I went to complete a documentary in South Africa was a squatters camp where people can't even imagine having sanitation or fresh water or easily available electricity. ... They can't conceive of life with less than 106 people for each concrete outhouse toilet. They can't because many were born in these camps, grew up in them, made love in them, and will die in them.

Millions of South Africans live in these makeshift slums euphemistically called "informal settlements," either in tin shacks, most no bigger than my Colorado kitchen, or in tiny "bungalows" of rough wooden slats through which the wind whistles almost without obstruction. We met families of up to twelve people, sleeping side by side on two adjacent single beds that occupy about 90 percent of the floor space. They cook over propane flames, and have only candles each night to relieve the dank darkness.

I asked one woman how long she and her family had lived this way. "For years," she said. I asked, "How will you ever get someplace better?" She answered, "By getting work." I asked, "Have you looked?" She said, "For years."

—Greg Dobbs, Rocky Mountain News, September 2, 2006

The greatest problem in the world today is poverty. Despite all the advances we have made, billions of people around the globe still live in conditions that are morally unacceptable. Every year, tens of millions die of starvation or disease, while myriads more are blinded or crippled. Whole populations live in squalor and ignorance, denied all but the tiniest crumbs of the material and intellectual fruits of twenty-first-century civilization. Nearly 2 billion people remain illiterate. In the nonindustrialized world as a whole, combined unemployment and underemployment averages 30 percent. While the worldwide per capita gross domestic product (GDP) is about $8,800, nearly half of the global population is forced to live on incomes under $2 per day.1 In the fifty poorest countries, life expectancy is under forty years, and infant mortality exceeds 10 percent.2

One could go on at length, citing figures documenting the lack of education, sanitation, clean drinking water, housing, heating, electricity, medicine, nutrition, and opportunity, alongside numerous other scarcities that continue to torment, degrade, and destroy the lives of the majority of humanity. But I don't think that is necessary. While most of us try to avoid looking at the unpleasant picture, we all know what is going on. It is the grim reality, the dirty underside of our gilded age.

Of course, being people of conscience, we, the voters of the advanced nations of the West, have not ignored this issue. By significant majorities we have, for decades, elected governments committed to alleviating the problem of third world poverty. Many of us also choose to contribute directly to projects initiated by churches or independent nonprofit development groups. As a result, some $60 billion in Western aid is currently being sent to the underdeveloped sector every year. Over the past fifty years, some $2.3 trillion (in today's money) of development aid has been sent, including about a third from the United States.

Unfortunately, it hasn't worked.3 While there have been a few large-scale success stories due to actions of the major donor organizations, including the elimination of polio in Latin America and measles in southern Africa, and many good small-scale projects implemented by the private aid groups, the general situation has not changed. Half the world still lives in misery.

Two schools of thought have appeared to explain the failure. One, the liberal group typified by former British prime minister Tony Blair, various World Bank officials, and Columbia University professor and UN Millennium Project director Jeffrey Sachs,4 argue that the amount of aid simply hasn't been enough. The other, more conservative group, exemplified by New York University professor and Center for Global Development fellow William Easterly, counter that most of the aid money has been wasted, and that such gross waste is an intrinsic feature of the foreign aid process.

Unfortunately, both groups appear to be right. The liberals are right because, as substantial as it might appear, $60 billion per year is really a meager budget if the problem to be addressed is third world poverty. There are 3 billion people on this planet living on less than $800 per year. Spread over that number, the aid total works out to an allotment of $20 per year, each. That's just not enough to do the job.

But the conservatives are also right, because as inadequate as it might be in any case, the large majority of the $60 billion per year is tossed into a bottomless latrine of corruption. This is not surprising, as the list of governments comprising the world's top recipients of foreign aid is practically a match for the list of the world's most corrupt regimes. Basically, the rulers of these countries are little more than crooks who do not give a fig about their people, so naturally they see foreign aid as an opportunity for loot. In one of many examples that Easterly cites, during a famine in the 1990s the warlords of Somalia did everything they could to worsen the general starvation, so as to increase the amount of aid available for theft.5 He then summarizes his case nicely, stating: "Foreign aid amounts to transferring money from the best governments in the world to the worst governments in the world."6 To lessen local graft, therefore, donor countries frequently demand that a certain fraction of their foreign aid largesse be spent by the recipients on contracts awarded to companies from the donor country itself. In that case, it is politically connected corporations and/or high-priced consultants from the professional "foreign aid community" who get the dough. Americans witnessed a mild version of this process in their own country in the case of the aid effort after Hurricane Katrina. Congress appropriated $62 billion in aid, enough to give $100,000 outright to each man, woman, and child of the roughly six hundred thousand displaced victims.7 The money vanished instantly into the pockets of insider contractors, with only a small fraction making it to those in need.

Of course, the officials of the foreign aid agencies like to have visible structures built with their money, so there is something tangible they can point to when asking their home country politicians for next year's budget. This prioritization fits the needs of the Halliburtons of the world as well. So roads and schools do get built in some numbers. But after the ribbon-cutting ceremonies are over and the aid officials fly home, the last thing the local kleptocrats have in mind is to waste their own share of the take paying road maintenance workers or teachers. No, such funds are needed to fill their numbered accounts in Switzerland. After all, they have their families' future well-being to consider, and no good thing ever lasts forever.

The private development organizations tend to spend their tiny fraction of the total aid budget rather more effectively, directing it toward focused local projects. But after Oxfam or WaterAid have done their work and provided a village with its first clean well, what remains is an impoverished village, with good water perhaps, but no work, no pay, and little or nothing to eat. (Unfortunately, if an aid organization should step in to resolve the latter problem by distributing food, the local farmers would be ruined.)

Despite the overall failure of aid efforts, a few formerly impoverished nations have advanced substantially over the past fifty years, so much so that some of them are no longer considered to be part of the "third world." These include India, China, Taiwan, South Korea, and Singapore. It is an interesting and important fact, however, that all of these nations accomplished this transition without Western develop ment aid playing a substantial role. Instead, following the earlier example of Japan, they earned their way to prosperity by finding something to sell.

There is a lesson here. Charity cannot and will not develop the third world. If we want to help lift the underdeveloped sector out of poverty, there is only one way to do it. Instead of giving them our aid, we need to give them our business.

Give a man a fish, and you will bankrupt his neighbor, the fisherman. Offer to buy a lot of fish, and the fisherman will hire the man to help him to meet your order. Then the man will have money, and he'll be able to buy whatever he wants, instead of being stuck with nothing but your wretched leftover fish.

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