What do AIG and Darfur have in common?

Efforts to save them might be misguided…

Most weekdays I spend my drive to and from work listening to NPR. I’ve written about it before, but I can’t say it enough – I loves me some NPR. The exceptions are those times when the state of things, for whatever reason, is just a bit too much; when every story seems to do little more than make me sad, tired, or frustrated.

Those times I think, I swear to God, if I have to listen to any more political bickering or depressing world affairs I’m just going to turn around, go back home, and crawl into bed until Friday. Then take a vacation day and crack open a cold one* to celebrate a three day weekend. That’ll teach ’em.

As you can imagine, that doesn’t happen too often.

A program a couple of weeks ago featured a story about Sudanese President Omar al-Bashir (the same gent who has an arrest warrant for him issued by the International Criminal Court, by the bye). Because this post has taken far longer to write than I anticipated, you’ve probably heard about it by now. But, on the off-chance you haven’t, the skinny is this: Sudan’s president has directed all foreign aid groups leave the country within one year. This mandate comes not long after the government had the good sense to kick out about two dozen other groups.

According to President al-Bashir, the goal of removing international aid is to “Sudanese” relief efforts. What that means is anyone’s guess, but given this guy’s history I have trouble seeing that as anything close to a good thing for the population.

But he’s a tyrant. And as a concept, murdering, bloodthirsty tyrants wanting absolute control isn’t all that surprising, right? It was the next story, and concept underneath, that really got my wheels turning.

Economist Dambisa Moyo recently released a book called Dead Aid. It posits that assistance, both monetary and general humanitarian efforts, has actually hurt Africa. Think about that – that’s 23 billion dollars in federal aid from the US (available 2006 numbers) – that she believes has done more harm than good.

Far better, she says, is the type of aid China provides – investments in the economy in the form of factories and other businesses that lead to jobs, new sources of tax income for the state, and the general economic growth that not only builds a community’s economy but also its sense of self-worth.

Click here for a review of her book by Paul Collier.

While researching this post I came across the quote below from another gent in an article from the Washington Post. The article is a few years old, but his point of view is interesting and worth the read if you have a few minutes.

“There is no African, myself included, who does not appreciate the help of the wider world, but we do question whether aid is genuine or given in the spirit of affirming one’s cultural superiority. My mood is dampened …because Africans, real people though we may be, are used as props in the West’s fantasy of itself. And not only do such depictions tend to ignore the West’s prominent role in creating many of the unfortunate situations on the continent, they also ignore the incredible work Africans have done and continue to do to fix those problems.”

So I have to wonder: are they right? Has assistance from the West hindered growth, innovation, and self-reliance in Africa? The (very, very small) conservative part of me appreciates the logic. Arguments have been made asserting blank checks can discourage entrepreneurship, make the government unaccountable, and foster an environment rich with the potential for corruption. And there’s clearly some truth to those ideas.

But the majority of my mind and heart say it’s hard for a society to open small businesses when their children are dying from horrifying, pandemic illnesses. You know, like a cold. And how does a government that can’t seem to provide something as basic as a clean water supply hope to change the tide? “Sudanese efforts,” indeed.

cash1

Now apply that thinking to our own economic issues. Is a blank check, read DART, a help or a hindrance to AIG, Fanny Mae, and the rest of their ilk? Two weeks ago purse strings were still pulled tight and the dial that measured bank lending hadn’t seen a twitch in the needle. In fact, small businesses with years of impeccable credit history have been unable to secure loans they’ve received, year after year, critical to operations. And because of that lack of capital they’ve now shut their doors. Add to that many bank’s hesitance to sell off “toxic” loans because they’re not being offered the price they now think those loans are worth and I’m having quite a few WTF moments.

But I’m not an economist. I thank the Maker I’m married to a woman far, far smarter than I am every time I envision helping Ellie with her algebra. But I am a taxpayer. And it’s my money, and yours, that’s seemingly been hurled into the ether from Washington the last six months and all I know for certain is that while I’m lucky and grateful to have a job that I love, unemployment rate at as of April 3rd is 8.5%.

So, is Ms Moyo right? Is the blank check we’ve written to the banking system, Wall Street (and Detroit, for that matter) part of the problem? And, if so, what’s the better plan? Let me know what you think…

*Full disclosure – because I’m a girly-man and don’t drink beer, a “cold one” is actually a Smirnoff Ice. Don’t laugh – they’re yummy.

photo by Amagil

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