Owing to some ill-health for both of our guests, all activities were cancelled giving some of the staff a more laid-back working day. But with an enthusiasm they later came to regret, our two resident voluntourists (Steve and Farinoz) headed up to our outstation, Makeidon, with Manny to help on the project to build a new coral.
The UK national debt is a ball and chain around the ankle of our society currently. It is an unnecessary burden which will be passed on to future generations, and I believe that the time has come to put aside party politics aside and agree to a long-term plan of debt elimination.
The recent tweet by Conservative MP Daniel Kawczynski (see below), highlighted three things for me. Firstly, it demonstrated the sheer idiocy of some of our elected representatives; secondly it showed just how far the buck-passing, playground bickering blame-game has embedded itself in Westminster culture; and thirdly, and most importantly, it also showed the extent to which the UK is saddled with enormous debt.
Amongst the retweets and the laughing, it is easy to forget that the topic of the tweet is where the importance lies, not in the ill-judged tweet itself. The growing national debt is a serious issue and it needs addressing.
Writing for The Daily Mail in 2008 (says it all really doesn’t it) Richard Branson said: “Entrepreneurs have made the world a better place, taking the risks involved in innovating products and services that make people’s lives easier, better and safer.” A bold, sweeping statement that is not entirely accurate.
Branson’s piece for the newspaper was titled “In defence of capitalism” and is precisely the argument you expect to hear from a man that is worth, according to Forbes’ latest estimate, some $5 billion.
For Branson, capitalism is the answer to the world’s problems. He admits that it may need a few tweaks and changes, but he is insistent that it is only through the pursuit of profit that societies are to improve.
The Virgin boss is just one of a number of billionaires that appear fairly frequently in Philanthrocapitalism: How The Rich Can Save The World. It is a book that I read a few months ago, but did little to convince me that the wealthy are indeed the world’s saviours.
Following Natalie Bennett’s car crash interview last month, I have decided to compile a list of get out clauses (for want of a better phrase) that she, or any member of the Green party, can freely use when backed into a corner on the issue of funding policies.
Bennett’s cringeworthy interview was one of the worst instances of a politician pressing the self-destruct button that I have ever seen. The naivety of Bennett to follow the line of questioning, even when she knew it was heading to disaster, proves that the Green leader still has much to learn.
Though it was very admirable and very human – something many politicians are not – to attempt to answer each and every question that was put to her, Bennett needs to be a little more clever in the future. With the televised debates just around the corner, and the Greens rightly participating in them, we can be sure that Bennett will face another moment in the spotlight, and she needs to be ready for this when it comes.
Many, if not all, of today’s top politicians have been trained and educated in the art of interview giving. It is PR, and it is an essential skill that you are able to hold your own when put under pressure and backed into a corner. With politics still very much a shallow image game, how you react to interviews and questioning can be a make or break moment in your career.
For politicians, and for anyone in the media’s crosshairs, interviews are not an occasion whereby you answer the questions that are given to you. What interviews represent are the opportunity to give the answers you wish to give. When you ask Nigel Farage a question, it will inevitably come back to the issue of immigration. When you ask David Cameron a question, it will inevitably come back to the economy. Politicians give the answers that they want to give, no matter the questions asked.
The reason they do this is because it empowers them. Rather than going blindly into a barrage of “Why is this?”, “What does this mean?”, and “What do you think?”, they have their answers prepared, their strategy dictated, and their chosen battleground in sight. Their strength lies in knowing where their weaknesses are and then managing to avoid them. This is where Bennett failed.
Rather than sticking to what she knew best and going on the attack, Bennett attempted to fight the battle on the ground that most suited the interviewer. As I said this is admirable, especially from a politician, but ultimately it is futile. When faced with questions relating to the funding of their proposed housing policy, Bennett attempted to find answers in the narrow confines that she had set herself. If Bennett had not have taken this route, she would not have faltered as she did.
When faced with the question “And how are you going to pay for that?”, here are just some of the answers Bennett could have given:
Raise Income Tax On Higher Earners
I am no economist, so I do not know the exact figures, but it seems fairly obvious that if you need to generate revenue, you raise the income tax. After being appointed Prime Minister, Cameron lowered the tax rate to 45% for those earning over £150,000. A simple way to generate extra funds would be to raise that figure back to 50% or perhaps even higher. Incidentally, a return to the 50% tax rate for those earning over £150,000 is something Labour are promoting as a policy for the next General Election.
Change The Tax Brackets
In the UK we have three brackets for income tax. These being 20% for those earning between £10,000 and £31,865 a year, 40% for those earning between £31,866 and £150,000, and 45% for those earning over £150,000 a year. France however has five brackets for income tax starting at 5.5%, rising to 14%, then 30%, then 41%, and 45% for the highest earners. This seems like a much fairer and progressive way of doing things, as quite obviously somebody in the UK earning £42,000 a year, and somebody earning £148,000 a year are living completely different lives, and yet they pay the same rate of tax. (Once again I should state that I am no economist, so if someone wished to check the maths and potential revenue on these suggestions then that would be welcome.)
Abolish The Monarchy
Already a policy of the Green party, according to Republic, this measure would save around £299 million a year. Although many would point to the fact that the monarchy is a great source of income for the UK, with high tourism and interest in the royals, it would still prove to be profitable even after they were removed. Take France once again as an example, they have not had a monarchy since September 1792 and yet the palaces, the gardens, and the history still provide the country with hundreds of millions each year. The fact is that monarchy tourism is not about seeing the Queen, just as a trip to Disneyland is not about Mickey Mouse. If one day Mickey were sick, people would still visit. Catherine Bennett of The Guardian – no relation to Natalie Bennett as far as I know – recently highlighted some of the ludicrous expenditures the royal family then charge to the UK tax payer. The worst amongst them was a scheduled flight on a private jet to South Africa for Prince Charles. The cost, £246,160.
Another Green policy which Bennett could have called on when fretting over finances is scrapping the nuclear missile system that is Trident. Both in terms of international safety and money-management, this policy seems like a no-brainer. Plaid Cymru, the Scottish National Party, and 75% of Labour’s candidates also wish to abolish the weapons system. The cost of Trident varies between £1.86 billion a year and over £2 billion a year over the space of between 30 and 50 years. Greenpeace have estimated that it could cost as much as £97 billion in order to maintain and update it in the years to come.
Tax Financial Transactions – The Robin Hood Tax
Once again, another already existing Green policy – I feel Bennett may have missed a trick not dropping these into the interview – and one that could bring in a fairly substantial sum each year is the so called Robin Hood Tax. This, as it’s website explains, is a “tiny tax on financial transactions” set at 0.05% and would apply to stocks, bonds, foreign currencies and derivatives. It is believed that this could raise £20 billion a year in extra income.
Introduce a Mansion Tax
Here is one taken from the Labour manifesto, and sure to rile popstars across the UK, Ed Miliband proposes a mansion tax on homes worth more than £2 million. The Institute for Fiscal Studies has said that there is “sensible logic underpinning” the policy which would affect between 50,000 and 110,000 properties, depending on which estate agents valuations you use. Labour believe that this would raise somewhere in the region of £1.2 billion a year.
Stop Sending UK Troops Overseas and Stop Bombing ISIS
Following the disasters that were both Iraq and Afghanistan, this policy should not be too controversial. In 2013, blogging for the Financial Times, Jim Pickard estimated that £33 billion had been spent in the previous two decades on UK military operations overseas – the vast majority of that money was spent on the Afghan invasion. Of course, that money has already been spent, so we cannot get that back, but we can prevent such money being wasted once again. Added to this £33 billion is the often overlooked cost of having to rehabilitate and treat those soldiers and military personnel that return to the UK and need help. Recent studies have shown that this may cost a further £30 billion.
Though touted as the most evil presence on Earth since the Nazis, it is possible that the fight against ISIS is one that the UK should not actively be involved in. As well as the arguments against war and Western imperialism there is also the small matter of the finances. Whilst UK citizens are forced into austerity measures, huge sums of money are quite literally thrown at terrorist forces in the Middle East. Brimstone missiles cost around £155,000 each, Paveway IV bombs cost around £30,000 each, and long-range Storm Shadow missiles are close to £800,000 apiece. Tomahawk missiles are said to be around £500,000 each, and the cost of flying one Tornado jet is around £38,000 an hour.
Day Fines Rather Than Speeding Tickets
A brief shift away from the obvious methods of raising money, this is something that has stuck with me ever since I heard it a few years ago. In a handful of European states fines are paid judged on what a person earns, so this means that when you break the law and you get a fine, the amount you are fined is directly related to your income. A day fine is equivalent to one days pay, a two-day fine is two days pay, and so forth. This method has been used in Finland since 1921, though I recognise it most due to stories from Germany. Most recently in Germany, Borussia Dortmund footballer Marco Reus was given a 90-day fine due to multiple driving offences. This racked up a cost of £427,000.
The Guardian recently ran an article on the issue, which can be found here.
Scrap All MP’s Expenses
Sure to be a winner with the electorate, but unlikely to make you many friends in Parliament would be scrapping all MP’s expenses. With MPs earning roughly £67,000 a year, you would think that they would be able to afford such luxury items as toilet roll holders, ovens, tin openers, and lightbulbs, yet for Labour MP Paul Murphy it seems he could not quite manage. Essentially MPs expenses are benefits for the rich, and seeing as we are here to save money and tackle “scroungers”, this should be the first port of call. MP’s expenses for the year 2013-14 stood at £103 million, money which could be better spent elsewhere.
Increase The Number of People Paying Income Tax
Sounds rather simple to say this, but the more people that are paying tax, the more income is received by the government. The obvious method of increasing income tax revenue is by getting more people into work. Something that the Coalition has prided itself on is the fall in unemployment figures, but these statistics hide the true reality of the situation. It should come as no surprise that the Coalition missed their own target for income tax revenue at the end of 2014, because when you look past the unemployment figures, you see that there are large numbers of people employed in low-paying jobs. Workfare schemes, employers hiring people on zero hour contracts, businesses paying less than the living wage, and many people who are self-employed means that income tax revenue is nowhere near as high as it should be.
Force Tax Avoiding Companies To Pay What They Owe
Whilst we are on the topic of tax, here is another no brainer. A suggestion that is not only morally correct, but also financially correct. Whenever a question is raised asking where funding will come from, this suggestion should be the go to answer, and until every penny is rightfully paid, it should be high on the agenda for all politicians. Companies that owe the UK tax payer money should pay it, and the loopholes that allow them to “get away with it” in the first place should all be closed.
The BBC reported: In 2012 Starbucks had sales of £400 million, but paid no corporation tax. “Amazon, which had sales in the UK of £3.35bn in 2011, only reported a “tax expense” of £1.8m.” Google UK had turnover of £395 million in 2011, and yet they paid just £6 million in tax.
Add to this list the likes of Facebook who have only paid £1 million in corporation tax since 2007; eBay who recently paid less than £1 million in tax despite sales of over £800 million; Boots shifted their headquarters to a post box in Switzerland in order to pay less corporation tax, saving a purported £150 million a year; and Vodafone avoided paying any tax when they sold £84 billion worth of shares in Verizon. And this, it seems, is just the tip of the iceberg. Cadbury, Walkers, Tesco, BP, Shell, dyson, Nando’s, BHS, Maplin, Pizza Express, Pret A Manger, and the Arcadia Group all participate in similar tax avoidance. And this list is by no means complete.
Force Banks To Pay What Is Owed Due To Their Tax Avoidance Schemes
Similar to the suggestion above, all banks that participate in schemes that allow clients to avoid paying tax should be fined, and the activity deemed illegal. The most notorious of the banks that participate in this disgusting practice are Barclays and HSBC. Though Barclays has said that it has closed its tax avoidance unit, between 2007 and 2010 it generated revenue of more than £1 billion a year. HSBC is the latest bank to be hit with criticism after it emerged that the bank helped its clients dodge hundreds of millions of pounds in tax. The 7000 UK clients accounts, held in Switzerland, are valued at over £14 billion, and it is believed that over 1000 of these clients have deliberately avoided tax.
Legalise Marijuana/Cannabis And Then Tax It
This policy is already becoming practice in some states in the US, and has grown in popularity worldwide in recent years. Jamaica have recently chosen to decriminalise it, Portugal decriminalised all drugs 14 years ago, Amsterdam is famous for their coffee shops, Barcelona have now chosen a similar path, and Uruguay have government dispensaries which sell cannabis to those wanting to buy it. It is high time (see what I did there) that the UK join the movement to decriminalise this plant. In Colorado, in 2014, its first full year of recreational marijuana selling, $700 million worth of marijuana was sold. Over $60 million was brought in through taxing the industry in just the first 10 months of the year. The Liberal Democrats are behind a reformed drugs policy, and as it is now widely accepted that the War on Drugs has failed, I am sure there would be many other supporters.
The decriminalisation of cannabis would also have the added effect of saving money and time on policing and law enforcement, and would ultimately lead to fewer criminals and prisoners, saving yet more government expenditure.
As if by magic, here is a piece by The Telegraph written mere hours before I wrote the above. It is entitled: “The economic case for legalising cannabis“.
Nationalise All Railways
This is yet another already existing proposal put forward in the Greens manifesto, but yet another policy which Bennett failed to mention when asked about the issue of funding. Before being privatised by the Coalition in their sickening make-a-quick-buck auction of tax payers property, East Coast railway was not only the most successful and well-managed railway in the UK, it was also the most profitable. In the financial year 2013-14 East Coast railway added an extra £6.2 million to the UK’s coffers.
End The Tax Free Status of Religions
Religious institutions in the UK are not classed as businesses, and they do not pay any tax thanks to their inclusion under the Charities Act of 2006. As if this wasn’t help enough, they are also entitled to claim back 25% in gift aid from donations. Though religion in the UK is nowhere near as profitable as religion across the pond in the US, there are still discounts and exemptions open to religious institutions allowing them to forego tax payments. In late 2013 the movement of Scientology, more cult than religion, was in fact deemed a religion by the Supreme Court. It’s London headquarters near St Paul’s cathedral saves itself £1.3 million in tax payments each year.
Introduce A Wealth Tax
Another of the Green party’s proposals, which was again forgotten by Bennett during her torturous interview. From a July 2014 Green Party document it says: “The Green Party proposes a Wealth Tax on the top 1% – UK individuals with assets of more than £3 million.” This tax, set at a rate of 1% or 2% would raise a reported “£21 billion to £43 billion a year.” Though this may be controversial in the UK, it is practiced in France, Spain, Netherlands, Norway and Switzerland.
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In her widely acclaimed book Dead Aid, Dambisa Moyo argues, as the title suggests, that aid is not working for the state of Africa, proclaiming instead that there is “another way” for the continent.
The first third of Dead Aid is spent giving the argument, stating that aid to the poverty-stricken continent has not worked, and that there must exist another solution to the problem. To say that aid has not worked in the context of Africa is a strange statement, as it has both elements of truth and falsehood within it.
As an African herself Moyo must be aware of the West’s habit of classifying the continent as simply a single poor impoverished country. Think “there are kids starving in Africa” or “You’re going to Africa? Ebola is in Africa!” With this being the case, to say that all aid to Africa is not working is to deny the obvious examples of the countries where it has.
A Guardian article from 2012 shows the very positive impact that aid has had on the state of Ghana. Though there is much work still to be done before Ghana can become fully self-reliant, aid has helped the country to meet the “millennium development goals on poverty and hunger, and boasts a growth rate [at the time of writing] that places it among the best-performing economies in the world.” Millennium Villages – projects led by Earth Institute, Millennium Promise and UN agencies – have “recorded crop yield increases of between 85% and 350% and reductions of up to 50% in the incidence of malaria.”
It seems that in Ghana at least, aid is very much alive and kicking.
With that pedantry out of the way, we shall continue.
Despite the obvious problem with saying that aid to Africa has not worked, a lot of the points that Moyo raises in the first third of her book are valid. To generalise across the entire continent is unhelpful and misleading, but one cannot argue with the facts and statistics put forward. Chief among the points raised was the issue of corruption. The political elite using the aid money that they received for their own benefit, rather than for the benefit of their people. It seems that this reason is the overwhelming factor as to why Moyo believes aid is not working.
Huge sums of money enter Africa through aid packages and handouts, but very little of it arrives at its intended destination. In bizarre logic however, Moyo decides not to condemn the corruption of the officials whose pockets it is lining, and propose methods of tackling this, but instead chooses to target the issue of aid itself. She suggests, as a way to counteract this rampant corruption, eliminating aid in it’s entirety, albeit over a period of 10 years, slowly weaning the countries off of their dependency.
I do agree that weaning African states off of aid is a good thing, but I do not agree that due to corruption aid should be stopped.
If a sportsman is cheating or bending the rules during a game, you do not outlaw the game completely and stop playing it. You make, amend, and enforce rules which would prevent the sportsman from cheating at the game. Or at least make cheating less likely.
Would the issue of aid be such a large problem in Africa if there was not rampant corruption? Would the aid programmes actually work to the benefit of the countries if the money was to reach its intended target?
Aid itself is not the inherent problem with poverty in Africa, though there is an inherent problem with aid in Africa.
As an aside, aid, how it functions, what its aims are and so forth, has changed in the last few decades, and indeed is still changing. Evolving in order to better achieve its aims. No longer is aid simply hand outs from rich to poor, instead it is more of a leg up. An initial boost in order to bring the poorer nations up to a level where they no longer need our support. At least this is what occurs when it is done correctly. The charity that I work for Renewable World, for example, seeks to paint itself out of the picture with its project installations. If the communities where we work still need us after a five years, we have not done our job correctly. Our goal, as all poverty alleviation projects goals should be, is self-sustainability.
With aid limp and lifeless, and benefiting only the corrupt officials who run the African states, Moyo recommends that the solution to Africa’s problems lies in capitalism. Opening up the markets, trading both internationally and regionally, acquiring bonds and loans, and using external sources of finance to achieve economic growth. Such a solution though, does not seem to promote self-reliance, instead it seems to further promote dependency on external sources, in this case the international market. Judging from Moyo’s CV (she spent time with both the World Bank and Goldman Sachs) it should have been expected that her solution was to open up African countries to loans and fund managers.
In a strange oxymoron of an argument Moyo lambasts the corruption that comes with large amounts of money heading into African states, and proposes a solution to the problem that involves large amounts of money heading into African states. The true capitalist twist in this warped logic is that that the money that she proposed to flood into the countries, will not be the free aid money, but loans with interest rates and repayment dates.
I must admit that Moyo is far more educated on the topic of economics than I am. She has numerous qualifications and degrees from various institutions and, as mentioned earlier, has a history of working with some of the world’s biggest names. I on the other hand, do not possess such degrees and have very limited knowledge on the issues of bonds and credit ratings, but where I see an obvious problem, and a solution that contradicts itself, I will speak up. Hence this article.
I respect what Moyo says in her publication because she is quite obviously an incredibly intelligent person, but I cannot be alone in thinking that her solution to the problem of poverty in Africa has more than a few contentious proposals.
Personally, I have always thought that the only way for African states to improve the situations they have found themselves in and to get out of poverty is through the nationalisation of their industries, and public control of their resources. Following this the proceeds that are made from their sale should be distributed among the population. As I am sure we are all aware, Africa is an incredibly rich continent, despite being so poverty stricken. It has large resources of oil, diamonds, tanzanite, gold, and other precious metals. The problem is not that Africa is poor, but that Africa is exploited.
I wonder what would happen to Africa’s nation states if one day they decided to follow the same path as countries such as Saudi Arabia, Norway, or Venezuela. Paths that meant that the countries natural resources belonged to its people rather than foreign companies.
Moyo speaks of “ensuring the longevity of infrastructure” and contributions ” to a country’s longer-term potential.” But what she prescribes do not seem to fit in with these statements. I don’t see how selling off your resources to the highest bidder, and opening up your markets for foreign companies will help the long term future of African nations. Certainly in the short term things will improve, but it can only improve up to a point. With major industries and businesses owned by foreign companies, the majority of the wealth that will be created will not remain in the country.
Profits will be removed, ownership will be lost, the country will become dependent on the West once again, and will be at the mercy of the multi-national corporations and financiers.
Moyo uses the example of toll roads, correctly saying that tolls “only make sense if the people can pay them”, but this begs the question, where then does this money go? The people of Wales and England are able to pay tolls, indeed when crossing from England into South Wales motorists have to pay a toll to cross either of the bridges that connect the two land masses. This toll money does not all go to the UK government however, but instead 50% of it leaves the UK completely and goes to France and the USA. (Both Severn Bridges were made by the organisation Severn River Crossing Plc, who are 35% owned by Vinci, a French construction company, and 15% owned by Bank of America.)
It is important to create and develop a society where the population have the ability to pay for tolls, taxes, and products, but just as important as the creation is the issue of where this money will then go. If it remains in the country then the economy will improve, if it goes abroad then the people of the country are improving the finances of foreign companies rather than their own government, and thus their own people.
Is the incentive to improve people’s lives, income and spending power? Or is it simply to ready the country for money extraction through the creation of new markets and customers?
As the book progresses Moyo continues to illustrate examples of policies and actions taken in the West which are detrimental to the situation in Africa. Moyo correctly identifies that poverty in Africa, like most things in life, “comes down to politics.” Despite aid money from the West and pledges to do more about the poverty situation on the continent of Africa, efforts will always be at best limited, and at worst harmful because of political decisions on other topics.
Moyo highlights the “trade restrictions and barriers thrown up around the West” that keep African produce out of Western markets. The issue of government subsidies is illustrated to be particularly harmful to the fight against poverty, hindering other efforts to tackle the problem. By 2005 estimates, members of the Organisation of Economic Cooperation and Development (OECD) spent almost $300 billion on agricultural subsidies. This figure is almost three times the total aid from OECD countries to all of the world’s developing nations.
Could this money, used to subsidise already relatively well off people and businesses, instead be used in the fight against poverty? It could and perhaps it should. The Common Agricultural Policy (CAP) takes up almost half of the entire European Union’s budget, and results in farmers receiving 35% of their total income not from sales, but from EU subsidies. “What this means is that each European Union cow gets $2.50 a day in subsidies” which is more than what a billion people in the world have to live on each day.
As well as this, subsidies to domestic businesses allow them to keep their products prices low and competitive, under-cutting any international exporters that want to break in to new international markets. Furthermore, subsidised farmers “can also afford to dump their excess production at lower prices abroad, thus undercutting the struggling African farmer.” At both home and abroad, subsidies prevent African products from selling, depriving impoverished communities and fledgling businesses of a much-needed source of income.
In what is Dead Aid‘s penultimate chapter, “Banking on the Unbankable”, I believe that Moyo finally touches upon a very real potential solution to the aid problem. Unfortunately, Moyo seems to have missed the significance of what she writes, and this area only receives a small amount of attention towards the end of her book. Nevertheless, its importance should not be ignored.
In this chapter Moyo speaks very highly of the positive effect of remittance – the act of migrants sending money back to relatives in their native African state. She says:
“remittances make an important and growing contribution to relieving poverty. According to a paper by World Bank economists, evidence shows that a 10 per cent increase in per capita remittances leads to a 3.5 per cent decline in the proportion of poor people.”
Moyo continues by saying that:
“household surveys in the Philippines indicate that a 10 per cent increase in remittances reduced the poverty rate by 2.8 per cent by increasing the income level of the receiving family but also via spillovers to the overall economy. Moreover, this 10 per cent increase led to a 1.7 per cent increase in school attendance, a 0.35-hour decline in child labour per household per week, and a 2 per cent increase in new entrepreneurial activities.”
These positive and very promising results come with a warning though, as through remittance a cut of the money is lost when the middlemen take their share. Regardless of this fact, the model of remittance shows that aid can be beneficial to African states. Even with the middlemen taking their share, the numbers are impressive, and if the middlemen were to be eliminated altogether then we could expect even better results from the money transfers. A form of direct giving would be needed, that like remittance, would go directly from people in the richer countries, to people who are struggling in the poorer countries. Luckily, such a movement already exists.
With a new model of functioning, that does not rely on huge sums of money being transferred to governments who then squander it for their own pleasure, and does not rely on middlemen to transfer the money between rich and poor, simple wealth redistribution has the potential to revitalise the dying aid movement.
GiveDirectly are a charity that does just this. They currently operate in Kenya and Uganda and provide unconditional cash transfers to the poorest families via mobile phones linked to bank balances. On their site they say that they are currently averaging 91 cents given straight in to the hands of the poor for every one dollar that is donated. Due to this measurement, and due to the fantastic results that they are seeing, both The Life You Can Save and GiveWell rank them as one of the best charities in the world.
In 2014 alone GiveDirectly gave over $6.6 million dollars, and like myself they believe “that outright gifts are a more effective way to lift people out of poverty than micro-loans, which have to be paid back.” The middleman is cut out, the corruption is avoided, and the results are truly life-changing.
As I said, it is unfortunate that Moyo did not look at this issue in more detail, because if she had then her entire perception that aid is dead may well have been changed. Due to Moyo’s interest in, and history of, finance and economics it is unlikely that she would see GiveDirectly as the beacon of hope that many others have, but this is no more than speculation on my part.
If the reader were not aware that Moyo’s recommendation has its roots in economics then she spells it out in her own words towards the end of her book.
“It should come as no surprise that Dead Aid prescriptions are market-based, since no economic ideology other than one rooted in the movement of capital and competition has succeeded in getting the greatest numbers of people out of poverty, in the fastest time.”
Such a statement is not entirely true and should not be accepted as gospel. Capital and competition may well provide governments with sources of income via taxation, but it is through spending this tax money on welfare that poverty is overcome. The businesses themselves are not the panacea for poverty, and nor do they provide the means by which people can remove themselves from poverty. Take the UK currently for instance, under the Conservative leadership the country’s businesses may be thriving, but poverty in the UK, especially child poverty, has increased dramatically, as has homelessness and reliance on foodbanks. All of which are things I have mentioned previously on this blog.
Moreover, the majority of people that are now considered to be in poverty in the UK are actually in work, and so this proves that even with market-based economics and competition, poverty may not be defeated, and can in fact thrive. In what is irrefutable proof that markets and competition do not “succeed in getting the greatest numbers of people out of poverty”, Oxfam recently stated “the UK is the world’s sixth largest economy, yet 1 in 5 of the UK population live below our official poverty line.”
To further cast doubt on Moyo’s prescribed solution to the poverty problem, she herself admits that the change she wishes to see may well rely on nothing more than blind faith. To prevent corrupt leaders taking the aid money for themselves, Moyo suggested that aid be stopped gradually over a period of say five years. As the income for the country falls year after year, the pot of gold that the corrupt leaders have access to will get smaller and smaller. As the money begins to dry up Moyo “hopes that any cutbacks (in government spending) would be on the non-essential, frivolous items.”
Such a hope does not fill me with confidence, nor does it do anything to support Moyo’s overall argument. Relying on “hope” is not a valid suggestion and completely negates all of the groundwork that Moyo had put in over the previous 146 pages.
These state leaders that Moyo hopes will cut back on “frivolous items” are the same leaders that she so heavily criticised for being corrupt in the first half of her book. I don’t see why a corrupt leader would sacrifice their life of luxury just because foreign countries began to lower their aid donations. Cutting off the supply of aid to these nations will do nothing but hurt the people you intend to help. Like embargoes, it will have next to no effect on the leaders and the elite who sit at the top of the pyramid, but instead will punish the poor even further.
In what can be seen as an attempt to justify cutting off aid, Moyo then focuses on the instances whereby aid has helped to prop up dictators. I don’t dispute the fact that aid money has been used by various despots across the world in order to tighten their grip on power, and give themselves a more luxurious lifestyle. Zimbabwe’s Robert Mugabe is the example given, with Moyo stating: “in fact, without aid, the likelihood is that Mugabe might have been long gone.” Once again though, this is pure speculation and there is no evidence to support this claim.
It may well be true that Mugabe uses aid money to his benefit, but this does not mean that he is only there, in power, because of said aid money. The two may be connected, but this does not mean that one causes the other. Fidel Castro in Cuba remained in power despite no foreign money coming in, so too the Kim family in North Korea. Neither have been propped up by an influx of aid.
Perhaps Moyo believes, or rather “hopes”, that as the aid money dries up the corrupt leader will become nicer, or that their power will wane, as they are no longer propped up by aid, and the people of the country could overthrow them. Neither of these options seem likely however. In a TedTalk entitled “Is China the new idol for emerging economies”, which I have included below, Moyo herself presents the fact that people in African states are less concerned with democracy and more concerned with survival. Food, water, and a roof over their heads are of far more importance than who is running in the next election.
Therefore, the proposal to stop foreign aid to African states that we know have corrupt leaders will benefit nobody. The corrupt leader will not be deposed, they will not be overthrown, and they will not magically have a change of heart. If democracy in Africa is secondary to survival even when millions of dollars/pounds of aid are given to its people, then it will take even more of a back seat when that aid money is stopped completely.
To conclude, I think that some very valid points are made throughout Dead Aid, and though I am by no means an expert, I do not see the Dead Aid model as feasible for the numerous reasons I have listed above. I agree that aid does need to change, but I think the real answer lies closer to something that Moyo all too briefly touches upon. The issue of remittance and direct giving is something that Moyo should have gone on to explore in far more detail, but I feel she did not do this because it contradicts her “market is the answer” solution. Even when she does look at the issue of remittance she is quick to dismiss her own suggestions, or to mutate the remittance/direct giving model to be of more benefit in a capitalist sense.
“One solution that the aid proselytizers could adopt would be an egalitarian approach to donor donations. Instead of writing out a single US$250 million cheque to a country’s government, why not distribute the money equally among its population. So in a country of 10 million people (roughly the population of Zambia) each citizen would get US$25 – a tenth of Zambia’s current per capita income. In line with the Dead Aid proposals, this would in effect be a remittance “donor-style.
“Indefinite grant transfers, however dressed up, are not something Dead Aid favours, but one could envisage how such remittances could be part of an effective financing package were the notions of accountability and repayment incorporated.”
There is no need for the issue of repayment to be brought in here. It corrupts what is essentially a very valid, and very moral method of transferring wealth, and helping those less fortunate. I feel that Moyo is dismissing human nature. People do not want to be reliant on handouts their entire lives, they want to be self-sufficient. Giving a family in Kenya $10 a week for a year is not charity, but an investment in their future. An investment that we may not see the benefits of, in terms of financial returns, but one that may well provide the necessary no-strings-attached financing that the family needs to invest in education, health, or business.
As I am sure Moyo is aware, the people of Africa not want to rely on the West if they don’t have to.
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