Bono?s Deaf on Africa

[Achtung Bubba]

I've returned to post the following article from NRO, an article that criticizes Bono's call for increased aid to Africa, an idea that Treasury Secretary Paul O'Neill is not entirely sold on.

(I must be fair to Bono: as the first article above recounts, he is apparently against domestic farm subsidies and tarriffs between nations. However, it seems his complaint about farm subsidies is that they are domestic, not that they are bad ideas to begin with; his solution may be - and probably is - far different than the solution that fiscal conservatives would back, despite the fact that both may recognize that domestic farm subsidies are problematic. Further, his complaint about tarriffs may have nothing to do with capitalism: he is calling for "not free trade, but fair trade," and that quote speaks volumes about the man.)

Recently, Rush Limbaugh's comments have caused quite a stir at several U2 fansites, and justifiably so. I agree that many of his comments were out of line. He should not have assumed that Bono doesn't know what he's talking about simply because he's a rock star.

(It may still be the case that Bono doesn't know what he's talking about. We should all easily grant that he's done his homework on this and studied the issue in depth. But quite a few policymakers have Ph.D's in economics and have vastly different solutions. They cannot all be right, so some of them must also be misguided. In other words, we should take Bono seriously, but doing so still allows us to disagree with him strongly. In fact, I believe Bono entering the political arena gives commentators more of a right to scrutinize what he says.)

(It's also worth noting that people continue to criticize President Reagan and NRA President Charlton Heston for once being movies stars. The door does swing both ways.)

Rush also shouldn't have made the more personal comments about Bono. I don't believe this point has made its way to the forum, but Rush justified his comments as being "tit-for-tat" responses to unspecified comments Bono has made about Presidents Reagan and Bush (41), comments made while accepting American awards and money from American consumers. I can see his point here - I have a similar complaint about Rage Against the Machine constantly berating the United States and capitalism in general (Evil Empire, etc.) while reaping millions of dollars earned via capitalism and safe-guarded by the U.S. Government's laws protecting property rights. That said, Bono's criticized individuals and not the system itself, as far as I know. Rush's comments were so inflammatory that the comments themselves overshadowed legitimate complaints about what Bono is supporting. And, ultimately, two wrong's do not make a right.

Rush's personal comments went too far, I think. But the complaints about the policy are legitimate; hence, this article, presenting a conservative response without the personal attacks - and proof, perhaps, that maybe we conservatives have a point.

(I believe the author may be right in his analyis, in that it is in accord with the idea of unintended consequences in economic policies. At any case, it's a perspective that has not found much of a home in this forum - as far as I can tell - so I believe it is certainly worth reading.)

Unfortunately, I'm not sure whether the author pronounces Mr. Hewson's stage name as "Bah-no" or "Boe-no." I apologize for being unable to find such crucial information.

From National Review Online :

Bono?s Deaf on Africa
Trade, not aid, is the answer.

Bruce Bartlett
NRO Financial Contributor
June 3, 2002, 8:45 a.m

Lately, Treasury Secretary Paul O'Neill has been traveling throughout Africa with rock singer Bono, an outspoken advocate of debt relief and increased foreign aid for Africa. Why Mr. O'Neill agreed to this silly tour is a mystery, since it was a virtual certainty that it would only result in increased pressure on the U.S. ? meaning U.S. taxpayers ? to increase foreign aid.

Predictably, Bono berated Mr. O'Neill for showing any degree of skepticism whatsoever that increased aid is the sole and exclusive cure for Africa's problems. To be sure, a bit of food and medicine would indeed go a long way toward helping many of Africa's sick and dying. But Bono and others like him are naive if they think that foreign aid alone is the answer to what ails Africa.

It is too easy for purely humanitarian aid to become a permanent lifeline. Once started, who is hard-hearted enough to cut it off, knowing that death for the recipient will be almost certain? Thus, one-time aid too often becomes everlasting.

Once the prospect of long-term relief is established, it sets in motion forces that virtually guarantee its necessity. For example, food aid to help countries through a temporary famine often drives farmers out of business. How can they sell their produce when wealthy western countries, often overflowing with subsidy-driven agricultural surpluses, are giving it away for free?

Partly for this reason, most nations of Africa have become dependent on food imports, even though they were food exporters not too many years ago. Punitive domestic policies are to blame as well. It is common throughout Africa for farmers to be forced to sell their production to marketing boards, which pay far less than the world price. This is just a kind of de facto tax that allows the government to reap most of the profit.

Not surprisingly, farmers don't like paying this tax. Instead, they farm only for themselves, smuggle their produce elsewhere, or simply cease farming altogether. Insecure property rights also discourage farming, as in Zimbabwe where white farmers have had their land confiscated by the government for no other reason than that they are white. Moreover, rather than distribute this land to the landless, it is often given to friends of the ruling party for their personal enrichment.

Still, even with all the burdens placed on African agriculture, it remains an incredibly productive place to farm. Much of the land and climate are ideally suited to growing crops and livestock. Of all the places on Earth, Africa is the least likely to have a shortage of food based on its natural endowments. It is bad government and misguided foreign-aid policies that mainly prevent Africa from being the world's breadbasket.

If Western governments really wanted to do something to help Africa, the easiest thing they could do is open their markets to African products. The fact is that domestic subsidies and import tariffs prevent Africans from selling much of their agricultural output in Europe, North America, and Japan. These nations, it seems, would rather tax their citizens and force them to pay higher prices for food than allow poor farmers in Africa to sell their produce in their countries.

This is an insane policy because it hurts domestic consumers as well as African farmers. By allowing African farmers simply to sell what they have produced in the West at market prices, consumers would have cheaper food and African farming would benefit, possibly obviating the need for aid.

A recent World Bank study found that full elimination of import tariffs in Europe, Canada, Japan, and the U.S. would raise African exports by $2.5 billion per year. This is a trivial sum in the context of their economies, but would lead to a major increase in growth for Africa. Most of the gain would come from opening the Japanese and European markets ? precisely those countries most often critical of the U.S. for insufficient foreign aid spending.

Of course, the U.S. could also do a lot more to allow in African goods, despite passage of the Africa Growth and Opportunity Act four years ago. Although most African goods enter the U.S. at low or no tariff, some of Africa's best exports, such as ground nuts and tobacco, are still very heavily protected.

On the other hand, Africa could do far more to encourage trade within itself by lowering its own tariff barriers. Almost all African countries have import tariffs far above those in the West. Encouraging trade within Africa would do much to help that continent, even if western nations continue to resist opening their markets further to African goods. Mr. O'Neill should tell Bono (and Congress) that trade, not aid, is the best way to help Africa.

? Mr. Bartlett is senior fellow at the National Center for Policy Analysis

 

[sulawesigirl4]

Not all of ?we conservatives? believe that trade without aid is the answer. It all sounds very pretty to have African countries open their markets, lower their tariffs and become free-market economies, but the truth of the matter is many of the countries that have taken our advice and tried this have found that ?free trade? is a misnomer. The U.S. is able to import plenty of goods to African countries (cheap textiles come to mind) and still has tariffs that prevent many of these countries from importing to us. Hypocrisy at its finest. So what happens when you open a market, flood it with goods which eliminates the few products these countries actually manufacture, thus eliminating jobs and continuing the cycle of poverty? How is that a good thing?

From a moral standpoint, I cannot justify standing by while millions of people suffer and die without at least trying to do something. No, aid by itself is not the answer. Trade along with aid until countries are able to function on their own IS something that seems to me to be a more balanced approach. And if you pay attention, that?s pretty much what Bono has been advocating.

If we want to use the trade argument to get us out of helping with aid, then for goodness sake, let's at least make the trade fair. Otherwise, it's all just semantics, isn't it?

Heart of Cheapness
By PAUL KRUGMAN

Poor Bono. He got stuck in a moment, and he couldn't get out of it.

In one of the oddest enterprises in the history of development economics, Bono ? the lead singer for the rock band U2 ? has been touring Africa with Paul O'Neill, secretary of the treasury. For a while, the latent tensions between the two men were masked by Bono's courtesy; but on Monday he lost his cool.

The pair were visiting a village in Uganda, where a new well yielding clean water has radically improved the villagers' health. Mr. O'Neill's conclusion from this, as from the other development projects he saw, was that big improvements in people's lives don't require much money ? and therefore that no big increase in foreign aid is required. By the way, the United States currently spends 0.11 percent of G.D.P. on foreign aid; Canada and major European countries are about three times as generous. The Bush administration's proposed "Millennium Fund" will increase our aid share, but only to 0.13 percent.

Bono was furious, declaring that the projects demonstrated just the opposite, that the well was "an example of why we need big money for development. And it is absolutely not an example of why we don't. And if the secretary can't see that, we're going to have to get him a pair of glasses and a new set of ears."

Maybe the easiest way to refute Mr. O'Neill is to recall last year's proposal by the World Health Organization, which wants to provide poor countries with such basic items as antibiotics and insecticide-treated mosquito nets. If the U.S. had backed the proposed program, which the W.H.O. estimated would save eight million lives each year, America's contribution would have been about $10 billion annually ? a dime a day per American, but nonetheless a doubling of our current spending on foreign aid. Saving lives ? even African lives ? costs money.

But is Mr. O'Neill really blind and deaf to Africa's needs? Probably not. He is caught between a rock star and a hard place: he wants to show concern about global poverty, but Washington has other priorities.

A striking demonstration of those priorities is the contrast between the Bush administration's curt dismissal of the W.H.O. proposal and the bipartisan drive to make permanent the recent repeal of the estate tax. What's notable about that drive is that opponents of the estate tax didn't even try to make a trickle-down argument, to assert that reducing taxes on wealthy heirs is good for all of us. Instead, they made an emotional appeal ? they wanted us to feel the pain of those who pay the "death tax." And the sob stories worked; Congress brushed aside proposals to retain the tax, even proposals that would raise the exemption ? the share of any estate that is free from tax ? to $5 million.

Let's do the math here. An estate tax with an exemption of $5 million would affect only a handful of very wealthy families: in 1999 only 3,300 estates had a taxable value of more than $5 million. The average value of those estates was $16 million. If the excess over $5 million were taxed at pre-2001 rates, the average taxed family would be left with $10 million ? which doesn't sound like hardship to me ? and the government would collect $20 billion in revenue each year. But no; the whole tax must go.

So here are our priorities. Faced with a proposal that would save the lives of eight million people every year, many of them children, we balk at the cost. But when asked to give up revenue equal to twice that cost, in order to allow each of 3,300 lucky families to collect its full $16 million inheritance rather than a mere $10 million, we don't hesitate. Leave no heir behind!

Which brings us back to the Bono-O'Neill tour. The rock star must have hoped that top American officials are ignorant rather than callous ? that they just don't realize what conditions are like in poor countries, and how foreign aid can make a difference. By showing Mr. O'Neill the realities of poverty and the benefits aid can bring, Bono hoped to find and kindle the spark of compassion that surely must lurk in the hearts of those who claim to be compassionate conservatives.

But he still hasn't found what he's looking for.

Trade not aid

The west demands that African countries adopt free-trade policies, then it floods the continent with subsidised goods which destroy their markets

John Vidal
Monday May 27, 2002
The Guardian

Paul O'Neill, the US treasury secretary, and the rock singer Bono will tomorrow arrive in Addis Ababa on the last leg of their 11-day tour of four sub-Saharan African countries. They have already seen some of the best and worst of the continent, including computer and flower factories, vibrant markets, self-help and micro-finance programmes, slums and new housing projects, under-resourced schools and hospitals.
Aside from the international PR and domestic political advantages of the trip, the broad intention of both individuals is to put Africa on the global economic map and to undermine the popular cliche, in the US at least, of it being a continent without hope.

Bono and O'Neill, like millions of Africans, know that the economic crisis is worsening. According to the UN, nearly half sub-Saharan Africa's 600m people live on less than $1 a day; the trend in life expectancy is declining; and improvements in health and education have been minimal in the last decade. Despite high growth rates, Ghana's average wage of just under $400 a year is the same as 40 years ago.

More than one-third of all sub-Saharan African children are now malnourished, 40% have no access to primary education and school enrolment rates are falling. Water is scarce and, for the very poor, ruinously expensive. The World Bank and the UK's Department for International Development have acknowledged that the benefits of globalisation are barely being passed on to sub-Saharan Africa and may have actually exacerbated many of its problems.

Wherever O'Neill and Bono have gone, just like Prime Minister Tony Blair on his Africa mission three months ago, they have met upbeat, optimistic people on every level who have strong ideas on how to improve the situation. They have been told many times by presidents as much as slum-dwellers that Africa does not want handouts, but a helping hand, that there must be a new economic relationship between the rich and poor and that investment from outside is vital.

In recent years, rich countries have significantly decreased the level of aid to Africa. Between 1990 and 1999 this fell by 40%, and per capita aid to sub-Saharan countries fell from $34 to $20. The US, in particular, has come under criticism for contributing so little in official development assistance. Although it is by far the world's largest donor, contributing almost $11bn a year, the world's richest economy contributes less than 0.1% of its GDP to helping the world's poor, well short of the OECD countries' average.

President Bush, following a lead given by Britain, Canada and Japan, has now said that he intends to increase the US aid budget by almost 50%, and a tranche of this can be expected to go to sub-Saharan Africa. Aside from the extra $5bn a year that Bush has allocated for his Millennium Challenge foreign aid initiative, the US has also increased by 18% its funding for the African Development Bank, and its funding of the World Bank's lending programme for the world's poorest countries by a similar amount.

On top of debt reduction, worth up to $1bn eventually in Africa, this enhanced aid package is expected to have demonstrable results; but it is still widely considered to be nowhere near large enough to achieve minimum UN targets for improving health, education, water provision or Aids reduction.

The reality, say African non-government groups like Isodec in Ghana and British charities like Oxfam and Christian Aid, is that unless the trading relationship between north and south is significantly improved, all the benefits of official aid and debt relief may be worth little. Trade, they argue, is the key to development and is worth 20 times as much as aid.

At the moment, they say, the rules are tilted strongly against Africa, and its percentage of world trade has dropped sharply in the past 20 years. In real terms, says Oxfam, if sub-Saharan Africa had maintained its exports at the same level as 1980, its economy would be worth an extra $280bn a year.

Official aid is increasingly being used to drive African countries towards trade liberalisation. As Secretary O'Neill said in Ghana last week, the US package will be directed only to those countries who show good governance and also who "encourage economic freedom". This means they must show that they are opening their markets, reducing subsidies and privatising industries, and this is already being achieved through a variety of mechanisms such as IMF-World Bank loan conditions, regional and bilateral trade agreements, and general policy advice.

The paradox, however, is that the US and EU, the world's two largest trading blocks, are not implementing at home the free trade policies that they insist that African countries take. This was starkly seen last month when the US announced its new farm bill which will increase US farm subsidies by $35bn, or more than $20,000 to each farmer.

European subsidies are only slightly lower, but the effect is that rich countries can continue to flood African markets with artificially cheap food and products, and that African producers who get minimal help from their cash-strapped governments find it ever harder to export. The Ghanaian rice industry, Bono and O'Neill saw for themselves, has collapsed in recent years as heavily subsidised US (and Thai) imports have flooded in. From being an exporter, Ghana now imports $100m of rice a year.

Historically, African trade tariffs have been high but they have been falling rapidly in recent years. According to the IMF's Trade Restrictiveness Index (TRI), some countries in Africa are now as economically open as the EU and the United States. Countries like Mali, Mozambique and Zambia are considerably more open than the EU and the US.

Bono and O'Neill both said that they went to Africa to learn about the potential of the continent and neither claimed to have a prescription for how to kick-start so many ailing economies. They may find the answers as much in Washington and Brussels as in Africa itself.

 

[diamond]

Hmmm.
Two great articles.

Still working on getting on Mr RushMouth's show..


..to set him right, and then pose a challenge for him or two.

Wish me luck.

diamond

 

[Achtung Bubba]

Not all of ?we conservatives? believe that trade without aid is the answer. It all sounds very pretty to have African countries open their markets, lower their tariffs and become free-market economies, but the truth of the matter is many of the countries that have taken our advice and tried this have found that ?free trade? is a misnomer. The U.S. is able to import plenty of goods to African countries (cheap textiles come to mind) and still has tariffs that prevent many of these countries from importing to us. Hypocrisy at its finest. So what happens when you open a market, flood it with goods which eliminates the few products these countries actually manufacture, thus eliminating jobs and continuing the cycle of poverty? How is that a good thing?

Both the author and I agree with you here that African countries lowering their trade barriers while we continue to subsidize our products and tarrif their exports does them no good whatsoever. From the article I posted:

The fact is that domestic subsidies and import tariffs prevent Africans from selling much of their agricultural output in Europe, North America, and Japan. These nations, it seems, would rather tax their citizens and force them to pay higher prices for food than allow poor farmers in Africa to sell their produce in their countries.

But that entire paragraph was introduced with what I believe is the obvious solution: "If Western governments really wanted to do something to help Africa, the easiest thing they could do is open their markets to African products."

I don't see how the problem of one-way trade barriers is solved by trade with aid.

From a moral standpoint, I cannot justify standing by while millions of people suffer and die without at least trying to do something. No, aid by itself is not the answer. Trade along with aid until countries are able to function on their own IS something that seems to me to be a more balanced approach. And if you pay attention, that?s pretty much what Bono has been advocating.

A very noble sentiment, indeed, to want to do something to help. But notice that - while it puts out most fires - water actually makes a grease fire worse by causing the flames to spread. There are some cases in which "doing something" makes things worse. In the "aid or trade" debate, I believe that most aid serves as a disincentive to be productive, that most aid hurts the prospects for trade. To quote Bartlett again:

Once the prospect of long-term relief is established, it sets in motion forces that virtually guarantee its necessity. For example, food aid to help countries through a temporary famine often drives farmers out of business. How can they sell their produce when wealthy western countries, often overflowing with subsidy-driven agricultural surpluses, are giving it away for free?

Partly for this reason, most nations of Africa have become dependent on food imports, even though they were food exporters not too many years ago.

In my opinion, aid may still be necessary (on a temporary basis), but we will have to be careful to avoid the pitfalls of disincentive. One possible solution would be to provide food, farm equipment, and training during a growing season in the hopes that the recepients will have the opportunity to grow their own food - all under the knowledge that our aid will sustain them only until harvest time.

I admit two obvious problems with that solution: nobody's proposing it, and I doubt many African governments would agree to such intrusive aid - aid that is far more difficult to subvert to their own beareaucratic purposes.

If we want to use the trade argument to get us out of helping with aid, then for goodness sake, let's at least make the trade fair. Otherwise, it's all just semantics, isn't it?

Again, I agree - and, again, I don't see how aid solves that problem. I believe the solution is genuine free trade: the removal of subsidies and tarriffs on both sides. I believe free trade is fair trade.

What worries me is that Bono doesn't seem to agree: ""African countries need to be allowed to trade fairly. Not free trade, but fair trade."

Any idea what Bono means there?


As I final note, I find Krugman's comparison of the estate tax to foreign aid to be a bit odd: they're simply not the same thing. The tax repeal lowers the amount of money that the government receives (its revenues); foreign aid decreases the amount it already has...

...all of which leads to a more striking difference: a tax cut is not welfare. (Put any other name on it, but aid is welfare.) The difference between a man getting a tax cut and a second man receiving aid is this: the first man is keeping his own money, and the second man is getting somebody else's money.

(If the second man were to directly take money from somebody else, we would rightfully call the act "theft." If the government does the job for him, is there honestly any substantial difference?)

That's not to say aid is inherently wrong in all cases. But it is worth recognizing it for what it is: taking money from one person and giving it to another. When you do that, I believe you should make sure that it's accomplishing its supposed goals (eliminating poverty being the primary goal), and I don't think welfare here and aid abroad have been all that successful.

 

[Salome]

But that entire paragraph was introduced with what I believe is the obvious solution: "If Western governments really wanted to do something to help Africa, the easiest thing they could do is open their markets to African products."

I don't see how the problem of one-way trade barriers is solved by trade with aid.

it doesn't solve the problem
but I feel that it only seems fair that as long as we are the ones not willing to open our markets then at least we should try to help by trade with aid

 

[Achtung Bubba]

it doesn't solve the problem
but I feel that it only seems fair that as long as we are the ones not willing to open our markets then at least we should try to help by trade with aid

True, one-sided trade barriers isn't fair (or consistent with hypocrisy OR good for our own economy), and what you suggest does seem more equitable.

The fairest case would be this: the U.S. generates $X billion in revenues through tarriffs against Africa and sends the same amount right back to them. It seems like that would be the same thing as having no tariffs at all, BUT you have two completely unnecessary disincentives to production: tarriffs here , and aid to there. So, the African economies (and our own) suffer further because of the second disincentive of foreign aid, regardless of how fair it may be.

Beyond that, if free trade is the ultimate goal, it's a step entirely in the wrong direction. If the New Deal programs - many of which were designed for JUST the Great Depression but are still in existence today - are any indication, it's very difficult to undo new government policies.