Foreign Aid

A reader of the blog mentioned foreign aid yesterday, so I thought I'd talk a little bit about the subject today.

Donald Trump has said very little about foreign aid - whether he would axe it, expand it or leave it alone.  Overwhelming majorities of Republicans favor cutting back on foreign aid. Cutting back or eliminating foreign aid may be said to be a libertarian, rather than a Republican, position, but libertarian thought is one "leg" of Ronald Reagan's "three-legged stool" of modern conservatism:

The decision to halt foreign aid to countries that do not represent our best interests is unquestionably a conservative view. By definition, one might expect conservatives to apply a cost-benefit analysis to such situations. Certainly, America borrowing billions from China to arm radical Islamists in the Middle East is of little benefit at too high a cost.

Few Americans have a realistic view of how much money is spent on foreign aid.  As of 2014, only one in twenty Americans could correctly identify that foreign aid constitutes less than 1% of the federal budget.  A family of four with a median income of just short of $76,000, paying around 5.34% of their income in federal income tax (see this chart for specifics, also from 2014), or about $4,050 and change per year, ends up spending about forty bucks and fifty cents of that $4,050 on foreign aid per year.

That's not a gargantuan sum, but consider the principle at stake: shouldn't that $40 be spent on our own homeless?  On our own needy?  What makes foreign aid worthwhile in the first place?

Foreign aid is not of a uniform character and therefore it worth looking at it piece by piece.  This Washington Post article breaks down our foreign aid contributions quite nicely.

The largest portion of our foreign aid budget goes to Israel, and that is almost entirely military aid.  If you're an interventionist, that probably makes sense, given that Israel is surrounded by enemies on almost all sides and is a functioning democracy.  If you're a libertarian, there's a lot to dislike in this aid.

First of all, American military foreign aid must be spent on U.S. defense contracts.  Therefore foreign military aid could be said to, in essence, be a handout to weapons manufacturers, certainly anathema to libertarians as well as many liberals.  On the other hand, if you favor a flourishing defense sector, this handout has its perks.  (Israel, specifically, gets a small carve out from this rule; it can spend up to 26% of military foreign aid from the United States on its own defense industry.  Critics of Israel will no doubt object, and fans of Israel can well contend that given the unique historic hostility towards Israel, this is not an unreasonable carve-out.)

Following Israel largesse-wise is Egypt, which receives not quite, but nearly half, of what Israel receives military aid-wise, and then a bit of non-military aid to boot.  In large part this aid is a reward for Egypt's historic peace with Israel, although it helps keep the Suez Canal secure as well, in theory.  Again, if you're a fan of Israel's security, this is probably money well spent.  If you think Israel can take care of itself, this is money not well spent, especially since the current Egyptian government appears both authoritarian and inept.

(There are good, if cynical, reasons to support a dictatorship, one of the main being, "they'll keep the lid on a dangerous situation."  Therefore, when a security situation actually deteriorates under a dictatorship, you have to ask whether active democracy promotion, even when it leads to the election of, say, an Islamist, isn't the better way to go.)

Once you get past Israel and Egypt, the vast bulk of American foreign aid is non-military and dedicated mostly to health initiatives, including the fight against HIV/AIDS in Sub-Saharan Africa.

I think almost everyone would agree that helping fight HIV/AIDS anywhere is a nice move, but again, why not spend that money on people suffering from HIV/AIDS and other debilitating health conditions here at home?

That's a very good argument in the abstract, but there is something else to consider.

The average plate of food in the United States of America travels 1,500 miles to reach the dinner table.  That requires a lot of oil.  Your tennis shoes and laptop also require a good deal of oil to manufacture.  Over half of a barrel of oil is required to manufacture all sorts of goods.

Even if we were to eliminate the combustion engine entirely and live in a world of futuristic, oil-less cars (which I hope we do, someday!) we'll still need a good deal of oil.

And where does most oil come from?  The world beyond our borders.

Perhaps domestic oil production will skyrocket and obviate our dependence on foreign sources of oil.  Or perhaps domestic oil producers will sell oil produced in North America on the global market, which all of us would do if we were the CEO of an oil company, as our job would be to focus on the bottom line of the company we were running, and damn all other details.  Hence, "drill baby drill" coupled with a hands-off approach to regulating business - such as telling an energy company where to sell its fuel - is likely to leave Americans in the boat of needing Saudi Arabia et al to go about our daily business.

As long as our relatively comfortable first world lifestyles continue to depend on the prevalence of cheap oil, we will need oil imported from abroad, and as long as we need oil imported from abroad, a good case can be made that a little money spent playing the beneficent neighbor is money well spent.

Let me make one other pocketbook appeal concerning foreign aid to Africa in particular: Africa is booming.  As an American in his late 30s, it seems odd to type that sentence; all I've ever known is war-torn, starving, suffering, disease-ridden Africa.  But that description, while still containing much truth, is gradually being replaced with that of a more stable, more prosperous Africa that constitutes a major market - a market that can fall under Chinese influence, or under American influence.  (Modern Africa really deserves its own blog post, and it'll get one, one of these days).

I've blithered on long enough, so let me close on a personal note.  My wife and I are lucky enough to be solidly in the upper middle class.  Our approximate tax contribution to foreign aid is $240 per year.

We could definitely use that money on four or five "big" trips to the grocery store, or perhaps a few nice date nights for ourselves, or if we were feeling big-hearted, on numerous meals for the needy.

But seen as a sort of "tip" to the world beyond for ensuring the continuous flow of cheap oil that keeps our upper middle class lifestyle going, $240 per year is, perhaps, money well spent.