Foreign Aid, Domestic Poverty: An Argument for Nation-Building at Home

Foreign policy is important. Allowing poverty, disease, and lawlessness to fester in faraway lands can lead not only to abhorrent human consequences, but threats to our interests.  It’s no mistake that Al Qaeda developed as an organization in sanctuaries like Sudan, Somalia, and Afghanistan. The central idea of American foreign policy is that by helping others help themselves, we’re actually helping ourselves.  In other words, it’s not just about answering to our humane values … it’s about safeguarding our interests.  It’s been difficult to avoid thinking about this concept recently, as the political struggle to determine spending priorities has focused on the consequences of a precipitously reduced defense budget.

It was in the context of thinking about these issues that my wife recommended I read an article.  She’d had a look at it and found it, in her words, “surprising and sad.”  I’ve always listened to the woman on matters of humanity ever since she taught me to cut up plastic six-pack holders to save the lives of ducks.  It’s not that her advice made me think I could save every duck.  I just didn’t think it was reasonable that a dead duck should be a consequence of my drinking beer.  As I looked at the BBC article she recommended, I found myself deeply disturbed to confront the subject matter: children without enough to eat.  This is unfortunately not a new story; poverty and famine are as old as the human ability to record them, and undoubtedly much older.  But what made this story different was that it wasn’t documenting starving kids in Niger, Ethiopia, or Mali.  It was documenting starving kids right here in the United States.

Child poverty in the US has reached record levels.  There are nearly 17 million children in the US without a secure source of food.  There are 47 million Americans dependent upon support from food banks. The US has the second highest rate of child poverty in the developed world, with only Mexico’s rate slightly higher.  The rate of child poverty in the US is more than three times the rate in the Netherlands, a country with a lower per-capita GDP.  In fact, the US is the fourth richest nation in the developed world and also has the fourth highest overall poverty rate. Demand for food assistance has skyrocketed during the recession.  This is perhaps unsurprising, reflecting growth in unemployment and homelessness.  Yet it also undeniably reflects policy choices and economic preconditions that left too many families unable to achieve unassisted basic survival when the recession took hold.  Fact is, the US has the lowest rate of anti-poverty government programming among developed nations.  As red-faced as some Americans are these days about the perceived largesse of social assistance, the current level of help provided by government falls well short.  If you’re anything like me, you look at these facts, shake your head with despair, and find them completely unacceptable.  While hunger at some level is endemic, there are things we can and must do reduce this problem to a level reflecting our status and honor as a nation.

Fortunately, there are two clear contributors to this problem, and both are approachable.

The first is wage disparity.  Real wages in the US are declining while corporate revenues are robust.  The Dow Jones Industrial Average recently reached an all-time high and has more than doubled since the recession began.  In that same period of time, the number of households living below the poverty level has risen nearly three percent, with seven million more Americans falling below the poverty line.  As skillfully articulated by James Galbraith in an insightful 2012 study, the American economy has grown since the 1980s on a model of inequality, with financial, tech, housing, and military bubbles creating exorbitant wealth for a small number of individuals without creating many jobs.

Instead, the jobs created have been largely in the service industry, which has not experienced wage growth.  In fact, the minimum wage for restaurant workers has not been raised in more than two decades.  The net result is many of those lucky enough to find work are making enough money to scrape by, but are still impoverished; as of the most recent USDA data, 41% of those receiving food stamps lived in a household with income, including more than 1.5 million veterans.  Despite the recent rise in unemployment, the share of those receiving social assistance living in households where someone has a job has continued to increase.  This suggests that working is increasingly not enough to stay off welfare in the world’s fourth-richest nation.  It also suggests that the laissez-faire market philosophies favored in recent times allowed business to build their profit models around unacceptably low labor costs, making them structurally resistant to wage improvement.  With businesses demonstrating for the past few decades that they’re not inclined to lift wages on their own, President Obama’s recent call for a higher minimum wage was music to the ears of many.  While raising the minimum wage could lead to consumers paying more for goods, this and other consequences would be more than offset by the reduction in poverty attendant to 13 million of the poorest working Americans getting a raise.

Still, common ground is unlikely when it comes to a minimum wage increase, despite the clear case for it.  A more likely target for consensus lies elsewhere.

Despite its problems at home, America continues to spend inordinate sums of the peoples’ money on activism abroad. Putting aside the massive military budget, which can scarcely be labeled a “defense” budget with a straight face, but which should be approached only with the greatest care until the nation brings home its troops from warzones, there remains a potential to adjust policy in this area to the benefit of the American impoverished.  There is a tradition, dating to the Foreign Assistance Act of 1961, of US government assistance to countries deemed strategically important to US national security.  This practice is an outgrowth of the Cold War, and as such is rooted in the idea of countering a pervasive global phenomenon through the direct and indirect exertion of American power.  As this post goes to press, both the original phenomenon and the notion any such thing can be countered with massive dollar transfusions have been made moot.  Ridding ourselves of the self-imposed requirement for massive foreign aid is difficult because any time we devote money to something, we create constituencies who will guard that thing jealously, and because humans abhor losses from the status quo.  But rid ourselves we must, in order to rediscover the difficult but essential discipline of caring for ourselves before we care for others.  This is the Jeffersonian ideal that carried the nation through its first century with the philosophy that using the peoples’ money to sustain foreign charity was not acceptable or even legal.  The perceived threat of Communism caused us to reinterpret and bend this tradition, and we must now bend it back.

Today, the US sends more the $70B annually to foreign countries in the form of economic and military assistance.  This would not surprise most Americans, who’ve been convinced by politicians that our nation’s superior economy is an instrument of power to be wielded abroad to advance our interests.  What would surprise them is just how little these expenditures are serving our interests.  At most recent count, America was sending $19B annually to six of the world’s ten most corrupt governments, with little noticeable effect.  One of these, Pakistan, has arguably spent much of recent history in some form of conflict with the United States. The largest recipient of US foreign aid is Afghanistan, a country whose president recently accused the US of colluding with his enemies. What exactly, then, are the people of America getting for their money?  Why does our government continue this practice?

We continue this pattern in part because we believe that we’re somehow exceptional, and that our money will be more magical, more penetrative, and more stimulative than that of another donor.  But we’re wrong.  What we’re really doing is flushing away money by handing it to corrupt governments who rationally use it to continue governing.  This makes us a party in something that doubly injures our ideals, as we neglect our poor while enabling others who neglect their poor to stay in power.  At the very least, our money is subsidizing the creation of power structures abroad that ought to be created instead through free elections.

Meanwhile, $19B spent domestically would equate to roughly $100/month for each US child currently undernourished.  Orchestrated well (and leaving aside for the moment the important question of civic/government roles in operationalizing new funding), this kind of infusion could virtually end the problem of child poverty in the US.  With this problem retired, we might then reconsider – having moved beyond the realm of need and into the realm of luxury – whether to indulge in the luxury of sending money abroad as part of an activist foreign policy.

Woven deep into the fabric of American exceptionalism is Jefferson’s aspiration that America lead the world not by taking too active a hand in it, but by setting an example irresistible to others.  His voice is whispering across history to us as our resources decline and the pressure to prioritize their use builds. He’s whispering to us that “[t]he interests of a nation, when well understood, will be found to coincide with their moral duties.”  Foreign policy is important. Allowing poverty to fester in faraway lands can lead not only to abhorrent human consequences, but threats to our interests.  But this logic has limits, and if our policy choices lead us to focus on threats and consequences abroad while our own society corrodes from within, we will have failed Jefferson.  We will have also failed our own children.  Arguably, that failure is already manifest.

Posted by Tony Carr, March 11th, 2013.