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  • Trade, Not Aid, Is Best Course for G-8 Ag Policy

    Tourists might buy souvenirs, but President Obama is seeking “deliverables” he can bring home to convince Americans that the millions of their tax dollars spent to send the huge U.S. delegation to the G-8 Meeting in Italy this week was money well spent. So, he has been leaning on other G-8 leaders to support his plan to provide new development assistance funds for programs in poor countries in Africa and elsewhere to help farmers learn how to grow more food. No doubt the President would also like to travel from Italy to Ghana today bearing a gift of fresh foreign aid cash.

    Defenders of big government programs such as Jeffery Sachs have already weighed in supporting Obama’s $20 billion “Agriculture Initiative,” which would provide “widespread subsidies for fertilizer…high-yielding seeds,…and agricultural extension services.” Sachs claims that such assistance can dramatically increase food production.

    The bad news is that traditional and stale old foreign aid programs like this one don’t work very well, are expensive to implement, and take years before they might help even a few people. Frequent foreign aid critic and economist William Easterly warns Obama to “study the past to avoid repeating it. ‘The curse of aid is that they never learn from history,’” Professor Easterly said. “They need to go back and realize a lot of things promised today have been promised before.”

    A better idea would be for President Obama to push his G-8 colleagues to reduce their countries’ agricultural market barriers and subsidies by the equivalent of $15 billion. G-8 taxpayers would thereby avoid the burden of yet more wasteful government spending, while tangible benefits to struggling agricultural producers in the Third World would be guaranteed. Of course, if Obama chose this market-friendly and more efficient private sector option, he wouldn’t be able to show up in Ghana today with promises of U.S. taxpayer cash.

    Much as U.S. politicians are using the massive $787 billion “stimulus” money passed by Congress in February to win friends and influence people in U.S. congressional districts here at home, the President is using promises of aid to win allies abroad. However, the real way to earn the friendship of developing countries in Africa and elsewhere is to offer them the access to developed country agricultural commodity markets in the U.S., Europe, Japan, and elsewhere that they have been seeking for decades.

    Posted in International [slideshow_deploy]

    2 Responses to Trade, Not Aid, Is Best Course for G-8 Ag Policy

    1. Ken, Costa Rica says:

      Jim, I'm inclined to agree with you on this one: Remove market subsidies in the wealthier countries, which act as barriers to trade for the poorer countries, instead of throwing a bunch of foreign aid dollars around (that are for the most part ineffectual anyway). However, I wouldn't throw out the baby with the bathwater quite yet. Government planning for "food security," even if that requires tweaking markets, is probably a good thing, while some kinds of targeted aid do appear to achieve results as well as be needed. On the other hand, you're just blogging here, not writing a treatise, and in the main I agree with your thesis.

    2. Pingback: » Financial News Update - 07/10/09 NoisyRoom.net: “Extremism in the defense of liberty is no vice. Moderation in the face of tyranny is no virtue.” Barry Goldwater

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