Foreign Aid: America Doing Just Fine

At $27.62 billion, American official development assistance (OSA) accounts for about a quarter of total world OSA of $106.78 billion, according to OECD estimates, and dwarfs that of any other country. When measured in GDP terms, however, this still puts us in the lower group. The newly released Index of Global Philanthropy shows why this old fashioned comparison misses the point.

Americans give abroad as they give at home - privately. No surprise. The private sector in the U.S. plays a much bigger role in the U.S. than in most other places. In a country like Sweden government spends 56.7% of the GDP. In the U.S.government spending is only 36.4% and the federal government’s share is only around 20%. Is it much of a surprise if the government portion of Swedish foreign assistance is not also a bigger percentage? American PRIVATE foreign aid amounted to $95.2 billion, almost four times our official government aid and significantly more than the total world government aid (minus the U.S.) When you sum up all the figures you uncover the numbers that really count & get a better idea about what might really make a difference.

Including only GOVERNMENT foreign aid and doing it on a percentage basis is a lot like saying that the UW -Oshkosh is a better university than Harvard or Yale because government funding makes up a bigger part of its total budget.

The most exciting development in development aid has been a kind of entrepreneurial outlook brought by private donors. Management is important and private management is often more nimble and effective than the rule based bureaucracies required by governments. You could well argue that government to government development aid has sometimes done more harm than good. By funding politically attractive but practically dubious projects and helping local kleptocrats avoid local accountability, development aid might have set back progress in some places. Private donors are using their own money and they usually have more limited amounts of it, so they watch more carefully. They want to get value for money and the often know how to do it.

The world has changed a lot in the last half century, but often our mental models have not kept pace. For too long we have counted the inputs of government based foreign aid w/o asking important questions about effectiveness and we have largely ignored massive flows of private aid and investment that has really changed the world.

America is by far the world’s largest aid donor. My reading of the situation is NOT that Americans are especially generous. We are above average in world terms, but our economy is just so big that we can be biggest in many ways. What is significant about the U.S. is the way (mostly through private means) that our generosity differs from that of many other countries. Unsophisticated analysis using percentages of government aid as criteria have led to some pretty silly conclusions. It is time to bring our models up to date.

Unless you want to believe that Oshkosh is a better university than Harvard because it gets a greater % of its budget from government funds.

Posted by Jack at May 24, 2007 11:15 PM
Comments
Comment #221265

Jack, whatcha doing in these last few posts of yours? Trying to outdo Pangloss?

Posted by: Gerrold at May 24, 2007 11:48 PM
Comment #221272

What’s interesting is that private givings measurement is, for most countries, largely incomplete.

While I’ll agree that comparing only one donor source (governmental) per GDP among countries is not fair anymore, comparing all donors per GDP still does. Unfortunatly, private giving is not that easy to measure yet, which make it hard for the moment such comparaison.

The published index rightly point this issue, going even saying that they got more accurate private giving numbers for US and U.K than for others major donor countries.

Comparing percentage of wealth have value regarding philantropy.
If you have one million and give ten dollars, you give ten times less than one who have one billion and give one thousand dollars, but you’re still the most philantropic one!

What it cost “to you” is the philanthropic measure .

Posted by: Philippe Houdoin at May 25, 2007 2:52 AM
Comment #221277

Philippe

The per GDP measure is also incomplete because it does not take into account the passage of time, choices and change. Let me explain with a simple example.

If you have two 20-year old guys. They are similar in their generosity. One works hard and builds a business. The other is more enthusiastic about his life of leisure. 20 years later the first one is successful financially; the other is successful in living la dolce vita. The first man has built the capacity to be generous. The other has not.

People have responsibly to develop the means to help their fellow man. It is really not a good excuse to plead poverty, especially not for a whole nation. Statistically, one individual could have bad luck even when he is working hard and making good decisions. In a large group, this caveat does not apply.

In any case, the U.S. is above average in total international giving. We are not the top, but also not the bottom per unit of GDP and since our GDP is so large, what we do makes a bigger difference.

I am not trying to brag about my country, but I also see absolutely no reason to feel bad about our contribution. I do believe that we need to take into account the whole picture of development, including private giving. I would also include a reference to the moral imperative to develop the capacity to be generous, but I have no idea how that could be properly measured.

When I was a kid, I complained to my father that I was too weak to do some of the chores. His reply as “get stronger.” People not have not only the responsibility to do their part, but also the responsibility to develop the ability to do their part to the extent possible.

Gerrold

Life is generally good in the U.S. and the U.S. is generally a good country. We judge ourselves and are judged by others using very high standards. Nobody and no country can even reach all its ideals. It is foolish to take too rosy a view of things, but it is equally foolish to be too pessimistic.

A realistic appraisal indicates that we are doing just fine. It does not mean we live in the best of all possible worlds. The way I use that term, it does not imply perfection or the achieving a final goal. It means making decent progress and well … doing just fine.

Posted by: Jack at May 25, 2007 8:07 AM
Comment #221280

I don’t disagree, Jack. Overall, this country is a good place to live. The problem with being satisfied with the status quo, though, is that then there is no impetus from improvement. Look what’s happened in just the last few years — we’ve engaged in and justified torture, we’ve adopted a pre-emptive doctrine of massively attacking countries who are not a clear threat, we’ve confused international leadership with bullying. On the domestic front, we have nearly 50 million uninsured people, many of them children, and we’ve continued to spend foolishly far beyond our means. I agree that in world historical terms, we live in very good conditions. If some in our country (I say some, because we have many apologists for our failings, some at the highest levels of government), then that is a good thing, not a bad. Ideals give us goals. You read some of the things written here; many posters I’d hate to have as neighbors. A blind patriotism is often equivalent to smug and hateful arrogrance. I’m not accusing you of this, Jack, but I think we are often proud of the wrong things.

Posted by: Gerrold at May 25, 2007 8:58 AM
Comment #221284

Jack,

Your recent posts demonstrate the desperate attemps of the Bush apologists and the GOP to remain relevant. It’s sad.
This administration and recent Congress has reduced your party to a sad afterthought. The incompetence, corruption, ignorance and total disconnect with reality has awakened the American people. Even the divisiveness and bigotry will have no effect on elections this time around.
Even the faithful are jumping ship.
Democrats and Independents are doing just fine.

Posted by: Andre M. Hernandez at May 25, 2007 10:16 AM
Comment #221286

Andre M. Hernandez

What does your post have to do with what Jack posted?

Are you one of those guys who applied for an astronauts job, but they ran out of space?

Jack

When other countries monetary standards were used, were they converted to the dollar standard or did they stay just to percentages of each nations currency?

Posted by: tomh at May 25, 2007 10:28 AM
Comment #221290

Jack said…

At $27.62 billion, American official development assistance (OSA) accounts for about a quarter of total world OSA of $106.78 billion, according to OECD estimates, and dwarfs that of any other country.

-and-

The most exciting development in development aid has been a kind of entrepreneurial outlook brought by private donors.

-and-

America is by far the world’s largest aid donor. My reading of the situation is NOT that Americans are especially generous. We are above average in world terms, but our economy is just so big that we can be biggest in many ways.

In response to these very upbeat assesments, Gerrold wrote…

…we’ve engaged in and justified torture, we’ve adopted a pre-emptive doctrine of massively attacking countries who are not a clear threat, we’ve confused international leadership with bullying. On the domestic front, we have nearly 50 million uninsured people, many of them children, and we’ve continued to spend foolishly far beyond our means.

(Which, of course has absolutely NOTHING to do with charity.)

and then Andre posted…

Your recent posts demonstrate the desperate attemps of the Bush apologists and the GOP to remain relevant. It’s sad. This administration and recent Congress has reduced your party to a sad afterthought. The incompetence, corruption, ignorance and total disconnect with reality has awakened the American people. Even the divisiveness and bigotry will have no effect on elections this time around.

Now, all you people need to answer this question. To which posters is the glass half full and to which is the glass half empty?

It appears the so-called “compassion” of the left is nothing more than a poorly disguised myth. All the left has is bile, vitriol and hate. They are incapable of recognizing or giving credit where credit is due. Their ONLY response to ANY subject on these boards is…”Hate Bush, Hate Bush, Hate Bush.”

Good article, Jack. Keep up the good work. The glass is half full.

Posted by: Jim T at May 25, 2007 11:48 AM
Comment #221292

Jim T,

I’m sure Jack understood what I was responding to even if you didn’t. Your penultimate paragraph is rather silly.

I wouldn’t even bother thinking about the problems facing our country if I weren’t optimistic about our ability to surmount them. I hold my country to a higher standard than I do other countries because it’s my country. I’ll praise other people’s kids if they don’t become thugs, but my own kid, while I do praise her, I also expect her to excel because I know she is capable. I know that doesn’t fit your paradigm, but that’s not my problem, it’s yours.

Posted by: Gerrold at May 25, 2007 12:04 PM
Comment #221294

I love when someone says an accepted standard is wrong because it’s “old fashioned” or “quaint”. That usually means it exposes an inconvenient truth. Thanks, Jack, for alerting us to that.

Posted by: American Pundit at May 25, 2007 12:20 PM
Comment #221295

BTW, I saw this company on CNN last night. They hook up 3rd-world entrepreneurs with people who have a little extra cash for micro-loans. And by ‘micro’, I mean like twenty bucks.

I have no idea what guarantees there are if the entrepreneur takes your loan and disappears, but sounds like something to look into: http://www.kiva.org/

Posted by: American Pundit at May 25, 2007 12:25 PM
Comment #221296

Gerrold:

While reading Jack’s post I was wondering how many replys it would take to hear “yeah, but we are not doing enough”. CONGRATULATIONS! You win the BOOBY prize (well named if you ask me).

Nowhere in Jack’s post did he advocate a desire to stick with a status quo or suggest this is the best we can do. But of course his posts are rarely good enough for you “blame America firsters”.

We as a nation have not engaged in and justified torture, we have not adopted doctrines of mass invasion and have not confused leadership with bullying. I think the only confusion is your own for not recognizing the kind of country we live in. You state that “Overall, this is a good place to live” is breathtakingly understated and I find this remark, on the eve of a Memorial Day weekend rather offensive. Name another country on the face of this planet that is as free, transparent and does more for humanity than America. You cannot. And if you ever THINK that you have found one, I will personally purchase your one way ticket to go live there. But you know you will never go because there is not another country in the world with so many BILLIONS of people wanting to come here and enjoy the freedoms you so obviously take for granted.

You also state that we have many appologists for our failings in this country. LOOK IN THE MIRROR, PAL!

50 million without health care. Spare me the demagoguery. This number (usually given as 40 million) includes anyone who, by say changing jobs, spent one day without insurance. And even those without insurance are not denied health care. BTW, this number also includes the 12 to 20 million illegal aliens.

“blind patriotism is often equivilant to smug and hateful arrogance.” Isn’t it ironic that those who always lament that their patriotism is being questioned, always take the opposite extreme with others? Yes, I am patriotic, I have a lot to be patriotic about and more to be thankful for. Unlike you, I can recognize it, along with our failings and still say there is no better place on earth to be. We are not perfect as a nation, never have and never will. Your neighbors not withstanding, respect yourself and maybe you can respect others and the counrty in which you live.

We are coming to what I beleive to be our most important national holiday, where we honor those who have given their lives, so that we can live ours. Do not cheapen or diminish their sacrifice to you. Have some pride in your country that does so much for you.

Posted by: Beirut Vet at May 25, 2007 12:59 PM
Comment #221299

Beirut Vet,

I respect my country enough to acknowledge where it excels and where it falls short. I also respect my country enough not to fall prey to jingoism. I pity those who equate patriotism with cheerleading, who fail to understand that the American journey must be an enlightened one or we are no different than any other historically great power. When I read the hateful comments here of those who fail to understand these simple points, I realize just how much of a journey is before us, and how very many are the obstacles. I know some, like you, Beirut, would very much like to deport anyone who values American ideals over self-congratulatory rah-rahs, but I don’t wish the same for you.

Posted by: Gerrold at May 25, 2007 2:14 PM
Comment #221313

Gerrold

I am never satisfied with much of anything. But I like to compare real world realities with real world possibilities. You get more that way. You need to assess the plusses and minus of any situation accurately so that you do not throw away good and get back bad.

In the natural world, some mutations lead to better adaptations, but most are fatal. The same is true in society. We learned by bitter experience that sometimes solving a problem in the wrong way leads to greater trouble. In the social area, much of the 1960s welfare created additional poverty and misery.

Re the U.S. it is like looking at Tiger Woods and saying that he could be better. He could be. That is true. But the dominant story line about him should not be failure.

Andre

I have written more than 300 posts. Please point to a single instance when you believe I have written anything that was bigotry or even particularly divisive. I would really like to know how you define such things.

In general I am a recipient of bigotry and vitriol, not a producer.


Tomh

I assumed it was converted to dollars. The percentages of GDP would not really have to be converted, but the totals I am sure were in dollars.

AP

Some measures are old fashioned. They were designed for an earlier time and different circumstances. At one time, governments dominated lots of things that are now the realm of private individuals, NGOs or firms. It does not fit today.

Think of the example of PBS. Some years ago, if you wanted to see historical or science programs, you needed PBS. Now you have History Channel, Discovery etc that make excellent series. I recall I watched “I Claudius” on PBS 25 years ago. Last year, I watched “Rome” on DVD from HBO. It was just as good, maybe a little better. If we looked only at government, we would ignore “Rome”, “Barbarians”, “History’s Turning Points” etc. You now have to count what you have on PBS, PLUS the greater number of offerings on non-public channels.

If you look only at government, Oskosh is better than Harvard.

And believe in big government dominated solutions IS a little old fashioned.

Posted by: Jack at May 25, 2007 9:09 PM
Comment #221453

Jack,

The per GDP measure is also incomplete because it does not take into account the passage of time, choices and change.

Here I agree, it’s very incomplete. But this being said, as unperfect it could be, it’s one of the few well-known numerical measure providing a fair basis for comparaison. Based on GDP.

If you have two 20-year old guys. They are similar in their generosity. One works hard and builds a business. The other is more enthusiastic about his life of leisure. 20 years later the first one is successful financially; the other is successful in living la dolce vita. The first man has built the capacity to be generous. The other has not.

Here I disagree. While I agree that GDP is an incomplete measure for philantropy, you seems to assert that money is the only philantropic tool.

I don’t think so. Being one of the easiest measurable ones doesn’t make it the only one.

Your starting hypothesis is both are equally generous at start. Okay. Following it, while one chose to be financially successfull, why make the second one sudently a lazy selfish!? He could perfectly chose to spent his time, not his money, in philantropic acts. Time, contrary to money, is equally shared between every people and is the most expensive thing people, all people, “have” to offer someone else.

You could be generous by giving your money. You could be as much generous by giving your time. And everybody could do that, while only wealthy could do the first. Both are valuable. It’s not because only the first one is easily quantified that the second isn’t as much philantropic.

Money can’t buy everything.
And not everything have a price tag for everyone to read it.

People not have not only the responsibility to do their part, but also the responsibility to develop the ability to do their part to the extent possible.

Hey, what happened to individual freedom to NOT be generous? I was almost converted to its virtuous spirit!
;-)

Posted by: Philippe Houdoin at May 28, 2007 10:59 AM
Comment #221463

Phillippe

Americans are the world’s most volunteering people. I have written about this in other posts.

Posted by: Jack at May 28, 2007 2:56 PM
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