It’s Time to Chart a New Course for Humanitarian Aid
By: Graham Bateman
In 2023, the United States Agency for International Development (USAID) will most likely administer roughly 29.4 billion dollars in international aid. Well-used international aid can improve the lives of millions of people, but poorly-used international aid can decimate local economies and push people interminably below the poverty line. Identifying those who benefit from aid – corporate stakeholders or under-resourced communities – presents an unfortunate challenge. Nonetheless, the topic of failed humanitarian efforts is typically avoided. That’s the problem. While headlines prioritize controversy, moral and bureaucratic failure may feature in a lonely documentary, academic journal, or, exhausting book – nothing more. Yet, the dirty truth behind humanitarian aid warrants your immediate attention, because it penetrates the optimists’ deepest illusions. The United States must evolve its aid strategy to better serve communities in need. Once aid policy breaks from existing practice, compelling possibilities for change emerge.
The United States’ existing use of non-governmental organizations (NGOs) to distribute aid benefits American interests and, in most cases, effectively responds to short-term humanitarian crises. Historically, USAID made no attempt to hide its prioritization of American economic interests. Until 2006, the USAID website claimed that “The principal beneficiary of America’s foreign assistance programmes has always been the United States. Close to 80% of the US Agency for International Development’s contracts and grants go directly to American firms.” The America first paradigm that dominates the United States’ aid policy does work in limited circumstances. American aid filtered through a network of American NGOs has successfully campaigned against worldwide polio, malaria, Ebola, and HIV/AIDS. Furthermore, look to the United States aid of Ukraine. In this instance, American defense contractors Lockheed Martin, Raytheon Technologies, Boeing, Northrop Grumman, and General Dynamics have faced incredible demand for their weapons. American weapons manufacturers have successfully armed the Ukrainian military against a well-armed adversary. When crisis hits, American companies can respond efficiently and effectively. Yet, when it comes to long-term economic development, compelling countries into reliance on American food, clothing, and other forms of aid destroys local economies.
Haiti represents a prime example of the failure of American economic aid. In 1995, the International Monetary Fund (IMF), World Bank, and United States compelled Haiti to markedly decrease tariffs on food imports. Prior to 1995, tariffs on rice imports had amounted to 50%. After 1995, tariffs decreased to less than 15%. At the same time, the United States provided billions of dollars in subsidies to American rice farmers, allowing the price of American rice to precipitously decline. For years afterward, the American government and NGOs, dedicated to feeding the Haitian people, bought cheap American rice and flooded the Haitian market. In 1981, Haiti had imported roughly 26.1% of its food, but by 2005, Haiti imported 51% of its food and 80% of its rice. Disaster relief became a permanent model in Haiti as the population became dependent on American food imports over the long term. Haitian farmers lost their livelihoods. The Haitian economy became volatile. American aid created the political tinderbox. Concealed in a cloak of false piety, United States politicians created a policy that benefits American farmers to the detriment of one of the world’s most vulnerable populations.
Yet, the United States’ policy can change. In the last two decades, the world changed at a blistering pace, unseen previously in history. We have never been more connected. We have applications that can write essays and code. We have cars that can drive unaided. We have plans to colonize Mars. The private sector has changed. The human experience has changed. But, our bureaucratic decisions in the realm of aid remain the same.
There exist several solutions. First, let’s prioritize human capital. Walk into your wardrobe and pull out several articles of clothing. If probability means anything, one of your tags will read “Made in Bangladesh.” In the early 1970s, millions of Bangladeshis faced death amid war and famine. The South Korean textile company Daewoo recruited 128 Bangladeshis to study the textile industry in South Korea. The company planned to begin production in Bangladesh to evade tariffs. While the plan fell through, these 128 Bangladeshis launched an industry that lifted their nation from poverty, supplying millions of jobs. Rather than sending food installments that undermine local economies, the United States should offer training in strategic industries. This can create lasting change.
Critics may assert that human capital training does not align with the United States’ interests, but it can. Consider GDP-linked securities. The failure of the United States and Wall Street to dedicate more research to this financial instrument represents one of the greatest mistakes of the early 21st century. Consider the statistics. Every dollar invested in vaccinations and primary school education generates roughly twelve dollars in economic return after ten years. Imagine GDP-linked securities issued on a municipal level. Localities could issue securities to finance human capital development, blistering GDP growth. The United States’ government and Wall Street could gain a share of the consequent increase in GDP, thus, incentivizing such foreign direct investment. So far, proposals for GDP-linked securities have focused on investment in specific nations. That will not happen. Nations can dodge payments, misreport their GDP, and a one-million-dollar investment in human capital simply will not make a difference to a nation’s entire GDP. Yet, by attaching GDP-linked securities to the GDP growth of specific regions or municipalities, smaller investments could more easily transform the economy. If the United States government backed such securities and, even, applied pressure against local corruption, then GDP-linked securities that fund development projects could transform the world. This area requires further research and seamless execution that needs to begin, now.
Furthermore, strategically developing human capital abroad will benefit the United States’ industry. American companies rely on complex global supply chains. By establishing a broad base of resilient supply chain links, American companies will benefit. More competition in industry also means cheaper goods. That offers a large benefit to American consumers.
Ultimately, when established practices fail, we need to innovate. Innovation in current practices of aid represents a moral imperative. Our government seems obsessed with adapting to current situations by applying established frameworks. While the world moves forward, the government remains stagnant. For that to change, we need to push forward ideas for change. No voice is too small. GDP-linked securities and plans for investment in human capital warrant our attention and devotion. While shipping truckloads of American rice abroad may benefit Midwestern farmers, it also comes to the detriment of millions. We can change the aid process from a political tool into a socially and economically profitable investment process that benefits all involved. Then, we can change the world.
The United States has flooded Haitian markets with American-produced rice, forcing the nation into dependence on food imports.
