Where Rotary Succeeds and Foreign Aid Fails

Income inequality picture

 

I hate to get all geeky on you, but it turns out that income inequality between rich and poor nations is one of the hottest topics you can find nowadays among economists and politicians, and the publication of Thomas Piketty’s book, Income in the 21rst Century, has ignited an outpouring of thoughtful discussion about income inequality within countries and between nations.  As Rotarians, dealing with issues of poverty and economic development fall well within our six areas of focus for the Rotary Foundation, with economic development being a separate focus on its own.  (Micro-lending being the most prominent programs in the category.)  How to help poor and developing nations is part of our DNA as Rotarians and how we go about getting the job done is an integral part of the work we do through the Rotary Foundation.

In another recent book on the subject, The Great Escape: Health, Wealth, and the Origins of Inequality, author Angus Deaton, takes on the same subject.  In a recent review of the book, Michael Edesess, mathematician, economist, and all around really smart guy, had this to say about the final chapter of Deaton’s book which is quite critical of foreign aid programs:

“In his final chapter, Deaton launches a devastating blast against international aid programs intended to lift people in less-developed countries out of poverty. These programs, Deaton claims, prop up bad governments and make donors feel good but do less than nothing for the poor of those countries. The funds donated, he points out, are fungible – so when they go to governments, or even to non-government organizations, there’s no way to guarantee that funds intended for clinics or food relief do not wind up being redirected, for example, to weaponry. Deaton says there have been cases where donor funds have ended up supporting murderous militias.

The autocratic governments of the poorest countries have incentives to keep their countries poor, so as to keep the donations – which are generally directed through the countries’ governments – coming. Deaton recounts one of the worst cases, in which “government officials in Sierra Leone held a party to celebrate the fact that UNDP [United Nations Development Program] had, once again, classed their country as the worst in the world and thus guaranteed another year’s worth of aid.”

Deaton gets into specifics about what kinds of programs are good for developing countries and which are not. In the area of healthcare, many of these countries have high infant-mortality rates similar to those of the rich world before the germ theory revolution led to public sanitation and the near-eradication of infectious disease.

Nevertheless, aid assistance for health care clinics and public-health programs does not always work. It is subject to the same fungibility issues and can rob local government-sponsored health-care systems of their limited supply of productive workers who may find amenities or compensation more attractive at the aid-sponsored facilities, thus undermining any existing nascent local government effort.

Deaton says that the few things that can work include vertical health programs, run by an agency such as UNICEF as well as some private philanthropies like the Bill & Melinda Gates Foundation. These are single-disease programs to “helicopter in” a specific targeted solution for a specific disease – for example, vaccination programs for polio or mosquito control for malaria.”

Folks, in case you missed it, the “vertical health program” referenced in the last paragraph is all about Rotary’s Polio Plus program and our Polio Eradication partners.  Perhaps more importantly, the model we use to fund and execute our humanitarian programs may be endlessly frustrating to us, but compared to the programs described above, what we do is amazingly effective.  We don’t just give funds to governments.  Instead we partner with other Rotary clubs in developing countries where the aid goes directly (hopefully) to where it is supposed to go.  And yes, the model we use to fund these humanitarian programs is the SHARE program where our District 7620 Rotarians determine which of the six areas of focus will get funded.  And yes, when working with Rotarians in other countries there are cultural issues about what constitutes fair business practices that can be frustrating for US Rotarians.  And yes, despite all of the hassles with making sure the partnering District is on board with the project, the other club is MOU trained, and the global grant is approved, we usually end up pretty close to the target in terms of getting something meaningful accomplished.

At the end of the day, your contributions to the Rotary Foundation are part of an amazing effort that is one of the very best models for trying to achieve world peace through humanitarian service.  I hope you are as proud of what we do as I am.

We have ONE MONTH left in this year to give to our Foundation.  PLEASE GIVE GENEROUSLY!

The Great Escape

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