Stupid Changes, Obama Style - Aid

Mr. Obama's oratory has struck a chord with his calls for Change.  He hasn't said much about specifics, but we get glimpses now and then.  For example, he's sponsored legislation to cut global poverty in half by 2015:

"Eliminating global poverty remains one of the greatest challenges we face, with billions of people around the world forced to live on just dollars a day," said Senator Obama.  "We can - and must - make it a priority of our foreign policy to commit to eliminating extreme poverty and ensuring every child has food, shelter, and clean drinking water.  As we strive to rebuild America's standing in the world, this legislation will not only commit to reducing global poverty, but will also demonstrate our promise and support to those in the developing world.  Our commitment to the global economy has to extend beyond trade agreements that are more about increasing corporate profits than about helping workers and small farmers everywhere." [emphasis added]

Perhaps we're being unkind in comparing what he says with what he actually does - the Global Poverty Act (S.2433) calls for cutting poverty in half; Mr. Obama's rhetoric speaks of "eliminating global poverty."  Once again, we see his rhetoric getting out in front of what he's actually doing, but never mind, let's limit ourselves to what the proposed law says and think of cutting global poverty in half.

A Worthy Goal

There is no doubt that eliminating global poverty would be a worthy goal, but what does that mean?  Mr. Obama's Senate web site sheds a glimmer:

Arguably no greater problem faces the world than global poverty. Nearly 2.7 billion people live on less than $2 a day and close to a billion people live on less than $1 a day. We have a moral obligation to craft an overall U.S. strategy to decrease global poverty and eliminate extreme global poverty.

That seems to bound the problem - the idea is to eliminate "extreme global poverty" which is defined as living on $1 or less per day and to "halve global poverty" which is defined as living on $2 or less per day.  Mr. Obama's Senate web site says that there are nearly a billion people who live on less than $1 per day and 2.7 billion people who live on less than $2 per day.  The 2.7 billion clearly have more than $1 per day or they'd be counted with the billion "extreme poor."

The simplest way to take an extremely poor person out of that category is to give him $1 per day.  Since he's living on "less than $1 per day," giving him $1 per day would lift him into the category of people who live on less than $2 per day.

We're also supposed to cut the number living on less than $2 per day in half.  That, too, can be done by giving half of them $1 per day each.  Since they are living on more than $1, giving each of them $1 per day would put them over $2 and thus, by definition, lift them out of poverty.

Let's add this up:

• 1 billion "extremely poor" people upgraded to "poor" @ $1/day
• Half of 2.7 billion "poor," or 1.35 billion people, promoted out of poverty @ $1/day
• Unfortunately, we increased the number of "poor" people by upgrading 1 billion "extremely poor" to "poor." To meet the goal of cutting "poor" in half, we have to choose half of our newly elevated "poor" and give them $1 more per day. That's .5 billion "newly poor" upgraded @ $1/day

The grand total is 2.85 billion dollars per day assuming no administrative overhead at all which we'll get to in a minute.  Ignoring administrative costs which in most bureaucracies eat up way more than they should, the cost of meeting Mr. Obama's goal of eliminating extreme global poverty and halving global poverty is $1,040.25 billion dollars per year, and needs nearly $3 billion more in a leap year.  One thousand billion dollars is a trillion dollars.

A trillion dollars is a good chunk of the federal budget.  According to Wikipedia, "The President's actual budget for 2007 totals $2.8 trillion."  Fulfilling Mr. Obama's rhetoric about fighting global poverty would cost nearly half our entire federal budget.

Does he really think his scheme could fly?  Or is it enough for him that it sounds good?

We Can't Give Money, What About Trade?

Simple calculations have shown that we can't afford to lift the world's extreme poor out of poverty, we have to provide some way for them to lift themselves out of poverty.  We lifted Japan, Taiwan and Korea out of poverty into the modern world by buying their exports; the trade benefited us as much as it benefited them.

We're doing the same with China and Mexico based on existing trade agreements - oops, Mr. Obama has criticized the WTO and he wants to shut down NAFTA unless Mexico and Canada agree to change it significantly.  Changing NAFTA will create a lot more poverty in Mexico which would run the costs of his global anti-poverty program up even more.

He can't be talking about using trade to fight global poverty because he's been saying he's against global trade.  A nice guy like Mr. Obama wouldn't lie about trade to all those voters in Ohio, now would he?  Would such a good speaker compromise lofty principle and stoop to sordid political calculations when spinning rhetoric?

More Foreign Aid?

If we can't eliminate global poverty through trade because that would cost too many votes in the upcoming election, what about increasing our foreign aid?  One of the virtues of giving money directly to every poor person is that the administrative costs could be low; foreign aid projects tend to have high administrative costs.

What's worse, foreign aid doesn't work.  The New York Sun wrote:

Foreign aid can be the kiss of death for poor regions, as a former World Bank official, William Easterly, demonstrated in his recent book, "The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good." Easterly's research found that $2.3 trillion in aid America and allies have spent over the past half-century has been a counterproductive distraction from achieving stable growth. And people die from the absence of growth - poverty-related malaria kills thousands a day.

$2.3 trillion worth of foreign aid not only hasn't worked, it's made things worse.  We can't reduce global poverty through trade because that might upset Ohio voters, we can't just give poor people money because that would cost too much.  Foreign aid won't work because it never works, even on small-scale projects backed by committed, competent, focused people who're spending their own money.

For all his soaring rhetoric, Mr. Obama comes up short when it comes to realizing his visions.  Didn't Hillary say, "I have so many wonderful ideas, the country just can't afford them all."  Is Mr. Obama stealing lines again?

It's no surprise that there's nothing Mr. Obama can do to fight global poverty beyond talking about it; the Democrat's ideas for fighting domestic poverty didn't work either.  Ronald Reagan pointed this out in his first "State of the Union" address:

Today [January 1988] the Federal Government has 59 major welfare programs and spends more than $100 billion a year on them. What has all this money done? Well, too often it has only made poverty harder to escape. Federal welfare programs have created a massive social problem. With the best of intentions, government created a poverty trap that wreaks havoc on the very support system the poor need most to lift themselves out of poverty: the family. Dependency has become the one enduring heirloom, passed from one generation to the next, of too many fragmented families. [emphasis added]

Mr. Reagan was right - fighting poverty using conventional Democratic methods fragments families and makes poverty worse.  Mr. Reagan was too tactful to point out that Democratic policies also create a "vast left-wing bureaucracy" who could be counted on to lobby for more spending while writing rules to keep poor people poor.

President Clinton realized that Democratic policy was perpetuating poverty and changed the welfare system so that poor people had to work.  Many lifted themselves out of poverty.  Governments can't lift anyone out of poverty, but people can lift themselves if government stops subsidizing them and gets out of the way.

Rhetoric or Reality?

Mr. Obama is a great speaker; his rhetoric soars.  Unfortunately, a bit of thought shows that there's no reality to his rhetoric.  His rhetoric is captivating, it's inspiring, but it's empty.  He's hot air on this issue and nothing more - and for that, our national budget can be grateful.