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Sunday, January 16, 2005

SCROOGE? 

Jim Boyd (yes, that Jim Boyd) weighs in on the is-the-U.S.-stingy debate in today's Strib. He pooh-poohs the case that traditional measures of foreign aid ignore or significantly underestimate the extent of private giving, characterizing it as "based on a single article" in Foreign Affairs by a "conservative" (bad, bad!) Hudson Institute analyst whose figures he claims "do not stand up to even cursory scrutiny." He relies instead on the "Commitment to Development Index" (CDI) created by the Center for Global Development in conjunction with Foreign Policy magazine. By that measure, the U.S. ranks seventh out of the 21 countries evaluated--hardly miserly, but not the epitome of charity.

(Curiously, Boyd provides the URL for the CDI study but not for the Foreign Affairs article; indeed, he doesn't even identify the author. Well, a little googling reveals that her name is Carol Adelman, that her article is available from Foreign Affairs' online archive for a fee [the first 500 words are available as a preview for free], and that the entire article can be read for nothing on the Hudson Institute's web site. Was Boyd's omission inadvertent, incompetent, or intentional?)

As is usually the case with policy debates framed in either/or terms, the real answer is both unclear and, insofar as it can be made clear, seems to be somewhere in the middle. For one, that's the impression I get from Daniel Drezner, who has blogged and written about this issue a lot and who seems quite objective and even-handed in his approach. (He also served on the Board of Advisors for the CDI study, a fact which he freely discloses.) His analysis demonstrates that, in creating foreign-aid rankings, there are a number of thorny issues about which components to include as a conceptual matter and how to measure them as a practical matter.

One big issue is foreign remittances--that is, amounts which foreign nationals working abroad send back to their families in their home countries. Adelman says that $18 billion flowed out of the U.S. in this way in 2000--making up over half of her $35 billion estimate of private U.S. foreign aid. The CDI study omitted this money, apparently because "[a]vailable data on remittances are improving, but still incomplete." (Adelman's article, it should be noted, provides no source for the $18 billion number, and there do indeed seem to be difficulties in getting an accurate handle on the precise amount of these flows.) For his part, Boyd rejects the inclusion of foreign remittances, not on measurement grounds but because he thinks they are categorically unworthy of being counted: this money, he says, "scarcely constitutes what most people think of as 'private foreign aid.'"

But so what? How is the actual effect of this money distinguishable from the actual effect of official aid or private charitable aid, at least in terms of increasing the wealth of the donees? And why should it matter "what most people think" about this--keeping in mind that the debunking of conventional wisdom was the ostensible point of Boyd's piece?

Drezner stakes out the middle ground:
Remittance flows are clearly important, but counting them as examples of American generosity strikes me as a bit off-kilter. Americans aren't remitting this money -- foreign nationals are. The U.S. deserves a measure of credit for permitting foreign workers into the country and sending money back -- indeed, I agree with Tyler Cowen that remittances are, "the most effective welfare programs ever devised." However, this policy is of a different kind than either public or private aid.

I don't think Adelman is incorrect in her core thesis. But lumping remittances in with charity flows exaggerates the generosity of Americans as a people.
Maybe, maybe not. Putting aside the measurement difficulties, the debate over whether to include remittances in assessing foreign aid seems to be just another variation on the age-old battle between intentionalist and consequentialist ethics. What's more important: how virtuous or venal Americans are in the realm of foreign aid--how yummy or icky we feel about ourselves, or perhaps more truthfully, about our political opponents? Or should we be concerned instead with the real, overall impact of the U.S. and its economy on increasing the wealth of poor countries? I'll give one more nod to my caution above about either/or debates before concluding that my cold economic heart beats decidedly harder for the latter option.

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