Rockridge High School
Taylor Ridge, Illinois
Teacher: Barbara Downey

MCA: A Failure in the Making
By Alex Kindred
12^th grade

The United States is an economic power.  As the world’s only superpower, the U.S. has often been said to have the responsibility of being the “shepherd of the entire world”.  On paper, this looks reasonable and fitting, and it is our duty as individuals of a more economically sound people to look out for the rest of the world.  However, the principles of capitalism do not adhere to the ideals of world socialism.  The idea behind a government is to protect its own citizens and further the interests of its own people.  Handing out money to other nations, nations that are often hostile toward the wishes of America, as a whole, is not in this interest.  So, while financially viable, the Millennium Challenge Account is not a step in the right direction.  Its ideals of developing impoverished nations through a blend of grants and loans are noble.  It has many positive new ideas, like increased responsibility for all nations involved. In theory it may help the world, and perhaps even the U.S., but the logic behind the account is doomed to failure before the organization is even conceived. 

The analogy is often used about the chick that is struggling to hatch out of its egg.  If it strains on its own, in the end, it turns out healthy.  However, if helped, it nearly always dies, for reasons that even modern science can barely fathom.  A fine comparison can be made between the chick and developing nations.  Yes, there are examples of nations who have received aid and went on to be successful, self-sufficient autonomies.  However, the truth is that these nations succeeded not because of the foreign aid, but in spite of it.  Those who point to foreign aid success stories normally point to South Korea.  South Korea’s success came not through aid, but from manufacturing and good trade policies, particularly with Japan.  The money rarely goes to the proper places, and when it does, the results are often as adverse as preferential.   Not only are our interventionist policies hindering the growth of other nations, we are losing money in the process.  Even worse than that, sometimes our money winds up developing programs that are directly at odds with our interests in the world.  The nuclear programs of North Korea and India come to mind, along with countless instances of small terrorist bands that have received laundered money of dubious origin.

The MCA is a grand, magnanimous idea.  Its principles would no doubt greatly increase the good that American foreign aid dollars do.  However, the attack plan is the same as every prior one.  Foreign aid must not be an ambitious program that is run on numbers and deadlines, and that is the very foundation of President Bush’s proposal.   Flooding a small, poor market with capital is not the correct means of attack.  A similarity exists between this logic and all the forms of domestic social welfare in the U.S. today.  Have these programs ended poverty and suffering as they were promised to do by FDR and LBJ?  Have they helped enough to justify the cost?  The only answers one ever receives are calls for more reform and more money.  The programs are an endless chain that will never be fixed into a complete circle.  The successes of America and capitalism have always and will always come from the private sector, and that is how nations must be made successful. 

The MCA, besides being doomed to fail in its initial goal of developing the globe, is likewise doomed to become another governmental bureaucracy that sucks up as much money as it ships overseas.  And anyone who tries to trim the bloated budget for this organization will be publicly scorned and chastised for “starving the hungry”.  The only thing that many Americans see when anyone says the term “foreign aid” is the commercial of starving children overseas.  And who would deny that child some food and clothing?  It is the job of NGOs, not the government to feed the world.  Alas, very little money from the MCA or any other government program will ever reach any starving children.  It will be siphoned off by endless streams of politicians, agencies, and other opportunists who see the chance to make a fortune for little to no effort. For example, Haiti’s economy is now in ruins, and there is no relief in sight.  The U.S. has spent around $100 million merely on the Haitian judicial system, yet it is still extremely corrupt.  When the U.S. revoked funding because of irregularities in their voting process, everything was even worse than before.

The money that started at the top of the inverted triangle fails to reach the bottom once more.  The ideology behind the MCA is to get the recipient country’s economy up and running by establishing industry and markets for export.  Now, has any government gained wealth through governmental industry and their markets?  The American dream (which is now the world’s aspiration) is one of private accomplishment.  Even in America, the history of government industries is clear.  Amtrak is the best of examples, but the U. S. Postal Service and countless others are on the list, also.  Capitalism and governmental administration do not work together; and the idea of money going through two governments is even more laughable.

Alas, at this very instant politicians, humanitarians, and now students are crying out for more and more money to be sent to help the “underdeveloped” nations of our earth that need only “a little boost”, and their markets will spring up from the ashes like a phoenix.  The UN and the rest of the world have been at it for years: there is no success in sending resources elsewhere to help total development.  The ideals of the MCA are noble and well-intentioned, but they will do little to help the nations in question.  Why should we bear needless burdens on our budget for a vain hope?  So, let us leave the humanitarian efforts to the NGO humanitarian groups, and allow our government to do its job unobstructed. 

Bibliography

“Charity Reports”. [Online] Available http://www.give.org

Questions

Q. 1  President Bush claimed that most funds for development do not come from international aid.  He mentions three things that do fund development.  What are they?

A. 1  “Contrary to popular belief, most funds for development do not come from international aid – they come from domestic capital, from foreign investment, and especially from trade.” 

Q. 2  President Bush reminded his audience that successful development in a third world country requires more than funds.  What two items did he mention in this regard?

A. 2  “Successful development also requires citizens who are literate, who are healthy, and prepared and able to work…education and health care needs.”

Q. 3  When is money sometimes counterproductive, according to President Bush?

A. 3  “When nations refuse to enact sound policies, progress against poverty is nearly impossible.  In these situations, more aid money can actually be counterproductive, because it subsidizes bad policies, delays reform, and crowds out private investment.”

Q. 4  Describe the Millennium Challenge Account and include in your description what is anticipated from donors and recipients.

A. 4  The MCA is a relatively new Bush proposal that sets out to reconstruct the world’s foreign aid program.  The money from this account is going to develop the economy, people, and overall well-being of various impoverished nations.  This new project also comes with new responsibilities for donor and recipient alike.  The wealthier donor nations are going to be expected to carry a heavier load than ever before.  Maybe more importantly, the recipient nations of the MCA will be accountable for how the money is used, and the level of corruption in their country.  The account will have the ability to revoke funding, and reinstate it if a nation recovers.  It is a new and revolutionary idea. 

Q. 5  What are the three broad standards that President Bush expects the leaders of developing nations to adopt?

A. 5  “Countries that live by these three broad standards – ruling justly, investing in their people, and encouraging economic freedom – will receive more aid from America.

Q. 6  Describe President Bush’s challenge to development banks and explain why or why not you favor it.

A. 6  “And I challenge the development banks to provide up to half of the funds devoted to poor nations in the form of grants, rather than loans.  Grants instead of loans that may never be repaid.”  I agree with President Bush in that the funding that impoverished nations receive should not be entirely loans.  If half of the funding received is in the form of grants, then these developing nations should be able to keep their debt to a minimum, while still building up alternative forms of income for its citizens.  At the same time, it would not be free money, as half of the money would still be due back to the donor nation.  This policy is definitely an improvement over the borderline loan-sharking policies of some of the world’s banks.

Q. 7  What percentage of our national income (GNP) do you think the United States government committed to foreign aid in 2002?  First answer this question and then use the Internet to find the answer.

A. 7  My guess is 3% of the GNP.  However, upon researching the topic, it is in fact around .1%.

Q. 8  Describe and defend a “Me First” attitude. (Use your head – you won’t find the answer in the required reading.)

A. 8  Many people hold the opinion that foreign aid is not worthwhile for the United States.  These people have many good points, and they do not get the publicity that the other sides get.  One argument is that our aid actually hinders the growth of more nations who receive it than it helps.  Pro-aid advocates normally point to “success stories” like South Korea and Turkey.  However, the development of these countries had little to do with our aid.  Their infrastructure was the reason that they prospered, and the money filtered down.  As Bush says, trade was the reason that these examples, South Korea in particular, developed as they did.  South Korea’s biggest help is that they trade heavily with the U.S., Japan, and other nations in the world.  And this trade stemmed from industry, and this industry was not built through foreign aid, it was built through the private investments of foreign countries (chiefly Japanese industries seeking inexpensive labor).  So, if the only way countries are going to recover is through the private sector, should not our government ease the national budget by keeping this money in the U.S.?  If the money that is going overseas was to stay in our country to help the businesses, would that not, in turn, better help the other countries indirectly?  More commerce in the United States would mean more jobs all over the world.  Also, foreign aid that is keeping reform from taking place in many semi-corrupt nations would benefit from our letting the governmental cycle run its course in each particular nation that much more quickly.  If nothing else, we would be helped, while no one would be hurt.

Q. 9  Describe and defend a “Mutual Benefit” attitude.  (Use your head – you won’t find the answer in the required reading.)

A. 9  Many people argue that the entire world will be helped when that world is on a completely stable footing.  These people argue that the only way that underdeveloped nations will catch up is through foreign aid and guidance.  The principles of the “ mutual benefit” argument compare foreign aid to everyday business investments.  If these countries progress to the point that everyone there has a little bit of free money, would they not like to buy American products?  Trade would flourish in a world in which there were just more capital. So, we would have greater trading partners, and the countries would be relatively developed.  It is a win-win situation that only needs time and money. 

Q. 10  Describe three unsuccessful foreign aid programs operated by the U.S  government or private American citizens.  (Do not use programs discussed in the testimony of Faith Action for People – Centered Development Policy included in your required reading.  Conduct your research using the Internet.  Duplicate examples from the same class will not be accepted.)

A. 10  Programs may fail for many different reasons, and often the line between success and failure is very thin, but the following programs have certain definite problems.  ACCION International has a few glaring problems.  To begin with, 40% of their funding goes to administrative functions.  This is far too much, particularly for a charity that is owned by a private organization.  Also, ACCION made over $6.8 million in excess of spending.  While a deficit is obviously bad, this much of a “profit” is not something that a charity should have.

ALM International and World Vision are two other programs that are running on deficits.  ALM International, in particular, is going rather poorly – they had a $1 million deficit and their reserves will not be able to continue in such a direction. 

Q. 11  Describe three successful foreign aid programs operated by the U.S. government or private American citizens.  (Do not use programs discussed in the testimony of Faith Action for People – Centered Development Policy included in your required reading.  Conduct your research using the Internet.  Duplicate examples from the same class will not be accepted.)

A. 11  World Concern is a successful charity that gave 90% of its incoming money to programs.  Bread for the World gave away 70%, while most of the rest was for expanding their base assets. However, the mission of Calvary Church in Muscatine, IA is what I would like to highlight.  This mission is symbolic of all the small organizations that are well run and efficient.  This group provided small-time medical help to the poor of Guatemala.

Q. 12  Steve Radelet, Senior Fellow at the Center for Global Development, believes we can do both – take care of our own people and lend a helping hand to citizens of less developed countries.  Explain why you think we can or cannot offer aid to both. 

A. 12  Can the U.S. afford to offer aid to both its citizens and help out the governments of the impoverished nations of the world?  Fiscally, yes, it is viable.  Our great capitalistic democracy generates money on all levels, and so much of this income is already negated by terrible beauracratic practices that a few more programs, even of the amount which President Bush is proposing, are not going to break the camel’s back.  However, should not the money for the MCA come from the reorganization of the current USAID programs and other foreign aid governmental agencies?  This would help deaden the blow to the budget that $5 billion would make.  Could we just heap on more and more foreign aid and get away with it?  In all likelihood, but the main point is not can we but should we.  In my opinion, the money should come from within for foreign or domestic aid, as the nation is taxed to its limit.

Q. 13  What do you think about Mr. Radelet’s assertion that “the administration is leaning towards a system in which eligible countries would write proposals (or business plans) describing their objectives and strategy, how they would use the money, the benchmarks used for evaluation.  Giving the recipient countries this responsibility is a revolutionary change in U.S. foreign assistance.”?

A. 13  I like the idea that there might be some upcoming responsibilities for the recipient nations.  I like even more the idea that all the money that goes into a nation must be accounted for.   However, I would like parameters to be set to enforce such demands.  If money that was to go to a certain place did not go there, then that nation should not receive aid from the MCA again.  These rules should be written and observed as laws, because they will soon be bent or broken if the parameters are just “observances”.  The administration’s new idea is in the right direction, but it still needs polishing.

Q. 14  Which of Mr. Radelet’s three concerns regarding the MCA concerns you and why?

1.      As more countries in this income range become eligible, there will be fewer MCA funds available for the poorest countries that are implementing sound development strategies.

2.      The make-or-break requirement may unnecessarily eliminate some countries.

3.      The separation of U.S. foreign assistance into two agencies could lead to a lack of coordination and overlapping functions.

A. 14  I believe that the third concern is the most pressing of the three.  Bush is trying to both help poor nations with all possible speed and not put a burden on our national budget.  The first two problems can be addressed later on and easily solved through tweaking or increased funding.  The third is a problem that could lead to an entire other level of beauracracy in the foreign aid programs of the American government.  Through consolidation, the amount of money that needs to be raised for the MCA would be greatly reduced.  Also, if USAID or other agencies and the MCA overlap, they could in many cases actually be counterproductive for one another.  Another main point is that if the MCA is established and underway, the government will never be able to get rid of USAID and the others.  The only chance of consolidation is beforehand.  After the MCA is underway, USAID employees will be out of a job if USAID is “consolidated” because no one will pay for another department for the MCA.  If, however, we take USAID and make it the base for the MCA, then this organization has a great head start.

Q. 15  There is evidence of an increase in negative world opinion towards U.S. foreign policy, not necessarily the American people.  To counter this negative perception of the U.S. some people want the U.S. to concentrate more on Weapons of Mass Assistance (WPA) and less on weapons of mass destruction (WMD).  Please comment.

A. 15  WMD and the so-called “WMA” are not comparable.  Their functions are entirely different.  The idea that the United States can stop spending on defense if we spend on philanthropy is not only ludicrous and illogical, but it is also suicide.  The U.S. needs defending, and part of that defense entails nuclear and other weapons.  Sending money overseas can and will not improve the world’s opinion of us –- we have already sunk billions of dollars into countless nations: Japan, France, Germany, and any number of others, and yet what are the opinions of the people of these countries?  They loathe the U.S., because it is everything they are not.  Could we bribe the members of Al-Qaida, do you suppose?  Weapons are and will always be necessary for the protection of the citizens of the United States.  Assistance cannot be a propaganda attempt to get the common people of other nations to like us.  It will never work, it is not human nature, because we will always have more than they do, and they will always resent that.  There will always be envy, and following this envy will be “negative perception”. 

Q. 16  What does the World Bank recommend as the United State’s “just and appropriate share” to reach the Millennium Development Goals by 2015?  Do you think our citizens can afford that kind of increase? 

A. 16  The World Bank is asking for $10-$15 billion annually.  Can the American people “afford” this?  Of course they can “afford” it, but they should not have to pay it.  Any foreign aid money that goes out from now on should come out of the current budget.  Taxes are strangling our economy as it is, and debt is rising to a point of no return.  Ours is a strong nation financially, but she will not stand against impossible odds.  So, yes we can afford it, but could we not also technically afford 85% taxes?  The World Bank could no doubt form an international commission and tell us that since we are so fortunate, that is our “just and appropriate share”. 

Q. 17  What do you think about the request of Faith Action for People Centered Development Policy’s request that tax dollars be used to fund not only government-sponsored foreign aid programs, but “that funds also go to NGOs and grassroots organizations.”?

A. 17  There is no better solution to the humanitarian needs of the world than to start giving government money to NGOs.  However, this is unconstitutional, as the separation of church and state would rule out all of the faith-based groups.  The other NGOs would be ridiculed by one and all if they condoned any activity or behavior at all, and soon everyone would be conforming to receive government aid.  Faith-based NGOs would soon start condoning things that were expressly forbidden in their religion just to receive government aid, just to compete.  Is it a wonderful idea?  Would it allow for maximum production?  Yes, but it would be unlawful and it would cause another entire set of problems.  Perhaps more importantly, NGOs will never get entire nations on their feet again, and that is what the MCA is all about.  So, governmental organizations are going to have to be involved. 

Q. 18  How many countries would be affected positively by health related- investments according to the Commission on Macroeconomics and Health (CMH)? 

A. 18  83 countries will be affected in a positive way.

Q. 19  According to the CMH, how much would be gained annually between 2015 and 2020 due to saved lives and increased economic growth, if an increased investment were made in global AIDS and other health services>

A. 19  An estimated $360 billion will be gained over the five year period.

Q. 20  Use the Internet for your research and name the two congressmen who introduced H.R. 4524.  Give a two line synopsis of that bill.

A. 20  The Honorable Christopher Smith and the Honorable John LaFalce introduced the bill.  In the specified brevity, the bill calls for more foreign aid for impoverished nations to help them to build up their economies and become increasingly self-sufficient. 
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