My guess they don't comprehend how big the budget is so when they hear X country got Y million dollars they do a crude estimate. Also the news talks a lot about foreign aid in terms of numbers instead of % of the budget. What makes for a better soundbite, "The US sent $10 million to Genericstan in foreign aid!" or "The US sent 0.0000025% of its budget to Genericstan in foreign aid!"? (Assuming a 4 trillion dollar budget.)
I'm not sure if it's a lack of knowledge on economics or a lack of compression when it comes to math and very big numbers. $10 million is enough for nearly any of us to live off of for the rest of our lives, but it's just 0.0000025% of a $4 trillion budget. Many people just can't wrap their heads around that. People act like spending a few hundred thousand on an unusual scientific research project is a huge waste then support a voluntary war that cost more than the amount spent on that one research project squared.
Saying its 26% might just mean people are counting our defense spending as part of our foreign aid (because it is). Billions are given in foreign aid through the military and not counted by the CBO as foreign aid.
Foreign aid is often not intended to "help" but to create dependencies. If the western countries would want to help, they would abolish the old (mostly colonial) debts of the developing countries, the protectionism and the subsidies. But they don't. They want to keep the developing countries depended on them. Developing countries have nearly no power in the so highly praised international organizations like the IMF, the World bank, the World Trade Organization or the UN. I'm not saying that foreign aid is bad over all. Trying to improve the medical situation is noble and works. Trying to improve the education is noble and works. Saying that countries have to enforce human rights but then have the dead penalty and lock up people in prison without a proper lawsuit is hypocritical and bigoted. Forcing other countries to adept democracy without democrats is not working, take a look at Germany after 1918.
This episode, more than any other in the series so far, reminded me of a joke my high school economics teacher liked to tell. "You put 5 economists in a room with a problem, they'll leave the room with 6 solutions."
1949 George Marshall Plan for foreign aid programs Remittances: money sent back to their families, positive effect in receiving country Nonprofit organizations: provide humanitarian aid - private foundations
that's what I was thinking! The boosts to the foreign relations far outway the damage to the patriot voter base. Oh, wait, I was thinking in Democracy 3. Oh well.
It's alright. I never played without the expansion on, so I might be wrong, but it just adds a new element to the game. Such as increased automation in the factories and new scientific policies you can implement. I have a question for you though. How is it possible, when I have everyone in the green or yellow, to hate me and have me lose to election. I'm still trying to figure that out.
Turnout? You also have to watch the membership of groups, you can check that effect on policies. Also, are you talking about the group "everyone" or about like every individual interest group?
Less than 10 % of foreign aid actually reaches its destination. And some times that destination is the company itself, and their effort to "help" the country in question comes secondary to making money and financial growth. Always be wary when international organisations hire PR agencies and former politicians to act as advisors.
Yeah... It's about the best investment... Pay a single percentage of the national budget to go to MARS... And afterwards we're kicked ahead on the tech tree by a decade. Who on earth thinks that's a bad idea?
Anyone interested in the general point she was making at the end should look up the Effective Altruism movement. It's probably not everyone's cup of tea, but it's certainly very interesting stuff.
I agree on the Remittances thing, in our country a significant portion of the GDP comes from Remittances, so a large number of people here study so they can work abroad. When a large number of skilled people leave, it takes toll on the infrastructure of the country.
***** Not from the US. People who leave for US are usually already finished studying. I'm talking about Brain Drain. I think you're barking up the wrong tree if you're complaining about accepting foreign students.
great video!!! I wish there was a little more on what's broken in the aid system. what I mean is that charities are disincentivized to acknowledge failure, both to the public and themselves. They are always hunting donations and that can cause problems, like where an aid worker in Africa is measured on how quickly they deliver a donor soccer ball to the intended child and get a photo to send back to the sponsors in the states. A lot of charities focus on how many cents per dollar donated are spent "on the ground", when in reality, a charity spending $0.45/$1 effectively is a lot more useful than a charity spending $0.95/$1 ineffectively. Charities tend to focus on technological fixes, which are sexy to donors here, but are not all that great when they arrive in the intended country. An example I saw while living in Zambia: a wonderful solar stove was being promoted in villages to save the trees and time for women collecting firewood. It sounded like a great idea! It was a black pot in a large clear bag with a solar reflector. The problem was that the staple food, and by that I mean the food eaten at literally every meal of the week except breakfast, is a thick porridge that requires constant stirring. You can't stir the pot if it's tied up in a solar bag and the solar bag doesn't work if it's open. Complete and total failure, that will never be reported on because that would get the charity less donations. A broken system.
This video could've talked about so much more. For example the fact that most of the 'aid' is in the form of interest bearing loans that trap poor nations in an endless cycle of debt. Or the fact that there's many restrictions on the aid. For example the US gave africa some aid to buy planes I think it was but they had to buy them from a US company so really it was a giveaway to American corporations.
Speaking of corruption and Foreign Aid, I did heard it from my dad. Not only that even lack of basic common sense or technical knowledge even hurt them. Like one town received a UN Road to alleviate traffic jams by making alternate route via Highway. The town decided to have an idiotic decision by moving their entire town to that road and got another traffic jams.
I looked at the Marshall plan (assuming that's what you're talking about) at university. It is more complicated than made out here (I'm British so we relied on it a lot) but it definitely had an impact. Of course there were other factors and changes in focus of the economy as well as tighter relations in Western Europe but it was a pretty good Kickstarter. The end of the war negatively affected many of the countries since their whole economies were geared towards it and the return of male soldiers put women out of work, reducing incomes in certain families. It's a very complicated subject and open for debate which wouldn't have worked in this video.
Great video. Just one error that I would like to point out. Both the IOK and the whole of north east India were omitted from the map of India. The north-east isn't even disputed. Please do take a look. Also, could the econ lessons get a more international perspective.
There's a thin line between helping and encouraging dependency. For example, as she said, you wouldn't want to send food to a country where the food market is starting to grow, nor would you want to send sneakers, clothes and so on. It's seems tough and radical, but in the end you're doing them -and this will sound ultra cynical- a favor. On the other hand, healthcare and education aid can help foster the country's IDH to an amazing extent. This is really a case by case isssue.
Thank you for posting the hard questions! It's difficult to talk about these things without trying to take a hard position on it. These are truly grey areas of economics that don't get enough attention.
Remember: poor countries are not just composed of kids (unlike the marketing of some NGO may let you think). Those countries are led by *adults*, so patronizing them will *not* work. You can only bring the help they are willing to receive, but only them can change their country.
In my country few years ago we had devestating floods. A farmer from south, which was not affected by flood could not sell his harvested crops and other food for profit, so he wanted to donate it to red cross, to redistribute it to those who were affected. He called them and they said - ok, we would take it, just organise and pay for transport of those good (which he had several tens of tonnes) to our central, which was about 300km form place he lived. All that food eneded up rotting away by the road. Huge pile of food.
I would have guessed that foreign aid was closer to 0.2%, but still think that is too much. This is mostly because our foreign aid is not truly aimed at improving life for the common people throughout the world, but consists of bribes intended to keep the power elites in strategic regions loyal to our government. Much of the foreign aid is actually corporate welfare given to the military industrial complex. That would be bad even if it was just a direct subsidy, but giving US companies money to supply arms to tyrants is much worse. Even the well intended aid often has bad unintended consequences. It often favors the sort of economic development that empowers landlords to evict their poorer tenants, making life better for a few but worse for far more. This sort of geo-gentrification leads to the growth of the kinds of slums that give rise to terrorists. Often US aid is in the form of matching funds, which require the local government to also tax its own people in order to fund certain services. The forms of taxation they choose often has deadweight losses that exceeds the benefits of the programs, especially when you consider the corruption common among administrators. Some foreign aid is in the form of loan guarantees, which are a subsidy to our financial industry which enables foreign governments to go deeper in to debt than they would otherwise.
Nepal has been remittance dependent since last 15 year. The results are good for people but. export deficit is stupendous.Food independence has been decreasing.Private Education has grown.
1% is not small at all. at least when you consider that education & healthcare are 6% each. so it's 1/6 of of whats spend on say education... it's also 1/54 of what is spend on military though. compared to that it's small. tough education spending is also just 1/9 of military spending.
I have a question. It might be better to ask in the gaming videos, but I feel that it's related to economics more. What do you call the in-game currency of games like MMO's? Fiat, Commodity, or Representative?
I don't like it when charities and non-profits keep sending you junk mail and "gifts" (address labels, calendars, etc) along with requests for money. It makes me feel like they're spending more on the mail than the charity's mission. I stopped contributing to the ASPCA for that reason some years ago (and I STILL get mail from them). When it doubt, go local. I think my money is better used by my local animal rescue than a national one.
They spend that money because it is cost effective -- it makes them more money in donations than they spend. Without that advertising, which I agree is annoying, they would be doing less good.
you do know that sending an email is free, right? making a good looking email takes one or two hours at most for a proffesional. making the cost at most a few hundred dollars.
***** pressing 'send' costs about 1 second and the power for sending an email costs a few dollars. every email sent by an EU or USA organization must include, at the end of that email, the option to unsubscribe. stop complaining, press that button. letting you do it instead of doing it themselves is very cost effective.
The following two organizations recommend charities based on how much good they do per dollar: www.givewell.org/charities/top-charities www.givingwhatwecan.org/top-charities/
I do question the 1% figure. That is what the government claims is spent on foreign aid, but I remember a Politico article that showed, just in the military budget, hidden aid to foreign countries that amounted to something like 2-3% of the total budget on its own.
IMO a lot of defense is technically foreign aid because our troops in bases on their soil spend money over there and provide other services, at the same time allowing their govts. to spend less on their millitaries...
Here's what I would say if I was doing an interview about foreign aid: Me: We should give more to foreign aid, but we should make sure it isn't stolen by corrupt dictators. Interviewer: Why should we give more? To be nice? Me: Not really. Because we should make the world a better place. Interviewer: Why should we make the world a better place? Me: Because it's a goal worth having, and if you don't have a goal worth having then why are you even alive? Half your motivation for getting out of bed in the morning is gone.
Yeah because the US invading Afghanistan is foreign aid. Jokes aside, while some of US military spending can be considered foreign aid, most of it would be going to advancing the goals of the US (such as national security)
I don't think this video has done enough to show what a failure foreign aid has been in the last 70 years. For one thing, helping the recipient country is often not even the primary intention of foreign aid. For example, looking at historical trends with food aid, you will find that Food Aid often goes up when cost of food drops and aid will go down when food costs goes up. This is opposite from what would seem reasonable. Why would you decrease food aid when cost of food is up and people are having trouble buying food? It is because food aid is most often used as a method of economic regulation. When food costs are high, it is worth more to sell food on the market. While when food costs are low, giving food aid will lower supply for food and help bring back up cost. Similarly, much of foreign aid is not money but in-kind services. The US doesn't give money for computers as foreign aid; it buys computers from Microsoft to donate. While this type of aid helps in building up infrastructure, it is vastly inferior to actually injecting money into developing economies. In fact, some humanitarian groups have started using a new measure of efficiency for their work: "Is the money used for our programs more effective in our programs, or would it be more effective being thrown out a plane window?" No it's not facetious. Direct cash injections have been shown to be far superior to most other forms of aid, but its use is almost non-existent. Instead we get steady streams of Structural Adjustment Loans from the World Back and IMF, designed to change the recipient's domestic economy to get it ready for the international free market. They do this by making this development aid contingent on removing tariffs, deregulating industries, privatizing public goods and services But these plans have failed. In almost every single case, structural adjustment plans have failed with the exception of Singapore. There is very little statistical evidence that this form of aid has led to any significant economic growth above what would have happened regardless. And those studies that do show benefit usually crumbles under further scrutiny. These plans have failed because they make the mistake of assuming recipient countries are the same as the experience of those countries doing the giving. Each country has its own set of cultural and political realities that must all be satisfied in the transition to the open market system. But our current model of foreign aid for promotion of economic growth assumes the same prescription of top down approaches will yield market results and they DO NOT. Don't get me wrong, there have been some fantastic developments that have occurred because of international aid work: The eradication of TB and small pox, or the success of the Grameen Bank are great examples. But speaking as someone who has worked in foreign aid for many years, the vast majority of foreign aid does very little to help development. And much of the good that DOES happen, happens because of aid workers at the bottom of the totem pole ignoring orders from above and doing just what needs to be done. I'll give one final example. I once met a Tanzanian nurse working in a Maasai community. She ran a maternal health clinic in the rural community funded by the national government. She was only in the community to provide maternity health services. But the Maasai did not come to her for maternal health. The Maasai have very private cultural rituals around birth and pregnancy, none of which can be satisfied by giving birth in a clinic. So for 3 years this clinic ran without a single client. And so what did the nurse do? She started offering other services, unsanctioned by the funders. She fixed broken bones, dealt with alcohol poisonings, and whatever other issues arose. And she forged reports outlining the maternal health cases she definitely was seeing to explain her use of supplies. In so many cases I see front-line workers making up stories to cover up the work they were actually doing. Lying about how many cases of Malaria was being seen to make sure flow of money and medications did not stop.
Are there other stories that you could share? Because I feel like I was beginning to read a book, not a youtube comment and I am curious about a non-minimalist approach to foreign aid. As you've said, foreign aid has failed quite a lot, but not because the idea of the service was bad, but because the system was immature and ineffective or because micro-political transactions were taking place (I hope I have not misinterpreted anything). And I would like to discern what works from what doesn't, should I ever play a role in deciding over such issues.
I highly recommend the book "The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good" by William Easterly. It gives a fantastic analysis that I agree with whole heartedly. The gist is that development has to come from grassroots innovation. Outsiders coming in can never understand the fabric of society well enough to institute change in a way that makes sense in local conditions. As foreign aid workers our jobs are to seek out innovators in developing countries and support growth, rather than driving growth from a top down approach. For aid workers from the Global North, we have to accept that development will not look like how development happened in our own countries. And we have to be mindful of our role in shaping development, particularly in terms of funding. An example, several years ago I worked for an organization that was trying to drive development in the sectors of Health and/or the Environment. We asked local partner organizations in the countries we worked in to develop programs in these sectors and submit proposals. But we were forced to be so stringent with our proposal demands (by our own need to be accountable to our funders) that many groups submitted programs that they thought we would like to see, rather than programs they wanted for themselves. In the end, out of 15 approved projects, upon evaluation only 2 or 3 of them had achieved any real results. In the above example, everyone is acting rationally. We needed to ask for details in their proposals and so we asked for the proposals in a format that gave us information we would usually like to see. But in doing so we led our partners too closely down the path of the programming we generally like to see. And on their end, they were incentivized to give us what they thought we wanted because if we didn't like what we saw, we might not have approved their project for funding to begin with. But in the end for many of these projects the only real benefit given was by the employment these programs provided for their duration. This is the real catch 22. We need programs that are accountable to the people being served (the populations in these developing countries), but as long as it is Western funders that hold the purse strings, it will be hard for any aid work to engage in a meaningful way. There are some ways to avoid this trap. For example, you can charge a small fee for services rendered. By charging a nominal fee, not only do you increase value in the eyes of the client, you also create an entitlement. People will demand quality if they have to pay for it. A great example of this is the Aravind Eye Hospitals in India. A doctor there invented a cheap, non-invasive method to treat cataracts. The hospitals provide surgeries for a cost and for free on a sliding scale. This way each hospital must continue to provide quality service due to customer demand, but even those who cannot afford anything can access the service.
Was there a discussion of loan repayments? In particular the interest? How much money are poor countries (what percent of their GDP) are they spending on loan repayments?
Compare the percentages of the u.s and Sweden, and then compare the actual number of what is given. A larger economy applying lower percentages is still giving a massive amount because well it's a larger economy.
Yeah, and by that standard, the US and China is the worst or the best in almost every category, depending on if the subject of the category is good or bad. That's why in statistics, to compare you always use "per capita" or "percent of gdp" or something similar. Look at an example, energy: Renewable energy produced/consumed or Fossile energy produced/consumed. US and China is always top two, but when it comes to energy per capita or energy as a percentage of GDP, you see the real story. Still topping the oil consumption though.
The problem here is there are people starving in the United States this is why foreign aid needs to go and use to take care of people in the United States instead of other countries.
If you helped as a laborer you would be taking a job from someone on the country and your help would in the end worsen the situation, the idea of a donation is not you giving people money for nothing, it's more in line with the organizations spending that money, to, for example, build a new building there and hire a ton of construction workers and with tha stimulate the local economy. Its the reason why most time serious charity groups prefer if you donate money (so they can make use of the local industries) then for example send food, most of witch gets tossed out because they DONT have time to reach the needed before expiration date, or sending clothes, that wreck the local industry. With money you can buy the food, clothes and whatever from local producers stimulating them to actually produce more and stabilizing the local economy. Just make sure the opnes receiving your money KNOW how to use it.
"if you helped as a laborer you would be taking a job from someone on the country" ...not. Unlike what the thousand-times-debunked wage fund theory suggests, the economy is not a zero-sum game. I'm pretty sure this was covered literally in the previous episode too...
in one hour you can do one hour of labour in that country in your country, one hour of labour easily pays for several workers in poor countries. work in your own country to pay for foreigner to work in your stead.
I have a Question Since you said the financial aid is given more to countries where the donor can make less restrictions for trade which will be done mostly on the natural resources of the recipient ( for which the recipient will lack money to make use of those resources) Isn't the foreign aid is a type of bribe ( since most of it is been used up the corrupt leaders of the recipient state) and also in turn gives the donor state to stay more economical better than recipient while using there natural resources.
TIED AID At 5:20 you state that there is a positive correlation between the levels of aid and levels of trade between two countries. There is also an insinuation that this is a positive thing--which would come close to arguing for tied aid (the administering of aids with stipulations such as that money must be spent on companies from the donor country or on ventures that the donor country has an interest in). Studies have repeatedly shown that tied aid forces capital to be used in a way that disregards how the actual recipient believes money would be best spent. * [Scenario 1] Donor wants an iconic creation. Eg, bridge, airport, etc. Recipient says there are other infrastructure projects (eg, roads, water) that are a higher-priority but, since they are beholden to the donor, the less-useful iconic project is what gets built. * [Scenario 2] Donor wants materials or equipment to be purchased from company XYZ (which is based in the donor country). Recipient says that they can buy that good (or a substitute) for half the price but, since they are beholden to the donor, they are forced to give half of their 'aid' to company XYZ for an over-priced product. Great series and I'd love to see a further exploration of the economics of aid/development :)
The argument that foreign aid is only 1% of the budget ignores the fact that that's just the part of the budget actually called " foreign aid ". For example at least half our military spending is actually foreign aid. We certainly don't benefit from it.
I thought maybe part of it was to keep people stable in their countries and to help avoid too many people crashing other countries. At least it makes sense to do so.
I wish we'd use more of our foreign aid to tie these other countries closer to the United States, and not just throw it to societies which aren't friendly to us.
the fees for sending remittances back home shouldn't go to private bankers. governments should do agreements for such transactions and senders should pay a tax instead of the fee for sending local money out of the country's circulatory system.
Some of the American foreign aid is even destructive. Giving away an agricultural surplus away for free might sound like a great idea - but... Leading the receiver pay for shipment and destroying the local agricultural production by this unfair competition is not. And it get really worse, when the local agricultural production is whipped out and the US does not have a surplus.
The percentage of the national budget is a problematic description of how much foreign aid a country gives. The most common yardstick, used by both countries, international organizations, NGO's etc. is the percentage of the country's Gross National Income, GNI. All the member states of the OECD has promised to give at least 0.7% of GNI to foreign aid. As you showed at 1:20 the US only gives about 0.2% of GNI in foreign aid, far below what they have promised. If all developed countries gave at least 0.7% the amount of foreign aid would be enough to save millions more lives.
You didn't talk about how in the European Union money is transferred from richer countries like the UK and Germany to poorer countries, could that not be considered a form of foreign aid?
Well the amount could be considered a bit higher if one includes military bases and training in allied nations. But regardless of what the percentage is, even 1% is a significant amount of money given the sheer amount of money passing through the government. This is money that could be spend on aiding the people paying into it. The government shouldn't send it's taxpayers' money abroad when citizens themselves face tremendous issues. This money should go towards the citizens first.
How does one get to the assumption that 26% of the budget goes to foreign aid? How misinformed does one have to be?
exactly.
I don't know. Look at Trump's supporters to find out.
My guess they don't comprehend how big the budget is so when they hear X country got Y million dollars they do a crude estimate. Also the news talks a lot about foreign aid in terms of numbers instead of % of the budget. What makes for a better soundbite, "The US sent $10 million to Genericstan in foreign aid!" or "The US sent 0.0000025% of its budget to Genericstan in foreign aid!"? (Assuming a 4 trillion dollar budget.)
I'm not sure if it's a lack of knowledge on economics or a lack of compression when it comes to math and very big numbers. $10 million is enough for nearly any of us to live off of for the rest of our lives, but it's just 0.0000025% of a $4 trillion budget. Many people just can't wrap their heads around that. People act like spending a few hundred thousand on an unusual scientific research project is a huge waste then support a voluntary war that cost more than the amount spent on that one research project squared.
Saying its 26% might just mean people are counting our defense spending as part of our foreign aid (because it is). Billions are given in foreign aid through the military and not counted by the CBO as foreign aid.
Foreign aid is often not intended to "help" but to create dependencies. If the western countries would want to help, they would abolish the old (mostly colonial) debts of the developing countries, the protectionism and the subsidies. But they don't. They want to keep the developing countries depended on them.
Developing countries have nearly no power in the so highly praised international organizations like the IMF, the World bank, the World Trade Organization or the UN.
I'm not saying that foreign aid is bad over all. Trying to improve the medical situation is noble and works. Trying to improve the education is noble and works.
Saying that countries have to enforce human rights but then have the dead penalty and lock up people in prison without a proper lawsuit is hypocritical and bigoted. Forcing other countries to adept democracy without democrats is not working, take a look at Germany after 1918.
This episode, more than any other in the series so far, reminded me of a joke my high school economics teacher liked to tell.
"You put 5 economists in a room with a problem, they'll leave the room with 6 solutions."
"... Corrupt leaders" shows picture of mugabe 😂😂😂😂 brilliant
"Countries with corrupt leaders" shows picture of Robert Mugabe. Nailed that one right in the head
I think people need to realize this is about the economics of foreign aid , not the politics behind it .!
how are they mutually exclusive?
1949 George Marshall Plan for foreign aid programs
Remittances: money sent back to their families, positive effect in receiving country
Nonprofit organizations: provide humanitarian aid
- private foundations
26 percent? yall need to play democracy 3
Is "clones and drones" worth it? Extremism and social engineering were great.
that's what I was thinking! The boosts to the foreign relations far outway the damage to the patriot voter base. Oh, wait, I was thinking in Democracy 3. Oh well.
Also u gotta stop that cyber warfare *WINK WINK China
It's alright. I never played without the expansion on, so I might be wrong, but it just adds a new element to the game. Such as increased automation in the factories and new scientific policies you can implement.
I have a question for you though. How is it possible, when I have everyone in the green or yellow, to hate me and have me lose to election. I'm still trying to figure that out.
Turnout? You also have to watch the membership of groups, you can check that effect on policies. Also, are you talking about the group "everyone" or about like every individual interest group?
Less than 10 % of foreign aid actually reaches its destination. And some times that destination is the company itself, and their effort to "help" the country in question comes secondary to making money and financial growth. Always be wary when international organisations hire PR agencies and former politicians to act as advisors.
Only 0.5% of the budget goes to fund NASA. I think we need to spend more on scientific research.
Yeah... It's about the best investment... Pay a single percentage of the national budget to go to MARS... And afterwards we're kicked ahead on the tech tree by a decade. Who on earth thinks that's a bad idea?
Or to get rid of carbon(in the atmosphere).
Anyone interested in the general point she was making at the end should look up the Effective Altruism movement. It's probably not everyone's cup of tea, but it's certainly very interesting stuff.
I agree on the Remittances thing, in our country a significant portion of the GDP comes from Remittances, so a large number of people here study so they can work abroad. When a large number of skilled people leave, it takes toll on the infrastructure of the country.
***** Not from the US. People who leave for US are usually already finished studying. I'm talking about Brain Drain. I think you're barking up the wrong tree if you're complaining about accepting foreign students.
great video!!! I wish there was a little more on what's broken in the aid system. what I mean is that charities are disincentivized to acknowledge failure, both to the public and themselves. They are always hunting donations and that can cause problems, like where an aid worker in Africa is measured on how quickly they deliver a donor soccer ball to the intended child and get a photo to send back to the sponsors in the states. A lot of charities focus on how many cents per dollar donated are spent "on the ground", when in reality, a charity spending $0.45/$1 effectively is a lot more useful than a charity spending $0.95/$1 ineffectively.
Charities tend to focus on technological fixes, which are sexy to donors here, but are not all that great when they arrive in the intended country. An example I saw while living in Zambia: a wonderful solar stove was being promoted in villages to save the trees and time for women collecting firewood. It sounded like a great idea! It was a black pot in a large clear bag with a solar reflector. The problem was that the staple food, and by that I mean the food eaten at literally every meal of the week except breakfast, is a thick porridge that requires constant stirring. You can't stir the pot if it's tied up in a solar bag and the solar bag doesn't work if it's open. Complete and total failure, that will never be reported on because that would get the charity less donations. A broken system.
This video could've talked about so much more. For example the fact that most of the 'aid' is in the form of interest bearing loans that trap poor nations in an endless cycle of debt. Or the fact that there's many restrictions on the aid. For example the US gave africa some aid to buy planes I think it was but they had to buy them from a US company so really it was a giveaway to American corporations.
Speaking of corruption and Foreign Aid, I did heard it from my dad. Not only that even lack of basic common sense or technical knowledge even hurt them. Like one town received a UN Road to alleviate traffic jams by making alternate route via Highway. The town decided to have an idiotic decision by moving their entire town to that road and got another traffic jams.
Couldn't you attribute the GNP growth to the fact that there was no more war. Rather than our foreign aid.
I looked at the Marshall plan (assuming that's what you're talking about) at university. It is more complicated than made out here (I'm British so we relied on it a lot) but it definitely had an impact. Of course there were other factors and changes in focus of the economy as well as tighter relations in Western Europe but it was a pretty good Kickstarter. The end of the war negatively affected many of the countries since their whole economies were geared towards it and the return of male soldiers put women out of work, reducing incomes in certain families. It's a very complicated subject and open for debate which wouldn't have worked in this video.
no.
Yes! Norway got noticed. Second most foreign as % of GDP.
ya i saw ireland at no 6!go us! :-)
+TankT9 But it's cold there
+Anthony Hutchinson Yeah we're pretty good at helping others, even when we don't have it so good ourselves.
Great video. Just one error that I would like to point out. Both the IOK and the whole of north east India were omitted from the map of India. The north-east isn't even disputed. Please do take a look. Also, could the econ lessons get a more international perspective.
This is the only non-linear Crash Course.
There's a thin line between helping and encouraging dependency. For example, as she said, you wouldn't want to send food to a country where the food market is starting to grow, nor would you want to send sneakers, clothes and so on. It's seems tough and radical, but in the end you're doing them -and this will sound ultra cynical- a favor.
On the other hand, healthcare and education aid can help foster the country's IDH to an amazing extent.
This is really a case by case isssue.
Thank you for posting the hard questions! It's difficult to talk about these things without trying to take a hard position on it. These are truly grey areas of economics that don't get enough attention.
Remember: poor countries are not just composed of kids (unlike the marketing of some NGO may let you think). Those countries are led by *adults*, so patronizing them will *not* work.
You can only bring the help they are willing to receive, but only them can change their country.
*insert statement that offends 99.999% of internet users*
You telling me this video isn't biased?
+Peardude89 it's honestly not .youre just angry that the truth supports the lefts views on certain things .
4:47 Funny! “For peace”
If only this video came out 3 weeks ago when I was doing my essay on the effectiveness on aid
That John Clifford picture at the back though
In my country few years ago we had devestating floods. A farmer from south, which was not affected by flood could not sell his harvested crops and other food for profit, so he wanted to donate it to red cross, to redistribute it to those who were affected.
He called them and they said - ok, we would take it, just organise and pay for transport of those good (which he had several tens of tonnes) to our central, which was about 300km form place he lived.
All that food eneded up rotting away by the road. Huge pile of food.
Foreign Aid problems? Now I am thinking of the Anthony Bourdain No Reservations episode in Haiti
I would have guessed that foreign aid was closer to 0.2%, but still think that is too much. This is mostly because our foreign aid is not truly aimed at improving life for the common people throughout the world, but consists of bribes intended to keep the power elites in strategic regions loyal to our government.
Much of the foreign aid is actually corporate welfare given to the military industrial complex. That would be bad even if it was just a direct subsidy, but giving US companies money to supply arms to tyrants is much worse.
Even the well intended aid often has bad unintended consequences. It often favors the sort of economic development that empowers landlords to evict their poorer tenants, making life better for a few but worse for far more. This sort of geo-gentrification leads to the growth of the kinds of slums that give rise to terrorists.
Often US aid is in the form of matching funds, which require the local government to also tax its own people in order to fund certain services. The forms of taxation they choose often has deadweight losses that exceeds the benefits of the programs, especially when you consider the corruption common among administrators.
Some foreign aid is in the form of loan guarantees, which are a subsidy to our financial industry which enables foreign governments to go deeper in to debt than they would otherwise.
Can you talk about repair payments? And economy right AFTER a war?
Nepal has been remittance dependent since last 15 year. The results are good for people but. export deficit is stupendous.Food independence has been decreasing.Private Education has grown.
Thank you for another great unbiased video.
1% is not small at all. at least when you consider that education & healthcare are 6% each. so it's 1/6 of of whats spend on say education...
it's also 1/54 of what is spend on military though. compared to that it's small. tough education spending is also just 1/9 of military spending.
I have a question. It might be better to ask in the gaming videos, but I feel that it's related to economics more.
What do you call the in-game currency of games like MMO's? Fiat, Commodity, or Representative?
Adrian Hill was on Marketplace, filling in for Ky Rizdol!
Adrian you are both Smart and a good teacher
I don't like it when charities and non-profits keep sending you junk mail and "gifts" (address labels, calendars, etc) along with requests for money. It makes me feel like they're spending more on the mail than the charity's mission. I stopped contributing to the ASPCA for that reason some years ago (and I STILL get mail from them). When it doubt, go local. I think my money is better used by my local animal rescue than a national one.
They spend that money because it is cost effective -- it makes them more money in donations than they spend. Without that advertising, which I agree is annoying, they would be doing less good.
you do know that sending an email is free, right?
making a good looking email takes one or two hours at most for a proffesional. making the cost at most a few hundred dollars.
They're not getting any more of my money yet they keep sending me junk mail. How is that cost effective?
No email is not free. It costs time and power that other people have to pay for.
***** pressing 'send' costs about 1 second and the power for sending an email costs a few dollars.
every email sent by an EU or USA organization must include, at the end of that email, the option to unsubscribe. stop complaining, press that button.
letting you do it instead of doing it themselves is very cost effective.
Isn't there a publication "gift giver's guide" which details how much money actually gets through to the folks who need it?
Considering Macroeconomics concepts, can a large amount of remittances cause inflation in a small country ?
Anybody know where Clifford went?
Canada, to write some textbook
THE WORM WAS THAT REALLY NECESSARY
The following two organizations recommend charities based on how much good they do per dollar: www.givewell.org/charities/top-charities www.givingwhatwecan.org/top-charities/
I do question the 1% figure. That is what the government claims is spent on foreign aid, but I remember a Politico article that showed, just in the military budget, hidden aid to foreign countries that amounted to something like 2-3% of the total budget on its own.
IMO a lot of defense is technically foreign aid because our troops in bases on their soil spend money over there and provide other services, at the same time allowing their govts. to spend less on their millitaries...
I guess you could count NATO as foreign aid, but its generally a net benefit to all countries involved
please talk about rescource-base economie!!! TZM
Here's what I would say if I was doing an interview about foreign aid:
Me: We should give more to foreign aid, but we should make sure it isn't stolen by corrupt dictators.
Interviewer: Why should we give more? To be nice?
Me: Not really. Because we should make the world a better place.
Interviewer: Why should we make the world a better place?
Me: Because it's a goal worth having, and if you don't have a goal worth having then why are you even alive? Half your motivation for getting out of bed in the morning is gone.
8:16 that's the most inaccurate map of India I've ever seen.
I can see why you would choose who to help. helping others can be a dangerous thing.
yes we are overspending on foreign ade... we should spend it on space
...i have a lot of it 4 sale..how much you wanna buy?...
or on cars
neonlent that settles it..space cars then!
+Yo ski that already exist, it's called a Tesla, and it can even land on water!
Yo ski ...meet george jeston....
I am from Nepal and not really happy about quarter of our GDP being from the remittance 😭
Economics ko exam ma aako hola yo herna 😂
I dont think that survey is reputable, military intervention could also be seen as foreign aid.
Yeah because the US invading Afghanistan is foreign aid.
Jokes aside, while some of US military spending can be considered foreign aid, most of it would be going to advancing the goals of the US (such as national security)
This was great, Thanks!
I don't think this video has done enough to show what a failure foreign aid has been in the last 70 years.
For one thing, helping the recipient country is often not even the primary intention of foreign aid. For example, looking at historical trends with food aid, you will find that Food Aid often goes up when cost of food drops and aid will go down when food costs goes up. This is opposite from what would seem reasonable. Why would you decrease food aid when cost of food is up and people are having trouble buying food? It is because food aid is most often used as a method of economic regulation. When food costs are high, it is worth more to sell food on the market. While when food costs are low, giving food aid will lower supply for food and help bring back up cost.
Similarly, much of foreign aid is not money but in-kind services. The US doesn't give money for computers as foreign aid; it buys computers from Microsoft to donate. While this type of aid helps in building up infrastructure, it is vastly inferior to actually injecting money into developing economies. In fact, some humanitarian groups have started using a new measure of efficiency for their work: "Is the money used for our programs more effective in our programs, or would it be more effective being thrown out a plane window?" No it's not facetious. Direct cash injections have been shown to be far superior to most other forms of aid, but its use is almost non-existent.
Instead we get steady streams of Structural Adjustment Loans from the World Back and IMF, designed to change the recipient's domestic economy to get it ready for the international free market. They do this by making this development aid contingent on removing tariffs, deregulating industries, privatizing public goods and services But these plans have failed. In almost every single case, structural adjustment plans have failed with the exception of Singapore. There is very little statistical evidence that this form of aid has led to any significant economic growth above what would have happened regardless. And those studies that do show benefit usually crumbles under further scrutiny.
These plans have failed because they make the mistake of assuming recipient countries are the same as the experience of those countries doing the giving. Each country has its own set of cultural and political realities that must all be satisfied in the transition to the open market system. But our current model of foreign aid for promotion of economic growth assumes the same prescription of top down approaches will yield market results and they DO NOT. Don't get me wrong, there have been some fantastic developments that have occurred because of international aid work: The eradication of TB and small pox, or the success of the Grameen Bank are great examples. But speaking as someone who has worked in foreign aid for many years, the vast majority of foreign aid does very little to help development. And much of the good that DOES happen, happens because of aid workers at the bottom of the totem pole ignoring orders from above and doing just what needs to be done.
I'll give one final example. I once met a Tanzanian nurse working in a Maasai community. She ran a maternal health clinic in the rural community funded by the national government. She was only in the community to provide maternity health services. But the Maasai did not come to her for maternal health. The Maasai have very private cultural rituals around birth and pregnancy, none of which can be satisfied by giving birth in a clinic. So for 3 years this clinic ran without a single client. And so what did the nurse do? She started offering other services, unsanctioned by the funders. She fixed broken bones, dealt with alcohol poisonings, and whatever other issues arose. And she forged reports outlining the maternal health cases she definitely was seeing to explain her use of supplies. In so many cases I see front-line workers making up stories to cover up the work they were actually doing. Lying about how many cases of Malaria was being seen to make sure flow of money and medications did not stop.
Are there other stories that you could share? Because I feel like I was beginning to read a book, not a youtube comment and I am curious about a non-minimalist approach to foreign aid. As you've said, foreign aid has failed quite a lot, but not because the idea of the service was bad, but because the system was immature and ineffective or because micro-political transactions were taking place (I hope I have not misinterpreted anything). And I would like to discern what works from what doesn't, should I ever play a role in deciding over such issues.
I highly recommend the book "The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good" by William Easterly. It gives a fantastic analysis that I agree with whole heartedly.
The gist is that development has to come from grassroots innovation. Outsiders coming in can never understand the fabric of society well enough to institute change in a way that makes sense in local conditions. As foreign aid workers our jobs are to seek out innovators in developing countries and support growth, rather than driving growth from a top down approach.
For aid workers from the Global North, we have to accept that development will not look like how development happened in our own countries. And we have to be mindful of our role in shaping development, particularly in terms of funding. An example, several years ago I worked for an organization that was trying to drive development in the sectors of Health and/or the Environment. We asked local partner organizations in the countries we worked in to develop programs in these sectors and submit proposals. But we were forced to be so stringent with our proposal demands (by our own need to be accountable to our funders) that many groups submitted programs that they thought we would like to see, rather than programs they wanted for themselves. In the end, out of 15 approved projects, upon evaluation only 2 or 3 of them had achieved any real results.
In the above example, everyone is acting rationally. We needed to ask for details in their proposals and so we asked for the proposals in a format that gave us information we would usually like to see. But in doing so we led our partners too closely down the path of the programming we generally like to see. And on their end, they were incentivized to give us what they thought we wanted because if we didn't like what we saw, we might not have approved their project for funding to begin with. But in the end for many of these projects the only real benefit given was by the employment these programs provided for their duration.
This is the real catch 22. We need programs that are accountable to the people being served (the populations in these developing countries), but as long as it is Western funders that hold the purse strings, it will be hard for any aid work to engage in a meaningful way. There are some ways to avoid this trap. For example, you can charge a small fee for services rendered. By charging a nominal fee, not only do you increase value in the eyes of the client, you also create an entitlement. People will demand quality if they have to pay for it.
A great example of this is the Aravind Eye Hospitals in India. A doctor there invented a cheap, non-invasive method to treat cataracts. The hospitals provide surgeries for a cost and for free on a sliding scale. This way each hospital must continue to provide quality service due to customer demand, but even those who cannot afford anything can access the service.
When we studied charities in my health econ classes I believe I hit maximum jadedness
"Foreign aid transitioned from geopolitical... to sending aid to strategic partners like Israel"
Yeah that's not geostrategic at all...
The US spends about 0.3% on foreign aid. The UN goal is 0.7% only a handful of countries meet that. The only country that goes beyond 1% is Norway.
1:23
I don't believe she said it with a straight face.
I sent some of those remittances!
Ahh Marshall Aid , "Hey Finland need free money?" "No , soviets union said i don't need it."
Was there a discussion of loan repayments? In particular the interest? How much money are poor countries (what percent of their GDP) are they spending on loan repayments?
People think our army is foreign aid lol
Compare the percentages of the u.s and Sweden, and then compare the actual number of what is given. A larger economy applying lower percentages is still giving a massive amount because well it's a larger economy.
Yeah, and by that standard, the US and China is the worst or the best in almost every category, depending on if the subject of the category is good or bad. That's why in statistics, to compare you always use "per capita" or "percent of gdp" or something similar.
Look at an example, energy: Renewable energy produced/consumed or Fossile energy produced/consumed. US and China is always top two, but when it comes to energy per capita or energy as a percentage of GDP, you see the real story. Still topping the oil consumption though.
1% of the budget going to foreign aid isn't that small at all when you have a 4 trillion dollar budget
There's private donations too.
That logic is rubbish. One percent is one percent. One one hundredth of the total..
When you are talking about the government spending to much, you have to look at the percentage, not the absolute cost.
It's true. We could be spending that money on other, more important things, like our education, or desalinization plants, or research grants.
Maxatrillion It's debatable whether those really are more important.
Great job!
I'm a simple man. I see you exclude Taiwan from China, I press like.
You mean excluded china from china...
hey you forgot to put it in the Economics playlist.
The problem here is there are people starving in the United States this is why foreign aid needs to go and use to take care of people in the United States instead of other countries.
Thank you!
Z
Good idea
Poverty Inc on Netflix tells a lot about what foreign aid does to a developing country's economy.
where is the guy that looks like mark cuban????
If a country needed my help, I'd rather help as a laborer and just give a donation
If you helped as a laborer you would be taking a job from someone on the country and your help would in the end worsen the situation, the idea of a donation is not you giving people money for nothing, it's more in line with the organizations spending that money, to, for example, build a new building there and hire a ton of construction workers and with tha stimulate the local economy.
Its the reason why most time serious charity groups prefer if you donate money (so they can make use of the local industries) then for example send food, most of witch gets tossed out because they DONT have time to reach the needed before expiration date, or sending clothes, that wreck the local industry. With money you can buy the food, clothes and whatever from local producers stimulating them to actually produce more and stabilizing the local economy.
Just make sure the opnes receiving your money KNOW how to use it.
"if you helped as a laborer you would be taking a job from someone on the country" ...not. Unlike what the thousand-times-debunked wage fund theory suggests, the economy is not a zero-sum game. I'm pretty sure this was covered literally in the previous episode too...
in one hour you can do one hour of labour in that country
in your country, one hour of labour easily pays for several workers in poor countries.
work in your own country to pay for foreigner to work in your stead.
So do you mean you'll go to somewhere like Ghana or Cambodia and help them build houses or schools manually?
You could do that too by signing up with the Peace Corps.
Nice video as always. Are remittances good or bad for the country where the money is from?
good video
and sweden is so hapy with non residents right now
I have a Question
Since you said the financial aid is given more to countries where the donor can make less restrictions for trade which will be done mostly on the natural resources of the recipient ( for which the recipient will lack money to make use of those resources) Isn't the foreign aid is a type of bribe ( since most of it is been used up the corrupt leaders of the recipient state)
and also in turn gives the donor state to stay more economical better than recipient while using there natural resources.
TIED AID
At 5:20 you state that there is a positive correlation between the levels of aid and levels of trade between two countries. There is also an insinuation that this is a positive thing--which would come close to arguing for tied aid (the administering of aids with stipulations such as that money must be spent on companies from the donor country or on ventures that the donor country has an interest in).
Studies have repeatedly shown that tied aid forces capital to be used in a way that disregards how the actual recipient believes money would be best spent.
* [Scenario 1] Donor wants an iconic creation. Eg, bridge, airport, etc. Recipient says there are other infrastructure projects (eg, roads, water) that are a higher-priority but, since they are beholden to the donor, the less-useful iconic project is what gets built.
* [Scenario 2] Donor wants materials or equipment to be purchased from company XYZ (which is based in the donor country). Recipient says that they can buy that good (or a substitute) for half the price but, since they are beholden to the donor, they are forced to give half of their 'aid' to company XYZ for an over-priced product.
Great series and I'd love to see a further exploration of the economics of aid/development :)
The argument that foreign aid is only 1% of the budget ignores the fact that that's just the part of the budget actually called " foreign aid ". For example at least half our military spending is actually foreign aid. We certainly don't benefit from it.
1%? That's so little, I would think 5% is a lot more fair
I was more surprised that people thought foreign aid was in the twenties
I thought maybe part of it was to keep people stable in their countries and to help avoid too many people crashing other countries. At least it makes sense to do so.
Adriene missed her calling; she should have auditioned as the teacher in the movie Serenity.
Did Hank Green become a girl?
...only fridays
+Greg Miller thanks
Where is crash course games this week?
Not only is it less than 1% but the Aid that the US gives is not for free there are certain political and economic concessions in return for those.
For every $1 given in aid $7 is taken back by conglomerates and political lobbyists through immoral means.
😑
It was so funny when she said that part of US foreign aid goes for protecting the environment. I hope Trump is watching CrashCourse
where do u get your data ?
These videos feel lonely without Clifford...
I wish we'd use more of our foreign aid to tie these other countries closer to the United States, and not just throw it to societies which aren't friendly to us.
the fees for sending remittances back home shouldn't go to private bankers. governments should do agreements for such transactions and senders should pay a tax instead of the fee for sending local money out of the country's circulatory system.
Communism and Socialism, still the two best systems that perfectly embody that phrase:
The road to hell is paved with good intentions.
lol my relatives in ethiopia always ask for iphones and money whenever I talk to them.
Where can I find their sources?
Early in crash course econ tended to make me sad - it's getting easier.
Some of the American foreign aid is even destructive. Giving away an agricultural surplus away for free might sound like a great idea - but... Leading the receiver pay for shipment and destroying the local agricultural production by this unfair competition is not. And it get really worse, when the local agricultural production is whipped out and the US does not have a surplus.
Sweden yes
The percentage of the national budget is a problematic description of how much foreign aid a country gives. The most common yardstick, used by both countries, international organizations, NGO's etc. is the percentage of the country's Gross National Income, GNI. All the member states of the OECD has promised to give at least 0.7% of GNI to foreign aid. As you showed at 1:20 the US only gives about 0.2% of GNI in foreign aid, far below what they have promised. If all developed countries gave at least 0.7% the amount of foreign aid would be enough to save millions more lives.
do Trade Deficits
You didn't talk about how in the European Union money is transferred from richer countries like the UK and Germany to poorer countries, could that not be considered a form of foreign aid?
Well the amount could be considered a bit higher if one includes military bases and training in allied nations. But regardless of what the percentage is, even 1% is a significant amount of money given the sheer amount of money passing through the government. This is money that could be spend on aiding the people paying into it. The government shouldn't send it's taxpayers' money abroad when citizens themselves face tremendous issues. This money should go towards the citizens first.