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          THE DISASTER OF INTERNATIONAL FOREIGN AID PROGRAMS
                          By Ken Schoolland

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FEAST AND FAMINE: AND AGE OF IRONY
Conscience money, popularly known as ``foreign aid'' cannot undo the
harm that is done to developing countries by the trade and agricultural
policies of industrial nations. While millions of people are starving in
Africa, it is not uncommon to read about tons of food being stored or
destroyed in the United States, Western Europe, and Japan. These reports
seem as if they were coming from different planets: an impoverished
Third World suffers while a prosperous First World disposes of surplus
food.

The food being destroyed is not just the accumulated discard from
schoolchildren's lunch plates. Instead, the great destruction of food is
the result of an official market in order to raise farm prices.

PLANNED WASTE
Not long ago Japanese officials announced plans to destroy 8,600 tons of
cabbages below ``acceptable'' levels. West European officials are
reported to have socked away mountains of butter and lakes of milk for
the same reason. And U.S. officials ordered 3.5 billion oranges,
two-fifths of all production, to be removed from the California market
in order to raise prices.

One farmer in California, Carl Pescolido, faced hefty fines because he
chose to give two-million oranges to the poor people of San Francisco
rather than let them rot in the field. The authorities do not always
look kindly on charity, unless it fits their own assistance plans.
Emergency assistance in the form of famine relief grabs the headlines,
but these paltry sums are dwarfed by the massive government programs
that created the conditions of poverty in the first place.

Nearly $100 billion is spent annually by governments to subsidize
farmers in the developed countries. Over the long run, these massive
subsidies to First World farmers have had a deleterious effect on the
ability of Third World Nations to develop a sound agricultural base and
to become economically self-sufficient. This occurs in two important
ways.

BAN TRADE - GIVE AID
In order to maintain high domestic food prices, First World nations use
one, or both, of these techniques:

1. Prohibit the importation of many agricultural products from the
developing countries and/or

2. Dump crops abroad under the guise of ``foreign aid.'' Such policies
serve to obstruct or ruin farm investment and production where it is
needed most.

It is no accident that, while First World nations restrict access to
their markets, they like to bast of helping their desperate neighbors
with generous shipments of aid. The Japanese government will herald its
new ties with Southeast Asia by offering economic assistance, but will
curtail the importation of rice and boneless chicken. The U.S.
government will fortify its Caribbean allies with military and economic
aid, but will restrict the importation of sugar and tomatoes. And
Western European governments will offer similar policies to their former
colonies in Africa.

This apparently inconsistent behavior, banning trade while giving aid,
is frequently part of the same agricultural policy. Politicians,
especially in the U.S. and the Common Market, are always in the awkward
position of having to dispose of the vast quantities of ``surplus'' food
that their domestic policies have generated. This must be done with
finesse so that these ``surpluses'', or subsidy crops, won't reach the
domestic consumer and reduce local food prices. Thus Americans and
Europeans must pay five t o seven times as much for sugar as they would
have to pay on the world market. And the Japanese must buy domestic rice
at five to seven times the price of rice which is produced by farmers in
Thailand.

Since Third World nations are prevented from selling these products to
the First World, they are not able to earn much of the foreign exchange
which is necessary to repay development loans or to purchase vital
fertilizers, tractors, petroleum, and education. As the opportunities
for self-generated earnings are diminished, developing nations remain
eternally dependent on their benefactors.

THE MAKING OF SUBSIDY CROPS
In America, this agricultural policy began in 1929. Under the Farm
Stabilization Act, the Hoover administration first bought up and stored
257 million bushels of wheat in order to please the farm bloc.

During the great depression, while the hungry and unemployed were lining
up at soup kitchens, the Roosevelt administration tried to save on
crops, to plow under millions of acres and cotton, and to slaughter
several million pigs and cows. It has been an expanding bi-partisan
boondoggle ever since. In 1983, U.S. government subsidies nearly
equalled the total of net farm income. In 1984, the U.S. government
succeeded in removing 82 million acres of prime land from cultivation.
This idled 36% of the land devot ed to corn, wheat, cotton, sorghum, and
rice. Still, new subsidies always brought on new surpluses. While the
U.S. Department of Agriculture (USDA) was holding land and commodities
off the market, various branches of government were simultaneously
increasing the farm yield and opening virgin territories to even more
subsidized farming.

With truckloads of pesticides and fertilizers at hand, the USDA
conducted research and training programs to help farmers increase their
crop yields. The Farmers Home Administration provided low-interest loans
and the U.S. Congress underwrote the construction of mammoth pork-barrel
irrigation projects in the desert. Disaster insurance even encouraged
farming in drought-prone and flood-prone areas.

So the embarrassing surpluses continued to mount. There was, however,
one last option for the disposal of subsidy crops. What couldn't be
stored or destroyed could be sent abroad.

WHAT HELPS FARMERS AT HOME CAN HURT FARMERS ABROAD
The Food for Peace program was established in the 1950s to get rid of
unwanted farm surplus, to build new markets for American products, and
to reward favored Third World regimes. With a bizarre twist, this ``food
for peace'' even included millions of dollars worth of tobacco. Logic
suggests that if American farmers benefit when the U.S. government
purchases their crop, then small, marginal farmers in developing
countries can be devastated when those crops are unloaded on Third World
markets. In a report fr om the British magazine, THE ECONOMIST (Feb 2,
1985), ``This dumping has allowed shortsighted local governments to keep
the price of foodstuffs for the urban proletariat so cheap that native
farmers are ruined, and dependence on imported food becomes a drag on
development.''

Farmers in many Third World nations don't always have the clout that
farmers have in developed nations. Many repressive Third World regimes,
along with some international bureaucracies and political lobbies, owe
their continued existence more to aid programs than to indigenous
popular support.

Autocratic rulers can more easily hold on to the reins of power when
there is an abundance of wealth to distribute among corrupt power
brokers. In this sense, foreign aid is more likely to retard
development. Over the decades of Eastern and Western programs, Ethiopia
has virtually become a textbook case.

It is simply not enough to measure a nation's concern for the poor, as
many analysts are prone to do, by examining the annual increase in
foreign aid. As economist Thomas Sowell reveals in his book The
Economics and Politics of Race: An International Perspective, Tanzania
has received more foreign aid per capita than any other nation, yet its
output per worker has declined 50% over the period of a decade and it
has turned from an exporter of corn to an importer. In fact, food
production all across Africa has been declining in the past decade
despite continued aid programs.

MATCHING PRACTICE WITH IDEALS
Japan, Western Europe, and the United States have more to offer the
world than restrictive trade barriers and the persistent custom of
protecting the domestic farm at all costs. As a lesson from their own
history, the First World nations know that an export potential is
crucial to developing economies. They could foster greater investment
and growth in the Third World by simply living up to their frequently
espoused ideals of free trade.

The citizens of the First World nations should be proud to be able to
feed the impoverished Third World, and much of the communist Second
World, but they must recognize that this abundance is not due to the
competitive strength of the agricultural sector as much as it is due to
those businesses, workers, customers, and taxpayers, who must shoulder
the burden of subsidies and high prices. This represents a tremendous
misallocation of resources and lost productivity for both the developed
and underdeveloped n ations. The poor in all nations, First and Third,
suffer as a result.

It is time that the United State, Western Europe, and Japan set a
better, more consistent model for the Third World to emulate.

Ken Schoolland, an assistant professor of management and economics at
Hawaii Loa College, was formerly a U.s. International Trade Commission
economist and a special advisor to the White House. He is a member of
ISIL's Board of Directors.


                       RECOMMENDED READING LIST

The Economics and Politics of Race: 
An International Perspective -Thomas Sowell ................. $15.95
The Lords of Poverty ........................................ $17.95
Reality and Rhetoric - P.T. Bauer ........................... $10.95
A Pattern for Failure - Sven Rydenfelt ...................... $12.95
The New Wealth of Nations - Guy Sorman ...................... $14.00


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