Several possibilities present themselves: at one extreme is the argument that no foreign aid should be forthcoming when we are running a huge deficit and can't even solve poverty in America. A corollary to that argument would be the suggestion that poverty relief is properly the function of private charities and NGOs. Recently, the suggestion that we forgive the debt of developing nations has been very much in the news.
The International Monetary Fund has often stepped in to help failed nations with bailout packages, but there are many who feel their prescriptions of budget austerity and monetary discipline are too rigid for countries reeling from a crisis; yet straight-up forgiveness of debt would seem to be throwing good money after bad, in that the poor economic principles that resulted in such economic basket cases are unlikely to change (note that issues such as the tsunami disaster are in a different category altogether).
The Wall Street Journal highlights a possible solution called the Copenhagen Consensus, the brainchild of a group of economists (including three Nobel Prize recipients), that uses cost-benefit analysis to pinpoint the areas of development aid that result in the biggest bang for the buck. The result: President Bush was quite right to reject the Kyoto Agreement, as it ranks at the very bottom, costing $94 trillion dollars (in 1990 dollars) to reduce global temperatures by a mere 1.2 degrees over the next hundred years.
What is effective? The four programs that help the most people per dollar, according to the analysis, are:
- Control of HIV/AIDS
- Providing micronutrients (vitamin and mineral pills) to the malnourished
- Trade liberalization
- Control of malaria
UPDATE 06/12/05 12:59 p.m. central: It's safe to say that Six Meat Buffet is not a fan of the debt relief approach...