Myth-Busting Poverty and Health

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Gates Foundation

When bad things happen, they often happen fast. When good things happen, they often happen slowly—sometimes so slowly that we only notice them after the fact.[1] This is certainly the case with how we think about the state of our world; we see some catastrophe on the news and think that the net effect is that the world is trending downward. We tend not to do the homework required to reflect on the slow, positive changes that come after years of hard work. In today's Gates Annual Letter, Bill and Melinda Gates make a convincing argument that, in many ways, the world is better than it has ever been. I agree. Life ain't perfect, but suffering and death are decreasing.

When I write about the slow, good news, the comments sections are fascinating. While many comments are positive, there are some persistent negative assertions that come up over and over—what's fascinating is that they're factually incorrect, but them apparently feel correct to the people who are writing them. Let's call these "myths about helping people," and let's take a rational look at why a big one simply isn't supported by the facts.

Myth: Foreign Aid is a Big Waste

First let's define "foreign aid": "a voluntary transfer of resources from one country to another." This generally means a relatively richer country giving money or goods to a relatively poorer country.

So the myth here is a many-headed hydra; at its core is a hunch that it's a waste of resources to give money to another country. Let's walk through this one and look at some data:

1. Cutting foreign aid would not save donor countries much money

One argument against foreign aid is simply that is costs too much. But foreign aid actually amounts to a tiny fraction of government spending. When we look at the economic assistance donor countries provide, it's in the low single digits of the overall budget. Norway is the most generous country in the world in this regard, and it spends a whopping 3% of its annual budget on foreign aid. The United States spends less than 1% on economic foreign aid—that's roughly $30 billion. About $11 billion of that is spent on health care (medication, disease prevention, bed nets, etc.). This last figure pencils out to about $30 per person, per year, in the U.S. on average.

So the fact is, at least in the United States, that we're talking about less than 1% of the budget. We can save less than 1% of our budget, or we can save lives around the world.

2. Foreign aid actually helps people

Another argument against foreign aid is that it's wasted—it doesn't help people, and instead ends up in the pockets of corrupt governments. While, yes, there is corruption in the world, here are three examples of organizations that receive money from U.S. tax dollars, and what that money has done to help staggering numbers of people:

GAVI - Has vaccinated 440 million children against various diseases since 2000. By 2015 this number is projected to increase by another 234 million. This means kids are protected from diseases like polio, measles, rotavirus, yellow fever, and the list goes on. Why this matters: By 2015, GAVI will have vaccinated 50 million children against rotavirus. Rotavirus causes an estimated 450,000 deaths each year.

The Global Fund - Has treated 11.2 million cases of TB; provided antiretroviral drugs to 6.1 million people; and has distributed 360 million insecticide-treated nets (these are used to prevent malaria) since 2002. Why this matters: In 2000, only 3% of households in sub-Saharan Africa owned at least one insecticide-treated mosquito net. Now, 54% of households own at least one net. If malaria deaths continue to drop at the current rate, by 2015 malaria mortality will have dropped by 56% compared to 2000.

Polio Global Eradication Initiative - Has vaccinated 2.5 billion children against polio since 1998. Why this matters: In 1981, there were 350,000 new cases of polio. In 2013 there were just 385.

While some foreign aid money has been siphoned off by corrupt governments, that is not an argument against foreign aid in general—it's an argument about how we should spend the money so that it actually helps people. (See above for examples.)

3. Foreign aid reduces infant mortality...and that's a big deal

Another old saw is that foreign aid may help in the wake of disasters, but it doesn't substantially affect the biggest problems affecting humanity. Here's data to disprove that one.

If you compare today to the year 2000, there are now 7,256 fewer children dying every single day. If that doesn't seem like a big deal, read it again, or think of it this way—there are 2.56 million fewer infant deaths each year compared to the year 2000. If you're a parent, consider the 7,256 families that today did not have to contend with the death of their child.

And this progress isn't just recent—it has been sustained in a slow march over decades. According to the World Bank, "In 1990, more than 12 million children in developing countries died before the age of 5 from diseases such as diarrhea, malnutrition, pneumonia, AIDS, malaria, and tuberculosis. By 2012, that number had dropped to 6.6 million."

Reducing infant mortality isn't just about reducing heartbreak for parents; children who do not die grow up to be adults. These adults are the next generation of workers. Having a healthy, working adult population is a key way that countries develop on their own. (Note: there is also an intriguing correlation between reducing infant mortality and reducing fertility rates—it appears that when infant mortality goes down, people tend to have fewer children. If you're concerned that overpopulation will result if we save kids' lives, please consult Myth #3 in the Annual Letter.)

4. Foreign aid is an investment

It's easy to look at foreign aid as money that's spent each year with no financial return, a kind of static handout. But if you actually look at what this money buys (aside from preventing death), the return is tremendous. Take polio eradication—there are only three countries left in the world (Afghanistan, Nigeria, and Pakistan) where polio is endemic. Once polio is fully eradicated, we'll save $2 billion each year spent on polio. This is simple: eradicating disease will save money in the long term, both for donor countries and for countries where the disease had a financial impact.

Another reason foreign aid is an investment is that countries receiving foreign aid develop their way out of needing it, and can themselves become providers of aid. This is already happening. Here's a list of countries that formerly received huge amounts of foreign aid, but today receive very little: Botswana, Morocco, Brazil, Mexico, Chile, Costa Rica, Peru, Thailand, Mauritius, Singapore, and Malaysia. (You can explore the data on a country-by-country basis over time.) Even more interesting, there's a set of countries that are now net donors (meaning that they give more than they receive); these include South Korea and China. India may soon join this list, as it now receives just 0.09% of its GDP in foreign aid (down from 1% in 1991); India currently gives money to Bangladesh and others.

The bottom line

While there are certainly inefficiencies in the way foreign aid money is spent, it's clear that this aid saves millions of lives. For many countries, foreign aid is currently the only way to reduce infant mortality. To quote Bill Gates:

"A baby born in 1960 had an 18 percent chance of dying before her fifth birthday. For a child born today, the odds are less than 5 percent. In 2035, they will be 1.6 percent. I can’t think of any other 75-year improvement in human welfare that would even come close."

Share Your Thoughts, and Bust Your Own Myths

Above, I dealt with just one of three big myths tackled in today's letter. I urge you to read the rest, and if you feel moved to do so, share the myths that irk you the most. (On Twitter, a handy hashtag is #stopthemyth.) As I've done above, it helps to show your work, so we're dealing with data.

1 = A note on this notion that bad things happen fast and good things happen slowly. I'm not the first person to make this observation; Gordon Livingston wrote a similar sentiment about family life: "Only bad things happen quickly, ... Virtually all the happiness-producing processes in our lives take time, usually a long time: learning new things, changing old behaviors, building satisfying relationships, raising children. This is why patience and determination are among life’s primary virtues."

January 21, 2014 - 8:00am
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