Why foreign assistance is important to US economy

Too many Americans are just plain wrong when it comes to foreign aid.

In January 2016 a Kaiser Foundation survey showed that 15 percent of the American people believe the foreign aid budget represents more than half of the U.S. federal budget.  The average answer from the survey was that the US spend 31 percent of its budget on foreign aid. Only 3 percent had the right answer: 1-1.5 percent.

 

And now the Trump Administration wants to cut the aid program (and the rest of civilian foreign policy operations) by a third.

Contrary to the attitude that seems to come from the administration and its supporters, the purpose of foreign aid is not to just give away money to make us feel better. In fact, foreign aid is an important factor in improving the U.S. economy.

When poor people in another country start earning more money, they most often use the money to improve the lives of their children by investing in education and health. And once those basic cares are covered, these people then start buying things.

If the country has a free-trade agreement with the United States, that means U.S. products can enter the country with low or no import fees. And that means the U.S. products can be purchased by the emerging middle class.

Helping build a strong middle class in the developing world is part of what development aid is all about. One of the most visible programs in the US Agency for International Development universe is Feed the Future.

I have seen the program in action in Honduras.

Farmers who barely able to grow enough to feed their families were able improve their agricultural output under the Feed the Future program. I saw farmers install healthy stoves — designed to expel the smoke outside the house. The extra income was also used to improve the diets of the families, thereby making the children healthier and better able to learn. And the extra money was also used to educate the children so they can find better paying work when they graduate.

For less than a penny on the dollar, tens of thousands of people in Honduras were brought out of severe poverty — about $1 a day. The lives of these people was improved and their children were given opportunities to improve their future.

And this affects the U.S. how?

By giving young people a viable future, U.S. aid programs keeps them away from gangs — in particular the major syndicates that help move drugs into the United States. Also, by improving the local country’s economy, there are fewer reasons for young people to leave their country for the United States.

And to be clear, Feed the Future is not only for farmers. It works with people who have an idea for a company but who aren’t sure how to proceed.

Norma Linares owns Loma Alta, a thriving food processing enterprise that she and her husband founded in 2014 in their village of Azacualpa, Honduras. The husband and wife team turned about 300 plantains per month into chips, which they sold to local retail outlets. Home-based and family-run, the business started small, generating a net income of around $75 a month.

Soon after Loma Alta’s founding, Linares and her husband started working with a Feed the Future project, where they were introduced to a wide range of training and technical assistance to improve processing efficiency, quality control, and packaging in their business. Feed the Future also helped Loma Alta establish ties with market contacts, giving it year-round access to reliable buyers and a more steady income throughout the year.

– Opportunities Sprout from Growing Plantain Business

Eventually the company expanded into other packaged foods and changed from a solely family business to one that hires people to package and sell their goods.

In just a few years this family moved firmly into the middle class in Honduras. And that means they will be able to buy U.S. products. It also means they will be staying in Honduras rather than making the dangerous journey to the U.S. to look for economic opportunities.

For about one cent on the dollar USAID (and the State Department) provide programs and assistance that helps build the economies of other countries, which in turn means more markets for U.S. goods AND reduced immigration.

So what is the more wasteful program: Building a wall and militarizing a border or providing assistance to people to work their way out of poverty?

Common sense says it is clearly the latter.

Chinese Pollution Issues Stress Need For Free & Independent Media

The Chinese government leadership have a real problem. Technology is giving people and local groups more power to look into issues and to get the results of their investigations to a lot of people in a hurry.

The latest is a report that students at the Changzhou Foreign Language School in Changzhou in Jiangsu province were falling ill at an abnormal rate.

Chinese children ‘fall sick at new school’ (BBC – April 18, 2016)

The Chinese authorities are investigating reports that hundreds of children have become sick after their new school opened next to a former industrial site.

Nearly 500 Chinese children are reported to have developed dermatitis, blood abnormalities, leukaemia and lymphoma thought to be a result of air, soil and water toxins at their new school.

Now, government officials report there is nothing to the reports that reports the soil near the school tests chemical levels at 95,000 times the national limit.

Yep, nothing to see here.

The initial report — by state-run media — caused an uproar among Internet users. And a series of articles outside China.

• South China Morning Post: Hundreds of pupils at school near toxic site in east China fall ill, some with cancer, state TV reports
• New York Times: Chinese Parents Outraged After Illnesses at School Are Tied to Pollution.

Lack of concern about where or how construction takes place is a common issue in China. And with no method to keep an eye on the government — freedom of information laws or an independent media or opposition parties — there appears little people can do except pass information by the Internet or mobile phone texts.

 

Those Chinese residents able to breach the Great Firewall would have been able to read the two stories mentioned above from Hong Kong and the US. They also would have been able to read another SCMP piece on how more than 80 percent of the country’s groundwater is contaminated and unfit for human consumption.

While the government leadership officially says it wants to dig out corruption and that media outlets have a role in that campaign, it is also the official policy that the media must first serve the (Communist) Party, the government, then the people. So if the Party or government leadership decide that potentially contaminated soil might be the cause of abnormal illnesses among school children AND if that situation makes the Party or government leaders look bad, then the contamination must not really exist.

So now the official media are reporting that three months of testing has shown contamination levels are within normal limits.

And that, of course, begs the question: What are normal limits?

Looking at how China deals with air pollution we can see that their limits leave something to be desired.

The World Health Organization puts on upper limit of Particulate Matter 2.5 (particulates less than 2.5 micrometers in diameter) at 35 micrograms per cubic meter. The U.S. Environmental Administration put the upper limit of “good” at 50 micrograms per cubic meter. China puts it upper limit of “good” at 75 micrograms per cubic meter.

These higher levels allowed the Chinese government to officially say Beijing, Shanghai and other major cities had a lot of “good” days. However, even Chinese researchers found something was wrong. The catalyst for real change came after the U.S. embassy in Beijing started taking its own pollution data and posting it online.

At first the URL — http://beijing.usembassy-china.org.cn/aqirecent3.html — was blocked by the Great Firewall of China. And the Chinese government complained the U.S. was interfering in China’s internal affairs. Eventually — and with the Olympics coming up — the government relented and once again allowed access to the site.

Chinese researchers have begun to look at the government data and the US embassy data to see just how bad pollution is and if it is improving. (The good news/bad news is that some changes for the good are taking place.)

The problem is that China still uses levels of “acceptance” that are way higher than the WHO and other industrial nations. This practice puts people’s lives in danger. And with the government tightening its grip on the news media, the people will have little chance of learning about how much danger.

And yes, Americans need to know about these situations because it can directly impact the quality of goods sold to the United States. And because more and more Americans are moving to China to work, study and vacation. We just have this weird idea that we should know the health risks of a place we are about to visit.

China steps up war on press freedom

The Washington Post did a great piece on how inspectors for the Chinese government said the Chinese propaganda office is not being aggressive enough.

“The effect of guiding culture and art to serve socialism and art is not obvious enough,” Wang Haichen, the leader of the inspection team, was quoted as saying. “Its news propaganda is not targeted enough, or effective enough.

“It needs to strengthen further its leadership of ideological work. It does not do enough in applying the principle of the party controlling the media in weak points like new media, or in coordinating thought and political work at universities.”

The complaint comes after President Xi Jinping told media outlets they need to “take Party” as their surname and to “serve as the party’s throat and tongue.”

The efforts to control the press have stepped up under Xi and have included efforts to shut down reporting on China’s violation of human rights by journalists not in China.

Part of the campaign is to not only make sure all Chinese media outlets kowtow to the whims of the party leadership, but also to make sure foreign media is made to be seen as the enemy by the Chinese people.

National Public Radio correspondent Frank Langfitt is about to leave China after five years of reporting from Shanghai. He did a great piece today (June 13) explaining how the Chinese government has stepped up its campaign against not only Western journalists but against the whole concept of free and independent media. (As of this posting — 6:30 a.m. June 13 — the whole piece is not yet available on the NPR website. It will be available later in the day.)

The growth of the Chinese middle class and the current economic slowdown clearly scares the country leaders in Beijing. For the past 30+ years, the Communist Party has told the Chinese people that only through the party will economic growth occur. Western notions of democracy, free press and market forces are not needed because “the Party will provide.”

The problem the party now has is that its claim to legitimacy is based on the one leg of economic growth. The current economic slowdown is threatening that sole pillar.

Migrants: Where to and where from

If you ever wondered why there is a better selection of tortillas in your local store or why getting good garam masala is suddenly much easier, the Pew Research Group has a quick way to look at immigration and emigration.

The Pew Group has a GREAT interactive graphic to look at immigrant and emigrant movements during the past 25 years at Origins and Destinations of the World’s Migrants, from 1990-2015

Along with an interactive map, the Pew Group added a table so you can see with real numbers migration movement.

I’ll let the Pew Group explain what its wonderful graphic depicts:

The figures in this interactive feature refer to the total number (or cumulative “stocks”) of migrants living around the world as of 1990, 2000, 2010 or 2015 rather than to the annual rate of migration (or current “flows”) in a given year. Since migrants have both an origin and a destination, international migrants can be viewed from two directions – as an emigrant (leaving an origin country) or as an immigrant (entering a destination country).

According to the United Nations Population Division, an international migrant is someone who has been living for one year or longer in a country other than the one in which he or she was born. This means that many foreign workers and international students are counted as migrants. Additionally, the UN considers refugees and, in some cases, their descendants (such as Palestinians born in refugee camps outside of the Palestinian territories) to be international migrants. For the purposes of this interactive feature, estimates of the number of unauthorized immigrants living in various countries also are included in the total counts. On the other hand, tourists, foreign-aid workers, temporary workers employed abroad for less than a year and overseas military personnel typically are not counted as migrants.

And for those wondering, the total number of migrants living in the United States in 2015 came from:

1. Mexico – 12 million
2. China – 2.1 million
3. India – 1.9 million
4. Philippines – 1.7 million
5. Puerto Rico – 1.7 million
6. Viet Nam – 1.3 million
7. El Salvador – 1.2 million
8. Cuba – 1.1 million
9. South Korea – 1.1 million
10. Dominican Republic – 940,000
11. Guatemala – 880,000

Remember, this is the TOTAL number of people from these countries living in the United States, NOT the number arriving in 2015. And I would personally put the migration from Puerto Rico to the U.S. mainland as internal migration rather than international. (That is why I have a Top 11, rather than Top 10). Seems the United Nations has its own way of looking at these things.

And in case you are wondering, in 2015 there were 180,000 people from Iraqi living in the United States and 70,000 from Syria, both up from 40,000 each in 1990.

Local reporters can follow-up on this information for a local angle by using material from the U.S. Census Bureau.

For example, I know from the American FactFinder, there are a lot of Ethiopian restaurants in Fairfax County, Virginia (population 1.1 million) because Ethiopian immigrants are the largest African group in Fairfax – 6,000 out of 31,000 African native-born residents.

You can get good papusas because Salvadorans make up the largest single group of Latin American residents — 32,000 out of 102,000 from Latin America.

We all know Annandale, Va., is known as Little Seoul. Well, the Census numbers bear that out, of the 170,000 people born in Asia in Fairfax County, 30,000 are from Korea. But what should be evident to anyone paying attention, the Indian and Vietnamese presence is also big. Fairfax has 29,000 people who were born in Indian and 23,000 born in Vietnam.

Not to leave out Europe, but let’s face it, the numbers are weak compared to the rest of the world. Fairfax has 25,000 people born in Europe. The single largest group are the Germans with 3,600.

Bottom line, if you are looking for a foreign story, start in your own neighborhood.

Economic Stability Needs Free Press

Despite all the complaints about how poorly “the media” covered the Wall Street shenanigans that led to the 2008 Great Recession, people still turn to the unfettered and independent media outlets for news about stocks, bonds and the general state of the economy. In fact, the whole system of savings and investment would not work without a free press.

The media — and this includes knowledgable bloggers — provide the public with loads of information about what is going on in the marketplace. They look at government regulations, company news and the overall status of the market.

One of the reasons there is global support for the U.S. stock markets is because there is such a strong tradition of free and unfettered media. (And perhaps, part of the trauma of the 2008 collapse was because how poorly the market was covered at the time.)

In fact, one of the most important part of any successful stock market is a free press that is allowed to dig into company records and government actions. Look at London, Paris, Tokyo and even Hong Kong.

So is it any wonder there are uprisings and complaints about how things are going in the Chinese stock markets?

China Digital Times summarized a series of articles of how people across China are complaining about their losses in Chinese investment instruments.

According to the [Wall Street] Journal, some 1.6 million investors lost a total of at least $24.3 billion to collapsing wealth-management products over the past year. Many say they invested because of the perceived endorsement of government officials and state media, and are now demanding reimbursement from authorities.

Rather than move to make sure people got the best and most accurate information about where and how to invest their money, the Chinese government, instead, has decided to restrict even more information.

A series of leaked media directives published by CDT further illustrates efforts to manage discontent. Trying to steer a course between inciting panic and stoking further exuberance in June, the State Administration of Press, Publication, Film, Radio and Television told broadcasters not to “join the chorus of the bull or bear market. Rationally lead market expectations to prevent inappropriate reports from causing the market to spike or crash. […] Do not conduct in-depth analysis, and do not speculate on or assess the direction of the market. Do not exaggerate panic or sadness. Do not use emotionally charged words such as ‘slump,’ ‘spike,’ or ‘collapse.’”

Additional directives instruct editors to focus on “illustrative examples of steady growth,” while downplaying or holding back on anything negative about the property and stock markets.

Wall Street Journal reporter Laurie Burkitt retweeted one of the best reactions to the Chinese government actions:

In China, “the markets are like K-Y Jelly. They can play a decisive role, but they aren’t the main actor.” – Jim McGregor @AmCham_China

— Laurie Burkitt (@lburkitt) April 15, 2016

And yet, the government continues to see it self as the main actor.

Why does this matter to journalists or even the people in the United States?
A great misunderstanding of how the Chinese markets work led to a global run on markets. And yet, only after the Western markets started falling because of what was happening in China, did people start figuring out the fall was an overreaction.

There is not enough foreign investment in the Chinese market for it to be a major problem. The London consultancy Capital Economics has said foreigners own just 2% of shares. — BBC  1/7/16

The smoke and mirrors situation in China built up by the ruling elite created a situation where otherwise strong Western investment instruments collapsed in just a matter of days. To be true, the collapse of the Chinese stock markets did indicate the Chinese economy was slowing. But again, had there been better reporting in China — that is had the government NOT restricted what reporters can cover — then the news about the slowing Chinese economy would not have come as such a shock.

The anti-free press fixation of the Chinese government is not just morally wrong, but it clearly also has a direct impact on U.S. investors, including a lot of retirement funds.

By the way, this has all happened before.

Back in the early 1990’s — when I lived in Shanghai — the government opened stock markets in Shanghai and Shenzhen. The party and government leaders encouraged people to invest. The people, figuring that the government has always taken care of them in the past will guarantee they will be taken care of in the future.

When the market collapsed in early 1992, millions of people lost their life savings. Men and women in their 60s discovered they had to now work many more years and save a lot more of their earnings to prevent starvation in their old age.

At that time the government did not step in to make good the losses. Deng Xiaoping was effectively in charge and forbade any bailouts. (Except for key companies, of course.) He made it clear the people will have to learn about the ups and downs of a marketplace economy with Chinese characteristics. He even allowed for and encourages small private companies to be set up.

The new leadership, however, has seem hell-bent to restore the all-pervasive nature of the Communist Party in Chinese society. They have apparently become nervous about the growing middle class. Seems once people get a taste of economic freedom, they tend to want political and social freedom as well. And that is not allowed.

So the government stepped up it campaign to crush freedom of speech and expression — including reminding the media their job is to represent the party — and stepped up its campaign of the government being mother and father.

The Chinese leadership claims they are concerned with preserving stability and avoiding social unrest. Yet the keep taking steps that lead to more social unrest.

By restricting the media to being only mouthpieces of the government, people will turn to rumors and whispering campaigns for information. And, as anyone who has played the “telephone game” will know, what goes in at the start is not necessarily what comes out the other end.