Your Help Is Hurting, Part II: The Unintended Consequences Of Giving Dictators Foreign Aid
This is a continuation of my interview with Micro-Lender, Peter Greer of Hope International. In addition to the many problems created unintentionally by the gigantic private foreign philanthropy industry, Peter goes on to describe the ways in which government to government aid can be even more harmful. The timing is lamentably good as the Zimbabwean President Robert Mugabe has managed to get himself ‘re-elected’ to another term as President and his first policy act is to appropriate property from white owned businesses to give to black citizens. For audio of the discussion click here, or simply read the transcript below.
Jerry: “What about government aid? Are the problems associated with that similar to, greater than, or less than the problems that you’re talking about when it comes to private philanthropy?”
Peter: “There are certainly a lot of similarities, but I would commend to you or to anyone that’s interested in exploring that. I thought Dambisa Moyo’s book Dead Aid was a fascinating look at that. Bill Easterly, the economist, also has a fascinating book called White Man’s Burden, and they are much more qualified to speak on that. But the same principles remain, and actually might be even worse. The argument that both of them make is that by pouring in billions of dollars of aid, and by having it in its very charter of the way this aid is structured, having to go through corrupt governments actually might prop them up, might actually make it more difficult for development to occur. They track this correlation between the places that have received the largest amount of aid—they’re actually experiencing economic stagnation, and oftentimes decline, and part of that is because aid can sabotage the democratic process. It’s tough to know what to do. When I was in Zimbabwe, this was when Robert Mugabe was having one of his “elections”, which you have to put quotes around the word ‘election’, but he was using the international food aid to reward those places that voted for him and to punish those places that had not voted for him. So, the message was pretty clear: If you want any of the maize, if you want any of the food aid, you vote for me. Using the international aid as a tool that he was wielding to cement his own power, that is side-stepping, that is sabotaging the democratic process.”
Jerry: “So the American taxpayers and European taxpayers funded Mugabe’s “Get Out the Vote” effort, inadvertently, without even realizing. You think about the story of Somalia, it’s hard to imagine the sort of warlordism at the scale that we got in Somalia in the mid-nineties without the fact that it involved control of and hoarding of food aid from the developed world. I suppose there’s also, you have this crowding out effect. Bill Eggers, he wrote the book Revolution at the Roots, told this story to me and it’s also in the book about, and this is in the context of the United States, a soup kitchen that was run by nuns where if you came to the soup kitchen, you couldn’t drink, you had to attend a worship service, and there were certain behavioral requirements. You had to go to a meeting having to do with addiction, et cetera. They were transforming peoples’ lives. The government set up a soup kitchen on the same block and there were no conditions whatsoever to stay overnight there or get fed. Almost immediately no one was going to the soup kitchen run by the nuns because government aid is frequently unconditional, whereas private philanthropy involves a faith aspect and a moral aspect. So, there’s a crowding out of more virtuous enterprises when you have large unconditional aid from government to government.”
Peter: “Yeah, these issues are so big and so complex, but for me the book The Tragedy of American Compassion–realizing just a hundred years ago the way that philanthropy was done was primarily local, was primarily in relationship, and was not afraid to have appropriate strings attached to as quickly as possible get people off the dole, and recognizing the value of work and creating a system that would incentivize, not disincentive-ize, the ability of people to get jobs. But very much, “How do we work people out of a system of dependency that isn’t good for them, is not good for the country, is not good for the community?” Unfortunately, it seems like about a hundred years ago that there was a significant tidal change in the way that philanthropy was approached and it seems to me that this has actually undermined a lot of the positive aspects of where charity should be appropriately applied.”
Jerry: “Well, I think that that book by my friend Marvin Olasky and some of the other comments that he’s made really illustrate the problem with a lot of transfer payments, government or otherwise. Marvin says that the welfare state is stingy, by which he means–I guess this was based on his own experience. He pretended to be homeless for a week, he kind of went undercover, and he went to soup kitchens and he could get food and he could get a place to stay, but he asked for a bible and they didn’t have one. So, his point is that the modern system of caring for the homeless is stingy in the sense that it only gives material help, it doesn’t give spiritual help. And if it doesn’t give spiritual help, it’s not giving everything that’s needed.”
Peter: “Jerry, it’s so interesting. We’ve done a survey, and the World Bank did this as well with I think sixty thousand people and asked them to define poverty. We did a similar thing on a much smaller scale, but asked people that we serve in places of financial poverty how they define poverty. The answers that we got back were that it’s an empty heart, it’s voicelessness, it’s powerlessness, it’s a feeling of inferiority, it’s a feeling of being dirty. So all of these things are ways that people define poverty. Just going in and providing a pair of shoes is not going to address the way that people define their own poverty, much more emotional and spiritual and in psychological terms. The disconnect of faith, the disconnect of our ability to go in and talk to a heart and not just to address the surface needs because of some fear of offending someone, I think takes away the power of the model of help and philanthropy. I don’t know about you but there have been times—there’s more to a life than how much money I have in my pocket. Disconnecting that, and I think really taking away the impact that the faith community has had on the United States of America and its founding, and still is happening around the world, and saying, “You’ve got to have a firewall between what you say about your faith, about your beliefs, and about the way that you serve the needs.” If you take those two things away and don’t allow the intersection, I believe you are actually crippling the potential impact that you can have. When we disconnect faith as to the way that we try to impact poverty, we are going to have a much smaller impact than we could have if we recognize that people are more than just things that need to have clothes and food in the belly and shoes on the feet.”
Jerry: “Well, it’s stingy. Just writing a check is stingy, if you don’t have some kind of transformative message. Which reminds me of a story that you tell about your friend Florian in Rwanda. Can you tell us that story?”
Peter: “This was heartbreaking. This was initially one of the first people that I helped. I was so excited, I guess I was 24 when I moved to Rwanda. So excited to help, and Florian was one of the people that we helped put into a gardening business, and he ended up having this business and it was growing. I was one of his customers and it was really going well. And then I went and visited his home, one time I just dropped him off. I was going somewhere and dropped him off and walked into his home, and I knew his business was growing, but still there was a dirt floor and still his kids didn’t have shoes even, and I remember thinking, “What in the world? Maybe it just takes more time for his business to really get going.” So I came back a little while later and again, his kids didn’t have the basic necessities, they weren’t in school. I felt so let down because I was convinced that this tool of helping people find a job was the best way to help within a faith-based context. And then I wasn’t seeing the results on his family. And it turns out that he was using his increased profit–he was making money, but he was using it on gambling, alcohol, other women. I remember at that moment being convinced that it wasn’t just microfinance that I wanted to spend my life doing. That’s a powerful tool and it has an impact, but I wanted to spend my life doing microfinance that was addressing the heart. I wanted to spend my life doing Christ-centered microfinance, as a way of touching hearts and also equipping people to provide for their families, and that is where you see a lasting impact.”
Jerry: “Well, people in the third world who are poor, that’s not the only problem they have. Maybe there’s a sense that if we get them to where they’re not poor anymore then everything’s fine, but is everything fine for us? America isn’t poor, but does that mean we’re fine? No. It just means that once that basic threshold of sustenance income is reached, a whole bunch of other problems manifest themselves. You have to get on to the next set of problems. And someone who’s got addiction problems or moral disorder or whatever, who doubles or triples their income is still somebody who’s trapped. Still somebody, in some sense, who’s poor even though their income is increased.”
Peter: “That’s exactly right, yep. And we know that intuitively, and oftentimes we fail to make that connection in the way that we address poverty.”
Jerry: “You know, I wonder—as I look at what you’re doing, and I look at other philanthropic enterprises around the world, all the sort of redistribution or transfer payment enterprises, government and private. You’re small, you’re tiny compared to that ocean. I’m not going to name names but I’ve interviewed people who are the heads of, say, much bigger philanthropic organizations, and they don’t seem to see this and they don’t do it this way, and I’m wondering if the problem is just habit or if there is an ideological blinder in the area of government to government aid. I mean, let me give you an example: Again, I’m not naming names but I interviewed some time ago the head of an agency that’s sort of like yours, it’s private philanthropy but it’s probably two hundred times your size, very big. When we were talking about the poor he kept going back to what seemed to be a hostility to business, a hostility to markets, a kind of, “Well, the poor in the third world are poor because American Christians are rich, and we’re taking up the resources.” It seemed to be tied to ideologies which are hostile to market processes, hostile to entrepreneurship, and that seemed to be the fundraising tool. “I’m going to guilt you in the first world to give money to the third world, and it’s just a transfer payment.” And there didn’t seem to be any appreciation of the place of property rights and incentives and everything else, so I’m wondering how much of the reason that the rest of the philanthropy world doesn’t do this is ideological blinders to the power of market exchange mechanisms.”
Peter: “I really don’t know, but my antidote for that is to go spend time with people who are living in poverty. When you spend time with people who are living in poverty there is a consistent request, and it’s not for more charity, it’s not for more hand-outs. The consistent request is for a job. People in the developing world don’t want to be poor, they don’t want to be someone else’s charity case, and we just need to listen to them and then change our approach. Redistribution is always going to be limited, it’s always not going to have the impact that it would have in looking at the nations that are experiencing economic growth and we know this. It’s the market mechanism, it’s the capital and labor productively employed to provide goods and services. And I really don’t know—“
Jerry: “Is this my imagination or have you picked up that vibe in that world, that there’s an under-appreciation of the power of market mechanisms, almost an ideological hostility in that world of developed world to undeveloped world philanthropy? Is that my imagination or have you seen that too?”
Peter: “No, unfortunately I do think that you’re correct in your assessment. But I would say that I’m starting to see this change a little more. Even if you look at Bono and his recent comments about the market… hugely encouraging. So I think there’s a positive move towards this recognition, but we still have a ways to go here.”
Peter Greer is president and CEO of HOPE International, a global nonprofit focused on Christ-centered job creation, savings mobilization, and financial training. A graduate of Harvard’s Kennedy School and the former Managing Director of Urwego in Rwanda.
Article originally published on Forbes.com.