The Instigator
JustCallMeTarzan
Pro (for)
Winning
39 Points
The Contender
HempforVictory
Con (against)
Losing
33 Points

Financial aid to impoverished nations' governments should be ceased.

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Voting Style: Open Point System: 7 Point
Started: 1/6/2008 Category: Politics
Updated: 9 years ago Status: Voting Period
Viewed: 2,380 times Debate No: 1444
Debate Rounds (3)
Comments (4)
Votes (15)

 

JustCallMeTarzan

Pro

Financial aid to impoverished nations' governments should be ceased. It does little to no good, and also creates more problems than it solves. I would like to present some reasons why I believe this is the case, as well as an alternative solution.

First, some history is needed. The governments of many countries in the developing world (mainly sub-Saharan Africa, the Middle East, and Southeast Asia) have been receiving financial aid from the World Bank and International Monetary Fund. These two institutions are basically run by the G8 (et al). They impose Structural Adjustment Policies (SAP) on the countries as conditions of the loan. Usually these involve cutting spending on social programs, focusing on building the economy, and opening their markets to free trade. This is a traditionally Western view, and it is not actually helping the situation - it is making it worse.

1) Corruption in government reroutes much of the money provided by these loans so that it does not actually reach its intended destination. As such, it serves to increase the gap between the wealthy and the impoverished - this increases the sense of elitism and biases the balance of power even more towards the few that already have it.

2) Bolstering the economy is usually undertaken as increasing production of an already-made commodity. For example, if a country already exports cotton, they use the money to invest in agricultural techniques that allow them to export MORE cotton. However, they still export cotton and import shirts - creating a trade defect.

3) Giving money to the government does not work nearly as well as giving money to the PEOPLE. Monetary aid to governments is a Top --> Down solution. What is needed is a Bottom --> Up solution. Countries as a whole are not benefited from aiding the government. It would be like trying to improve conditions in East LA by donating money to the federal government in DC - the money needs to go where the problem is.

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Solutions
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1) Loan money to individuals - mostly WOMEN. Women are more likely to use capital for activities like education, improvement of the community, and farming. Men, on the other hand, are most likely to invest the money in some way to try to make MORE money, such as a business or market investment. In an impoverished economy, these ventures usually fail.

2) Educating the populace is important, but it is being done backwards at the moment. Many new schools are being built, but the students in them are mostly male. This isn't a case of a 60/40 split - it's more like 80/20 or worse. Educating the female population does two things - first, it creates a larger educated workforce, and second, it DECREASES the fertility rate of a country. The education of women can reduce the fertility rate (children per woman) by 2/3 or more. This controls population growth and also reduces the workload of the woman in the family (the woman is traditionally the homebuilder - the man is working in a city much of the time and sending money back).

3) Incentives should be given to companies that move factories and other businesses to the developing world with the EXPLICIT PURPOSE of returning portions of their product to the country. This could be in the form of reduced tariffs on the goods that were exported. Doing this allows for cotton from one country to be processed in a textile factory IN THAT COUNTRY and returned to the market in the country. This is the basis for economic independence.

I believe I have outlined the gist of my argument here - I look forward to a contender. To reiterate - the IMF and World Bank have no business providing financial aid to impoverished governments - The Grameen Bank's microfinance model is much better - Western SAP's have no business telling developing countries how to develop - A Bottom --> Up approach is needed.
HempforVictory

Con

You've picked an excellent debate topic, tarzan, and let me just start by saying that I think I agree with you, but there is a compelling argument against your position that you may not have considered and probably didn't expect.

First of all, while you did not explicitly write it, you seem to be of the mindset that the purpose of financial aid to developing countries is to help their impoverished majorities to get out of poverty. Unfortunately for them, this is not the case. The purpose of financial aid is to increase their production of raw materials and resources necessary for the consumption of developed countries(i.e. America, and maybe some European countries).

1,3) The money doesn't necessarily go to the governments of these countries. Ironically, the bulk of the money may never leave it's country of origin as it is paid directly to a developing firm whose financial headquarters is located in America. The World Bank "loans" money to a company like Halliburton to do some kind of development in a country like Indonesia, such as building a power plant for them, building up their ports, giving them an aiport, or something else of this nature which will only benefit the wealthy and the producers of the nation. The reason I put the word loans in quotes is because the burden of the debt is of course not held by Halliburton, but by Indonesia. If, or rather when Indonesia defaults on their loan, they may than be forced to provide their resources in large quantity, lowering the world price so that developed nations can afford to buy more of it.

2) Exactly, this is really just another example to prove my point.

Now, you may think that the scenario that I've described above is evil, as do I. It gets even more evil when you consider that the countries are expected to default on their loans so that their countries may be raped, legally under international law, of all their resources. However, it may be difficult for we, as Americans, to denounce such a practice because in order to allow developing nations to get out of poverty, we need to make sacrifices. Do you like being able to buy t-shirts for $5 and pants for $10? Do you realize that the people who make those clothes are lucky to make that much money in a day? Do you like being able to fill up your gas tank every week? Let's imagine how much oil would cost if the oil-producing nations actually dictated their supply levels, you can be sure it would be well over $100/barrel.

Frankly, financial aid to developing nations is necessary, not to help their people out of poverty, but to satisfy OUR greed.
Debate Round No. 1
JustCallMeTarzan

Pro

I would say that the purpose of aid to developing countries is to help them develop. Which, yes, would include helping them climb out of poverty, but also includes solving problems that reside in social and governmental sectors as well.

The World Bank's loans do not exclusively go to companies like Haliburton. In any event, that is not a loan to a government, and is irrelevant. But I shall respond to it anyway.

1) In that case, the loan to the company is just as bad as a loan to the government. There is no conceptual difference in the end result. Regardless of WHO uses the money, it still serves to promote elitism, retard social structures, and make it easier for economic powerhouses to promote their own agendas.

I'm sorry, but with your point here, you simply redirect my argument, not refute it. Financial aid should be ceased to BOTH development firms and the governments of these countries.

2) I'm not sure it really proves either of our points - it's bad whether it's a nation's government or a development firm that employs the policy. Both institutes do it - it's bad in both cases.

I was disappointed you didn't address my solutions - some think they're rather revolutionary or incorrect.

Financial aid to the developing world from the G8 is actually not necessary for development. The Grameen bank was not founded by the G8 and is doing more for development in Southeast Asia than foreign financial aid has ever done. Financial aid to the governments of developing countries is, as you say, a way to fulfill our own greed.

Does that mean it should continue? I'm confused here - you seem to be defending an action that creates a situation of moral injustice. Perhaps I am misunderstanding some of your points, but I would appreciate it if you would take a clearer stance. Much of what I'm getting is that you aren't refuting my arguments, but rather pointing out additional areas that deliver the same results that I put forth.

Thanks for a great start - I await your reply...
HempforVictory

Con

"I would say that the purpose of aid to developing countries is to help them develop. Which, yes, would include helping them climb out of poverty"

Not necessarily. Development is quantified by GDP, and GDP can certainly rise while 80% of the country remains in poverty. What I'm saying is that the true purpose of financial aid is not to help a country get out of poverty, but rather to stimulate their development by increasing their production of raw materials. In the end, financial aid does more to benefit the country loaning the money than the one receiving it.

"The World Bank's loans do not exclusively go to companies like Haliburton. In any event, that is not a loan to a government, and is irrelevant."

It's not irrelevant because the debt is still carried by the country receiving the companies services. While you may see it as redirecting your argument, I am merely showing how the financial aid further benefits the country loaning the money.

"2) I'm not sure it really proves either of our points - it's bad whether it's a nation's government or a development firm that employs the policy. Both institutes do it - it's bad in both cases."

It proves my point that financial aid increases the production of raw materials in the third world, which lowers the global price and makes it cheaper for the primary consumers(i.e. the developed nations).

I'm sorry for ignoring your solutions. The first one seems kind of sexist, but I think loaning money to individuals would likely put a lot of people into a debt that they cannot repay. The second and third seem good for what you want to accomplish, but they don't address the issue that I am presenting: that developed nations would need to make sacrifices for the poor to move out of poverty.

"I'm confused here - you seem to be defending an action that creates a situation of moral injustice."

I am. You're basing your argument on morals, and I'm basing mine on the reality of people's greed. It's not possible for everybody in the world to enjoy the same high standard of living that we have, there simply aren't enough resources. It is a sad truth that our way of life depends upon cheap labor in foreign countries, so if you want to alleviate the poverty of people living on the other side of the world, you need to first accept a willingness to sacrifice the availability of cheap goods. My argument is that the majority of Americans aren't willing to make such a sacrifice.
Debate Round No. 2
JustCallMeTarzan

Pro

Development cannot be characterized by GDP alone. GDP is a factor, but you also have to take into account things like birth rate, infant mortality, percent of non-agricultural economy... all sorts of social factors are involved as well.

Increasing production of raw materials will not stimulate development. In fact, stimulating production of raw materials will INCREASE a trade deficit that is originally caused by the fact that the country exports raw materials and imports finished goods!

1) I do not mean to suggest here that your argument in and of itself is irrelevant - but it IS irrelevant to my first point in Round 1. I spoke of government corruption. Loans to Haliburton do not have any bearing at all on the corruption at the governmental level that is the root of the problem.

2) Yes - and when it makes the price cheaper for us consumers, it leaves the producers with less money, which is a bad thing as far as their development is concerned, and supports my rationale for giving the developing countries LESS financial aid to their governments.

Actually, in practice, the people that receive microfinance loans are just as likely to pay the loan back as you or me. They are not receiving loans of several thousands of dollars, but rather only a couple hundred. When invested in things like livestock and agriculture, the initial investment repays them many times over. Loaning more to women than men may be sexist, but it is also realist - the women are less of a credit risk than men, and do more for the community.

Actually, the developed world doesn't need to make sacrifices for the developing world to develop. It simply needs to realize that the Western model and economic approach doesn't work in all cases. What we're seeing here is a contrast between a power structure that looks like a triangle with the wide side at the base. There are only a few number of people with power. The monetary structure is the reverse - with the tip at the bottom. This creates much of the internal imbalance, and financial aid from the developed world only increases this contrast.

What is needed is to begin putting the money towards things like infrastructure, education, and institution-building. Currently, we're doing things like shipping combines to Ethiopia. They sit in the mud and rust because there are no roads to drive them on... this is a HUGE problem, and the reason why the West is doing more ill than good at the moment.

We don't need to make sacrifices to change this - we simply need to put the money where it WILL matter - not where we THINK it will matter. Using our aid to help developing countries won't necessarily drive the price of raw materials up. When demand is high, and availability is high, the price goes down. When nations develop, their production of raw materials will increase anyway, but they'll have the infrastructure and resources to lower their cost of production without changing the price they charge, which will increase their profits.

No monetary sacrifice needed on the part of the developed world at all. Only the will to admit that the Western model didn't work and we need a new one.
HempforVictory

Con

"In fact, stimulating production of raw materials will INCREASE a trade deficit that is originally caused by the fact that the country exports raw materials and imports finished goods!"

Ok, I should have corrected you on this in round 1, but developing countries do not have a trade deficit, they have a surplus. Their surplus is our deficit, for the most part, not to say that we're the only country that has a deficit, but it is by far the largest. If you stimulate production of a primary export, you will increase the trade surplus or decrease the deficit; this says nothing about an effect on importing finished goods.

"1) I do not mean to suggest here that your argument in and of itself is irrelevant - but it IS irrelevant to my first point in Round 1. I spoke of government corruption. Loans to Haliburton do not have any bearing at all on the corruption at the governmental level that is the root of the problem."

If anything I was further proving your point that the loans don't really help the recipients, but I was also proving my point that the loans benefit the country of origin.

"2) Yes - and when it makes the price cheaper for us consumers, it leaves the producers with less money, which is a bad thing as far as their development is concerned, and supports my rationale for giving the developing countries LESS financial aid to their governments."

Right, but I don't care about their development, I care about benefiting our consumers and our economy and am ignoring their plight. (in this debate)

"Actually, the developed world doesn't need to make sacrifices for the developing world to develop."

Everything else aside, developing countries need oil in order to grow to where they can be considered developed. For example, as China goes through its development, it has caused the price of oil to skyrocket. But oil is only one of many factors necessary for development, albeit the most important. If there is no longer a large supply of cheap labor as people in the third world demand higher wages, the price of goods in America will go up. Similarly, if the demand for consumer goods in these regions increases from an expanding middle class in developing countries, the price will go up even further.

"Using our aid to help developing countries won't necessarily drive the price of raw materials up. When demand is high, and availability is high, the price goes down. When nations develop, their production of raw materials will increase anyway, but they'll have the infrastructure and resources to lower their cost of production without changing the price they charge, which will increase their profits."

By availability I assume you mean supply. When demand goes up, price goes up. When supply goes up, price goes down. You're assuming that the supply will increase to accommodate the increased demand resulting from billions of people who suddenly have money, but the problem is that it's simply not possible for the supply to increase that much. It might increase, but not enough so that everyone in the world could own a car. Not so much that everyone in the world could eat meat every day. Not so much that everyone in the world could flush their sh*t away in 3 gallons of potable water.

It's not the western model, it's the exploitation model, and it's working just fine.
Debate Round No. 3
4 comments have been posted on this debate. Showing 1 through 4 records.
Posted by JustCallMeTarzan 9 years ago
JustCallMeTarzan
And much of mine is based on Jeff Sachs and William Easterly's books "The End of Poverty" and "The White Man's Burden" respectively. They are very much a pair of books - Easterly responding to Sachs. I would assume that they are somewhat similar to "Confessions of an Economic Hitman." I would recommend my source books as well.
Posted by HempforVictory 9 years ago
HempforVictory
Much of my argument is based upon information from a book entitled, Confessions of an Economic Hitman. It was written by a guy who worked for a company that specialized in justifying the loans given by the World Bank to countries like Ecuador, Columbia, and Indonesia. It's really quite an eye-opener, and I would recommend it to anybody.
Posted by Korezaan 9 years ago
Korezaan
my bad, I thought it said "INcReased."
Posted by Korezaan 9 years ago
Korezaan
I will take you up on this once I get that dependency file.
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