The Last Condom Factory in Alabama
An important New York Times article today describes a little-known aspect of foreign aid: it is often legally required that the money flow to US (or European, in the case of European aid) companies. Thus USAID buys condoms from a US manufacturer in Alabama for more than twice the cost of the condoms they could be buying from a factory in Asia. Not the most effective means of providing aid, but the government contract is the only thing keeping that company in business. Towards the end, there is a quote from a poor single mother who works in the factory for around $7 per hour:
But even facing her own impending job loss, Ms. Appling took a moment to empathize with the women making condoms on the other side of the world. “We need a job — I guess they do, too,” she said, during a brief pause from feeding condoms into an intricate, rotating, whooshing machine that tested them for holes. “It’s sad. At the same time, the United States can’t just keep helping overseas. They’ve got to help us, too.”
This is a heart-rending story. It’s terrible to think that we have to choose between helping a poor Alabaman woman, an anonymous Asian condom factory worker, and Africans threatened by HIV. Can’t we help them all?
The short answer is no, you can not protect everybody. You can’t save everybody’s job from being shipped overseas, and you can’t save everybody’s employer from bankruptcy. If you want to see what happens when you try, the best example is American and European farm subsidies. Decades ago, before poor countries were competing with the U.S. and the E.U. for manufacturing and IT jobs, they were competing on the global food market. In response to this rising scourge of globalisation, the U.S. and the E.U. implemented massively expensive and counter-intuitive farm subsidies. This hasn’t kept a lot of independent American farmers in business, although it has fuelled agro-industry, the over-sized factory farms with dubious ethical practices. It has also killed thousands and thousands of Africans and other farmers. Agriculture accounts for 80% of Uganda’s exports; no amount of foreign grants, of “free money,” could make up for the lost benefits that the great increase in earned money would have for the Ugandan economy.
So what do you say to that poor Alabaman single mother who will lose her job if USAID starts buying condoms from Asia? You can’t save her job, but you can provide her with a decent education. You can give her the tools she need to fend for herself. She’ll do a better job of that than a government bureaucracy would.
Artificially supporting uncompetitive domestic industry is both futile and globally irresponsible—not to say cruel. And when packaged with foreign aid, it undermines any attempt to do good abroad. For example, when, in an attempt to stem a famine, the US ships American-grown food to African countries, the bottom drops out of the local food market and African farmers find that they can't raise enough money by selling their crops to afford both basic necessities and seeds for the next year. The agricultural economy is undermined, and the stage is set for future famines. Using the same money to purchase African-grown food could avoid this calamity.
In fact, using aid money to buy American goods and ship them to Africa is probably not as helpful as using aid money to buy African goods an ship them to America. “Trade, not Aid” has become a slogan of many modern African development promoters, and with good reason. It’s the “teach a man to fish” philosophy: don’t give a man a second-hand t-shirt, give him a job. Let him spend his earned cash in his country, spreading the benefits to others. Make the government dependent upon local tax money rather than foreign grants, which could not fail to stem some of the rampant corruption and lack of accountability.
So, returning to my earlier question, maybe you can help everyone. There may not be a simple solution to these problems, but here’s a start: drop all protective subsidies, starting with farm subsidies, and re-direct the money into a modern-day GI bill, providing the so-called “victims of globalization” with the training they need to stay competitive. Their lives will improve when they move from dead-end factory jobs to higher-paid skilled positions, anyway. Then, reverse the policy of supporting U.S. firms with our aid money. Instead, stipulate that all aid supplies must be manufactured by corporations owned from within the target country, where possible. Without spending an extra cent, everyone—U.S. laborers, foreign recipients of aid, and consumers worldwide—will win.