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March 02, 2005

The French Ambassador er, Speaks Out.

An interesting and fun piece from the French Ambassador today in the Grauniad. On the face of it worthy enough but, well:

First, developed countries should aim at devoting 0.7% of their GDP to Official Development Assistance.

Interesting really, as there is as yet little evidence that official aid actually helps anything other than to salve the consciences of those who send it. Rather the opposite in fact, channeling money from government to government has been shown to be positively deleterious to those receiving it. Still, we rarely expect economic logic from a diplomat now do we?

France has, for some time, strongly advocated the creation of global taxes to finance the fight against poverty. This would not require the creation of any new international bureaucracy, and would be based on voluntary cooperation between sovereign states. Its main advantage would be to secure stable, immediately available financing for the MDGs. Last year, in a joint endeavour between emerging and developed countries, Brazil, Chile, France and Spain looked at several options for global taxes. The report they co-authored concluded in favour of the economic feasibility of international taxes. Building on this emerging consensus, President Chirac, in his Davos speech in January, suggested a very small levy (about one ten-thousandth) on international financial transactions and some taxes on air transport.

Admittedly, international taxation is controversial. However, the public outpouring of generosity throughout the world following the Asian tsunami, points to a shift in world opinion. A contribution of £1 or £2 on every plane ticket in the world would produce almost enough revenue to finance the worldwide fight against Aids. Who could refuse such an effort?

Allow me to step up to the plate here. I would refuse such an effort. No, I am not surprised that a product of the grandes ecoles would suggest that more taxes are the answer, that’s how France has been run for generations. There mere idea that what is already being spent should be spent better clearly never crosses the minds of such Statists, let alone the thought that it should not be The State that undertakes such actions.

There are two more specific problems with the proposals, just to underline the fact that no Frenchman since Bastiat has understood economics. For a Tobin Tax to work, everyone has to apply it. Not just most or many, but all. Rather like the droit de suite that the French, via the EU, have foisted upon us. As New York does not have it, and there is no way in hell they ever will, the effect of this tax is simply to shift the art market from London to New York. Obviously a victory for French diplomacy, screwing les rosbifs, but of little effect in any other manner. All that is required for the Tobin idea to fail is Monaco, or Liechtetenstein, New York,
Vanuatu or China not to apply it and all such transactions will be routed through them. Net revenue raised zero....you see markets work but then again, we don’t expect a Frenchman to understand that.

The airline tax is a little different. There probably are good reasons to tax air travel, given the externalities involved. However, here we come up against one of the great truths of taxation, that hypothecation is a bad idea. There is absolutely no connection whatsoever between the amount that can be raised from taxing travel, the amount that should be raised from so doing so, and the amount that could or should be spent on Third World Development. If RyanAir doubles the number of people who take weekend breaks, does this have any relationship at all with the optimal amount of aid? Or if there is another 9/11, passenger numbers falling drastically, does this mean that some destitute picanniny is no longer deserving of our help? 

No, l’escrot Chirac rather needs to crack open the textbooks again and read up on the idiocies that he’s asking his Ambassadors to  propose to a breathlessly waiting world.

We recognise that, ultimately, greater integration of poor countries in world trade through better access to our markets is an essential driver of growth and poverty reduction.

You do recognise this? Excellent, so it is now France’s official position to abandon all of the absurdities and simply abolish the EU’s tariff regime, including, of course, the Common Agricultural Policy, that behemoth that supports French peasant farmers at the cost of millions of deaths in the Third World? Glad we’ve got that clear and I have no doubt that the Trade Commissioner, dear Mandy, will be interested to hear it.

Unless, of course, the old Anglo saying (perfidious these Brits, actually taking statements at face value) that a diplomat is a man sent abroad to lie for his country is actually true. 

March 2, 2005 in Make Poverty History | Permalink

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To the burgeoning list of things Tim Worstall knows nothing about (which already includes statistics, housing, Latin American development and the history of free trade) we can now add aid and poverty. First, aid. Decrying the lack of 'economic logic'... [Read More]

Tracked on Mar 5, 2005 12:44:38 AM

Comments

"channeling money from government to government has been shown to be positively deleterious to those receiving it."

Shown where, exactly? Forgive my scepticism, but you have a habit of talking through your hat when it comes to development. Your claim is also directly contradicted by this research.

Posted by: Jim | Mar 2, 2005 11:59:48 AM

Jim,
From the paper you point me to:

"Some re-searchers have concluded that aid does little for growth, with a few suggesting that in the wrong circumstances (such as under a corrupt dictator), aid can undermine growth and development."

Posted by: Tim Worstallt | Mar 2, 2005 12:10:56 PM

So when you said that "there is as yet little evidence that official aid actually helps anything other than to salve the consciences of those who send it. Rather the opposite in fact", you were only referring to the specific case of sending aid to corrupt dictators? Funny, because it sounded like you were talking about aid in general. The research I linked to then goes on to show that short-impact aid is unambiguously good for growth. Are you saying they're wrong? If not, shouldn't you correct your post to remove your rather uninformed over-generalisation? I won't hold my breath though.

Posted by: Jim | Mar 2, 2005 12:57:44 PM

Glad you agree then Jim, that aid to corrupt dictators is a bad idea. So, we need to get rid of corrupt dictators before we send aid. Glad to see you on board with the Iraq War then.
As to corrections? Why, you think you’ve managed that perfectly well in your comments. Readers can, in the future, read both of us and make up their own minds can’t they? Known as diversity I believe.

Posted by: Tim Worstallt | Mar 2, 2005 1:12:43 PM

oh hogwash, if I wanted "diversity" I'd read butterflies and wheels, or whatever. Is govt-to-govt aid generally a bad thing, or is it just in cases when the recipient is a corrupt dictator, and otherwise it's groovey? in which case Mr Worstall we would have "diversity" of views in the sense that Jim is right and you're wrong. Or, is corruption so endemic that the statement govt-to-govt aid is rubbish becomes generally true, and Jim must be forced to eat hat. Duke it out please.

Tim adds: Well, looking at the Transparency International survey on corruption at http://www.transparency.org/surveys/index.html#cpi there is a correlation between those places poor enough to need aid and those so corrupt as to waste it, as a number of people, including myself, have pointed out beofre.

Posted by: Paddy Carter | Mar 2, 2005 2:15:18 PM

hmm, I wish there was an edit comments facility.

Tim adds: There is, but it’s at my end of the system :-)

Posted by: Paddy Carter | Mar 2, 2005 2:22:12 PM

Glad you agree then Jim, that aid to corrupt dictators is a bad idea. So, we need to get rid of corrupt dictators before we send aid. Glad to see you on board with the Iraq War then.

WTF???

Jim's criticisms seem to be on the mark and Tim should probably offer a qualification of his initial claim.

Posted by: Guy | Mar 2, 2005 6:55:22 PM

Aid to corrupt dictators is a fundamental principle of progressive social democratic thinking. The alternative is an American model. Since there is, therefore, no alternative, it's absurd to criticize an admittedly imperfect set of institutions when they're really all we've got and should, instead of being criticized, be given time to improve instead.

Besides, if aid to even one corrupt dictator, somewhere, anywhere, does any good at all, then the principle Tim is expounding is invalid and the other 99.5% of cases are irrelevant anecdotal evidence, mere nit-picking and ankle-biting. Besides, France is a well-respected nation. It's not some kind of banana republic. You can't just go around criticizing nations like France.

Posted by: blarg | Mar 2, 2005 7:21:12 PM

In fact, Tim is clearly a Euroskeptic, a swivel-eyed loon whose views cannot not be taken seriously enough to merit the dignity of rebuttal. By embracing Euroskepticism, Tim has voluntarily removed himself entirely from the sphere of legitimate debate — and for that, he has only himself to blame.

Posted by: blarg | Mar 2, 2005 7:24:08 PM

Aid typically distorts the market and is a bad thing. If a poor farmer is growing his crops and his neighbour is rewarded for doing nothing to improve his lot by being given food, then waht's the point in working hard himself!?!

If Europe was really keen to overcome poverty in the third world, it should look at reforming the CAP as Tim alludes to first. Rather than being so self-congratulatory about giving aid.

Aid donation to Africa seems to have been an absolute disaster when you consider the $billions that have been given over the years.

Posted by: Snafu | Mar 2, 2005 9:57:55 PM

By embracing Euroskepticism, Tim has voluntarily removed himself entirely from the sphere of legitimate debate

Oh blargy, thanks for the laugh. God, that was good …whew.

So, let me get this straight. You have created a word “Euroskepticism” to label the thoughts of those who have a differing opinion of European policy than yourself. Which you then claim they “embrace” as though it were some sort of cult-like phenomenon. Thereby, relegating such misguided dissidence as an “illegitimate” argument; and to top it with a cherry, dismiss the disagreement with your opinions on that basis alone whilst avoiding all contact with the actual themes, policies and (if I may be so bold) facts in question.

O.K., perhaps it’s just that I’m a thick Yankee girl, lacking in subtlety and nuance, but I’m having difficulty following your clearly superior logic. I think I have it though; call them names then take your ball and go home. Works every time.

Oh, and along those lines, “You can’t respond to me ‘cause you’re a big dumb doody-head.

Your Pal,
Starke

Posted by: Starke | Mar 2, 2005 10:13:28 PM

In one article I read about African aid, plows given as charity by Western do-gooders ended up putting the local plow vendor out of business, thereby destroying the local farm-equipment-making capability (such as it was) as well as making all the subsistence farmers dependent on Western charity.

I agree that ending trade barriers is a more effective form of aid than do-gooder chairty.

And BTW, how much of the "aid" taxes proposed by Chirac would end up going to support tranzi bureaucracy in luxurious Western comfort? Quite a bit I imagine. And I'll bet Wacky Jacky has the perfect location for the headquarters of this wonderful new tranzi organization. . .Paris, perhaps? And what global "statesman" would be the perfect managing director for same? Why, I bet Wacky Jacky wouldn't blush too much if someone submitting his own name for the job - he might need some diplomatic immunity to keep himself out of prison once he departs Elysee Palace.

Snafu: good fisking of a moron.

Posted by: Irene Adler | Mar 2, 2005 10:50:37 PM

Coincidentally, I have begun to collect together some evidence about the effectiveness of aid on my blog.

If you and your readers are interested in evidence-based analysis, rather than wishful thinking or blind prejudice, you may want to take a look at the "aid works" entries in my blog.

I would welcome comments and contributions.

Owen Barder

Posted by: Owen Barder | Mar 9, 2005 3:55:42 AM