This was posted to another board that I frequent, and was not recieving the kind of response that I feel it deserves. the author gave me permission to repost it here in hopes of having an actual discussion.
Posted by Mouji:
In the light of the avalanches in Europe, the hijacked plane in the middle east and the debate over cancelling world debt, I was wondering what people on here generally thought about us giving aid to developing countries. I am a fairly left wing person (!) and I believe that we have a responsibility towards other nations to support them. However, it is of course a worry to some people that if we cancel world debt some businesses will have to fold as they rely so heavily on the world bank system at the moment and there seems to be a multitude of other reasons that people have for disagreeing with the idea.
What do you think? Do we have a responsibilty? Do you support any particular causes? Have you ever been to a developing country to work with the people? How much DO world issues affect our youth culture and how much SHOULD world issues affect our youth culture?
Youth culture in this country (USA) isn’t affected in the least by world issues. Sometimes I think a stint in the Peace Corp should be mandatory for all young Americans. It would certainly have a benificial effect on the USA. I don’t know if I can say the same for the poor countries we send them to.
If I understand the post correctly, the suggestion is that America forgive all debts owed to us by under-developed countries. IMO, this is a bad plan. One of the important skills a nation must master in order to rise above poverty is responsible economic planning. In many Third World countries, a good portion of the foriegn aid that is provided never reaches the people, but ends up in the pockets of politians and their friends. What does get funneled into social programs is very often mismanaged. If the county in question is not a democracy, wiping out the debt will only encourage this sort of behaviour. In cases where the country is a democracy, it does not take long for the people to see the graft and corruption and start to rally for change. (Side note: those in non-democratic societies see it to, they just don’t have the power to do anything about it). Eventually, this will lead to less graft and corruption. But if the debts is forgiven, there will be far less concern about misuse of the funds.
It is essential for the long term prosperity of any nation that they learn to manage their finances, and without pressure to do so, this won’t happen. If the U.S. were to forgive debt even once, it would be assumed (hoped, planned on) that the U.S. would forgive debts again. A country would have no chance of learning how to succeeed because they would have no impetus to plan for long term economic stability.
It’s just human nature. If your bank came to you one day and said they were going to forgive your mortgage debt because it seemed you could really use a break, would you not be more inclined to overspend again, thinking that they may again forgive your debt?
And, since you asked, I do work in the Third World. I do think that we should do all we can to help other nations to succeeed and to feed, clothe, house and provide medical care for as many people on this planet as possible. But one must also remember that we are not talking about “noble savages”. These are real people with thoughts, feelings and moreover, pride in thier country. In my experience, it is not hand-outs they are after, it’s opportunity.
“I should not take bribes and Minister Bal Bahadur KC should not do so either. But if clerks take a bribe of Rs 50-60 after a hard day’s work, it is not an issue.” ----Krishna Prasad Bhattarai, Current Prime Minister of Nepal
If my bank came to me one day and said they were going to forgive my mortgage debt, I’d have to scramble to pay the income taxes. Forgiveness of debt is considered “income” under U.S. tax law.
The truth, as always, is more complicated than that.
“I should not take bribes and Minister Bal Bahadur KC should not do so either. But if clerks take a bribe of Rs 50-60 after a hard day’s work, it is not an issue.” ----Krishna Prasad Bhattarai, Current Prime Minister of Nepal
As Richard Feynman once said, a lot of people base their views on the misconception that there is a fixed amount of wealth to go around and rich countries have somehow taken it away from the poor countries. In most cases, forgiving a debt owed by a poor country will help in the short term but will do nothing to solve the basic problem.
The usual problem is that 3rd world countries are not producing enough wealth. Either because of war, corruption, lack of education, disorganization or something else.
Sure, it can help to cancel a debt, but if you really want to help the 3rd world there are much more efficient things you can do with the money. To increase wealth you need to increase wealth production.
