Friday, March 9, 2012

Foreign Aid is a Money Laundering Scam for Banks and Major Corporations (Part 2 of 2 Parts)

(To read part 1, click here.)
     Several decades ago, a youthful idealist said to me, “Many allowances are made for the illusions of youth, but few are made for the disillusionment of old age.” Now that I’m older, I believe that the idealist spoke better than he knew. There’s no conflict between idealism and disillusionment. Idealism has more practical value once the matrix of illusion is shattered.
     The ultimate idealist and the ultimate realist are one and the same. He sees the world both as it really is and as it can be and should be.
     In the first part of this series, I detailed instances of massive and systemic waste and fraud in foreign aid programs. There are only two explanations for this problem: Either the world’s brightest economic experts have committed the same blunders over and over again throughout the world for more than sixty years, or massive waste and fraud were deliberately built into the system. The latter explanation is more credible.
     Here's how the  foreign aid scam works:
    Billions of dollars are borrowed in the taxpayers' name, supposedly to help needy people overseas. Little or none of it is sent to needy people anywhere. It's sent to foreign governments, whose corrupt leaders use the power of distribution to prop up their rule. By agreement with the "donor" government, most or all of it is used to buy goods and services from U.S. corporations such as the military industrial complex. Of course, the borrowed money has to be repaid to the banksters who had created it out of thin air. It's not paid by the recipient government or by the corporations; it's repaid by the American taxpayerswith interest paid over so many years that it amounts to several times the value of the loan, and the American people never get out of debt.
     In college, I learned by way of a textbook called The Myth of Aid, that much “foreign aid” is entirely unneeded by the “recipient” country. For example, during the Cold War, the United States built a highway in Turkey, all the way to the Russian Soviet border. The highway was used almost exclusively by the U.S. military.
     On another occasion—also several decades ago—I read a memorable defense of U.S. foreign aid. The writer pointed out that America “benefits” from foreign aid because the supplies “donated” to recipient countries are bought from American factories. At the time, it had not yet dawned on me what this really meant: that the money had been borrowed from banks in the taxpayers’ name and transferred to corporations, after much of it had been spilled abroad.
     In case you’re wondering, the Marshall Plan was modeled along these lines. After Germany and much of Europe was thoroughly bombed to rubble, American corporations profited from rebuilding Europe.
     America’s current “foreign aid” policy in Iraq is a clever refinement of the Marshall Plan. In the Middle East and West Asia, countries are bombed to rubble and rebuilt at the same time. It’s a self-perpetuating means of soaking taxpayers of hundreds of billions of dollars and calling it compassion.
     The documentary Iraq for Sale details how both war and foreign aid is a self-perpetuating scam.
     For genuine foreign aid, corporations do have legitimate interests. So do governments, and so do non-governmental organizations. Rather than shock doctrine, disaster capitalism, or embezzlement by gangster government, I propose a strategic fit among the legitimate interests of corporations, recipient societies, and concepts of social and environmental responsibility (CSR) as defined by non-governmental organizations.
     There is probably nothing new about my model for foreign aid. It’s based on Harvard business scholar Michael Porter’s view of CSR. Business, society, and the environment are not mutual enemies. They all need one another. Rather than a zero-sum game in which CSR is measured by each giving up something to achieve an artificial “balance” of needs, Porter posits a win-win model for CSR.
     The Nestle Corporation is well known for some of the evil things they’ve done in third world countries, but Porter cites one case in which Nestle did something right. It’s a model for others to follow.
     In one cattle area of Central Africa, milk cows were unhealthy, refrigeration was virtually non-existent, and transportation was difficult. As a result, milk was of lower quality than it might otherwise have been, and a third of it was spoiled on the way to market.
Nestle provided veterinary services and refrigeration, and they improved roads. As a consequence, dairy farmers produced higher quality milk, more of which was fresh when it reached buyers, and farmers’ profits significantly increased. Nestle, in turn, had reliable sources for high-quality milk.
     In short, Nestle fit its business model (in this case) to business needs, societal needs, and CSR concepts. A business model that is purely “charitable” would likely have been an unsustainable waste of corporate resources. A business model that failed to take societal needs into account (such as tricking new mothers into using Nestle’s milk until the mothers’ breast milk had dried up) would have generated a public backlash.  (See Michael Porter and Mark Kramer's article "Strategy and Society: The Strategic Link between Competitive Advantage and Corporate Social Responsibility.")
     Between the farm and the fork, half the food in the world goes to waste. Either it’s ruined by weather or war, or it fails to reach the market in edible condition, or it’s ruined or thrown away before it reaches the consumer. As a result of this waste, a third of the world goes to bed hungry each night.
     The causes are manifold, so I don’t presume that strategic fit will solve all the problems of hunger and other needs. I do suggest, though, that a strategic fit of business needs, societal and environmental needs, and CSR concepts—if they are effectively monitored—can be a far more effective foreign aid program than the more familiar model of shock doctrine and disaster capitalism.

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