Have you ever heard of the Millennium Challenge Account? I didn't think so. But this (so far) obscure program promises to revolutionize America's foreign aid, by rewarding countries on the basis of their adherence to fundamental norms of justice, openness to foreign investment, and care for their people's welfare. Corrupt tyrants need not apply.

George Gedda of the AP reports that the program, introduced by President Bush in March of 2002, is now nearly ready to be implemented. So far, no money has been appropriated by Congress, but the Bush Administration is hopeful of obtaining $1 billion or more in its initial year, building up to $5 billion in annual expenditures by 2006.

The program was announced six months after the 9/11 attack, as an element of the War on Terror:

"Poverty, weak institutions and corruption can make weak states vulnerable to terrorist networks and drug cartels within their borders," according to Bush's National Security Strategy report from September 2002.

Fundamentally, the program relies on the power of incentives: if you provide rewards for good behavior, and withdraw them for bad behavior, and there is a good probability that behavior will improve. But not everyone agrees. Two prominent Democrats have criticized the program, one of them on reasonable grounds.

Tom Lantos (D—Calif.) faults the program on the specific criteria used to define good behavior, and on the organizational structure chosen to administer it. These can be usefully debated, and possibly improved by scrutiny.

But Rep. Robert Menendez (D—NJ), an expert on Latin America, is less reasonable in his objection that the program will do nothing in the short term to alleviate massive poverty in that region:

Menendez and several colleagues are proposing a development fund of $500 million per year for Latin America to fight growing poverty. He noted that current U.S. aid for Latin America is skewed toward military and counternarcotics assistance.

Peru, Ecuador, Colombia, Guatemala and Venezuela, among others, "remain on the verge of chaos, increased conflict or political turmoil," Menendez said, and his information suggests none is a prospective first—round beneficiary country.

In the real world, where resources are limited, no program can accomplish everything. More importantly, without incentives for change, the conditions which created the problems in the first place are likely to persist, and the aid will only temporarily palliate the suffering, not relieve it or cure it. Indeed, if unconditionally continued, it can become a perverse incentive to keep the masses in poverty, to ensure the continued inflow of funds, benefiting those who administer the aid.

One of the fundamental issues on which politics is divided today in America is the role of incentives.

Republicans generally believe in them, and thus support tax cuts to encourage economic growth, swift, sure, and unpleasant punishment to deter crime, and exit testing for public school students, to encourage teachers to cover the basics before moving on to sex education and political indoctrination.

Democrats, on the other hand, in general tend to see incentives as 'mean,' because they involve penalties imposed on those with comparatively less wealth and power than those administering the incentives. Their criticisms impugn motives, and complain that the programs will not solve every problem immediately.

Let the commonsense voters decide.

Posted by Thomas  01 04 04