Published on 5 Dec 2016
This week: Let’s get in the holiday spirit! What would an economist do about Christmas gifts?
What do you really want for the holidays? And how can you be sure you’re giving the perfect gift to someone else?
Of course, you want to get your loved ones something they will appreciate, but you face a knowledge problem: you don’t know everything about their wants and needs. You also have an incentive problem: oftentimes people aren’t quite as careful choosing a gift for others as they would be if buying something for themselves.
We’ve all received a present that we didn’t really want. When that happens, the value that we place on the gift can be less than its cost. According to research by economist Joel Waldfogel, gift givers spend an average of $50 on gifts that recipients only value at $40. Given that Americans spend around $100 billion on Christmas gifts, we’re wasting $18-20 billion every holiday season!
Is there a solution to this costly problem? Well, you can always give cold, hard cash! Many gift recipients would prefer it. But if you know the recipient’s tastes very well, you do have the opportunity to give them a non-cash present that they’ll love and that creates value by lowering their search costs.
There are, of course, occasions where the gift of money doesn’t make sense. Perhaps you want to signal that you care in a different way, or maybe there’s a custom you want to follow. You’ll just have to risk it in these situations.
Around the holidays, there’s also a spike in charitable giving. If you face knowledge and incentive problems in giving gifts to loved ones, you can imagine that these issues increase when you’re giving to someone you’ve never met. To combat this problem, some charities, such as GiveDirectly, give cash to people in need so that they spend charitable donations however meets their needs.
The efficiency of an economist’s Christmas may feel less warm and fuzzy, but the value creation is no less generous!
December 6, 2016
September 21, 2016
Amy Alkon on the mainspring of some (possibly many) altruistic actions:
I write about this sort of thing in Good Manners for Nice People Who Sometimes Say F*ck. It’s called “pathological altruism,” and describes deeds intended to help that actually hurt — sometimes both the helper and the person they’re trying to help:
[Dr. Barbara] Oakley notes that we are especially blind to the ill effects of over- giving when whatever we’re doing allows us to feel particularly good, virtuous, and benevolent. To keep from harming ourselves or others when we’re supposed to be helping, Oakley emphasizes the importance of checking our motives when we believe we’re doing good. “People don’t realize how narcissistic a lot of ‘helping’ can be,” she told me. “It’s all too easy for empathy and good deeds to really be about our self-image or making ourselves happy or comfortable.”
One example of this is The New York Times series on nail salons — intended to help the workers but actually keeping a number of them from being able to get work…work they were able to get before the crackdowns the NYT piece led to. From Reason‘s Jim Epstein:
Salon owners have also stopped hiring unlicensed workers, whether they’re undocumented or not. By law, every manicurist working in New York State must complete 250 hours of training at a beauty school, which costs about $1,000, and then obtain a government-issued license. This is a barrier to entry, and some aspiring manicurists can’t afford the time or tuition. There are some salon owners in the industry who, up until recently, were willing to hire them anyway because they were desperate for employees and the state rarely checked. Cuomo’s task force changed that.
Kim sponsored a state law, passed in July, that attempted to remedy the situation. The bill made it legal for nail salons to hire workers as apprentices receiving on-the-job training. After a year, they’re eligible for a state license without attending beauty school.
Few are utilizing the apprenticeship program. “It needs tweaking,” Kim admits. Despite assurances to the contrary from state officials, Kim says he’s hearing on the ground that when signing up for the program, applicants are being asked their citizenship status, which is scaring off many would-be apprentices.
Licensed workers legally working in the U.S. have also been hurt by the inspections. “Workers themselves prefer to be paid in cash, and it’s not just at nail salons,” says Kim. Salon owners have started recording every dollar that passes through their shops to avoid getting fined. The inspection task force has had “unintended consequences,” he says.
The biggest victims, however, are people like Jing Ren, the main character in the Times series. Ren, 20, is undocumented, penniless, and “recently arrived from China.” Instead of paying $1,000 for salon school, she signed on as a trainee at a shop in Long Island. By the end of the article, she’s making $65 per day in base wages.
When weaving its cartoonish tale of evil bosses and oppressed workers, the Times never considers what would happen if all of the nail salons willing to hire Jing Ren disappeared. Would future immigrants like her be better or worse off?
August 17, 2016
For decades I have observed an abuse of charities that I am not sure has a name. I call it the “lifestyle” charity or non-profit. These are charities more known for the glittering fundraisers than their actual charitable works, and are often typified by having only a tiny percentage of their total budget flowing to projects that actually help anyone except their administrators. These charities seem to be run primarily for the financial maintenance and public image enhancement of their leaders and administrators. Most of their funds flow to the salaries, first-class travel, and lifestyle maintenance of their principals.
I know people first hand who live quite nicely as leaders of such charities — having gone to two different Ivy League schools, it is almost impossible not to encounter such folks among our alumni. They live quite well, and appear from time to time in media puff pieces that help polish their egos and reinforce their self-righteous virtue-signaling. I have frequently attended my university alumni events where these folks are held out as exemplars for folks working on a higher plane than grubby business people like myself. They drive me crazy. They are an insult to the millions of Americans who do volunteer work every day, and wealthy donors who work hard to make sure their money is really making a difference.
Warren Meyer, “The Lifestyle Charity Fraud”, Coyote Blog, 2016-08-04.
December 3, 2015
David Warren is rather a skeptic on the long-term usefulness of big medical charities (and not just because, like any big bureaucracy, sooner or later the primary goal becomes for the organization itself to survive and grow rather than pursuing whatever they were originally created to do):
Medical “research” does similar direct damage. Huge foundations are created to “fight” every imaginable human ailment, and find new ones on which to build fresh fundraising efforts, should any of the old ones go stale. Grand sums are expended on “public awareness” campaigns, to encourage hypochondria and psychosomatic disorders. (I suspect, for instance, that the chief cause of lung cancer today is grisly health warnings on packets of cigarettes.) Money is raised in billions to “find a cure” for whatever. (Snake oil sales were on a much smaller scale.)
At the most elementary level, people should try to understand cause and effect. Vast numbers come to rely upon the metastasis of these soi-disant “charitable” bureaucracies. And if a cure is ever found, they will all be out of their overpaid jobs. Moreover, it is almost invariably some isolated, eccentric, unqualified and unfunded tyro, who makes the fatal discovery. That is why one of the principal tasks of any large medical foundation is to locate these brilliant “inventor” types, and sue them into surrender.
Does gentle reader know that almost all the increase in human longevity, over the last century or so, can be attributed to people washing their hands and taking showers? And most of the rest to better sewage disposal? Or that it took until almost the middle of the last century for life expectancy in the West to rise to levels last seen in the parish records of the Middle Ages? Which was when “modern” hygienic practices were last observed. (Large, centralized hospitals are the most efficient spreaders of infection today.)
Painkillers are nice, and I’m inclined to keep them, only if we realize that the blessing is mixed. They turn our minds away from futurity; they displace faith in God, to faith in doctors. They create the mindset that embraces “euthanasia.”
Of course, the main focus of contemporary liberal “philanthropy” is not on saving lives at all; rather on killing off babies — in Africa, by first choice. It is what the proggies used to call “population control,” until they invented better euphemisms. That is what truly gladdens the peons in the foundations of all the Bills and Melindas; and lights the corridors of the United Nations. That and the (still historically recent) “climate change” agenda.
December 1, 2015
Brendan O’Neill says it’s time to smash the welfare system because it’s too badly broken to fix:
… however much the the apologists for the Byzantine system of welfarism might kick and shout, we need to get the facts out there, and we need to talk about them frankly.
The fact that more than half of Britain’s households, 13.7m, receive more in welfare benefits than they pay in taxes. The fact that this represents a rise from 45.9 per cent of households in 1997 to 51.5 per cent today. The fact that 20.3m families now receive some kind of state benefit. The fact that for 9.6m of these families, benefits account for more than half of their income. The fact that nearly five million people have their rent paid by the state. The fact that vast numbers of people, first through Incapacity Benefit and then through Employment Support Allowance, have been redefined by the state as ‘incapable’ — of work, of independence, of dignity, in effect — and have been put out to pasture. There are parts of Britain where a state-sanctioned culture of incapacity has deadened community spirit, destroyed its soul.
The growth of welfarism in recent decades, the replacement of economic vision and the creation of new wealth with a colossal system of state charity and therapy, has terrible consequences. It dents individual ambition, and corrodes social solidarity. When people are invited to rely for their every financial and psychic need on the distant, faceless state, then they’re less likely to rely on their own volition and on the support and kindness of neighbours and friends.
Welfarism is a classic good intention turned hellish: in the name of helping people it actually weakens both individual pluck and community zest. Of course, the loudest cheerleaders of welfarism — the comfortable, cushioned liberals who shout down anyone who criticises the welfare state — have no experience of this. They don’t even want to see it on their TV, as their lust to censor Benefits Streets demonstrated. Yet a few miles from the leafy suburbs in which they churn out their defences of welfarism there will be communities branded incapable and made divided by that welfarism.
Some people say, ‘But welfare benefits is not a huge part of government spending!’ This is true. It accounts for somewhere over 20 per cent. Or they say, ‘And old people get most of it!’ This is also true, and I think it is quite proper: the generational jihadists who moan about pension spending don’t seem to realise that old people who have worked or child-reared all their lives deserve society’s help in their twilight years, and that this is massively different to giving state largesse to fit, young 25-year-olds.
But my concern with welfarism is not how much it costs the government but the costs it has for community life, public spirit, the self-willed individual. Welfarism should be radically rethought not in order to save a few billion quid but in order to reverse the state’s spread into communities and to repair the self-belief and independence of working-class and poorer sections of society.
September 24, 2015
Don Boudreaux looks at the different effects of international aid and capitalist exploitation in a desperately poor, far-away country:
The far-away land of Subsistia is inhabited by people who are desperately poor, not only relative to the typical person elsewhere on the globe but also in absolute terms. For decades well-meaning, well-educated, and well-funded people from the United States and other wealthy countries have visited Subsistia to help raise Subsistians out of poverty.
Alas, while these efforts by governments, NGOs, and churches have been many and munificent, all ordinary Subsistians continue to live in deep poverty – that is, until recently. A few short years ago a large U.S. corporation, Nik-Mart, set up factories in Subsistia. The wages that Nik-Mart pays to its Subsistian workers, while much higher than the average wage in Subsistia, are only a tiny fraction of the wages that Nik-Mart pays to its production-line employees in America.
Nik-Mart sells the goods produced in its Subsistian factories all around the world. One result of Nik-Mart’s operations in Subsistia is that the real prices that poor Americans and Europeans pay for shoes, clothing, and home furnishings have fallen significantly.
Nik-Mart is consistently one of the world’s most profitable corporations. It is also one of the world’s most hated.
When word recently leaked out of Nik-Mart’s record sales revenues and of the healthy rate of return on Nik-Mart’s assets, protests erupted in all major capitals of the developed world. Washington, Ottawa, Santiago, London, Amsterdam, Stockholm, Paris, Berlin, Madrid, Rome, Prague, Moscow, Tokyo, Pretoria, Canberra – these and other cities were swarmed by protestors demanding “social justice” and criticizing Nik-Mart for exploiting workers. “Nik-Mart’s profits are in the billions,” screamed U.S. Sen. Elsbeth Walter, who gave a rousing speech to protestors on the Washington Mall, “and yet it exploits poor workers in Subsistia while it off-shores jobs from America, hurting poor Americans! Have you no shame, Nik-Mart? Have! You! No! Shame?!!” Sen. Walter rhetorically asked, her index finger pointing accusingly at an imaginary Nik-Mart executive presumably hovering, phantasmically yet bloatedly, before her.
The Sunday talking-head shows were filled with heads talking of little else. “It’s really unconscionable,” said Harmon Nicholson, a famous progressive columnist, “that Nik-Mart takes advantage of the freedom that this country gives it to produce the things it sells in America outside of America. It’s no wonder our jobs picture is so weak and that American wages have stagnated.”
Sen. Lawrence Greenham, a Republican from the south, chimed in: “I don’t normally agree with Harmon, but he’s right on this. American plutocrats are gettin’ richer an’ richer off the backs of America’s poor. It’s gotta stop.”
May 17, 2015
This report says that one of the richest men in the world is opening new frontiers in philanthropy:
Perennial contender for World’s Richest Man Carlos Slim announced Friday that he had reconsidered selling his Upper East Side home for $80 million, and instead was opening the Beaux Arts mansion to undocumented roomers. “Ever since I became the second largest shareholder in New York Times Inc., I’ve started reading the editorials,” explained the telecom monopolist. “And they’ve convinced me! What’s all this obsession with documents anyway?”
The Mexican oligarch continued, “If you can fool my doorman into letting you in once, or if you have the moxie to throw a brick through my window and crawl in over the broken glass, well, it would be inhumane to evict you. And if you have kids or parents, then they can come too because I wouldn’t want to stand in the way of family reunification. If I find you inside my house, then mi casa es su casa!”
This is clearly too good to check (but I did verify that the story isn’t dated April 1st, so it must be true, right?
February 12, 2015
Last month, Matt Ridley ran down the benefits to farmers, consumers, ecologists and the environment itself that the European Union has been resisting mightily all these years:
Scientifically, the argument over GM crops is as good as over. With nearly half a billion acres growing GM crops worldwide, the facts are in. Biotech crops are on average safer, cheaper and better for the environment than conventional crops. Their benefits accrue disproportionately to farmers in poor countries. The best evidence comes in the form of a “meta-analysis” — a study of studies — carried out by two scientists at Göttingen University, in Germany.
The strength of such an analysis is that it avoids cherry-picking and anecdotal evidence. It found that GM crops have reduced the quantity of pesticide used by farmers by an average of 37 per cent and increased crop yields by 22 per cent. The greatest gains in yield and profit were in the developing world.
If Europe had adopted these crops 15 years ago: rape farmers would be spraying far less pyrethroid or neo-nicotinoid insecticides to control flea beetles, so there would be far less risk to bees; potato farmers would not need to be spraying fungicides up to 15 times a year to control blight; and wheat farmers would not be facing stagnant yields and increasing pesticide resistance among aphids, meaning farmland bird numbers would be up.
Oh, and all that nonsense about GM crops giving control of seeds to big American companies? The patent on the first GM crops has just expired, so you can grow them from your own seed if you prefer and, anyway, conventionally bred varieties are also controlled for a period by those who produce them.
African farmers have been mostly denied genetically modified crops by the machinations of the churches and the greens, aided by the European Union’s demand that imports not be transgenically improved. Otherwise, African farmers would now be better able to combat drought, pests, vitamin deficiency and toxic contamination, while not having to buy so many sprays and risk their lives applying them.
I made this point recently to a charity that works with farmers in Africa and does not oppose GM crops but has so far not dared say so. Put your head above the parapet, I urged. We cannot do that, they replied, because we have to work with other, bigger green charities and they would punish us mercilessly if we broke ranks. Is the bullying really that bad? Yes, they replied.
Yet the Green Blob realises that it has made a mistake here. Not a financial mistake — it made a fortune out of donations during the heyday of stoking alarm about GM crops in the late 1990s — but the realisation that all it has achieved is to prolong the use of sprays and delay the retreat of hunger.
January 1, 2015
It’s actually rather amazing how powerful the US government can be … and we’re not talking about military power here. US banking laws are being exported to other nations without their consent or consultation, and there’s nothing non-US governments can do about it:
Now here’s a real surprise. The various anti-terror laws, terrorist financing laws, know your customer, illicit money tracking laws which now festoon the financial system have costs. Really, who would have thought it that bureaucratic regulations have real costs out there in the real world? It’s something of an amusement that it’s a rather lefty think tank, Demos, that brings us this news. For, of course, it tends to be those who are rather lefty who tell us that regulation is the cure for all our ills and no, of course not, regulations never have any costs they only do good things. You know, the Elizabeth Warren approach, piles of regulations on finance will be just wonderful, no one will ever lose out.
It particularly interests me as I’ve a very vague connection with a charity, Interpal, that has been hit by these sorts of regulations. Not, I hasten to add, that I am actually connected with that charity, only that I was once on a TV program with the head of it discussing their difficulties in gaining access to a bank account. The basic problem was that the Americans thought that they were less than kosher (the charity themselves obviously disagree) and that thus they shouldn’t have access to the banking system. This shouldn’t be all that much of a problem as they’re a UK charity and they were looking for access to the UK banking system. But that isn’t how it all works. If the Americans decide that they don’t think someone should have access to the banking system then they tell the bank that, well, you wouldn’t want us to come looking at your American banking licence if you were to offer an account with your UK licence, would you? And thus there is the leverage required to extend US law to other countries.
It’s not particularly the British government that is causing these problems although they have a part in it, to be sure. It’s the general international rules over who a bank may deal with, what they’ve got to know about them and what they’re doing with the money. Everyone seems quite happy with this as it stops (or hinders at least) drug dealing, money laundering and tax abuse. But it does have costs. Absolutely any set of regulations will affect people who are not the target of said regulations. If you insist that banks make a large effort to understand what their customers are doing then the banks will simply reject some customers as not being worth the candle. If perhaps handling money for some Islamic terrorist means bankers go to jail then bankers won’t handle the money of anyone who might be an Islamic terrorist: nor anyone who wanders around in Huddersfield in Islamic robes and states that they’re raising money to help the poor of Gaza. The manager of, say, Lloyds Bank in Huddersfield doesn’t know what the heck is going on in Gaza, who is linked to Hamas, who is not, who is delivering food and who is doing other less reputable things. And there’s no reason why she should either. So, the laws to prevent the one will lead to the other not gaining access to a bank account. This is really simple, simple, stuff.
This is what happens when people regulate.
September 11, 2014
What about the rationalization that charitable extracurricular activities teach kids important lessons of moral engagement? There are reasons to be skeptical. A skilled professional I know had to turn down an important freelance assignment because of a recurring commitment to chauffeur her son to a resumé-building “social action” assignment required by his high school. This involved driving the boy for 45 minutes to a community center, cooling her heels while he sorted used clothing for charity, and driving him back — forgoing income which, judiciously donated, could have fed, clothed, and inoculated an African village. The dubious “lessons” of this forced labor as an overqualified ragpicker are that children are entitled to treat their mothers’ time as worth nothing, that you can make the world a better place by destroying economic value, and that the moral worth of an action should be measured by the conspicuousness of the sacrifice rather than the gain to the beneficiary.
Steven Pinker, ” The Trouble With Harvard: The Ivy League is broken and only standardized tests can fix it”, The New Republic, 2014-09-04.
April 20, 2014
Tim Harford found a recent assertion by a clergyman to be troubling:
‘Some research on students suggests economics either attracts or creates sociopaths’
Justin Welby, the Archbishop of Canterbury, recently bemoaned the way that “we are all reduced to being Homo financiarius or Homo economicus, mere economic units … for whom any gain is someone else’s loss in a zero-sum world.”
The remarks were reported on the 1st of April, but I checked, and the Archbishop seems serious. He set out two ways to see the world: the way a Christian sees it, full of abundance and grace; and the way he claims Milton Friedman saw it, as a zero-sum game.
Whatever the faults one might find in Friedman’s thinking, seeing the world as a zero-sum game was not one of them. So what do we learn from this, other than that the Archbishop of Canterbury was careless in his choice of straw man? The Archbishop does raise a troubling idea. Perhaps studying economics is morally corrosive and may simply make you a meaner, narrower human being.
However, the Archbishop appears to have been misinformed:
Economists did actually give more to charity in Frank’s survey. They were richer, and while they gave less as a percentage of their income they did give more in cash terms.
What about those hypothetical questions about envelopes full of cash? Were economics students selfish or merely truthful? Anthony Yezer and Robert Goldfarb (economists) and Paul Poppen (a psychologist) conducted an experiment to find out, surreptitiously dropping addressed envelopes with cash in classrooms to see if economics students really were less likely to return the money. Yezer and colleagues found quite the opposite: the economics students were substantially more likely to return the cash. Not quite so selfish after all.
Most importantly, classroom experiments with collective goods or the prisoner’s dilemma don’t capture much of economic life. The prisoner’s dilemma is a special case, and a counter-intuitive one. It is not surprising that economics students behave differently, nor does it tell us much about how they behave in reality. If there is a single foundational principle in economics it is that when you give people the chance to trade with each other, both of them tend to become better off. Maybe that’s naive but it’s all about “abundance” and is the precise opposite of a zero-sum mentality.
In fact, some of the more persuasive criticisms of economics are that it is too optimistic about abundance and peaceful gains from trade. From this perspective, economists should give more attention to the risks of crime and violence and to the prospect of inviolable environmental limits to economic growth. Perhaps economists don’t realise that some situations really are zero-sum games.
February 8, 2014
James Delingpole on the remarkable community of interest between charitable organizations (partly funded by governments) and the government agencies they lobby:
“To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves and abhors is sinful and tyrannical”. Thomas Jefferson, 1779.
One of the curses of modern life is the plethora of “charitable” lobbying groups demanding that the government take more regulatory action in areas where most of us believe the state has no business interfering.
Almost every day you read in the papers that some apparently grassroots movement, supposedly speaking for all of us, thinks more should be done to stop us drinking, smoking, eating sugar or salt, make us less sexist, force us to spend more on foreign aid or environmental issues. But if that wasn’t annoying enough, here’s the worst thing of all: we’re paying for these unrepresentative, mostly left-leaning lobby groups with our taxes.
This is the message of Chris Snowdon’s report for the Institute of Economic Affairs, The Sock Doctrine [PDF] — the third in his trilogy of broadsides against the lavishly state-funded “fake charities” industry. By 2007, he noted, a quarter of the UK’s 170,000 charities were receiving money from the state and approximately 27,000 received at least 75 per cent of their income from the state. If you share these charities’ predominantly liberal-Left-leaning aims you probably won’t mind so much. But if you don’t, you might be inclined to believe, as Fraser Nelson argued in these pages last year, that “Britain’s charities are nurturing a colourful, talented and efficient anti-Tory alliance.”
But, of course, there are opposing charitable organizations equally dependent on government funding and spending disproportional time and effort lobbying for their pet causes?
Well the problem is that they’re almost non-existent. The reason for this was identified in 1985 by US researchers James T. Bennett and Thomas J. DiLorenzo:
“Virtually without exception, the recipients of government grants and contracts advocate greater governmental control over and intervention in the private sector, greater limitations on rights of private property, more planning by government, income redistribution, and political rather than private decision making. Most of the tax dollars used for political advocacy are obtained by groups that are on the left of the political spectrum.”
November 28, 2013
Published on 24 Nov 2013
Five Clydesdale shire horses have taken part in a charity race at Exeter racecourse.
The horses thundered down the home straight with the aim of promoting the breed, which has been given “at risk” status.
The horses took part in the Devon Air Ambulance charity race 35 minutes before before the day’s main racing and were ridden by professional jockeys.
The two furlong race was won by Tom Parker, ridden by Michael Nolan.
July 30, 2013
Tim Worstall applauds you for wanting to use some of your economic surplus to help out the poor and less fortunate producers of various goods in the developing world, but points out that the “fair trade” method is incredibly inefficient at funnelling any of that extra money to the original producers of your coffee or other “fair trade” goods:
However, you might want to have a little think about this in the lights of these quite astonishing numbers:
An interesting statistic is that in 2010, retail sales of fair-trade-labelled products totalled about $5.5 billion, with about $66 million premium — or about 1.2 percent of total retail sales — reaching the participating producers. There has to be a better way of helping poor farmers. Having only 1.2 cents out of every dollar spent on fair-trade products reach the target farmers is a hugely inefficient way of helping these people. If people wish to help these farmers there has to be charities out there that can transfer more than 1.2 cents per dollar to them.
It may well be that you are exercising your consumer choice as a way to make the world a better place. It’s just an incredibly inefficient method of doing so and thus you might want to reconsider that plan.
My own supposition is that the reason Fair Trade is so appallingly inefficient is the number of Interchangeable Emmas who have to be paid from that money supposedly going to producers. It takes very many poor coffee farmers’ incomes to pay for the PR bod advertising Fair Trade coffee from an office in central London. It might well be better to simply do as Madsen urges, and buy things made by poor people in poor countries. Then send the money saved by not paying the Emmas off to a charity of some minimal efficiency. Or even, if coffee farmers are really your thing, simply drink an extra cup or two a day and send the money by increasing demand for their production.
Update: In a marginally related item, Jonathan Katz explains why the policy of sending food to distant lands is less an attempt to ameliorate hunger than it is a corporate welfare policy to prop up US agribusiness:
The problem, says Christopher Barrett, an economist at Cornell University and one of the world’s leading experts on food aid, is that the U.S. has an entirely different goal when it comes to sponsoring humanitarian assistance. Feeding the hungry has never been its sole purpose.
Rather, the historical goal of food aid has been to stimulate U.S. businesses — the agriculture and shipping industries above all. Modern food aid was devised in the early days of the Cold War as a way to dispose of government-held surpluses, in order to regulate crop prices at home and create markets abroad. The main programs in the early days of food aid didn’t even give food away for free, rather selling it to foreign governments at a discount. “It just happened that this could get advertised as and provide humanitarian relief on occasion,” Barrett said.
Over time, things began to change. Surplus disposal became less important than other forms of domestic price control, and the cheaply sold food did not prove very effective in opening markets. When in the 1970s and 1980s, food donated during famine emergencies in Asia and Africa proved effective, free-food distributions took over as the dominant programs.
Today, the major players in food aid are nongovernmental organizations (NGOs) such as World Vision. But, because of how American laws are structured, domestic corporations still reap the much of the profit. Major U.S. agribusinesses can count on hundreds of millions of dollars in annual sales to the government.
Shipping companies do even better. Federal law mandates that at least half of all U.S. food aid must be shipped aboard U.S.-flagged vessels. With shipping costs taking up nearly 40 percent of any food assistance funding, the law guarantees hundreds of millions of dollars in contracts for shipping companies. The winner of the Mozambique shipment was no exception: Sealift Inc. has grossed $203 million in government contracts since 2011, mostly from the Pentagon, according to data at USASpending.gov. This benefit is not lost on the shipping industry: The sector’s leading coalition, USA Maritime, spent $250,000 lobbying Congress on food aid and cargo-preference laws in 2011 and 2012.
June 9, 2013
A charity event in Halifax had to be cancelled due to a phoned-in bomb threat:
A bomb threat that forced one of the Canadian Cancer Society’s biggest fundraisers to cancel on Friday night is still being felt by other groups organizing their annual walks and runs this weekend.
Halifax Regional Police said someone called 911 from a payphone at the corner of Spring Garden Road and South Park Street and made threats that alluded to the Boston Marathon bombing.
Nearby, nearly 700 people were gathered at the Oval in the Halifax Common for the Relay for Life.
Police met with the organizers and the fundraiser was called off, ruining a year’s worth of work by dozens of volunteers.
“I would say don’t ever do this again because you are hurting people in their time of need,” said Barbra Stead-Coyle, CEO of the Cancer Society.
“Last night my heart broke for the volunteers who put their whole heart and soul into making last night’s events.”