David Roodman of the Center for Global Development has a thoughtful response to my blog post (responding in turn to his initial post) on the growing calls to cancel Haiti's debt.

To summarize, David and I are discussing whether debt relief for Haiti is A) a good thing and B) should be a priority -- we agree on A (yes) and disagree somewhat on B. David argues that debt payments aren't going to be an issue in the foreseeable future, and that countries like Venezuela shouldn't get points for relieving relatively small sums of debt -- particularly if they aren't also providing significant aid, which is more important in the near and medium term. I say there's a short window in which to ask for countries to throw in the kitchen sink, so why not, particularly given debt's historical choke-hold on Haiti and given that three or ten years from now, Haiti will still be poor and in debt. Lots of others have good commentary on the subject, including Daniel Altman and Alex Tabarrok.

Ultimately, I still believe there's room and reason to ask for debt forgiveness -- if not now, then when? But it made me wonder about aid effectiveness -- if you're giving x dollars of aid, what provides the maximum benefit: debt forgiveness, direct governmental grants, funding specific programs, ending agricultural subsidies?

Development economists, of course, research this question, well, exhaustively. And the answer? It's now always clear -- or, there's no general rule. Academically, a dollar of debt relief is worth more than a dollar of granted aid. In reality, the level of indebtedness, degree of governmental corruption, relevant economic fundamentals, and the entities doing the lending all matter considerably.

But there's consensus on what other countries can be doing, should be doing, and are doing now. Haiti needs material support (water, batteries, medical supplies, etc.) and cash aid. But the United States, especially, should also think about remittances and immigration. Here, Michael Clemens and Amanda Taub argue for giving Haitians temporary protected status in the States. In the longer term, the United States might consider taking a close look not just at debt, but also at rice.

Not every day does Bill Gates lay the smack down on a sitting premier, but that was the case when the Microsoft founder slammed Italian Prime Minister Silvio Berlusconi's foreign aid policy. Berlusconi's stolen Italian headlines in the last week (but when is that not the case?) for a post-hair-transplant bald head -- and Gates couldn't resist making a not-so-subtle reference:

And in a clear reference to the notoriously image-conscious Berlusconi, Gates told Süddeutsche Zeitung: "Rich people spend a lot more money on their own problems, like baldness, than they do to fight malaria."

Italy's foreign aid budget was approximately 0.11% of its GDP in 2009, one of the lowest figures among developed countries, and half of what it was even in the prior year. Gates didn't mince words on his views:

"Dear Silvio, I am sorry to make things difficult for you, but you are ignoring the poor people of the world," he told the Frankfurter Rundschau.

China is denying that the $1.2 billion in aid that Vice President Xi Jinping pledged during a visit to Cambodia yesterday had anything to do with the fact that just hours earlier, the country deported 20 Uighur asylum speakers -- a move that Xi praised during the very same visit:

A Chinese Foreign Ministry spokeswoman defended the deportations Tuesday, called the handling of the Uighurs an "internal affair" and said there were "no strings attached" to the aid package.

"According to my knowledge, some are suspected of criminal cases," Jiang Yu told a regularly scheduled news briefing. "Public security forces will handle the relevant outlaws. Their whereabouts, I have no information to offer you."

 

Yesterday, I wrote about the brief life and presumed death of Rep. David Obey's "war tax," also known as the "Share the Sacrifice Act of 2010." Obey and his cosponsors hoped to make the Afghan war pay-go from here on out, with an income tax surtax (one percent for most earners, and higher for high earners) linked to the cost of war. 

I liked the idea precisely because so much of this war (around 40 percent) thus far has been funded with deficit spending during very good economic times, from 2001 to 2006, when high-income Americans certainly could have afforded higher taxes (which were cut by George W. Bush).

Commenters here and elsewhere asked: Why raise taxes during a recession, when the government has been deficit-spending wildly to boost the economy? Tax dollars are tax dollars, not earmarked for one use or another. Raising taxes is raising taxes. Isn't this precisely the time we're supposed to deficit spending? 

Well, yes, but not all deficit dollars are created equal, I fear. If we spend an additional $60 billion on the Afghanistan war, it does do some good for the American economy. It goes to American companies to build things like planes and armor, to hiring new soldiers, to American contractors working in Afghanistan to build roads and schools. But, down the road, the United States doesn't get those roads and schools. Soldiers stop fighting in Afghanistan, but continue to collect salaries and benefits. This means the deficit dollar spent in Afghanistan isn't as effective as the deficit dollar spent in, say, Detroit.

For some data on this phenomenon, Dean Baker at the Center for Economic and Policy Research produced a paper showing that war spending (rather than domestic spending) ultimately costs jobs and GDP.

But all of this might be moot. It seems that Congress is considering extending the estate tax, which was due to expire for a year before coming back into force in 2011. The tax only hits estates worth more than $3.5 million. I say extend it, and expand it to include less, erm, ample estates as well. That seems even better than the Obey plan. 

A World Bank research paper posted today finds that countries with a high proportion of young males with low levels of secondary education are significantly more conflict-prone. The combination of these "youth bulges" and low rates of secondary education is especially likely to lead to conflict in low- and middle-income countries, the authors also report. The findings focus particularly on Sub-Saharan Africa, as "the continent with the largest youth cohorts and the lowest levels of male secondary education, scoring on average nearly 30 percentage points lower than the world average."

Countries outside of the region also call for concern. In Syria, for example, males 14 years old and younger make up nearly 20 percent of the population. Only 39.1 percent of secondary school-aged students are enrolled in school, making it the 101st lowest-ranking country of 135 surveyed. In the long run, Syria is facing declining oil production and rapid population growth - a recipe for violent unrest.

The policy implications are clear. Programs that focus on primary education, like the U.N.'s Education for All and Millennium Development Goals programs are important (after all, students have to read and write before they can pursue secondary schooling), but there must be more support for programs like the World Bank's own Secondary Education in Africa initiative.

The total cost of a secondary education in Kenya is estimated at $6,865. A 2007 Oxfam report found that on average a "war, civil war, or insurgency shrinks an African economy by 15 percent," and conflict causes the continent to lose about $18 billion a year. You do the math.

Photo: SONIA ROLLEY/AFP/Getty Images

Over a million people die unnecessarily from malaria in Africa, according to a survey by ACTWatch. The group released a study of seven countries in Africa today, it found that most people in these countries are obtaining ineffective anti-malarials in the private market, due to the low availability and high prices of the far more successful Artemisinin combination therapy (ACT). ACT costs 20 times more than the older medications to which malaria has developed resistance. At about $11 it's 65 times more than the average daily wage in many of these countries.

Malaria needs to be treated with speed, explained Dr. Desmond Chavasse, speaking from the Pan-African Malaria conference being held in Nairobi. Children must receive medication within 48 hours of displaying malarial symptoms if they are to survive. This is why ACTs must get "out through the marketplace, so they are available at the end of the supply chain, in small shops, at affordable prices."

The study, funded by the Bill and Melinda Gates foundation, is intended to provide baseline information for a program that will subsidize ACT medication.

TONY KARUMBA/AFP/Getty Images

After many mumblings of foreign assistance reform in the works, some concrete signs came from today's Senate Foreign Relations Committee Hearing, "The Case for Reform: Foreign Aid and Development in a New Era."

That the Senate is holding such a hearing in the first place cause for applause. Once taboo, critiques of the U.S. aid system are now prolific -- coming from NGOs, academics, observers, and even the U.S. government itself. In fact, FP and Oxfam held a joint event to talk about just this last week. The flurry of discussion is clearly being noticed.

So what's wrong with aid? As Senator John Kerry put it in his statement,

[Experts] agree that too often decision-makers lack basic information about the actual impact of our development programs. They also agree that excessive bureaucracy and regulations and fragmented coordination are hampering our efforts to swiftly and effectively deliver assistance. And they agree that even as we plan for broad, fundamental reform, there are many steps we can take in the interim to dramatically improve the effectiveness of our foreign aid efforts."

Fixing all that is a tall order, especially with big domestic fish to fry (read: healthcare). But Afghanistan and Pakistan -- once again the first fronts on the war on terror -- bring these questions to the fore. There, the U.S. military is desperate to win hearts and minds, and helping out with roads, schools, hospitals -- in addition to security -- is one of the best ways to do just that. As the Counterinsurgency manual puts it, "military operations create temporary breathing space, but... long-term development and stabilization by civilian agencies are required to prevail."

So I, for one, am pleased that there are discussions ongoing -- and hopeful they'll be followed up with action. Read more about what the experts on the ground think needs fixing here.

ALI AL-SAADI/AFP/Getty Images