By Jonny Lupsha, Wondrium Staff Writer
Foreign aid is a complex economic subject. Many people believe that more federal money is spent on assisting other countries than what actually is. Tonga suffered a devastating volcanic eruption; Australia and New Zealand answered the call.
A volcano suddenly erupted on the island of Tonga on January 15, impacting 84,000 residents, resulting in deaths, injuries, loss of homes, and a lack of access to drinking water. The nearby nations of Australia and New Zealand have since sent military planes bearing generators, communications equipment, kits for building temporary shelters, water containers, and more, while Japan pledged to follow suit.
Foreign aid is complex, misunderstood, and an often contentious subject. In his video series America and the New Global Economy, Professor Timothy Taylor, managing editor of Journal of Economic Perspectives, offers a clearer picture of foreign aid.
Expectation vs. Reality
“There’s an interesting gap here, in the United States, between perception and reality about how much is given in terms of foreign aid,” Professor Taylor said. “There are lots of surveys done asking Americans about their perspective on the federal budget and taxes, and one common finding of these surveys is that if you ask Americans what share of U.S. government goes to foreign aid, the typical answer is something like ’20 to 25% of all U.S. spending goes to foreign aid.”
Following that, survey participants are usually asked what percentage of U.S. spending should be on foreign aid, most people typically agree on about 10%, which is less than half of what they believe the U.S. currently gives.
In reality, 1% or less of government spending goes toward foreign aid. A study by The Brookings Institute found that in 2019, $39.2 billion was earmarked for foreign aid, which is actually less than 1% of the federal budget.
Everyone’s Got an Opinion
In addition to how much money people think their country should grant to other nations in foreign aid, there’s also the question of what kind of aid should be given. Of the money given in foreign aid by the United States, only 20% or so goes to foreign governments, with the remainder being provided to nonprofit organizations, multilateral organizations, and so on.
Is this good or bad? Professor Taylor pointed to the proverb “If you give a man a fish, you feed him for a day; if you teach a man to fish, you feed him for a lifetime.”
“In terms of foreign aid, there are times when you just need to give people fish,” he said. “There are cases of natural disasters——where there’s a big need just to save lives right away. Many kinds of foreign aid really are about immediate need, but there’s also foreign aid in the category of building human resources and physical resources for the future.”
The latter category belongs to helping develop better nutrition and education, better health care, long-term access to clean water, and applicable technologies for all of those. The eradication of smallpox by the World Health Organization falls under this category, for example.
Spending in the former category relates to the aid Tonga is receiving from its neighbors.