Posted on 4-6-2002
Heart
of Cheapness
By PAUL KRUGMAN
Poor Bono. He got stuck in a moment, and he couldn't get out
of it.
In one of the oddest enterprises in the history of development
economics,
Bono — the lead singer for the rock band U2 — has been touring
Africa with
Paul O'Neill, secretary of the treasury. For a while, the latent
tensions
between the two men were masked by Bono's courtesy; but on Monday
he lost
his cool.
The pair were visiting a village in Uganda, where a new well
yielding clean
water has radically improved the villagers' health. Mr. O'Neill's
conclusion from this, as from the other development projects
he saw, was
that big improvements in people's lives don't require much money
— and
therefore that no big increase in foreign aid is required. By
the way, the
United States currently spends 0.11 percent of G.D.P. on foreign
aid;
Canada and major European countries are about three times as
generous. The
Bush administration's proposed "Millennium Fund" will increase
our aid
share, but only to 0.13 percent.
Bono was furious, declaring that the projects demonstrated just
the
opposite, that the well was "an example of why we need big money
for
development. And it is absolutely not an example of why we don't.
And if
the secretary can't see that, we're going to have to get him
a pair of
glasses and a new set of ears."
Maybe the easiest way to refute Mr. O'Neill is to recall last
year's
proposal by the World Health Organization, which wants to provide
poor
countries with such basic items as antibiotics and insecticide-treated
mosquito nets. If the U.S. had backed the proposed program,
which the
W.H.O. estimated would save eight million lives each year, America's
contribution would have been about $10 billion annually — a
dime a day per
American, but nonetheless a doubling of our current spending
on foreign
aid. Saving lives — even African lives — costs money.
But is Mr. O'Neill really blind and deaf to Africa's needs?
Probably not.
He is caught between a rock star and a hard place: he wants
to show concern
about global poverty, but Washington has other priorities.
A striking demonstration of those priorities is the contrast
between the
Bush administration's curt dismissal of the W.H.O. proposal
and the
bipartisan drive to make permanent the recent repeal of the
estate tax.
What's notable about that drive is that opponents of the estate
tax didn't
even try to make a trickle-down argument, to assert that reducing
taxes on
wealthy heirs is good for all of us. Instead, they made an emotional
appeal
— they wanted us to feel the pain of those who pay the "death
tax." And the
sob stories worked; Congress brushed aside proposals to retain
the tax,
even proposals that would raise the exemption — the share of
any estate
that is free from tax — to $5 million.
Let's do the math here. An estate tax with an exemption of $5
million would
affect only a handful of very wealthy families: in 1999 only
3,300 estates
had a taxable value of more than $5 million. The average value
of those
estates was $16 million. If the excess over $5 million were
taxed at
pre-2001 rates, the average taxed family would be left with
$10 million —
which doesn't sound like hardship to me — and the government
would collect
$20 billion in revenue each year. But no; the whole tax must
go.
So here are our priorities. Faced with a proposal that would
save the lives
of eight million people every year, many of them children, we
balk at the
cost. But when asked to give up revenue equal to twice that
cost, in order
to allow each of 3,300 lucky families to collect its full $16
million
inheritance rather than a mere $10 million, we don't hesitate.
Leave no
heir behind!
Which brings us back to the Bono-O'Neill tour. The rock star
must have
hoped that top American officials are ignorant rather than callous
— that
they just don't realize what conditions are like in poor countries,
and how
foreign aid can make a difference. By showing Mr. O'Neill the
realities of
poverty and the benefits aid can bring, Bono hoped to find and
kindle the
spark of compassion that surely must lurk in the hearts of those
who claim
to be compassionate conservatives.
But he still hasn't found what he's looking for.
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