Tuesday, September 21, 2010

Foreign Aid 11: People Mobility and Aid Hypocrisy

Mobility = Freedom. A person living in an unfree society or culture can free himself by leaving that place or cultural village and move to another place where unnecessary restrictions and prohibitions are absent or at a minimum.

International mobility of people, their goods and services, is an attempt by people to find personal and economic freedom. If they find a good job or education and training abroad that makes them more productive, then both their origin and destination countries will benefit.

Remittances from migrants to their folks back home is growing fast every year. It is estimated that in 2009 alone, they sent $319 billion. That's several times bigger than official development aid (ODA) or foreign to developing countries, and bigger than foreign direct investments (FDI) inflow into those countries.

The Philippine peso also has been appreciating (aka "getting stronger") recently. One important factor is the huge inflow of foreign remittances by Filipinos working abroad. Last year, total remittance via the financial institutions was about $16.3 billion. This year, it should hit between $18 to $19 billion.

With international and local migration of people, the mutual beneficiaries are people to people.

With more foreign aid like MDGs, WB and ADB loans, mutual beneficiaries are government to government, and indirectly, bureaucrats to bureaucrats.

A sick or aged person in the US or Europe -- if there are no qualified locals, or there are qualified locals but not interested to do the work or asking too high salaries -- will remain sick if foreign health workers and professionals are not allowed to come in. Thus, it's people to people mutual beneficiaries.

Foreign aid is government to government. Politicians of rich countries tax-tax-tax their citizens, a portion of which will be given to politicians and bureaucrats of poorer countries through foreign aid. If one or both parties is/are corrupt and/or wasteful, foreign aid is immediately wasted. And there is a tendency on the part of politicians and bureaucrats of poorer countries to become more complacent and wasteful with foreign aid money. If they can be wasteful with their own citizens' tax money, why not be more wasteful with tax money of rich countries?

Implication: free market groups should demand less or no foreign aid, and more international mobility of people, their goods and services, with the least restrictions possible.

Meanwhile, one Filipino bureaucrat from the ADB who is also a member of one of my discussion ygroups irritatingly asked,
"Nonoy why are you so upset (putting it mildly) with ADB, WB, USAID etc. employees & consultants? Like everyone else we work our asses off to deserve our salaries, fees."
The lady was wrong. I was not upset with ADB, WB, USAID, UN employees and consultants. Neither am I upset with Globe, Smart, Google, Jollibee, Victory, PAL, Cebu Pac, Chinabank, Teotico arts and gallery, Dome coffee, etc. employees and consultants.

What I was criticizing was the exemption from mandatory, obligatory, withholding personal income tax system for employees and consultants of foreign aid bodies. Aren't the UN, ADB, WB, USAID, IMF, etc. living off on tax money, both for their operations and the salaries and perks of their staff and officials?

Contrast it with us, workers in the private sector -- we live off on clients' money. No clients, no money, we go hungry. Yet we are subjected to mandatory witholding personal income tax.

Rule of law means no exception. The law applies to all, governors and governed; administrators and the administered. But for the foreign aid establishment, the law on mandatory personal withholding income tax does not apply to them. They are not ordinary mortals, they are above us.

Such hypocrisy of public policy. If we want the rule of law, then we should abolish personal income tax. Fair is fair. Whether one works in tax-hungry foreign aid bodies or not, no one should be forced and coerced to surrender up to 1/3 (or 4 months out of 12 months work) of his/her monthly income to the state.

A friend Paul H. commented:

From these debates you not only see the differences between statists and the anti-statists, but the diversity among anti-statists as well, in that they would counter the statists' arguments in a variety of ways.

For instance, you mention that you cite everyday examples to make your point, while others will go the other way and discuss matters in a strictly theoretical manner. It's all good!

Yes, the free market movement and philosophy rests on spontaneity and diversity, never on uniformity, monotony and central planning.

See also:
Foreign Aid 6: IMF is Engineerable and Abolishable, September 05, 2006
Foreign Aid 7: Wolfowitzoellickation of the WB, May 30, 2007
Foreign Aid 8: Abolish the IMF, August 08, 2007
Foreign Aid 9: WB Wants Hike in Gasoline Excise Tax, July 10, 2009
Foreign Aid 10: Why We Don't Need It, February 15, 2010

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