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Hi,

I've written a brief document (https://docs.google.com/document/d/1IwR7uO1yUR_78G8oR8Tg1UaY59A1riIuhP5p4roLMgY/pub), trying to collate some answers to frequently raised objections to donating to global poverty charities.

I'll probably extend this document in the next few months.

 

Q: Isn’t economic growth going to lift people out of poverty? Should we not focus on growth?

Q: Should we not support health systems strengthening instead of supporting ‘vertical’ interventions that might are not sustainable?

Q: Can stopping tax evasion by multinational enterprises close the gap in finance for development?


Q: Isn’t economic growth going to lift people out of poverty? Should we not focus on growth?

A: Yes, eventually, but it would take decades, because the growth trickles down to the poorest very slowly. We have written about this in detail here.

Q: Should we not support health systems strengthening instead of supporting ‘vertical’ interventions that might are not sustainable?

A: AMF and SCI must strengthen general health-care systems insofar as they reduce the burden of disease that would otherwise be met by the rest of the health-system (see figure from below).

We have written about this in detail here.


Q: Can stopping tax evasion by multinational enterprises close the gap in finance for development?

A: While tax evasion is certainly an issue that can help with development, the matter is much more complicated than this. We refer the interested reader to the Center for Global Development and the International Center for Tax and Development for more information on this. In brief, the Center for Global Development writes on this issue:

“We find that the potential for governments to raise additional revenues by taxing multinational companies is limited by the actual levels of profit generated by foreign direct investment in each country; changes to effective tax rates may also have impacts on investment prospects. Estimates of corporate tax dodging are often presented, mistaken, or repurposed in a way that exaggerates potential impacts - for example, large aggregate tax loss estimates are compared with aid revenues or healthcare funding gaps, implying that taxes raised in China, Brazil and South Africa might be available for public spending in Cambodia, Haiti and Malawi. Multi-year tax estimates are compared with annual costs of nurses or teachers. In some cases larger estimates (‘trillions’) which relate to estimates of corruption, informal sector activities or offshore assets held by domestic citizens are mistakenly repurposed to represent complex tax planning practices of multinationals. Much-quoted figures such as ‘‘developing countries lose three times more to tax havens than they get from aid each year” and “‘60% of global trade takes place within multinationals” or “Zambia could have doubled its GDP” are not likely to hold up.”

 

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Regarding "should we not focus on growth" the fact that Chinese reforms have been responsible for the bulk of recent poverty relief (with India following up in the rear) really does make a big argument for anything that contributed to that and wasn't ludicrously expensive. For example, the think tanks and technical advice involved in India's reforms, the economists and analysts who contributed to governance in Hong Kong and Singapore (which acted as powerful models for the CCP in deciding to reform).

I think the response to that shouldn't be "oh, it's too hard" but rather "something along those lines plausibly IS better than what we're doing, these are our plans to investigate it, and we will modify our recommendations if the investigation comes out positive with specific targets." One might follow that with one's reasons for giving now before such investigation, even a back of the envelope calculation about total spending on such things over the last 100 years and an estimated role for these in growth-inducing reforms.

Absolutely agree that growth has lifted lots of people out of poverty.

The idea here was that, even under very optimistic growth projections, i.e. Africa emulating China, it would simply take to long for growth to benefit the very poor. Because the main factor for growth is capital, and free market forces already provide that (China is investing a lot in Africa), our marginal dollar might be better spent elsewhere.

I think you could strengthen the response to the first question by noting that global poverty/health interventions likely promote economic growth, and with a more equal distribution (obviously by a very small amount depending on the size of the intervention).

We're looking into this issue currently.

Do people ask about MNC tax evasion specifically or illicit financial flows generally? And when they do ask about MNC tax evasion - is it tax evasion of LDCs or globally?

Does anyone know if someone's looked into the likes of these http://www.taxjustice.net/ for effectiveness. I see this article in a search suggesting donation if its something you care about, but not sure about an evaluation? https://www.givingwhatwecan.org/blog/2014-10-07/donating-in-face-corruption

This is about illicit financial flows generally. I should probably make this more clear. Thanks for the feedback.