An American Cure for Poverty: Remittances
2nd March 2016
Hundreds of billions of foreign-aid dollars have gone to fight rural poverty in the developing world since the end of World War II. But ask people in this dry, mountainous outback what has made the most difference in their difficult lives and you get only one answer: remittances.
The U.S. Agency for International Development, the World Bank and the InterAmerican Development Bank have brought remarkable prosperity to Northern Virginia and Maryland. But it’s the fruits of migrant labor sent home that explain how, in places like this, hardscrabble poverty is slowly giving way to development. I emphasize “slowly,” but the change is real. And as one local told me, “When you build something yourself, you value it more.”
One of the reasons that people cross the border illegally is because they can get better jobs in the U.S. The Mexican government doesn’t mind this because their poor and unemployed are shipping themselves out of the country, and the money they send back to their families is boosting the Mexican economy with no effort on their parts.
One might call this “re-imported jobs” — rather than ‘exporting jobs’ overseas so that the work can be done by foreigners in their own country, we’re effectively importing the foreigners so that they can do the same work here; the effect is the same, with the earnings of those foreigners going overseas to benefit their native countries.
And, rather than the U.S. government sending taxpayer dollars overseas in foreign aid, to be stolen by kleptocrats in the recipient countries with a small trickle winding up in the hands of the intended beneficiaries, this form of ‘foreign aid’ uses dollars that are actually earned by the foreigners involved rather than stolen from taxpayers, and almost always find its way to the people who need it.
Whether or not this is a good thing is left as an exercise for the reader.