"SELF-HELP" AS AN EXAMPLE OF AID'S REUSE OF VAGUE CLICHES

This new "self-help" aspect is, in fact, as old as aid itself.

President Truman, in announcing his fourth point in his 1949 inaugural address, said our aim is to "help the free peoples of the world through their own efforts."

President Johnson repeated, "The key to victory is self-help.”

Dr. John Hannah echoes these statements saying, "We recognize that the developing countries are responsible for their own development.

"Self-help" is a catch phrase which sounds good, but what is "self-help"? The concept offers no guidelines for the selection of recipient countries because no country intentionally tries self-harm. All are making an effort to improve their lot. The self-help concept is equally confusing to the nations which receive our aid. A friend in the Dominican Republic once told me his understanding of "self-help" was that of a U.S. supermarket where the developing nation strolls along the AID shelves and helps itself to what it wants: a power plant here, a road there, and next an irrigation canal.

Old, familiar phrases abound in the current AID presentation:

"..

the new program places emphasis on people first; initiate innovative programs; imaginative attack; sharply focused on the real needs of the people; catalytic role; bring the small farmer more fully into the economic life of the country; in the final analysis the process of development is relevant only in what happens to people. . . .”

Beautiful words you have all heard many times. But nowhere in the presentations is there a clue as to how one might, in the future, measure the success or failure of today's program.

Mr. Chairman, when you opened the hearings on the Foreign Assistance Act of 1961, the bill you are now considering to amend, you said:

"We must be concerned today not with what our aid programs will accomplish next year, but by what they will accomplish in five years or ten years."

It is now twelve years later. $25 billion (plus military assistance and Vietnam) has been spent on this bill. Is it unreasonable to expect AID to give some concrete evidence of what has been accomplished in the intervening years before It asks that you appropriate more funds to continue it?

AID KEEPS CHANGING JUSTIFICATION FOR ITS EXISTENCE

One reason AID does not offer such evidence is that the justification for the program keeps changing.

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In 1961 Mr. Rusk told you AID was needed to fight Communism, saying: "... those who oppose foreign aid must accept the consequences of their opposition. They must understand that, if they succeed, they deny the people in the emergent societies their last great hope for independent development and therefore condemn them to the high probability of communist servitude--and us to communist world encirclement."

But in its 1969 presentation to this committee, Aid did not mention communism. To what extent had AID prevented or hindered the communist servitude of the emergent societies, Specifically how had AID saved (or protected) the United States from communist world encirclement? We shall never know. AID, having changed its justification, makes no reference to this earlier argument for appropriations.

This year AID says the United States must continue to assist the developing countries for two reasons: (1) "our ideals compel it," (2) "our self-interest requires it."

In justifying the first reason ("our ideals compel it") you are told of the masses within the developing world who are unemployed, illiterate, poor and hungry which "demands a U.S. response." I do not believe that charity must begin at home. But if this Committee accepts such reasoning to be valid for continuing AID, then this committee bears the burden of proof as to why our ideals do not equally compel us to use the requested $1.3 billion for those within the United States who are also unemployed, illiterate, poor and hungry.

The justification for the second reason ("our self-interest requires it") is: "Peace cannot be sustained in conditions of social upheaval or a growing confrontation between rich and poor." Which is a variation of the phrase repeated through the years by AID: "wealthy nations cannot survive as islands of abundance in a world of hunger, sickness and despair." This is an unsupported myth. We are obviously doing so now and, like it or not, we will continue to do so. When Mr. Morris Ernst testified before this committee on the original Foreign

Assistance Act of 1961, he said his studies showed "it will be at least 75 years for any of the underdeveloped countries to start to close the gap in per capita income compared to our standard of living." Unfortunately, he was optimistic. Every day the gap widens and at an accelerating pace. In 1960 the per capita GNP gap between the rich and poor countries was $2000; today it is $3000. World Bank President Robert S. McNamara says, "Projected to the end of the century the people of the developed countries will be enjoying per capita incomes, in 1972 prices, of more than $8000 a year while the masses of the poor will, on average, receive less than $200 per capita, and some 800 million of these will receive less than $100. . ."

NO AGREEMENT ON WHY UNITED STATES HAS A FOREIGN AID PROGRAM

It would be difficult to find two people who would agree on why the U.S. has a foreign aid program. Is it to fight communism? Correct the ills of the developing world? Salve the conscience of affluent America? Protect U.S. markets? Insure foreign sources of raw materials? Or is it all or only some of these?

The newly introduced Humphrey-Zablocki foreign aid bill (entitled: Mutual Development and Cooperation) is promoted as a "vigorous new initiative." The bill proposes to make AID available only to the "poorest countries-those with per capita GNP of $200 per year or less". This means aid would be limited to only 53 nations having 2.1 billion inhabitants! (the administration would include still more by upping the ante to a GNP of $375). If one seriously intended to help the poorest, U.S. aid should then be limited to those countries with a per capita GNP of $100 or less-of which there are quite enough to be a challenge (23 nations with 140 million inhabitants). However, the bill is not designed to help those poorest nations, but instead the group of countries where "U.S. exports are not doing well at all." (Congressional Record, June 20, 1973, S 11568). The bill would earmark $5 billion in export credits with the specific function of making U.S. industry more competitive in the developing nations and thus put "the great U.S. industrial machinery and agriculture at the service of development while protecting U.S. exports and U.S. jobs" (ibid).

Is it any wonder no two people can agree on why the United States has a foreign aid program?

REASONS FOR OPPOSING THE CONTINUATION OF THE FOREIGN ASSISTANCE ACT OF 1961

(1) My studies have shown that AID does not know how to carry out an effective development program. Be they programs in land reform, public health, fortified foods, or whatever is the current vogue, my experience has been the same. This does not mean that some people might not have benefited from some programs. But it does mean that the programs I have studied, programs old enough to have measurable results, inevitably fail the test for success when the results are compared with the objectives set when they were initially funded.

(2) No evidence has been given that AID can make a significant impact on poverty and related problems it says it intends to solve minimize.

All AID goals are couched in such general terms that there is no way to determine if they will or will not be achieved, thus, no one can measure the effect of the money AID spends. For example the FY 1970 Program Presentation to the Congress said AID had four objectives in India. Note: only the 1st is measurable.

(1) Achieve self-sufficiency in food grain production in the early 1970's. (2) Speed up and strengthen its family planning program.

(3) Improve export performance.

(4) Support and extend the growing industrial recovery.

But in this year's Program Presentation AID makes no mention of that measurable 1st objective though we are now in the "early 1970's". I do not fault AID for not achieving the objective. I fault the organization for not specifying to you how closely it did or did not achieve its goal.

The accomplishments of AID must be accepted as one accepts the Bible: on faith.

(3) The U.S. economy cannot today afford the luxury of continuing an ineffective program. I know of no one who would not favor AID if there were evidence it is effective or essential to our security. There is so such evidence.

Those who advocate AID claim we can well afford the $4.1 billion that administration this year is requesting, that even if AID is overly ambitious in what it

says it will do, it is worth the gamble to try for the impossible dream. I would agree; if $4.1 billion were all it were to be.

I doubt that when this Committee first approved this bill in 1961, the one you are now considering amending, you expected it would cost by today more thas $25 billion (plus military and other assistance).

In your 1961 hearings a State Department aid-memoire was read which said: "The deficit of the United States arises wholly from its commitments and actions in the common defense of the free world. Without these freely assumed obligations the United States would now be running a heavy surplus in its balance of payments."

Since that testimony our balance of payments situation has worsened and the $25 billion this bill has used in the intervening 12 years, is a factor.

In 1961, as in 1973, this committee was told 80 percent of U.S. aid would be spent to buy U.S. goods and services and the domestic economy therefore would be materially helped. Not so, one witness told this committee in 1961:

"Actually the effect is the reverse. It simply means that this quantity of goods and services are taken out of the economy, and that the American people are deprived of that much goods and services, while the amount of purchasing power remains the same, with that result that the total effect is inflationary."

(4) Finally I have concluded that AID holds out a false hope to the developing world. (Virtually every knowledgeable authority agrees that drastic action must be taken if the hungry nations of Africa, Asia, and Latin America are ever to cope with their growing population/food problem. Yet nowhere has the necessary extreme action been undertaken. Nor is it likely to be taken in any hungry nation as long as its leaders have a shred of hope that dollars and technology can solve or at least minimize-its basic problem: too few arable acres for too many people. We can end that futile hope by ending our aid program.

MORATORIUM ON NEW AID PROGRAMS

The majority of the American people believe our foreign aid program should be terminated or curtailed. To give yourselves time and the opportunity to determine if the majority opinion is valid, I urge that you do not approve AID's current request for new funds for its "new program".

Instead, I urge that you declare a two-year moratorium on the start of any new AID program or loan.

During this moratorium AID would continue to supervise the money it has in its pipeline (when last AID came to this Committee for economic assistance funds, there was more than $3.3 billion unspent from previous appropriations). If pipeline funds are not sufficient to maintain essential AID staff during the moratorium, perhaps the Congress can find a way for AID to use some of the annual $200-$250 million receipts for prior-year loan amortization and interest payments (such as is suggested in the proposed Mutual Development and Cooperation bill).

The moratorium would give our President an opportunity to determine whether AID is indeed a necessary tool for U.S. foreign policy and, if so, how that tool can be structured to serve the needs of our foreign policy, the American elector ate, and the developing nations.

Finally, the moratorium would serve notice that our bilateral program could well terminate, thus giving recipient nations two years to determine which programs they would fund with their own money, which programs they might finance through other sources (World Bank, regional development banks, other donor nations) or which to cancel.

During the moratorium the Congress should make its own assessment to determine the reasons for and objectives of a U.S. foreign aid program, and, if indicated, what that program should realistically be. Such a job cannot be done for Congress by either AID or the GAO. Therefore, I urge the Congress to establish a temporary, modest equivalent of the new Office of Technology Assessment to carry out the study.

The Congress must recognize it consistently receives biased information on AID. When church and foundation witnesses report favorably on the impact of their own programs, it enhances, by implication, the potentials of AID. University professors usually become knowledgeable on foreign assistance through AID contracts or foundation grants. Even the distinguished Overseas Development Council, funded by foundations, as well as many businesses apt to profit from AID and in which Dr. John Hannah "played a key role in getting underway (Wash. Post March 1, 1969) likewise cannot be considered unbiased.

If you want an objective assessment of the U. S. foreign aid program, you must make it without the help of those who are associated with the program. In 1961, Mr. Chairman, you said to Mr. Labouisse, then head of the aid program: "I am really questionning the validity of the concept which we are trying to follow. Is it not a false one-basically false one that is impossible. . . . This raises a question of whether we have not been pursuing the wrong broad policy. There is no use in just being blind to a mistaken policy that has been adopted under previous and different conditions. . . . I think the highest authority in the executive ought to send us a paper, if they want us to pass (the Foreign Assistance Act of 1961)-a very serious paper saying, "We have examined all of this and this is absolutely vital to the continued security of this country."

Mr. Chairman, as far as I can determine, you have not received such a paper. Now, $25 billion later it is time to have that paper-but make certain it is written independently.

The United States is vastly different today than when President Truman read the fourth point of his 1949 inauguration. Then we had only 660,000 men under arms, today we have a million. Our population was 25% smaller, yet we owned $25 billion in gold and owed less than $4 billion (today we have $11 billion and owe more than $15 billion). Black power remained unborn, there was no energy crisis, few knew the word "ecology" and fewer still suspected we would soon fight two more major wars. The changes that have occurred during the intervening 24 years do not in themselves require discontinuing foreign aid, but they do require that we not use the cliches of the 1950s to justify a program for the 1970s.

Thank you.

[Additional questions and answers follow:]

RESPONSES OF MR. PADDOCK TO QUESTIONS POSED BY DR. JOHN A. HANNAH,

ADMINISTRATOR, AID

Question 1. You cited the Mexican agricultural credit programs as a failure, because the two farmers you visited weren't carrying out some of the recommendations of their credit advisors. I understand that about 20,000 farmers received loans and that defaults on these loans have been very, very low-in fact nearly zero. Don't you think that this is a better measure of the program?

Answer. In our book, WE DON'T KNOW HOW, we looked at programs which the head of the foreign assistance program said was among their best. In the case of the Mexican Agricultural Credit program, the American Ambassador, Fulton Freeman, told us it was "without question our (U.S.) most effective development project."

To determine if the program was effective, one must determine the objectives for which the program was initiated and see if those objectives were achieved. The objective was not, as you say, to give 20,000 farmers loans which would be repaid (incidentally, does anyone know the accuracy of the 20,000 figure? answer: no).

The objectives for which the AID loan was made, according to our ambassador

were:

(1) to focus attention on the small farmer

(2) to put farmers who previously had not been able to borrow from a bank into the Mexican credit system.

However, on investigation, we found that the recipients of loans whom we had been told to visit, were:

(1) by Mexican standards, large commercial farms (of 61 and 300 acres with tractors, television, etc.).

(2) all previously in the credit system, borrowing from commercial banks prior to the AID loan. In addition, the loans from this AID source was being reused by the same farmers-the loan officers were not, in other words encouraging the farmers to use normal Mexican credit sources after receiving loans from AID sources.

Thus, the objectives for which the AID loan was originally made were not achieved. How, then, can one say the AID loan was successful?

Question 2. I'm interested in your comments on Mexico. About the time Dr. Norman Borlaug received the Nobel Prize for his contribution to food production, it was widely proclaimed, as I remember, that Mexico's wheat production had about trebled and corn production doubled in about 20 years. Is that your recollection and if so how does it square with your conclusions?

Answer. The figures are correct. What is not correct is the conclusion that most have drawn from them: Mexican increase in wheat and corn production is due to the new technology which the Rockefeller Foundation (Dr. Borlaug's employer) introduced to Mexico.

While the new Rockefeller varieties were important factors in the increase in production, other factors are of equal or greater importance. Note:

The development of new, irrigated lands in Mexico. USDA economist Henry Hopp has shown that "the increase in the irrigation has been as important as research advances" in Mexico.

...

Increased use of fertilizer as new fertilizer plants were built in Mexico (USDA economist Reed Hertford shows that well over half the total change in Mexican crop production has been due to the increased use of chemical fertilizer).

High subsidies paid Mexican growers (Mexico with a per capita GNP 87% lower than that of the United States, pays a wheat subsidy 40% above that of the United States).

Dr. George Harrar, former President of the Rockefeller Foundation has said, "In 1941 the Mexican Government asked the Rockefeller Foundation to help improve annual corn yield . . . Today Mexico can produce all the corn it needs on less land through the use of synthetic hybrid varietied, even though its population has almost doubled since 1943." Although this statement is widely believed today, it is not true. Note:

In 1943 Mexico planted 8.4 million acres with corn. Today Mexico plants 20 million acres with corn. Thus, the increase in corn production is largely due to putting new land into production, not to new technology.

Question 3. Doctor Paddock, I have before me an excerpt from The Washington Post, dated Saturday, June 23, 1973, in which Dr. S. R. Sen, President of the very prestigious International Association of Agricultural Economists, says that you have stated that if the people of India had been denied food supplies from the U.S. in 1965 and 30 million people were allowed to starve, this catastrophic disaster would have been a boon to India, because it would have shocked India into doing more for her people in agricultural development and family planning.

Dr. Sen goes on to point out that the very thing you are suggesting did in fact take place during the hey day of imperial rule from 1857 to 1947 in a score of major famines in India which killed off millions of people. Yet none of the effects suggested by you occurred. Agricultural production remained stagnant, the population went on increasing, and the standard of living steadily declined to the point that the average life expectancy was 28 years. Since independence, however, India has not suffered such deaths from famine, although droughts have not stopped recurring. Since 1971, India has stopped the import of concessional food grains from the U.S. and has provided as much as 2 million tons of free food to the distressed people of Bangladesh.

How do you reconcile these obvious contradictions

Answer. I have never said that the starvation of 30 million people "would have been a boon to India." My statement reads "Cruel though the statement might sound India would be a more viable nation today if in 1965 the United States had not shipped a fifth of its wheat crop to that sub-continent, thereby averting a famine and saving perhaps 30 million

Dr. Sen has made some errors in his statement.

For example, he is wrong about colonial India (from 1857 to 1947) having a "stagnant" agriculture (agriculture grew steadily during this period keeping pace with India's population growth). Furthermore, instead of the life expectancy declining during this period as he says, it actually improved (in 1881 a male child at birth had a life expectancy of 23.6 years. In 1931 it was 26.6). To compare colonial India with today's independent India is to compare apples and oranges. A famine in the 1800s would involve only a fraction of the number of people which a famine today would involve; communications were, comparably, non-existant so that the knowledge of a famine would be minimal and thus its impact slight when compared to today's conditions. Furthermore prior to World War II most still considered an occasional famine as a way of life for much of India resulting in an attitude which would never be tolerated in today's India of rising expectations.

To underscore the contrast between colonial India and today, look at the population figures. In the next 13 years alone, India and Pakistan will add to their populations 300 million people (bringing their total to over 1 billion) or 50 million more than their entire population in 1880!