Gaming the World’s Poor

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Upon returning from a United Nations-sponsored conclave in 1954, philanthropist Preston Hotchkis warned Americans to “[g]et acquainted with the United Nations, because what it does can touch your pocketbook.” Hotchkis would not be surprised at how just many times his warning proved correct in the next 50 years.  Many Americans are still not aware of the oddball ambitions of this international body—ambitions that carry a steep price tag.For decades, the U.N. has sought to create new revenue streams to fatten its coffers.  A document to be released this September will introduce the latest scheme.  The Department of Economic and Social Affairs (DESA) will present the General Assembly with a study that DESA head Jose Antonio Ocampo calls “proposed global taxes.” The report will consider 5 levies: an airline travel tax, a weapons sales tax, a carbon tax, a tax on currency trading transactions, and—I am not making this up—a lottery. Of course, none of the global tax blather in this report represents new thinking.  The lottery idea, for example, goes back to 1972, when <?xml:namespace prefix = st1 ns = “urn:schemas-microsoft-com:office:smarttags” />Ghana first floated it.  The odds of any of these proposals ever being enacted are about a thousand to one.  Still, it represents a way of thinking that is both troubling and harmful.  Rather than encouraging developing countries to take the steps necessary to build their economies—ending corruption, promoting the rule of law, etc.—the world body remains stubbornly wed to fantasies of global wealth redistribution, with a great big imaginary bull's-eye on the part of the map that the United States occupies.This is, frankly, disappointing.  Lately, U.N. agencies had promoted trade between industrialized and poor countries as a viable economic strategy for alleviating poverty. In 2002, for example, Rubens Ricupero, the chief of the U.N.'s Conference on Trade and Development, proclaimed that “trade and investment are the most important tools to promote development.”  The Center even issued a report denouncing the hypocrisy of developed countries that preach free trade but keep their markets closed to many goods from Third World countries—a rhetorical bell that the U.N. sounds from time to time.As the global tax report suggests, however, the old dreams of global income redistribution have proved more potent.  The U.N. preaches about its “Millennium Development Goals” for the Third World.  It wants wealthy countries to double their yearly development assistance from $50 billion to $100 billion.  This extra $50 billion is in addition to the “critical mass of new resources” that U.N. Secretary-General Kofi Annan wants added to his organization's budget.The elephant in the room here is that achieving higher living standards in the Third World will require the rich global “North” to learn to share more resources with the indigent global “South.” And there is no identifiable statute of limitations for this obligation.The U.N. has gone down this road before.  Exactly 30 years ago, the body released a report on multinational corporations that also had redistributive intentions. The report argued for weakened intellectual property laws to “lower the cost of technology [transfer]” from large companies to developing countries.The U.S. Chamber of Commerce felt this idea to be wrong-headed.  It issued a firm rebuttal, emphasizing truths that, three decades later, the U.N. still seems no closer to acknowledging.  The Chamber said that the U.N. report was “based on assumptions that multinational corporations have an infinite capacity for adjustment and such high returns on investment, overall, that they can accommodate…a wide variety of [demands] and still remain viable enough to [provide the investment and technology transfer that Third World governments] wish to continue to receive from them.”  The Chamber argued, correctly, that this is not true, that even large companies have limits—that they cannot be treated as piggybanks to be raided by social engineers.The U.N. should keep the Chamber's words in mind.  At some point, money invested by governments is money that will not flow to these nations in trade dollars, into private hands, were it could do more good by generating jobs or allowing businesses to create economies of scale.Assume that the body truly believes that more trade is good for the poor.  This should give the blue hatters an incentive to say ixnay on the edistributionray.  Such calls come with another price tag that may be harder to measure but that is just as real.  In the minds of an awful lot of Westerners, the U.N. can make the case for lowering trade barriers, or it can make the case for further subsidies, but not both. If they insist on eating our cake and having it too, then no one will take them seriously. And it will be the poor in developing countries who go hungry.