I often disagree with Marginal Revolution, but their post today made me a new level of angry:
Commenters correctly point out that there’s a difference between regranting to other charities and “pocketing the money”.
USAID is not, itself, a charity. It is an organization that funds other charities. Cowen/Rubio’s claim that “only 12% goes [directly] to recipients” is false, because 0% goes directly to recipients, because USAID is not set up in a way where this even makes sense. Nobody is entirely sure where Rubio got this number from, but it seems like he is most likely misquoting a report saying that 12% went to foreign organizations (charities, government programs, charitably-minded forprofits), with the remaining 88% going to American organizations that operate in foreign countries1.
USAID gives ~100% of its money to other organizations that work on the charitable priorities it thinks are important. These organizations take an overhead averaging 25-30%, then pass the rest onto recipients, or to smaller, more local organizations that pass it on to recipients. Overheads pay for salaries, facilities, compliance costs, and audits to make sure the money is reaching its intended targets. You will never have (and would not want) an overhead of zero.
Maybe Cowen thinks that 25 - 30% is too high an overhead, and that you can’t get that high unless you’re doing something corrupt? I asked o3 to estimate the overhead for the Mercatus Center, the libertarian charity that Cowen runs. It said that it was hard to give an apples-to-apples number because much of the administrative work that would be counted under “overhead” in other charities is covered by George Mason University. But it estimated that if the federal government gives a dollar of research funding to Mercatus, about 40% would go to combined university and Mercatus overhead - higher than the average USAID charity.
Maybe Cowen is spooked by the admittedly-weird-and-incestuous world of charities that regrant money to other charities? I normally wouldn’t begrudge someone for being unnerved by this. But Cowen is the director of a charity that regrants money to other charities! Here is a typical cohort of Mercatus regrant recipients, including the Council of Christian Colleges, the NC Leadership Forum, and “Vibecamp LLC”.
(disclosure: I also take funders’ money and regrant it to other charities, although I would gouge my own eyes out with a spoon before giving it to Vibecamp)
USAID programs like PEPFAR have saved millions of lives. The Trump administration is trying to turn Americans against these programs by pretending that the money gets “pocketed”. This is a lie. PEPFAR is well-audited and the audits find between 0-2% unexplained expenses, which is lower than the average domestic US government program.
Not every program is this good. Some are cringe scholarships-for-underrepresented-women-in-permaculture garbage2. Others go over budget or accomplish less than hoped, because charity is hard. But the overall track record is outstanding, outright fraud is rare, and the cringe is less common than you think (because Rubio and Trump falsely attributed many cringe programs to USAID that it never funded at all).
Politics is nasty and sometimes involves lies. But the thousands of doctors, nurses, and charity workers who give up more lucrative careers elsewhere to save lives in the developing world are some of my heroes. I’ve talked to many of these people (see my father’s story of his time in this world here) and I couldn’t do what they do for a month, let alone a whole career. When Trump and Rubio try to tar them as grifters in order to make it slightly easier to redistribute their Congress-earmarked money to kleptocrats and billionaire cronies, this goes beyond normal political lying into the sort of thing that makes you the scum of the earth, the sort of person for whom even an all-merciful God could not restrain Himself from creating Hell.
Part of the joy of owning your own blog is getting to make absolutely sure that you never give one iota of aid or comfort to these lies or anything remotely associated with them. If Cowen means something else, I think he should clarify it better. Otherwise, I think he should edit his post to make it less misleading.
I think o3 interpreted Tyler’s request to confirm as a third thing - asking what percent of aid went “directly” to governments vs. “indirectly” to NGOs. But governments aren’t necessarily better than NGOs, and in poor countries they are often worse. This, too, is a meaningless distinction.
This is what I meant by the second-to-last paragraph of The Other COVID Reckoning. If a group both saves millions of lives, and funds some cringe women-in-permaculture scholarships, this doesn’t in any sense “cancel out”. It comes out millions of lives ahead. By all means try to get rid of the cringe stuff if you can, but not in a way where you throw the baby out with the bathwater.
