'Celebrity saviors' a net negative for Africa

I'm always ready to pile on any criticism of St. Oprah and Lady Madonna!

All in all, despite their perhaps good intentions -- and acknowledging their tendency to self-aggrandizement -- "celebrity saviors" are probably a net negative for international development efforts, really misrepresenting to the public what effective aid is about.

In fact, studies show that "flies in the eyes" imagery of developing nations actually turns Western people off to supporting aid efforts.

Such stereotypical imagery, as African journalist and TED talker Andrew Mwenda notes, also scares away business:

Thus, as a result of these campaigns, our continent tends to attract the most compassionate people of the West who come to give charity. However, its negative side effect is to scare away the most enterprising people of the West who would bring capital to invest and make money. Even when they do try to do something in Africa, like Bill Gates has done through his foundation, they come as merchants of charity, not enterprise.

Madonna and Africa's 'celebrity saviors'

By Andrew M. Mwenda

April 17, 2013 | CNN

URL: http://edition.cnn.com/2013/04/16/opinion/madonna-charity-africa-mwenda/index.html?hpt=hp_c4

For job creation, size still matters

Looking at a sample of [U.S.] companies created from 2004 to 2008 ... only 3 percent added more than 10 employees during that time. An even smaller proportion had applied or were in the process of applying for patents. (So much for being seedbeds of innovation.) Many small businesses simply go bust after a few years.

Indeed, according to data compiled by the U.S. Census/SBA, the "churn" of small businesses in most years is more than 85 percent.

Moreover, jobs at larger companies offer more stable employment, and better wages & benefits. This is true in the rest of the world, too.

According to one study, the higher a country's national wealth, the fewer small enterprises it has. Why? Because larger companies are more productive (perhaps because they attract better managers) and add more value.

Perhaps one take-away from this, as BB suggests, is if quality job creation is the goal, then U.S. policy should seek to woo more large businesses away from other countries, instead of giving yet more tax giveaways and loan guarantees to U.S. small businesses. It also causes us to re-consider (I can't believe I'm saying this) the efficacy of so-called "corporate welfare."

Political candidates' promises to provide even more government help for small business may be smart populist politics, since about 90 percent of U.S. firms employe fewer than 20 people, but it is not necessarily good policy.

Concludes the article's author Charles Kenny:

In the developing world, support for small businesses through tools such as microfinance is part of a safety net to help those who lack better employment opportunities. But in the U.S. and Europe it is far more often a subsidy to people making a lifestyle choice that reduces national productivity, which doesn't help the economy or promote job creation. Extolling small business might be a good way for politicians to win elections. But when it comes to creating jobs, size still matters.

Rethinking the Boosterism About Small Business

Politicians may love to extol the virtues of small business, but big companies are still the key to growth

By Charles Kenny

September 28, 2011 | Bloomberg Businessweek

URL: http://www.businessweek.com/magazine/rethinking-the-boosterism-about-small-business-09282011.html

Tenn. against bailout, for subsidies to VW

Disgusting.  Whatever happened to Congress defending the national interest, instead of whoring up with taxpayer dollars to any foreign company promising to bring jobs to the Home State? 

Stunts like this lay bare the self-serving cynicism and hypocrisy of those "free market defenders" in the GOP.  The free market doesn't play favorites to foreign companies with our tax money.

Auto workers union head questions VW subsidies

December 12, 2008  |  Chattanooga Times Free Press

 

UAW President Ron Gettelfinger said today that U.S. automobile companies are being put at a disadvantage by government in competing against Volkswagen's new auto assembly plant in Chattanooga.

 

The union leader questioned why government leaders in Tennessee are willing to provide assistance to the German-based Volkswagen while the state's U.S. senators declined to back a federal loan to help the Big Three U.S. car makers.

 

Mr. Gettelfinger said that trying to equalize UAW pay with what foreign car makers pay in the United States, as urged by U.S. Sen. Bob Corker, R-Tenn., is like comparing apples to oranges. In its home country, Germany provides government-paid health care for Volkswagen workers, and VW is receiving $577.4 million in tax breaks and direct assistance from Tennessee governments to build an automobile plant in Chattanooga.

 

"They use taxpayer dollars to subsidize our competition," Mr. Gettelfinger said during a news conference. "It doesn't help our industry."

Alabama, Detroit, and parochial politics

All politics is local!  This article gives insight as to why Alabama's Republicans are calling the Big 3 "dinosaurs." 

Note that Alabama paid $175,000 in tax concessions and subsidies for each job brought to the state by auto makers Mercedes, Toyota, and Honda. 

Gee, if only the answer to helping the Big 3 were as simple as "letting free markets work," then we wouldn't have to worry.  But what free markets?  Where are they?  Where is the auto market in the U.S., Japan, China, EU, or S. Korea that is free of protective tariffs, preferential subsidies and tax breaks? 

If GM offered to close its plants in Detroit and move them to Alabama, at a cost of $175,000 per job to Alabama's taxpayers, would free-market cheerleaders like Sens. Rick Shelby and Jeff Sessions support the deal?  You bet your free markets they would.

I wonder if Japan, China, S. Korea, and India allow foreign investors to play off different regions/provinces, inciting internal FDI bidding wars for the biggest subsidies and tax breaks, like the United States does?  Are we the only developed country that encourages this self-defeating "race to the bottom?"


Alabama emerges as foe to auto aid
By Bryce G. Hoffman
November , 2008  |  The Detroit News