Commentary

Remitting Disaster

By Will Wilkinson
This article appeared on Reason.com, January 14, 2005.

How can the United States best help the millions of people who were rocked by the Indian Ocean tsunami? America’s generosity has been impressive. The federal government has pledged $350 million, and private, voluntary donations from Americans will soon surpass that amount. American helicopters and aid workers have been critical for rendering aid in the aftermath of the disaster. All this will help.

But there is something more we can do that will have long-term positive benefits for the citizens of tsunami-battered nations — something that will buy us goodwill but cost us almost nothing.

Let them work in the United States.

When migrants earn money while working abroad and then sent it back to their families living in their home country, it’s called a remittance. Not many people know that total remittances around the world now add up to $80 billion a year. That’s impressive because it’s twice the amount of government foreign aid.

Mexicans working in the United States ship close to $20 billion a year to their families on the other side of the Rio Grande. In some nations, such as Jordan, Albania, Nicaragua, and Yemen, remittances account for over 15 percent of GDP.

Unlike aid from governments and multilateral agencies like the World Bank, remittances are not squandered by bureaucracy and are not channeled through often corrupt governments, which routinely use money intended to buy milk to buy missiles. Instead, remitted money goes straight to common people on the ground, the people who need it and for whom it is intended.

In a 2003 Foreign Policy article, Devesh Kapur of Harvard University and John McHale of the Queen’s School of Business in Ontario note that immigrant communities have begun to pool remittances and use them to finance small business and public works projects in their home communities.

Kapur and McHale report that remittances have helped people living in collapsed states such as Afghanistan, Haiti, Liberia, and Somalia to survive. They call remittances the “most reliable source of foreign money going to poor countries” and the “principle source of foreign capital for small family businesses throughout the developing world.”

The potential for remittances to help rebuild businesses, communities, and lives along the battered coastlines of South Asia should be obvious. But in order for remittances to work their magic, Indonesians, Malaysians, Sri Lankans, and other victims of the tsunami need to gain entrance to and employment in other countries. Help from the United States may already be on the way.

Last week, President Bush proposed a new temporary worker program that would allow foreign citizens to work legally in the United States for a limited time. The program is intended primarily to bring illegal Mexican and Central American workers into the legal labor market, and to expedite the ability of foreigners to begin working for American businesses who have offered them a job. However, the program could easily be reconceived as a prime source of aid to disaster-stricken nations.

American citizens have been laudably generous with their charitable giving. But South Asians need more than a sudden influx of money. And recall: Iranians received only a small fraction of the aid pledged by the UN in the wake of the Bam earthquake, and the Red Cross created a storm of controversy when it proposed to use funds donated to the victims of 9/11 for other purposes. The victims of the tsunami need the kind of steady, medium- and long-term support that remittances offer.

So Congress, with the disaster victims in mind, should speed the passage of Bush’s temporary worker plan, and charities should begin working to match South Asian workers with American employers. Handouts initially produce gratitude that eventually shades off into resentment. But because everyone gains through trade, longstanding economic relations tend to engender friendship and trust.

A concerted effort to bring South Asian workers to the U.S. would not only provide tsunami victims with effective aid through remittances, and American employers with needed workers, but it would also foster benevolent sentiments toward the United States in this largely Muslim part of the world.

Some pundits have excoriated the United States government for failing to win the government money-pledge numbers game. But Americans know that private charity can often help the needy better than the government. We also know that helping people to become independent is better yet.

By quickly implementing a temporary worker program, and working hard to bring South Asian workers to the U.S., Americans can demonstrate to the world the wisdom and compassion of helping people help themselves.

Will Wilkinson is a policy analyst at the Cato Institute.