Thinking globally while acting locally has never been more difficult.

The New York Times reports today that CARE has decided to decline $45 million in federal financing (in the form of food aid) because the program that supplies the aid does more harm than good in the countries it was designed to help.

The charity’s dilemma was a difficult one: do you take money that you know will help people concretely, or do you reject that money for the sake of a larger but more ethereal good? It’s not fair to characterize the decision as one between self-interest and altruism, since even the charities that remain in the program are still presumably putting the money to good work. But the dilemma is typical of one we’re growing more and more accustomed to: whether to act in pursuit of some local, immediate, and visible good or to take a structural approach whose effects will likely be diffuse, long term, and invisible.

The food-aid program works like this: the U.S. government buys agricultural products from U.S. farmers at market prices and then pays to ship those products to needy countries on mostly U.S.-flagged ships. In the destination country, the product is transferred to a designated charity, which then sells the product on the local open market and keeps the proceeds to fund its operations.

As CARE points out, however, there are several problems with this system. The first, and most serious, problem is that the way the food-aid program is set up means that the donated agricultural products are introduced into local markets at artificially low prices. This drives down the price of competing locally-produced goods and makes it more difficult for local farmers to survive on the produce of their farms.

In a normal economy, a U.S. farm good like soybean oil would face several trade barriers before it could enter, say, the Kenyan market: two of the most important of these barriers are the profit motive and the cost of shipping. But the charities who play the role of middleman in this system receive the produce for free and therefore have no incentive not to sell the produce at a low price: to them, it’s all gravy. A Kenyan farmer has no such luxury; he has to reckon the prices he’s offered with the costs of production. Likewise, the cost of shipping produce across an ocean provides one of the few advantages local farmers have over the streamlined agricultural operations that operate out of the U.S. But by subsidizing the cost of that shipping, the U.S. food-aid program removes the local farmer’s competitive advantage.

The second problem, which should be of concern only to US taxpayers, is that there’s good evidence that the people who really benefit from the food-aid program are U.S. agricultural and shipping interests. For the government’s purchases are not only depressing foreign markets; they’re also propping up American ones.

The evidence for both of these claims is that the charities only receive seventy to eighty percent of what the U.S. government paid for the agricultural products. This means that the government is buying the produce from U.S. farmers for too much and the charities are selling it to foreign markets for too little. This is what the GAO means when they called the program “inherently inefficient.” The missing twenty to thirty percent is not hard to track: it’s going right into the pockets of American farming and shipping companies. Charity, indeed.

So far CARE is the only organization to pull out of the system, and it doesn’t look like others are rushing to follow. Charities like World Vision believe that on balance the cash generated by the program outweighs any negative impact of the program’s structure. That doesn’t seem likely, but even so, the dilemma is a real one. It’s much easier to mobilize support—within an organization as much as without—for a good you can see (giving out food to starving people) than for one you can’t (stabilizing prices so that local farmers can thrive.) In slipping the golden handcuffs, CARE is not only getting itself out of a situation they find morally dubious. It is also betting that by withdrawing from the program they can draw attention to the problems and with any luck provoke change. But this is a decision no organization should have to make.

The real fault lies at the doors of Congress and the President, for the way to fix the program is simple: instead of using the money to buy American products to ship abroad, give the money to charities to buy locally. As the NYT reported on July 31, the Senate is considering the first steps toward just such an option, albeit under heavy counterpressure from the agricultural and shipping industries:

The Senate Agriculture Committee chairman, Tom Harkin, Democrat of Iowa, where growers and landowners got $1.58 billion in corn subsidies in 2005, is advocating a $25 million pilot program to test buying food in poor countries for both emergency and long-term aid. Even that modest proposal is meeting stiff resistance from farm-state legislators. The House Agriculture Committee’s version of the farm bill includes no such pilot.

Hyperpluralism is a given in American politics, but it’s still hard not to fume at the stupid chauvinism of “farm-state” (or “auto-state” or “hedge-fund-state” or “defense-contractor-state”) legislators. For the massive problems of the day—health care, poverty, global warming—won’t be solved on a state-by-state (or even a nation-by-nation) basis. They’re going require broad, coordinated, structural solutions.

But for reasons best explained by the classic Prisoner’s Dilemma, no one in a competitive environment (and charity is as competitive as any other) wants to leap before anyone else, even if the projected outcome will be mutually beneficial. By turning away $45 million in aid, CARE (like the countries who signed the Kyoto Protocol and the states who are anteing for universal health care) is taking a heck of a bullet for all the rest.

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