US Global Leadership Coalition

Thank you, Secretary Glickman.

It is a tremendous honor to join the U.S. Global Leadership Coalition in paying tribute to Secretary Albright and Secretary Ridge.

Secretaries, as someone still adjusting to his second career, I am inspired by the fact that you’re not only still engaged—you’re still innovating and leading.

I consider it a great privilege to address the USGLC. For a decade, you have been driving the discussion about the role of development and diplomacy in American policy. I want to thank you for your contributions to the public debate—and for inviting me to be part of it.

I’d also like to recognize Raj Shah, the administrator of USAID. It was a pleasure to work with Raj at the foundation. Melinda and I always relied on his insights, and now we’re excited by the reform spirit he’s bringing to AID.

The talent and seriousness of the leaders in this room give me confidence that our society will rise to the challenges we face.

Unlike many of you, I am not an expert on smart power. But I know a bit about business, and I am speaking as a businessman when I say that investing in the world’s poorest people is one of the smartest ways our government spends money. It saves lives, it improves livelihoods, it promotes stability, and it stimulates economies.

The national security arguments I have heard in favor of foreign assistance from President Obama, President Bush, Secretary of State Clinton, Secretary of Defense Gates, and General Petraeus appeal to my common sense.

It seems reasonable that the world will be a safer place if there is enough food to go around—that it will be a more stable place if children grow up with opportunities instead of frustrations. Furthermore, I can only assume that if the United States plays a role in helping to create prosperous societies, we will have friends to call on in times of need.

Secretary of the Treasury Geithner’s arguments in favor of development resonate with my experience. He often points out that exports to developing countries have grown six times faster than exports to major economies in the past 10 years.

He concludes from that fact that, quote, “Growth for this country in the future is going to be overwhelmingly dependent on our ability to see faster income growth in the most populous parts of the world,” close-quote.

We already have an important stake in the success of developing economies. Half our exports go to developing markets. That’s half-a-trillion dollars every year, and the number is only getting bigger.

An important new book called Emerging Africa tells the story of 17 African countries that are developing at a rate that surprises many people who still see the entire continent as a lost cause. To take just one example, Mozambique has achieved phenomenal GDP growth of 7.5 percent per year since the mid-1990s, due in large part to a steady and predictable flow of aid.

In the future, growth in poor economies will be an engine of our own economy. Our success is tied to the progress of those around us. The investments we make today in the developing world will help create the jobs of tomorrow here in America.

History, Values, and Context

When Melinda and I first started learning about health and development in the late-1990s, the American public didn’t know nearly as much about the issues as it does now. I always marvel at how fast awareness of what’s happening in poor countries has grown.

I got to be 40 years old without understanding the terrible inequities that divide the world. But my children are learning about the Millennium Development Goals in elementary school.

When Americans began to appreciate what assistance for the poorest could accomplish, they wanted to do more. Over the past decade, with strong support from both Democrats and Republicans, our country steadily increased its commitments.

The United States helped launch some of the most effective health and development initiatives in history, including the President’s Emergency Plan for AIDS Relief, or PEPFAR; the President’s Malaria Initiative; and the Millennium Challenge Corporation.

Americans are now—and we almost always have been—the largest donor to projects for the poor.

That is something we should all be proud of. As a nation, we express our noblest values when we make a priority of helping others. We also set an example for the world to follow. Our generosity encourages other donors to give more. However, the economic crisis has forced us to reassess everything. In the short-term, we face an employment emergency, with unemployment above 9 percent. This crisis is compounded by growing pressure on our national deficit and debt. Congress will take a very hard look at spending as it decides how to get Americans working again and restore the long-term health of the economy.

In this time of painful tradeoffs, it is right to ask tough questions about our aid expenditures.

Aid Effectiveness

The first question on everybody’s mind is—how effective are development programs for the poorest? Some say the return on investment doesn’t justify the expense. Others claim a large portion of aid is lost to corruption.

It’s not surprising that people feel that way. For years, many governments disbursed foreign assistance without measuring its impact. At times, they didn’t even have a clear vision of what the impact was supposed to be. Especially during the Cold War, aid sometimes had more to do with forging alliances than with helping people.

In the past decade, donors have started to get clearer and more principled about the purpose of their foreign assistance. Many of the newer programs are focused on the investments that we know have the most impact on people’s health and well-being.

But there are still challenges. Last week, news coverage of a Global Fund report from months ago about misused money in a few countries brought the issue of accountability back to the forefront.

When Global Fund money is stolen, it costs lives.

But we should not respond to the finding that a small portion of Global Fund money has been misspent by calling for cuts, because that will also cost lives. The point of oversight is to save more lives, not simply to find fault.

In fact, the Global Fund does a very good job making sure almost all its money is used to save lives. It hires independent investigators, makes the results of investigations public, and quickly corrects the mistakes uncovered by the investigations. That’s how oversight is supposed to work.

If you show me a program that doesn’t report any diverted funds, I’ll show you a program that doesn’t have a mechanism in place to track how its funds are being used. We need to continuously monitor, evaluate, and improve our aid. We need to be relentless not just about rooting out fraud but about measuring results, understanding what works and what doesn’t, and squeezing more out of every dollar.

I believe in the lifesaving goals the Global Fund has set, which is why our foundation has provided it with over $1 billion in support. The Global Fund has saved more than 6 million lives, and I am confident that it will build on that success if it’s given the chance.

The danger, of course, is that these excesses will obscure the very significant accomplishments of international affairs programs. Let me be clear: any claim that foreign assistance to the poorest countries is just money down a rat-hole simply doesn’t stand up to scrutiny.

Because of foreign assistance, the world eradicated smallpox 30 years ago.

Because of foreign assistance, we’re on the threshold of eradicating polio. The number of cases has dropped from 350,000 in 1988 to fewer than 1,500 last year.

Because of foreign assistance, 5 million people with AIDS are receiving life-saving treatment.

Because of foreign assistance, hundreds of millions of children are sleeping under bed nets that protect them from malaria.

We need to understand the benefits of foreign assistance, so we can have an honest debate about the costs of cutting it.

If we take people off of AIDS treatment, they will die. If we fail to replace bed nets when they wear out, children will get sick. If we pull back from the goal of polio eradication, we will lose the best chance we’ve ever had to eliminate this scourge from the earth.

Foreign assistance is largely responsible for one of the greatest accomplishments of the past 50 years: the massive drop in the number of child deaths. In 1960, about 20 million children died before they turned five years old. Last year, the figure was 8.1 million.

That’s an almost 60 percent decline, and it happened in a period when the number of births rose by almost 25 percent.

There are many reasons for this progress, but the most important one is vaccines. Vaccines are the most cost-effective health tool available. Just a few doses protect a child from deadly and debilitating disease for a lifetime. In the case of measles, for example, just two 18 cent doses of vaccine end the threat of one of the most contagious diseases in the world.

American assistance buys vaccines every day.

And the number of lives saved, as impressive as it is, doesn’t capture the full benefits of vaccination. Mortality statistics don’t take into account morbidity, which is a fancy way of saying that disease doesn’t just kill people; it also disables them.

Take diarrhea. It kills about 1.5 million children every year. But it affects hundreds of millions more. Frequent bouts of diarrhea make it harder for children to absorb nutrition, which interferes with their mental development.

So by the time the children who survive diarrhea are well enough to go to school, many are unable to learn. The disease doesn’t take their lives, but it steals their future.

The huge disease burden in poor countries means that a substantial part of their human potential is lost by the time children are old enough to talk.

A recent study published in The Economist shows a strong correlation between IQ and disease burden. IQ is not a perfect measure by any means, but the trend is unmistakable: the less disease in a country, the higher the average IQ of its people. By fighting disease, aid helps countries make the most of their human potential—and that has a direct impact on economic growth.

Another benefit of vaccines—beyond lives saved—is that saving children’s lives actually promotes sustainable population growth.

While it seems logical that saving children’s lives will cause overpopulation, the opposite is true. That’s because parents tend to make choices about how many children to have based on how confident they are that their children will survive.

When the child mortality rate goes down and parents know their children are likely to make it past the age of 5, families get smaller. And then it’s easier for countries to meet people’s basic needs—to feed, educate, and employ their citizens.

Investments in agriculture have also paid amazing dividends. Fifty years ago, more than half the people in the developing world did not consume enough calories to be healthy. Now, thanks to the aid-supported Green Revolution that helped farmers plant better seeds and manage their land more effectively, that percentage is less than 20.

So it’s not just that more children are surviving to age five; they’re also growing up to be healthier adults.

Most poor people in the world feed their families and earn their income by farming small plots of land. So when farmers increase their productivity, they do more than fend off starvation; they also build wealth.

Ghana has cut hunger by 75 percent in the past two decades, and in the same period the income of the average Ghanaian has gone up by 40 percent. Those two advances go together. Agricultural assistance comes with an exit strategy built in: As farmers improve their productivity, access new markets, and boost their income, they become self-sufficient.

And, incidentally, the global revolution in food production over the past several decades has made food cheaper for consumers here in the United States.

When you put all these factors together, you have many of the key elements of successful development. A poor country with a sustainable, healthy population and a thriving agricultural sector won’t remain poor for long.

Assistance that intervenes at strategic points triggers a virtuous cycle. Simple things like seeds and vaccines lay the foundation for more complicated things like education, environmental sustainability, and good governance.

Brazil, India, Indonesia, and Poland are compelling case studies of how aid can help lead to prosperity.

Last year, I joined the South Korean foreign minister Yoon Jeung-Hyun and others to launch the Global Agriculture and Food Security Program. Minister Yoon described his memories of being hungry as a child and eating food given to him and his family by the American people.

I can make the case my whole life about how aid can help move countries out of dependency. It will never have the impact of his personal testimony.

South Korea used to receive aid; now it gives aid. In fact, it has now given more than it ever received. And you could see the minister’s joy in being able to return the favor to the world.

When people make the argument that development assistance isn’t effective spending, I don’t just say I disagree. I say I think well-spent aid is uniquely effective among all the different kinds of spending our government does.

The Long-Term Economics Argument

But even though aid is effective, there’s a second question we’re obliged to ask—do we have the money to spend on it right now?

I believe we do. I look to the inspiring example of the United Kingdom, which under David Cameron’s leadership passed an austerity budget while maintaining foreign assistance.

As Congress rightly looks to retrench, it is imperative that we consider the costs and benefits of each line item in the budget. The 1 percent we spend on aid for the poorest not only saves millions of lives; it also has an enormous impact on developing economies, which means it has an impact our economy.

In my career at Microsoft, I staked a lot on my belief in innovation. When pessimists look ahead, they assume a world without innovation. They simply extrapolate in a straight line from the current reality. They fail to recognize that new insights will bend the curve, and they don’t see the most exciting areas for growth.

I consider myself an optimist. When I founded Microsoft, I was motivated by the conviction that computers could change everything. I couldn’t predict the future, but I could predict that software would fundamentally transform our lives for the better. More than 30 years later, I am proud to say it has—in some ways I expected, and in other ways I never imagined.

When I look forward to the future of the economy, the biggest reason to be optimistic is the fact that we have the opportunity to unleash the creative power of millions of people and thousands of new markets.

I still can’t predict the future, but I can predict that a world with 200 healthy and thriving countries offers much greater opportunity than the world we have now.

Conclusion: Touch Choices and Leadership

When people say the economic crisis should force us to make tough choices, I agree. These are times when we are tested. These are times when we need bold leadership. Does our society have the courage to do the right thing, even when it’s not easy?

Right now, the tough choice is to maintain foreign assistance, not to cut it. Right now, the bold act of leadership it to defend spending on key international programs, not to attack it.

A strategic opportunity is one that advances our most important goals and our highest values for a low cost.

Businesspeople spend their lives looking for these kinds of opportunities, and if they’re lucky they find half a dozen of them in their career.

Our country has a phenomenal strategic opportunity right now. We must keep on investing in the world’s poorest people. For their sake. And for ours.

Thank you.