How Much Would it Cost to Fix the World?

How Much Would it Cost to Fix the World?

Why are aid budgets so small? This is a question that gets politically active peoples' hearts racing in most developed countries. From what the author sees it's usually on the side of "they aren't too small, they're too big". Anyone with an opinion on foreign aid, the less sexy side of international relations, should be commended. It's not often you get people really caring about what's going on beyond their shores that doesn't involve our fighting men and women oversees or a sport. But commendation aside, I'm going to show people who think these budgets are too big, why they're not.

In 2010 Walmart had a gross revenue of $422bn, roughly the same as Norway's total gross domestic product for the same year. I'd like to reiterate that, Walmart, the US retailer made as much money as Norway, the Scandinavian country, did in 2010. Not only that but Walmart out-earned the other 156 countries, out of a possible 192 recognised states, below Norway.

Norwegian parity with the world's biggest company by revenue is purely coincidental but it adds a flow to my argument. Norway is the world's 2nd most charitable country in terms of its aid budget (as a total of it's GDP) giving out 1.06% of it's total revenue in aid, as a whole number that's $4.09bn. So if Walmart decided it wanted to spend just over a percent of its revenue on charity it could match the world's 2nd most generous country's contribution. If it wanted to.

These numbers seem small when we look at total contributions. The United States tops the ballot at nearly $30bn a year in 2010. 2nd, 3rd and 4th are France, Germany and the UK adding up to about $35bn. The top 10 most charitable countries giving away a total of roughly $100bn every year.

Now we've got some context on what is typically given, both in percentages of total GDP, absolute cash numbers and relative to other countries and big companies, let's get down to business of comparing it to the other things we spend money on.

During the Global Financial Crises of the last few years the European Union spent $4 trillion bailing out its banks, the United States spent a cool $2.3 trillion. That's $6.2 trillion on propping up financial institutions.

Who else is making this sort of money? The top 10 biggest oil companies' gross revenue in 2010 was $2.5 trillion. The oil companies partners in crime, the automotive industry's top 10 biggest earners in turn racked up $1.2 trillion in revenue in 2010. The global arms trade generates $1.5 trillion a year. The vast majority of that is countries selling each other guns and bombs. Are we starting to get the picture?

The solutions to these problems isn't going to be a quick fix or a one-size-fits-all global template. But in the spirit of comparisons we've been so committed to over the last 500 words or so, here's what we could have bought with, for example, a 5% one off tax on the revenues of the top 10 biggest companies in each field.

  • Taxing the top 10 oil companies a 5% one off fee would generated $125bn, 25% more than the total aid contributions of the top 10 wealthiest countries combined who typically donate less than 1%. This125bn could also have paid for 5 hydroelectric plants at the same size and capacity as the Three Gorges Dam, the second largest hydroelectric plant in the world.
  • Taxing the top 10 automotive companies a 5% one off fee would have generated us60bn, which could match the revenue of 6 public transport systems on the scale of Transport for London which carries a billion people a year.
  • Putting a 1% tax on the $4 trillion European bank bailout would generate enough money to pay for the realisation of all of the Millennium Development Goals, whilst a 1% tax on the $2.3 trillion US bank bailout would generate enough money to pay for universal anti-retroviral treatment of people in low and middle income countries.

Aid budgets aren't small, they aren't small at all. They're microscopic. They're barely visible with the fiscal eye. It isn't like we don't have the cash to pay for things to be better, we clearly have it or the reasonable means to raise it. We just choose not to.


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