From Aid to Equality
Reader exercise: please explain "aid fungibility" to our Secretary of State
UPDATE: OK I finally define fungibility (see end of post). It involves brothels.
the United States said Friday that it planned increased aid for Pakistan’s military over the next five years.
Secretary of State Hillary Rodham Clinton made the announcement in Washington ...
In announcing the aid, Mrs. Clinton did not discuss the administration’s moves to stop financing certain elements in the Pakistani Army that have killed unarmed prisoners and civilians.
On Thursday, senior administration and Congressional officials said that the Obama administration planned to cut off funds to those units.
T or F: Increasing aid to Pakistani military while you "stop financing certain elements" who kill civilians is equivalent to increasing aid to these same "certain elements."
UPDATE: OK, OK I can tell you guys really want me to define "aid fungibility". Here's the official definition given by the World Bank's Chief Economist in the 1950s:
It's when we think we're financing a power plant, and we're really financing a brothel.
Aid Fungibility is when the Donor gives the Government Aid for Good Thing A and refuses to fund Bad Thing B. The clever Government then reduces its own spending on Good Thing A one for one with the aid, so that total spending (Donor + Government) on Good Thing A is unchanged. The government uses its savings on A to spend more on Bad Thing B. So de facto (compared to the pre-aid situation) the Donor really has no effect on A and only has the effect of increasing total spending on Bad Thing B.