The NYTimes has an excellent article on how foreign aid is often more about aiding local companies than aiding foreigners. It’s a familiar story but told with a wry look at condom production in Alabama where for decades billions of condoms have been manufactured for USAID and other programs despite the fact that costs are much lower on the world market.
A central theme in the article is the contrast between the waste of foreign aid dollars and the plight of the poor, low-skilled workers who make the US condoms. Here, however, is a way to square the circle. The US plant typically produces about 450 million condoms a year at a cost of 5 cents each. Condoms could be bought on the world market at 2 cents each so if the plant shuts down USAID can save $13.5 million dollars a year. The US plant employs 260 people so every one of those employees could be paid a one-time quitting bonus of $51,923, equivalent to several years of salary of the lowest paid workers. USAID would be indifferent in year one and would have more to spend on foreign aid in every subsequent year. My bet is that the workers would jump at the chance to be bought out. So there you have it, that’s how you use a condom optimally.