McLeod Group guest blog by S.L. Erikson, March 12, 2025
Aid can’t be run like a private equity or hedge fund. And yet, Benjamin Black, Donald Trump’s nominee to run the US International Development Finance Corporation (DFC), is eager to redirect USAID’s US$44 billion budget away from public civil servants to Wall Street financiers.
Black, a former Goldman Sachs analyst, “wants to repurpose USAID funds,” reported Forbes, Bloomberg and the New York Times. As Black and venture capitalist Joe Lonsdale spelled out in How to DOGE US Foreign Aid, a Substack post, “If we’re going to spend money abroad, let’s do so with an investment-driven model.”
Black, an Ivy Leaguer with limited foreign policy chops, no legislative experience and a lifetime as the privileged son of a billionaire, doesn’t have a clue about the toil of actually helping people in need. But helping people is not what the “repurposing” is about. The goal is to get access to big pots of money to make more money. And there are many indications that Trump and Musk went after USAID first because they assumed that most Americans don’t care about this particular pot (although some definitely do).
I worked for USAID in a former life. For years, I’ve advocated for structural and sometimes even disruptive global health and international development reform. But not like this.
Sending USAID money to Wall Street is not the way to reduce human suffering. Finance doesn’t care about care – not for humans, struggling economies or the planet. Its goals are elsewhere. The DFC, which Trump created in 2018 as an independent agency and which was accused of insider trading in 2020, is all about private, profit-seeking development.
The financialization of helping people has been well underway for over a decade. I met an advisor to the Gates Foundation who took credit for telling Bill Gates in 2010 that “there’s a whole big part of global health that has the potential to be cash flow positive,” by which he meant that Gates’ philanthropic efforts could make money. “Back then,” the advisor told me, “when you put money in, you did not expect anything back.” Gates went on to create the Global Health Investment Fund, now a corporation, to “drive global health innovation” – and pocket returns. Implementation, the hardest part of any aid project, was outsourced.
Financialization is, in this case, about transforming the goods and services for essential human needs into speculative financial instruments for investors to gamble on. The problem with financializing USAID money further – it’s been heading that way for years in response to political pressure – and redirecting it to the DFC is that it further confuses aid with markets. Successfully implementing a health or other development project that works for humans long-term is very different from just raising money.
Black and Lonsdale argue that the goals of markets and aid are one and the same. But markets are not about the hard slogs of building systems that sustain human beings for the long haul; they’re about making money. Their cluelessness about aid is revealed when they write about where they’d put returns. Not into helping people, but back into financial markets, where, it goes without saying, capital can be syphoned off for private investors.
Many people are taking potshots at government these days. Yes, governments and NGOs are imperfect and some are terrible, but the good ones have built-in mechanisms for feedback, change and systems of care at scale simply unmatchable by private investment schemes. In the good ones, return on investment is measured by the well-being of other humans, not investor profit. Yet now taxpayer dollars and other big pots of money, like pensions, are willfully being turned over to the vacillations of Wall Street.
Governments around the world are looking wobbly these days. Peace, order and good governance can be restored with a lot of work and some luck. In human pursuits of a good life, government needs to move slowly and support people, through reasonable regulation, well-rounded planning, and court systems that can support both contracts and human rights. Markets can be flakey. Businesses come and go. But governments provide the stability and reliability necessary for human prosperity.
Aid is never just about the money. At its inception in 1961, USAID was to be an expression of American soft power, set apart from the dog-eat-dog world of global markets. Humans need markets, but markets have no social contract to improve human health, no obligation to do good, no constituency committed to minimizing human harm. Governments do.
USAID has long needed reform, but closing its doors and redirecting its money to the DFC would confirm what many have long feared would happen with a wholesale turn toward an anti-government, financialized world: Too bad for you if you happen to be poor or unlucky. We used to try to help, and now we don’t.
S.L. Erikson is Distinguished Professor at Simon Fraser University and author of Investable! When Pandemic Risk Meets Speculative Finance – A Cautionary Tale. Photo: Daniel Lloyd Blunk-Fernández.