The Importance of US Foreign Aid (Part I)

An International Rules-Based Order Created by Us, for Us

Every few years, especially when Congressional budget talks come around, US foreign aid becomes the country’s collective whipping boy. Recently, it has been a hot topic of conversation as President Trump’s DOGE team starts trim what they view as government waste.

This is not a partisan or anti-Trump piece.

Trimming government fat - which has unarguably grown at astronomical rates in the last several decades - is certainly a worthy and laudable goal. And foreign aid is always viewed as low-hanging fruit with the domestic crowd.

“Why should we be sending money to other countries when we have ______ going on here?”

That’s a fair question to ask. But I wanted to take a brief look at why foreign aid has historically been an important part of our foreign - and even domestic - policy.

And this isn’t even necessarily about every single program we fund (you’d be crazy to think every single one is good or merited) through our foreign aid expenditures.

I want to look at this from a holistic perspective.

I’m by no means an expert on international relations, but it was my main area of study in college (and I somehow managed to trick my professors into letting me graduate with honors). So it’s something I’ve always been interested in - and I think more people would benefit from understanding why it’s so important.

Global Rules-Based Order

The United States has long been a key architect of the global rules-based order that has shaped the world since the end of World War II. This system, which includes international institutions, agreements, and norms, has underpinned a stable and interconnected global economy. A global economy that has raised the standard of living for almost every human being on the planet - but especially here in the US.

By promoting peace, stability, and economic cooperation, the rules-based order not only ensures a safer world but also delivers tangible benefits to the average American, particularly through trade partnerships, market access, and economic growth.

Creation

Following the devastation of World War II, the United States recognized the need for a framework that could prevent future global conflicts and support long-term economic recovery. This led to the creation of many international institutions which fostered this economic growth and stability.

The United States played a pivotal role in shaping these institutions and norms, which sought to encourage cooperation, promote free trade, and create predictable economic policies across borders. In parallel, the US championed the spread of democratic governance and market-oriented economic systems, believing that nations that adhered to these principles were more likely to be stable, peaceful, and prosperous.

In the decades following World War II, and more notably post-Cold War, the US did not emerge as the world’s lone hegemon because of our military strength alone - we emerged as such because we became the economic powerhouse on the global stage.

Stability as a Foundation for Economic Growth

One of the central tenets of the rules-based order is that stability and peace create the conditions for economic prosperity. Countries that are politically stable and respect the rule of law provide an environment conducive to business, trade, and investment.

In these stable environments, businesses can plan for the future with greater certainty, knowing that legal frameworks will protect intellectual property, contracts will be honored, and disputes can be resolved through diplomacy or arbitration rather than violence or illegitimate seizures.

For the average American, this means access to a broader range of goods and services from around the world. Stability in trade partners creates the foundation for international markets where American goods and services can be sold, helping to drive the economy.

We don’t become wealthy as a nation by simply creating and purchasing our own products!

In turn, these countries become important sources of the materials, goods, and technology that the United States needs. This reciprocal relationship supports industries across the United States, from manufacturing to agriculture to technology.

Trade Partnerships and Market Access

One of the greatest benefits of the rules-based order for the average American is the access to international markets.

The United States, as a global economic leader, has consistently worked to reduce trade barriers through bilateral, regional, and multilateral agreements. These efforts have created a framework in which American companies can sell their products to consumers in virtually every corner of the world.

The stability of trading partners allows American companies to expand their reach and secure reliable customers. Countries that are part of the global economic system—especially those that follow international trade norms—serve as significant markets for US products.

For example, the European Union, Canada, and Mexico are among the United States’ largest trading partners. American farmers, manufacturers, tech companies, and service providers benefit from stable, predictable access to these markets.

Moreover, by supporting the rules-based order, the US has encouraged the growth of a global middle class, particularly in emerging economies. This expanding middle class translates into more consumers with purchasing power, providing new opportunities for American exporters. For instance, demand for American agricultural products like soybeans and corn is driven by growing populations and rising incomes in developing countries.

In essence, a rising tide lifts all ships. The more purchasing power that’s created around the world, in a rules-based order that the US designed for our benefit, means American companies and workers have more access to markets to which we can sell.

This means more businesses, more (and better paying) jobs, and more opportunities for Americans.

But - while Americans benefit from selling goods abroad, we also rely on imports to meet our own needs. From electronics and automotive parts to clothing and raw materials, the US imports a wide range of products that support domestic industries and improve the standard of living for American consumers.

Stable, rules-based trade relationships ensure that these goods are delivered reliably and at competitive prices.

It’s Not Just the Economy, Stupid

The rules-based order not only benefits Americans economically but also supports our national security. By promoting stability and the peaceful resolution of disputes, the US helps to reduce the likelihood of conflicts that could disrupt trade routes or harm global economic activity.

The free flow of goods, services, and capital is vital for the continued prosperity of the US economy, and protecting this system has become a cornerstone of American foreign policy.

But policymakers and leaders haven’t always done a good job at explaining this or selling it to the American people.

This leads to mistrust or misunderstanding.

Have we overstepped our boundaries in the past? Yes. Are foreign affairs insanely complex? Also yes.

But there’s usually an underlying method to the madness, outside of just “Bush wants oil” or “Biden is laundering money through Ukraine” (which are some of the most intellectually lazy takes out there - get real, people).

Furthermore, the US military presence around the world—often framed within the context of upholding the rules-based order—has contributed to the stability of key trade routes, such as the Strait of Hormuz, through which a significant portion of global oil passes.

By ensuring that international trade continues unhindered, the US helps protect both its own economic interests and those of its allies.

So Why Should We Care?

The US-led rules-based order has not only fostered global peace and stability (relatively speaking - we see far less death and destruction on a global scale than we have in centuries past) but has also created a framework that brings significant benefits to the average American.

Through strong trade partnerships, access to international markets, and reliable imports, Americans enjoy a higher standard of living and greater economic opportunities. We made a lot of the rules - and we made them to benefit us, while also benefitting others. It’s not all zero-sum!

By promoting stability and the rule of law, the US has ensured that the global economy remains open and predictable, benefiting businesses and consumers alike.

You don’t have to agree with all of the programs that are funded, or the policies that are pushed - but there is a reason (usually) behind these decisions, made by very intelligent, competent professionals.

But when you wonder, “why are we sending billions to Ukraine” or “why are we spending millions on children in Iraq? - I would respond, in short, “to uphold the global rules-based order, promote regional and international stability, which in turn defends US economic and security interests.” And then I’d say, “here, read this Substack article I wrote.”

Not only does war in Europe disrupt grain trade around the world (as Ukraine is one of the world’s largest grain producers) making things more expensive for us at home - but it also destabilizes an entire region. If we don’t fight for those who are trying to uphold the rules-based order that we helped create, other bad actors will see no reason why they shouldn’t look to break the rules, either.

It would allow an unfriendly actor (Putin) to hold more leverage over EU and global markets - and we’ve seen how well that’s worked for us and our allies in the recent past with energy supplies.

Or in Iraq, where we apparently invested $20 million in “Iraqi Sesame Street.” Think about it. Iraq is home to hundreds of thousands of kids - many of whom are orphans and refugees - who have known nothing but trauma, death, violence, and despair (thanks in no small part to us, if we are being honest).

Don’t you think investing 0.00032% of the US budget to help ensure these kids can develop in ways that not only allow them to flourish, but to create a stable populace in an historically unstable region, is a worthwhile investment? Especially when the alternative is likely just more war, death, disruptions to global trade, and a laundry list of other negative and expensive options (I haven’t even touched on the moral obligations) - all of which would undoubtedly have an impact on Americans’ safety and wallets.

Consequences

So who benefits if this order falls apart? I don’t have a crystal ball, but if I were a betting man I’d guess unfriendly actors like China and Russia would benefit most of all.

If the US stops ensuring an order that we created - and four our benefit - the power vacuum allows for Russia and China to step in and put their rules in place.

And they don’t want us to succeed.

I believe President Trump wants to make sure we are at a competitive advantage against our global adversaries - but we can’t do it by strong arming and “stick” tactics alone. And it certainly won’t help if we alienate our allies and push them into the arms of someone else.

We need “carrot” approaches - and US foreign aid is a huge part of that approach.

So who gets left in the lurch? It will be the average American citizen that feels the effects with higher food, fuel, or other consumer prices. Or less access to global markets. Or less stability or predictability for their investments overseas. Or fewer options to purchase the materials they need to create and sell their products.

The world is too big and interconnected now. Technology has allowed us to connect with anyone at any time in any place around the world - and to ship or receive goods from anywhere in a matter of days.

To quote Saul from Pineapple Express, “The monkey’s out of the bottle now! Pandora can’t go back into the box, he only comes out.”

At the end of the day, we should be having constructive debates on where US tax dollars go. You don’t have to agree with every program. Priorities shift with administrations, as is their prerogative. But they aren’t all “stupid,” like I’ve heard many say.

Is the global rules-based order perfect? Absolutely not. There is still war, instability, and smaller actors who are taken advantage of. And the gap between the super rich and the poor is growing - but so is the global middle class. Just because the super rich are getting super richer (and I’m not defending them) doesn’t mean the middle and bottom tiers aren’t seeing historical gains as well.

At the end of the day, it’s better than every system we’ve had before - and the US designed it to help the US.

So don’t be duped into thinking that foreign aid isn’t important - or that it’s just shipping your money to “help foreigners.”

There is a direct impact on us all - even if we can’t exactly see it or touch it directly. More often than not, these are investments - not just handouts.

And just like your own personal or business finances - if we are smart with our investments both domestically and abroad, we can help the single mom or homeless veteran at home and the orphaned refugee in Iraq or AIDS-stricken town in Africa.

And it could greatly benefit us all.