I agree that in retrospect foreign aid is abused. Ironically we're still being called stingy so there is no winning side to the issue except good oversight and thick skin.
Foreign "aid"
newsandopinion.com | Now that the
International Monetary Fund and its political and media allies are in
a full-court press for more money from the American taxpayer,
expect to see more stories about the supposedly good things the
IMF and other international donor agencies have done and the lives
they have supposedly saved in the Third World. But the reality is
very different from the pious stories.
When you do something for someone, that doesn't necessarily mean
that what you did would not have been done without you. In fact, a
case can be made that it was precisely the cutbacks in American
economic aid to Taiwan and South Korea in the 1960s which forced
these countries to get their own acts together and institute the
reforms which led to their economic rise.
With nations, as with individuals, dependency is not the royal road to
prosperity. What "we" can do for "them" is usually a lot less than
what they can do for themselves. Playing Lady Bountiful with the
taxpayers' money may allow some people to feel good, and it
certainly allows those who administer vast sums of money to
become important and impose their ideas on the recipients. But that
is very different from saying that this is the policy which produces
the best long-run results.
Where it is simply a matter of allowing people to survive in the short
run -- as with the Marshall Plan in war-devastated Europe or
emergency aid during famines in India in years past -- then of
course immediate help is urgently needed. But a distinguished
Indian economist warned long ago that continued shipments of
American wheat to his country inhibited the development of India's
own agriculture.
Instead of continuing to rely on donations of wheat from America,
India reformed its restrictive agricultural policies. Its own production
of wheat then increased so much that today it has a surplus of wheat.
Had we continued to supply India with wheat, no doubt the foreign
aid bureaucrats could point to statistics on all the lives we "saved" in
India with our food. But instead, those people have been kept alive
with India's own food. Indeed, a few years ago, India was able to
ship surplus wheat to Ethiopia to relieve a famine there.
Professor Peter Bauer of the London School of Economics has
waged a decades-long crusade against foreign aid, arguing that the
very word "aid" begs the real question: Are transfers of wealth to
Third World governments really an aid to economic development?
His own experience in Third World countries convinced him that
"foreign aid" was often in reality foreign hindrance.
The continuing fiascoes and tragedies of foreign aid programs have
won more converts to Professor Bauer's position over the years.
More and more economists and others have begun to complain that
the policies which the international donor agencies like the IMF have
imposed on various poor countries around the world, using the
leverage of "foreign aid" money, have made matters worse instead of
better.
In addition to calls for more outright donations of money, there have
also been cries for the "forgiveness" of Third World debts. This would add financial
irresponsibility to dependency as the keys to progress. Those who talk this way may feel
good about themselves but they are unable to point to any country that has actually risen out
of poverty this way.
With far more money -- trillions of dollars -- being available in the international capital
markets than in foreign aid, why is any government forced to rely on either outright gifts or
disguised gifts, such as "loans" that will later be "forgiven"?
First of all, it is always more tempting to get something for nothing than to get investments
that have to be repaid. Moreover, foreign aid can be spent on whatever is politically expedient,
such as a grand plaza with government buildings or a showy new sports stadium, and much
of the donated money can simply disappear into the Swiss bank accounts of Third World
politicians.
Investors who are lending their own money are a lot more hard-nosed about the practicalities
of proposals to use it, and are far less likely to "forgive" loans afterwards, much less continue
to make new loans when the old ones are unpaid. That happens only with the taxpayers'
money.
JWR contributor Thomas Sowell, a fellow at the Hoover Institution, is author
of several books, including his latest, The Einstein Syndrome: Bright
Children Who Talk Late. |
