Saturday, February 16, 2008

More on Foreign Aid. It does nothing for the poor.

THE humanitarian case for aid has been patterned after the Western welfare state. The idea was that many people favor welfare to transfer wealth from the relatively rich to the relatively poor within a country, so they will favor welfare to transfer wealth from relatively rich countries to relatively poor ones.*

The humanitarian motive for giving aid may have justified transferring Western taxpayers' money to poor people, but not to poor governments: the latter may have no effects on the former.

Remember the likes of Ferdinand Marcos of the Philippines, Jean-Bedel Bokassa of the Central African Republic, Sani Abacha of Nigeria, Joseph Mobutu of the Congo, Robert Mugabe of Zimbabwe, and a host of other kleptocratic tropical gangsters in power, who simply stole aid money? Many African rulers rely on aid to feed their people, while they destroy their livelihoods through a neglect of, and even by destroying, their own infrastructure.*

According to New York University professor of economics, William Easterly, despite more than $2 billion in foreign aid being given to one African country for roads, the roads did not improve. What increased was the bureaucracy, with the government producing 2,400 reports for the 1,000 donor missions that visited each year.*

The poor of the world cannot claim a moral right for welfare transfers from the rich. While recipients of domestic welfare payments depend on the existence of a national society with some commonly accepted moral standard, there is no similar international society within which a right to aid can be established.

The vast majority of foreign aid efforts has failed to alleviate poverty. There are a few cases where it has improved the lot of poor people. The people of Martinique, for example, are probably better off because the French Government provides a very high percentage of their gross domestic product. Also, foreign aid has helped.*

A recent study found that foreign aid "appears to redistribute from the reasonably well-off in the West to most income groups in the Third World, except the very poorest." This is consistent with the evidence from both poor and rich countries that the middle classes tend to capture government transfers. Another study found that, after correcting for the link between aid and income levels and growth, the effect of aid on growth is often negative. A survey of other such studies concludes that "there is now widespread scepticism that concessional assistance does have positive effects on growth, poverty reduction, or environmental quality."

In badly run developing countries, governments channel aid to a small group of high ranking people who help keep them in power. Poor people in villages and shanty towns never see any aid. Infant and child death rates remain high and women still die in unattended childbirth in countries to which this aid is focused.

The foreign aid programs of the past half-century are a historical unusual. They were a response to the disastrous breakdown of the 20th-century liberal economic order during the interwar period. It has taken a long time to repair the damage. However, it seems a new liberal economic order is gradually being reconstructed. The Bill now coming before our Congress, “Global Poverty Act” (S.2433), sponsored by Sen. Obama is a prime example of this. Billions of dollars will be hijacked from the American taxpayer to be paid to the UN so they can redistribute OUR income to some foreign governments. The failed Oil for Food fiasco should be enough reason for us to cut off all funding to the UN much less burden the US Taxpayer with billions of more dollars of aide to unfriendly, uncaring and unappreciative countries.

I don’t know if there ever was a real time for foreign aid with the exception perhaps at the end of WW2, but it is certainly an idea whose time has passed, and it is time for the U.S. to “just say NO.”

*Facts and figures from an article written in 2006 by Deepak Lal, professor of international development studies at UCLA and professor emeritus of political economy at University College, London.


softwareNerd said...

Re: "THE humanitarian case for aid has been patterned after the Western welfare state."

Coincidentally, just today, this parallel was drawn on another blog I follow.

Even when foreign aid helps third-world countries, it is nothing compared to what they could do if they simply changed their laws. China and much of the far-east are good example of this: a few words on paper, allowing people a little more freedom, and voila! India tried the same thing, with similar results.

Truly, if one wanted to help the third world, one must first drop the blinders of multiculturalism that would have us believe that all cultures and political systems are equivalent in moral terms. Then, one would want to teach the less advanced countries how to adopt the western model of individual rights.

Ticker said...

Mulitcultrualism is another idea that needs to be buried. I have a good article on that subject in my files and may do a piece on that in the coming weeks. Thanks for the head's up on the other blog.

g-hogg said...

The UN is the illustration of a waste of money and time. They sanction Iran and invite Ahmadinejad to speak. He rants about not recognizing the authority of the UN and the members applaud him.

This past summer, Bush visited Columbia to give them money for the war on drugs and had to be protected from the demonstrating mobs.

In spite of ideas of the democrats that it is our duty to bring the world to our living standard, there comes a point of diminishing returns.

I like the policy of the Godfather: "I will grant you this favor and someday, I will ask a favor of you."

I do believe we have granted enough favors.