The world our parents gave us is rife with problems.Three billion people survive on less than $2 per day. Every day, almost 16,000 children die from hunger-related causes — one child every five seconds — according to the U.N.These problems are not caused by a lack of money.From 1950 to 1985, the total net transfer of capital from the first world to the third world amounted to the staggering sum of $2 trillion in 1985 dollars. Although private sources accounted for as much as 40 percent of this in the 1950s, that number has trended downwards and reached 16 percent by the 1980s, according to a commentary by Nick Eberstadt entitled “Famine, Development and Foreign Aid.”Two trillion dollars is a tremendous amount of money. In 1985 that was enough to purchase all the companies on the New York Stock Exchange and the entire U.S. farming system, according to the aforementioned commentary.And that amount has not decreased in recent years.Former President George W. Bush vastly increased the amount of aid sent to Africa, and Vice President Joe Biden has often stated his commitment to double foreign aid.But the extreme poverty of the third world has persisted despite these measures. In fact, an honest examination of the evidence leads one to the conclusion that foreign aid ultimately harms its recipients.Before looking at the way foreign aid affects the impoverished, it is worth pointing out the vast majority of U.S. “foreign aid” is not even nominally designed to help the poor.The largest recipient of U.S. aid in 2008 was Israel. Virtually all of the $2.4 billion was used to buy weapons, 75 percent of which are made in the U.S. Of the $1.7 billion given to Egypt — the second-largest recipient of U.S. aid — $1.3 billion was used for military purchases, according to the State Department.One would have to go down to the fifth largest recipient of U.S. aid, Kenya, to find a country whose primary aid expenditures were not related to the military. The majority of Kenya’s $586 million was used to fight HIV/AIDS and malaria through abstinence education and drug treatment.Most of our “foreign aid” is not welfare but a military expenditure — a subsidy for the weapons industry.But that’s not to say non-military aid helps the poor — even when it’s designed to do just that.One of the largest problems with sending goods overseas is it destroys local industries.No one can compete with free.President Dwight Eisenhower originally created America’s Food for Peace program in the 1950s to hide the large amount of excess food America’s agriculture subsidies had created. When this wheat was dumped in India, it bankrupted thousands of local farmers and resulted in the starvation of millions of Indians, according to George Dunlop, chief of staff of the Senate Agriculture Committee.Another tragic example of farm subsidies is Africa. Although historically a food exporter, the continent “lost its ability to feed itself” when foreigners began to “smother Africa with foreign aid,” according to Thomas Sowell’s “The Economics and Politics of Race.”Kenyan economist James Shikwati said, “For God’s sake, please stop the aid!” in an interview with Spiegel. “As absurd as it may sound, development aid is one of the reasons for Africa’s problems. If the West were to cancel these payments, normal Africans wouldn’t even notice. Only the functionaries would be hard hit. Which is why they maintain that the world would stop turning without this development aid.”The relationship between foreign aid and foreign governments cannot be overstated.”In practically every case, the influx of ‘aid’ has been immediately followed by the emergence of a massive, unproductive, parasitic government bureaucracy whose very existence undercuts the recipients’ ability for sustained economic growth,” according an article by David Osterfeld in The Freeman, a publication by the Foundation for Economic Education.A large government can often get in the way of economic progress. For instance, starting a legal business in Kenya requires as much as 20 licenses and numerous bribes, according to a 2006 “20/20” special.Not only does aid to foreign nations finance destructive bureaucracies that hinders economic growth, but it also disconnects foreign governments from the incentive to better their countries. When U.S. policies damage the economy, it decreases the amount of money politicians collect from taxes.But foreign aid destroys even this tenuous link between politicians and their policies.Andrew Mwenda examined this change in incentives in a 2006 paper entitled “Foreign Aid and the Weakening of Democratic Accountability in Uganda.” Addressing how Uganda spends its aid, Mwenda writes, “The government is wasting much of the new money on military equipment and political patronage. To promote democracy and accountability, the West should discontinue future aid flows.”To some extent, democracies succeed in reflecting the will of their people. Americans are concerned with improving the state of the world, and they have supported politicians who favor sending aid.If Americans are willing to vote for politicians who will raise taxes to help the third world, then they will surely donate by themselves without the coercion of taxation. Private charities will not only more flexibly deal with the challenges of poverty but also will not waste billions arming the world.It’s easier for Bono to ask his fans to beg our government to help the poor than it is to ask his fans to donate without the always-corrupt middle-man.But this is a cause we must start supporting.If we want to leave a better world for our children, then we must end foreign aid.–Contact Daniel Morgan at [email protected]
Common Cents: U.S. foreign aid starves third world, promotes evil
February 10, 2009