Posted by Dan Ewert : 8/29/2002 02:03:00 AM (Archive Link)
You may have read recently about the U.N. conference that took up the cause of helping Third World countries develop to… well, at least to the 2.5 World. The poor countries, of course, said how it was the moral duty of the rich Western nations to provide them with more aid. The West is balking and for good reason. Throwing money at these countries is money wasted.

The first problem I see with aid is that most of these governments are hopelessly corrupt. Foreign aid in the form of cash is largely pocketed by officials or squandered on projects that benefit only themselves. Foreign aid in the form of grain or food is controlled by these same people and is distributed to friends or resold for profit as they see fit. The citizens, then, continue to wallow in poverty and the same bloated emissaries cry out about how the world oppresses them and they deserve more aid. A fine example of this is the Palestinian Authority. Here’s a group that receives money from the U.S., the U.N., the E.U. and who knows how many Arab nations. For the population and geographic size, they have a huge aid income. And yet the people suffer while the PA officials build and live in mansion/palaces. It’s well known that it’s impossible to accomplish anything there without extensive bribery. And so you can see similar behavior in any number of the Third World countries. So aid accomplishes little because of the entities who are entrusted to handle it. The entrusted can’t be trusted.

Secondly, I don’t like aid because it has the tendency to keep these corrupt governments in power. Not only in the sense that the liquid money and the power of distribution give them exceptional power and military might, but if the people have just enough to keep from starving, they’re likely to tolerate an oppressive regime… especially when combined with the military might. North Korea is a prime example of this. A Communist country with a leader worship mentality, it is unable to feed its own people. Many have starved there and this is in spite of much food aid from other countries. I’m willing to bet that when that food aid reaches the masses, it’s never presented as foreign aid… it’s more likely presented as food that the great leader has provided to his people, he’s such a swell guy. Without such extensive aid, though, the greater suffering of the people would create a groundswell to overthrow the bad government. Instead the aid preserves it. Cruel? Yes. It’s the realpolitik in me. Another part of me doesn’t like the idea of letting many more people starve for the purpose of revolution, but then again I wonder if it’s better in the long run.

And third, I dislike aid because even at its best, it ultimately teaches reliance on that aid. If you keep giving people fish, there’s little reason to learn to fish.

What I would like to see instead is a larger presence of private enterprise in these countries. Since many don’t have the capital to start this out and those who do just become part of the corruption problem, then foreign private enterprise would have to get involved. International corporations have the ability to cater to corrupt regimes and once they have a foothold, they can resist them. At the same time, they can increase the overall wealth of the nation and its people which enables the citizenry to conduct their own private enterprise and it’s a snowball effect from there to the establishment of a well-to-do and effective middle class.

Some will no doubt call my proposition simplistic, that it ignores how many international companies have a tendency to pay poorly, that they can further enrich and empower the rulers, and that some examples of foreign companies in the Third World haven’t been the best. All this is true and they are issues to be worked on. Nevertheless, well-applied capitalism has been a far greater boon to the world than any other system. For this reason alone, it deserves consideration in developing nations instead of milking the already developed countries of ever more foreign aid.