Foreign Aid Often Hurts More Than Helps
When these corrupt regimes are flush with American cash, it's no wonder that so many poor nations fail to prosper.
There’s an old saying that charity begins at home. While the spirit of the phrase is controversial in our hyper-political climate, the fact is that sending federal aid overseas is more of a feel-good solution than a long-term way of reducing poverty or increasing the ability of people to become more self-reliant and prosperous.
For decades, the United States has sent aid to countries around the world with the noble intention of helping those unable to access the basic necessities of life such as medicine, running water and shelter. But some Third World countries never break the cycle of poverty, and this often has more to do with their corrupt political leaders than a lack of work ethic, resources or a desire to improve. When these corrupt regimes are flush with American cash, it’s no wonder that so many poor nations fail to prosper.
The best way for people to escape poverty is to implement a free-market economy, support individual freedom and business expansion and fight political corruption. The reason tyrannical and corrupt regimes don’t follow this advice is self-evident.
The data show that free nations are more prosperous than those whose political systems aim for equality at all costs. The Heritage Foundation’s 2018 Index of Economic Freedom ranks 180 nations based on their level of economic freedom and the corresponding level of poverty. Some economic studies send mixed messages, but not this one. The numbers are irrefutable: As economic freedom increases, poverty decreases.
As Patrick Tyrrell writes at The Daily Signal, “This finding should not be overlooked when organizations like the International Monetary Fund or the World Bank plan aid for developing countries. Such aid too often ignores economic freedom violations by despots, dictators, and autocrats.”
There seems to be little thought given to where the aid goes when it leaves places like the IMF or World Bank, or how the money is spent if it actually makes it past an entrenched autocracy. But should we expect anything different from organizations that habitually overlook corruption in countries receiving aid?
Tyrrell adds, “Strongmen who disregard property rights or the rule of law to remain in power have been rewarded with billions of dollars in foreign aid from rich countries for decades. Despots and dictators have often used this aid to solidify their grips on power, such as by withholding food aid from groups that do not support them.”
So that’s why decades of American and international aid hasn’t even made a dent in the problem.
Not surprisingly, the political Left is often the driving force behind these global relief programs, and government aid isn’t the only problem. More often than not, so-called progressive aid organizations are plagued by malfeasance while the people in need continue to suffer. We only need to look at what the Clinton Global Initiative did with contributions from wealthy, progressive donors. Remember the millions that were sent the Clintons’ way in order to help the Haitian people recover from the 2010 earthquake? Haiti still hasn’t recovered, yet the Clintons have rolled in cash.
Another segment of our society pushing for more global assistance is progressive Christians, who use their faith as justification for pouring billions of dollars of government aid into poverty-stricken countries. Once a donation drops into the collection basket, the assumption is that a hungry mouth will be fed and medicines will be delivered.
Unfortunately, this is rarely the case. As The Resurgent’s Peter Heck suggests, “Christians who see their brother in need personally should give generously from their own resources, bank accounts, and wealth to care for them. Christians who see their brothers in need in other parts of the world should support charitable organizations that work to rebuild their lives through missions and relief efforts.”
This sounds reasonable considering that Americans are the most generous people in the world. “Americans out-donate Britain and Canada two-to-one and nations like Italy and Germany 20-to-one,” The Almanac of American Philanthropy reported in 2016. “What’s more, more than half of every single income class except those earning less than $25,000, give to charity. The much maligned top 1% in the U.S. economy fork over one-third of all donations made.”
But Heck adds, “Christians who are interested in results more than political posturing, should encourage and urge their government to spread a doctrine of economic freedom to the impoverished world. That, far more than confiscation and redistribution of wealth, achieves the results we desire.”
The problem with sending money overseas is that it doesn’t get to the needy, and it therefore has a minimal impact on people’s long-term living conditions. Princeton University economist Angus Deaton, who worked for decades at the World Bank, asserts that rich do-gooders may be exacerbating the problem of corruption in the Third World, given that there’s been so little to show for $135 billion in global aid.
What Deaton and other economists discovered was that countries receiving aid actually found their economic situation growing worse because the relationship between the governments and their people changed. This makes sense. A country is less likely to be accountable to its people if the government can rely on a steady stream of international aid.
The U.S. should lead the way toward reform. This includes ensuring that nations receiving aid are working toward implementing policies that expand the economic and political rights of their people, and working directly with aid organizations rather than funneling money through politicians and despots.
We can also apply these standards to our own cities, by promoting entrepreneurship and supporting business-friendly policies that help the downtrodden build independence and wealth. Like Third World despots, Democrat mayors across the country have largely squandered hundreds of billions of taxpayer dollars since the “Great Society.”
Only when we battle poverty at its root cause will we break the cycle of political corruption and poverty.