18/02/2010 - 00:00

Foreign aid fails to hit the target

18/02/2010 - 00:00


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Foreign aid is clearly no panacea for developing nations.

NOT only was the Australian mainstream media’s reporting of the Copenhagen Conference inadequate, it also failed to highlight another hoax heavily promoted at the Danish capital.

State Scene refers to the scores of delegates from so-called developing or Third World countries attending to get something for nothing from Western governments.

That something for nothing has been rather deceptively named foreign aid, when it’s more accurate to call it ‘international welfare’ or ‘government-to-government gifts’.

Unfortunately the practice of giving something for nothing to so many incompetent – in many cases downright corrupt and criminal – governments has now been with us for more than 60 years, so most Australian taxpayers no longer notice it.

They’ve come to take for granted that some of their taxes are handed over by ignorant Western politicians to such governments.

Such rorting is now seen as standard practice.

So-called foreign aid has become such a permanent fixture in the minds of Canberra politicians and bureaucrats that taxpayers no longer query this scandalously wasteful practice.

Let’s highlight some truths on this matter that will hopefully become more widely appreciated.

The first that needs asking about giving away money and capital goods is: Do countries need foreign aid to develop?

While most may believe they do, the correct answer is, they don’t.

Britain, which launched the global development trend in the late 18th century known as the Industrial Revolution, never received foreign aid, for the obvious reason that there was no-one to give it.

Nor were the US, Germany and others in the next group of industrialising nations recipients of aid.

Nor did Canada, Australia, New Zealand or other European settlerist colonies receive aid. All had to pay their own way, like Britain previously.

Nor did Japan, which began industrialisation in the 1860s with its unique Meiji Restoration.

Why then do so many African and other countries expect, even demand, international welfare, and get it?

Here’s what the late and great British economist, Lord Professor Peter Bauer, said: “A society that cannot develop without external gifts is altogether unlikely to do so with them.”

It’s simply a fact of economic life that foreign aid isn’t the trigger, catalyst, or cause of sustained economic growth and development.

That being so, what is the trigger, catalyst, or cause?

The answer is simple. Again, Professor Bauer puts it best.

“An economy consists of people whose performance determines its material achievement,” he says.

“Economic achievement depends primarily on people’s aptitudes and attitudes (e.g. interest in material success) and their social institutions and political arrangements (e.g. encouraging people to take long views).”

The key words in those paragraphs are aptitudes, attitudes, social institutions and political arrangements.

If a people have the skills and desire, the yearning, for material improvement plus the institutions (i.e. protecting private property, competent policing, just legal systems, and so on), and governance arrangements that guarantees they’ll blossom – development can and will occur.

Unfortunately so many of the countries whose delegates always attend conferences like Copenhagen either don’t have these crucial attributes, or their governments suppress them.

Consequently, no amount of so-called foreign aid can ensure their development; that is, they won’t move from under-developed to being developed.

It’s simply a waste giving so-called aid in the forms of money, capital goods or infrastructure to such governments.

Such elementary facts, unfortunately, haven’t prompted Western governments to scrap their foreign aid bureaucracies.

On the contrary, the inevitable failure to see development realised in such countries simply leads to calls for ever-more aid.

“Aid is clearly not necessary for progress, nor is it sufficient,” Professor Bauer says. “If the personal and social conditions of material progress (capacities, motivation, mores, and institutions) are not present, aid will be ineffective.

“What holds back countries is the people who live there, including their governments.

“Foreign aid is patently not necessary to emerge from poverty.

“Many poor countries progressed rapidly before foreign aid was ever heard of – Mexico (and a number of other Latin American countries) West Africa, South-East Asia, Hong Kong, and many others.

“Some of these areas have been largely transformed in a few decades.

“In the 1890s, Malaya was a sparsely populated country of small hamlets and fishing villages; by the 1930s it had developed into a country with substantial cities, thriving commerce, and an excellent system of roads, largely the result of the emergence of the rubber industry.”

Professor Bauer worked in Malaya in late 1940s, then in West Africa where he observed how their economies operated and steadily progressed.

Unlike pro-aid activist economists, he appreciated the importance of efforts of small landholders and traders who helped to steadily move their economies from subsistence to market orientation, a crucial transformation for subsequent material progress.

He was born in Hungary, studied law in Budapest before turning to economics at Cambridge University in pre-war England.

After spending time with a British merchant house that traded with ‘far eastern’ economies, he began lecturing at the London School of Economics.

Long-time admirer, Margaret Thatcher, made him a Life Peer in 1983, as Baron Bauer of Market Ward in the City of Cambridge.

As you’d expect, Lord Bauer was regularly and often targeted by members of the highly organised worldwide pro-foreign aid lobby, which resembles today’s climate warming hysteria lobby, most especially by those employed by United Nations bureaucracies that have vested interests in the foreign aid scam continuing forever.

But their days may be numbered.

Last year, African economist, Dambisa Moyo, published Dead Aid: Why Aid is Not Working and How There is a Better Way For Africa, which she dedicated to the late Professor Bauer.

Dr Moyo was born and raised in Lusaka, Zambia.

Her economics doctorate is from Oxford University. She has a master of public administration in international development from Harvard University’s Kennedy School of Government.

She also holds an MBA in finance and bachelors degree in chemistry from the Washington-based American University, has worked for the World Bank and been a consultant to Goldman Sachs.

In an interview given when her book was launch she said: “The book is actually dedicated to Peter Bauer because, unfortunately, he was ahead of his time.

“He saw that the world was then so obsessed with the notion of [foreign] aid on the back of the success of the [post-war American] Marshall Plan that nobody really paid attention to what he had to say.”

Dr Moyo, like Professor Bauer, argues that foreign aid from governments of developed nations not only fails to promote development, it actually hinders it, something he began arguing from the early 1950s until his death in 2002.

Unfortunately, Western economists, politicians, and do-gooder activists maintain their efforts to discredit Professor Bauer’s, and now Dr Moyo’s, learned insights.

Despite so many Third World politicians and Western pro-aid activists attending Copenhagen’s Conference, the days of getting something for nothing would be numbered if more people listened to the Dr Moyos of the world.

But don’t hold your breath.



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