The Problems with Current “Foreign Aid,” and What True Foreign Aid Should Look Like

Foreign aid as currently administered fosters corruption, is unconstitutional from an American legal perspective, and entrenches poverty in the third world countries it purports to assist.  Do countries need foreign aid?  Absolutely.  Then let the market (individuals acting freely, i.e. voluntarily donating to a charity of choice) do the heavy lifting.

The market works more efficiently.  A bad charity gets less money.  A bad government gets more money.  In the real world, the answer to such problems is to cut the revenue stream.  In the political world, the answer is almost always more money to remedy the problem, which of course perpetuates further problems, thus requiring more money, ad infinitum.  But perhaps I digress.

I’m always impressed when I hear about the Church’s response to humanitarian issues.  Rarely have I heard a word of complaint about their services (perhaps I do not patronize the right blogs to come across such criticism).  But the work of private agencies like the Church and the Red Cross and Habitat for Humanity stand out to me as good examples of what charity should look like: voluntary, non-discriminating, quick, effective, efficient, and frequently gets rave reviews from those they strive to help.  Contrast this with government aid.

You may wonder, would individuals give sufficiently to meet foreign aid needs without being forced to do so?  Considering Americans already give nearly three times what the government gives (and that’s with the tax burden we share), I would strongly suggest that is the case.

Some recommended thoughts on foreign aid from thinkers much smarter than this feeble intellect:

From Thomas Woods in a review of his book The Politically Incorrect Guide to American History:

The Marshall Plan, which continues to be defended even by some conservatives, is revealed as the failed giveaway program it was. Worse, the perceived success of the Marshall Plan influenced the ideology surrounding development aid to the Third World. U.S. foreign aid, beginning with Truman’s “Point Four” program, has been based on the idea that the Marshall Plan, which consisted of infusions of money into poor economies, had been a success, and that the appropriate response to Third World poverty was therefore some kind of similar program. In fact, as economist Peter Bauer pointed out over the course of a distinguished career spanning several decades, Western aid programs proved disastrous for the Third World. Among other things, since they took the form of government-to-government grants they entrenched in power some of the most brutal and economically repressive regimes in the world. Thanks to infusions of U.S. and other Western aid, these regimes could prosper without having to institute market reforms.

This article by Ron Paul, originally a speech delivered at the House of Representatives, wherein he courageously opposes the Millennium Challenge Act, clearly explains his reasons for opposing foreign aid.

Another article also by Rep. Paul discusses what true foreign aid (hint: it’s voluntary) would look like.

Finally, recently reading this article finally compelled me to get off of my duff and start sharing some thoughts on foreign aid, a task I have long considered.

In short, our current way of administering foreign aid engenders corruption and hostility, neither making America safer nor the rest of the world more prosperous.  Like many government programs, it does the near opposite of what it purports to do.

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Filed under Austrian Economics, foreign policy, Libertarian, politics, role of government, Ron Paul

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