Foreign Aid: Dump It
WHY YOU SHOULD CARE
Foreign aid is opaque, undemocratic and ineffective — and it’s done in your name.
Pooja Bhatia is an OZY editor and writer. She has written for The Wall Street Journal, The New York Times and the Economist, and was once the mango-eating champion of Port-au-Prince.
Provocativations: OZY’s occasional take on an intriguing idea
Shall we have a little polemic for the holidays, then? How about this one: Eliminate foreign aid. Yes, we are full of holiday cheer. And no, OZY hasn’t gone all Ron Paul-ish on you, though Paul’s quip that foreign aid transfers money from poor people in rich countries to rich people in poor countries isn’t too far off the mark, actually. Mind you, it is not quite on the mark, either. Foreign aid also transfers taxpayer money to corporations, and it constitutes but the tiniest smidgen of rich-country budgets.
Here’s why we should eliminate foreign aid: It’s bad for poor countries. If that claim sounds preposterous, it might be because you think that something well-intended — it’s called “aid,” for goodness sakes! — must be good.
If so, you also probably haven’t read any of a growing oeuvre of aid critiques. You have your pick of styles, and most of them depict a development-industrial complex in crisis. There’s Princeton professor Angus Deaton’s careful and magisterial The Great Escape, Bill Easterly’s cheeky and smart White Man’s Burden, Dambisa Moyo’s trade-not-aid manifesto Dead Aid, or, for that matter, Linda Polman’s bordering-on-satire jeremiad, The Crisis Caravan. Then there are the bloggers, twitterati and think tanks devoted to critiquing aid.
In our opinion, there are three main reasons we should eliminate foreign aid:
1. Most foreign aid is not intended to reduce poverty.
As OZY reported back in October 2013, a welter of motivations — many of them frankly militaristic or self-serving — underlie our “aid.” As a result, the countries that receive the most support are not the poorest, but ones we’re looking to protect or win over, or have security interests in: places like Israel, Afghanistan, Egypt and Pakistan. Most of the money the U.S. provides there does not go to vaccinate kids or shelter refugees, etc.
United States food aid, moreover, is often more helpful to American farmers and shippers than to the long-term food security of poor countries. That’s because our food aid programs require buying from U.S. farmers and shipping on U.S. ships, and they generally do not allow local purchases or supporting local farmers.
2. Foreign aid makes governments less accountable to their citizens.
This is one of the main arguments that Moyo and Deaton make. As Deaton put it in a Foreign Policy piece:
Governments that receive most of their revenues from abroad are relieved of the need to raise taxes at home, and so do not need to justify their activities to their own populations. … Good government requires a contract between the state and the people, and aid undermines such contracts.
In poor, aid-reliant countries, government leaders’ loyalties are split. Their duty is ostensibly to serve their citizens. But when the United States, World Bank, IMF and other powerful institutions control the purse strings, leaders are effectively accountable to them, too. Often, their interests conflict or compete with those of the populace. When things go wrong — projects are delayed or the literacy rate stagnates at 50 percent for decades — it’s hard for the average citizen to tell who is at fault. Is it her broke government, or the wealthy institutions that technically owe nothing to her country?
3. Foreign aid is essentially undemocratic.
In aid-dependent countries, foreigners often have a weighty say in policy matters mundane and monstrous, but no one elects them. Many development workers don’t even speak the local language. Most aid agencies have nothing like a complaints hotline. There is no requirement to hold town hall meetings to hear what people actually want or need. In Easterly’s description, few feedback loops exist between those who control aid and those who are supposed to benefit from it. And the state, which is supposed to represent its citizens’ interests against the foreign aid apparatus, is often either too weak or too bought to do so effectively.
Naysayers will argue that instead of nixing aid, we should reform it. In principle, we agree. We’d save some things, like humanitarian aid, and some organizations that try to make aid more democratic, participatory and justice-oriented. But mostly? We suspect the system’s too far gone and so riddled with hypocrisy, mixed motivations and entrenched interests that it’s beyond reform.
Our real Christmas wish? That we in rich countries do something meaningful for the world’s poor. Here, Santa, is a list:
1. Open our borders.
2. Pay out reparations for the human rights abuses that gave donor countries their economic head start.
3. Cut down carbon emissions.
4. Eliminate tax havens and loopholes.
5. And — ’tis the season for it — give peace a chance.
This OZY encore was originally published Dec. 9, 2013.