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Foreign Aid Does More Harm Than Good
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10348 |
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Current Issues
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12 / 1986 |
3,053 Words |
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James Bovard
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In the recent discussions over the effects of Gramm-Rudman-mandated budget cuts, much concern has been voiced over the effects of cuts in foreign aid on various Third World countries. However, reducing our foreign aid is one of the nicer things the United States could do for many of the poor around the globe.
Our thinking on foreign aid has long been sentimental and simplistic. Foreign aid has been judged by Western intentions, not by Third World results.
In fact, our aid often is the coup de grace to struggling poor families abroad. In Indonesia, the government confiscated subsistence farmers' meager plots for irrigation canals financed by the U.S. Agency for International Development (AID). In Mali, farmers were forced to sell their crops at giveaway prices to a joint AID-Mali government project. In Egypt, Haiti, Jamaica, and elsewhere, poor farmers have seen the prices for their own crops nosedive when free U.S. food was dumped onto their country's markets.
Since 1946, the United States has given more than $146 billion in humanitarian aid to foreign counties, including over $10 billion in 1985. Despite providing oceans of aid, America has fewer friends and less respect abroad now than it had 20, 30, or 40 years ago. Many of those countries that received the most aid are now in the worst shape.
Foreign aid projects occasionally turn out well--but the great majority are either ineffective or positively harmful. Generally, American foreign aid primarily strengthens oppressive regimes, allows governments to avoid correcting their mistakes, and bails out bankrupt state-owned enterprises around the world.
How Much Good?
How much good has our foreign aid done? Perhaps the best way to measure the impact of foreign aid is to look at those who have received the largest amounts of foreign aid and see how American dollars have been spent.
Israel will receive more than $3 billion this year. Aid to Israel has soared in recent years as Israeli socialism has foundered. Each new billion-dollar aid package was premised on the government's commitment to substantial economic reforms. Yet, after massive injections of U.S. aid, the government still effectively controls the economy and price controls are pervasive. The government still directly or indirectly employs the majority of Israelis and owns the vast majority of land.
An International Monetary Fund (IMF) analysis found that, by one measure, Israeli labor productivity has fallen 29 percent since 1979. Private and foreign investment has declined since the early 1970s. The government was committed to full employment at any price, with a resulting proliferation of make-work, do-nothing jobs.
American aid is essentially enough to provide food stamps for every citizen of Israel. Yet, at the same time that American taxpayers are paying more than $50 a year per family for Israel, Israeli spending on imported luxury goods has soared 17 percent a year since 1981, and Israelis have enjoyed a rising standard of living--largely due to the huge influx of U.S. aid. America has insulated Israel against
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