If the West really cared

August 29, 2007

Free Market Foundation

CARE International says that accepting $45 million in U.S. food each year that it ships to poor nations might be hurting the very people it’s supposed to help. But that’s the way it is with aid, says Investor’s Business Daily (IBD).

Like welfare, it supports a beggar’s mind-set when it’s not being stolen by corrupt governments or warring factions and does nothing to move the recipients toward independence.

In CARE’s arrangement with the United States, the federal government buys domestic food and donates it to CARE. The charity then sells the food in the poor countries. The money it receives from sales is used to fund CARE’s programmes.

There are obvious problems with this setup, says IBD:

Because the food is sold, those who can afford it buy it while those who can’t are likely to remain hungry.

Dumping the food on Third World markets crowds out local farmers, many of whom are struggling and could use the business.

Then there is the moral hazard as long as industrial countries continue to ship food to poor nations, those countries will never take the steps they need to become self-sufficient.

Monetary aid has the same effect:

Recipient nations have no incentive to reform their governments and liberalise their economies.

Aid keeps them where they are, chained to the wretched present with no hope for the future.

If the West freely gives anything to poor nations, it should be the American style of government, says IBD. Nothing can build and sustain economic growth better. Handouts can relieve short-term misery, but they should be limited only to the most urgent situations.

Source: Editorial, If The West Really Cared, Investor’s Business Daily, August 16, 2007.

For text: http://www.ibdeditorials.com/IBDArticles.aspx?id=272156057945384

For more on International Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=26

FMF Policy Bulletin/ 21 August 2007