Accuracy in Media

Having been overshadowed by the terror bombings in London, national attention is only now being directed at the G8 summit held in Scotland and the foremost problem it sought to address, African poverty. The summit and its principle issue were of course accentuated thanks to the self-congratulatory altruism of the Live 8 concerts where notable development economists such as Green Day and Will Smith took to the stage to “raise awareness” of the dire situation in Africa and offer their suggestions for improvement, mainly the forgiveness of debt and large increases in foreign aid. Already, the United States has pledged to double its annual aid to Africa and agreed with Great Britain to write off the debt owed by 18 of the poorest African countries. Similarly, European politicians, such as Tony Blair, are calling for an African Marshall Plan. So it looks like we’re going in the right direction.

But things aren’t quite so rosy. Dave Matthews noted that ending poverty in Africa “is effortless. It’s eight signatures [at the G8 summit] really.” This of course conforms to the international activist notion that, no matter what the problem, it is somehow of our own making, either that or thanks to callous inaction on our part. All we need do is spend a little more money and Africa would be swimming pretty.

The idea that rich countries can pull poor countries out of poverty irrespective of their domestic condition, politically and economically, has long been popular among activist elites, yet it is unprincipled and misguided. In today’s dollars, the Marshall Plan amounted to about $100 billion dispersed over the course of four years after World War II. According to various Cato Institute studies, thus far Africa has already received the equivalent of about five Marshall Plans. Despite nearly $500 billion in aid over the last 45 years, African GDP has declined by .59% per annum from 1975-2000. South Asia, on the other hand, received just 21% of that amount and has enjoyed a 2.94% annual increase in GDP over the same period. There are several reasons for such discrepancies in results.

Critical to success is both domestic leadership and allocation of funds. Zimbabwe, for example, is in dire straights because it is under the yoke of a corrupt, murderous and authoritarian government that exploits the country’s resources and foreign aid for its own benefit. When an individual like Robert Mugabe is at Zimbabwe’s helm, no amount of aid is going to make a lick of difference, and one shouldn’t be surprised when most of the aid recently paid to that nation ends up in a Swiss Bank, as has generally happened.

Likewise, any aid offered to the impoverished continent should be available primarily on a strict, results-oriented basis. Blank checks to unaccountable and corrupt regimes that actively impoverish their own people clearly do not work and instead act as an impediment to progress rather than its enabler.

Yet more than aid, what is needed is basic, market-centered reform, and when the two do not work in tandem the results can be even more detrimental than had we never gotten involved in the first place. Suzanne Fields of the Washington Times had it right when she said “it’s not enough to teach an African to fish, but we must show the African how to sell the fish in a market where competition is fair. He has to learn how to keep government officials from cutting in on his business. Aid without reform is a dead-end concept, literally.

One notable example of when unaccompanied aid has actually made things worse is that offered up by Kenyan economist James Shikwati: food. Consider this scenario: “Famine hits Kenya, so Kenya goes to the U.N. and begs. So corn is shipped to Kenya, whereupon a portion of the corn often goes directly into the hands of unscrupulous politicians who then pass it on to their own tribe to boost their next election campaign. Another portion of the shipment ends up on the black market where the corn is dumped at extremely low prices. Local farmers may as well put down their hoes right away; no one can compete with the UN’s World Food Program. And if there were another famine next year, the Kenyan farmers, having been wiped out by the U.N.’s aid program, wouldn’t be able to help.”

It’s for reasons like this that leads Shikwati to pronounce: “For god’s sake, please stop the aid,” at least until markets are given a snowballs chance to thrive. Trade and liberalization, not blindly altruistic aid, is what can really help Africa, as was the case in India. As helpful as food aid from abroad was during the worst of their famines, the long-run policy of continually giving wheat to India was just reducing the ability of local farmers to grow wheat and sell it for a price that would cover their costs. Eventually, and after years of stagnation, that aid policy was stopped, a reformist government came to power, and today India produces so much wheat that it has been able to send some to Africa to deal with the famines there. Similarly, they now have one of the fastest growing economies in the world.

Thankfully, by the 1990’s a long-delayed consensus emerged among development experts that aid that goes into poor policy environments doesn’t work. Ultimately, according to Ian Vasquez of the Cato Institute, there is no correlation between aid and growth, but in Africa aid has actually harmed development by supporting governments whose policies have actively impoverished people. Yet for all the proof, I wouldn’t hold my breath for any change in course when it comes to the activist mantra of African aid. The anti-globalist crowd will continue to rally-on about the compassionless West and clamor for an increase in nominal aid; so we might as well just get ready for the next Live 8 in 2015. African poverty isn’t going anywhere, but sadly, many Africans will.

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