Is obama making the poor poorer? Official foreign aid… it hasn’t worked so why do our politicians insist on failed policies?

Posted on March 8, 2010 by

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Official Aid is bad for 2 reasons: 1) it creates the wrong incentives 2) it is creating a new era of colonialism … Have rich countries really let go of their colonial hold on Africa?  Foreign Aid promotes economic slavery!

President Obama wants to double US spending on Official foreign aid… What are the effects of such policy? if Official aid hasnt worked then what are the motives for sticking to failed policies? 

A news article dated of March 2, 2009 echoed now President Barrack Obama’s campaign promise of doubling the US spending on foreign aid:

“…President Obama’s 2010 budget seeks to double U.S. aid payments to other countries despite a $1.75 trillion deficit and the worst recession in over a quarter of a century…”

(http://newsmax.com/Newsfront/obama-foreign-aid/2009/12/12/id/341764)

One way to keep the African masses under economic slavery is to keep them dependent on foreign aid.  “You eat when we give you food to eat, you depend entirely on us because you’re incapable of taking care of yourselves, oh and by the way, you do what you’re told!” That’s the message! Developed nations and their politics control the fate of Africa. 

Foreign aid is the transfer of resources from one government to another, in other words, from one potentially flawed institution to another.  Given the basic economic assumptions that individuals always prefer more of any good or service to less (non- satiation), and that they are rational maximizing beings, why would it not be reasonable to question the motives of these official flows to Africa?  Official Development Assistance (ODA) has created the wrong incentives preventing Africans from becoming productive members of the global economy.  Foreign aid keeps the African masses from exploiting their comparative advantage to produce goods that would be mainly exported to north countries that “pretend” to be in favor of free trade but are still protecting some industries (I primarily think of agriculture among others).  I used the word “pretend” because politicians believe that free trade is fair trade and good only when it gets support and votes on the home front.  When times are tough, and during an election season, a new sense of nationalism rises and the most avid supporters of free trade become the biggest advocates of protectionist policies. Politicians in Europe and America don’t get elected to worry about the poor in Africa, they get elected to solve problems for their own constituents, so why are people so deluded into thinking that all this money sent to Africa, is aimed at helping the African people? Foreign aid first only creates a dependency that impedes economic productivity and second, it also reveals a new age colonialism driven by selfish motives.

There are very little documented cases where official aid has actually met the needs of the African masses that live in extreme poverty.  It is no secret that the biggest supporters of aid are the African elite, more often than not, members of African governments, and recipients of this aid.  It is also no secret that most of these oversized governments have been accused of widespread corruption over the course of the 50 years since most African nations gained their independence from colonial power.

In practically every case, the influx of “aid” has been immediately followed by the emergence of a massive, unproductive, parasitic government bureaucracy whose very existence undercuts the recipients’ ability for sustained economic.

More systematically, the World Bank notes that Official Development Assistance totaled five percent of the gross domestic investment of the low-income countries of South Asia, but over 40 percent in the low-income countries in Africa. It also notes that for the decade of the 1970s per capita income in South Asia’s low-income countries grew over five times faster than it did in the low-income countries of Africa. (Osterfield, David: “The failures and fallacies of foreign aid” The Freeman ideas on liberty, Vol. 40, Issue 2, Feb 1990)

It is also not far fetched to assume that the African “governments” elite would have no incentive to break away from this economic dependency because they benefit so much from it.  Foreign aid is a “free lunch” that keeps the African elite fat because it never really reaches the masses, so why make any effort in terms of reform to encourage economic activity? 

Are Africans incapable of producing goods for consumption at home or abroad or is it that their own governments have failed them by not providing the basic infrastructure to attract the private capital needed to encourage this economic activity? The African elites have turned their back on their countrymen.  European governments have found a great ally to help them maintain their control over the natural resource rich African nations.  Furthermore, foreign aid promotes such laziness that it is a sure way of keeping Africans from competing, thus it contributes to the protection of some local industries.  Let’s pretend to “help” the poor by sending aid and let’s protect our struggling local industries, what a sure way to win an election!  As long as the African masses are incapable to compete in the global economy, they will continue to depend on the good graces of the rich nations.  Official aid is clearly not the way to sustainable development and the eradication of global poverty.  It creates dependency and it undermines efforts in favor of free trade.

What’s the current US administration stance on official aid? 

A news article dated of March 2, 2009 echoed now President Barrack Obama’s campaign promise of doubling the US spending on foreign aid:

“…President Obama’s 2010 budget seeks to double U.S. aid payments to other countries despite a $1.75 trillion deficit and the worst recession in over a quarter of a century…”

(http://newsmax.com/Newsfront/obama-foreign-aid/2009/12/12/id/341764)

… To be continued

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