Now that the International Monetary Fund and its political and media allies are in a full-court press for more money from the American taxpayer, expect to see more stories about the supposedly good things the IMF and other international donor agencies have done and the lives they have supposedly saved in the Third World. But the reality is very different from the pious stories.
When you do something for someone, that doesn't necessarily mean that what you did would not have been done without you. In fact, a case can be made that it was precisely the cutbacks in American economic aid to Taiwan and South Korea in the 1960s which forced these countries to get their own acts together and institute the reforms which led to their economic rise.
With nations, as with individuals, dependency is not the royal road to prosperity. What "we" can do for "them" is usually a lot less than what they can do for themselves. Playing Lady Bountiful with the taxpayers' money may allow some people to feel good, and it certainly allows those who administer vast sums of money to become important and impose their ideas on the recipients. But that is very different from saying that this is the policy which produces the best long-run results.
Where it is simply a matter of allowing people to survive in the short run -- as with the Marshall Plan in war-devastated Europe or emergency aid during famines in India in years past -- then of course immediate help is urgently needed. But a distinguished Indian economist warned long ago that continued shipments of American wheat to his country inhibited the development of India's own agriculture.
Instead of continuing to rely on donations of wheat from America, India reformed its restrictive agricultural policies. Its own production of wheat then increased so much that today it has a surplus of wheat. Had we continued to supply India with wheat, no doubt the foreign aid bureaucrats could point to statistics on all the lives we "saved" in India with our food. But instead, those people have been kept alive with India's own food. Indeed, a few years ago, India was able to ship surplus wheat to Ethiopia to relieve a famine there.
Professor Peter Bauer of the London School of Economics has waged a decades-long crusade against foreign aid, arguing that the very word "aid" begs the real question: Are transfers of wealth to Third World governments really an aid to economic development? His own experience in Third World countries convinced him that "foreign aid" was often in reality foreign hindrance.
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