7 million dead children every year

[TimG]

I got from the argument the notion that "foreign aid" stifles entrepreneurship, which might otherwise lead to a more prosperous society; but if so, then why do the domestic policies of entrepreneurially-successful nations behave on the principle that funding, infrastructure et all is necessary to success?....and that this seems to have worked quite well?

There is a difference between spending that is funded by collecting taxes from your own population and funding things with outside money. When things are self funded there is a built in incentive to make sure the money is not misused. No such incentive exists with outside money. We see the same problem with transfers to Indian reserves. In some cases, like Bangladesh, many of the social welfare functions of government have been taken over by outside agencies and the government has no incentive to rectify the situation. In this case, aid is extremely bad.

That said, there are cases where clearly targeted aid for infrastructure development is a net benefit. But to be a benefit there has to be an end date - a point where aid will be tapered off and then stopped. That is not the case with most African aid.

Edited February 20, 2014 by TimG

[bleeding heart]

I do agree, completely, that my response is not perfectly analogous, as I was speaking more to a ideological viewpoint: the idea that our success is built on the backs of hardy entrepreneurship, in some sort of "rugged individualist" myth as a sop to the libertarian impulses we all love and have been spoonfed, as with other children's stories and epic poems.

That said, and as implied by Michael Hardner's understandable confusion, I should have been more clear in the obvious distinctions...which you point out.

[carepov]

A simplistic analysis. Welfare obviously does some good things in the short term. The long term is the bigger issue:

http://www.independent.co.uk/voices/commentators/dambisa-moyo-aid-dependency-blights-africa-the-cure-is-in-the-credit-crisis-1522996.html

Simplistic? Gates takes every one of Moyo's arguments and refutes it, such as "..far from being a catalyst, foreign aid has been the biggest single inhibitor of Africa's growth"

Gates:

"Critics are right to say there is no definitive proof that aid drives economic growth. But you could say the same thing about almost any other factor in the economy. It is very hard to know exactly which investments will spark economic growth, especially in the near term. However, we do know that aid drives improvements in health, agriculture, and infrastructure that correlate strongly with growth in the long run. Health aid saves lives and allows children to develop mentally and physically, which will pay off within a generation. Studies show that these children become healthier adults who work more productively. If you’re arguing against that kind of aid, you’ve got to argue that saving lives doesn’t matter to economic growth, or that saving lives simply doesn’t matter."

Do you agree that saving lives is a long-term net benefit?

That said, there are cases where clearly targeted aid for infrastructure development is a net benefit. But to be a benefit there has to be an end date - a point where aid will be tapered off and then stopped. That is not the case with most African aid.

Really? Not the case with Morocco, Ghana, Rwanda, Botswana?

And if aid worked for Morocco, Brazil, Mexico, Chile, Costa Rica, Peru, Thailand, Mauritius, Singapore, Malaysia, South Korea, China, and India, then why can't it work for the rest of Africa?

Also from Gates:

"Even in sub-Saharan Africa, the share of the economy that comes from aid is a third lower now than it was 20 years ago, while the total amount of aid to the region has doubled. There are a few countries like Ethiopia that depend on aid, and while we all—especially Ethiopians themselves—want to get to a point where that is no longer true, I don’t know of any compelling argument that says Ethiopia would be better off with a lot less aid today."