From a Christian-based economics book I have. There might be three of you who will enjoy this. I did, anyway......
Although as we have seen, government-to-government (bureaucracy-to-bureaucracy) foreign aid cannot change the real factors of productivity, I do not mean to give the impression that it has no results at all. It has three very important results.
First, foreign aid produces irresponsibility and dependence. Capital is turned over to be spent by people who do not bear the cost. This creates waste. If you are spending your own money, you have an incentive to be careful, and to make sure that it is invested in productive, profitable enterprises. The executive with an unlimited expense account will be tempted to eat lavish dinners with the company money. He will use his own funds to save toward a new set of tires, reducing his personal spending in less important areas. Foreign aid beneficiaries are spending other people's money, and thus much of it goes to prestigious and wasteful government projects, such as universities that are not really needed. They produce professionals who are trained in nonexistent technological fields, and an increasing problem in underdeveloped countries is the high number of unemployed university graduates.
Socialism, being inherently rebellious, morally, wants the social rewards without the underlying base of gradual economic growth. The result is that socialist bureaucracies get everything backwards, imposing the fruit of generations of progress upon a society that is culturally unprepared for it — sort of like giving light bulbs to a tribe 1,000 miles away from a generator.
Where biblical aid seeks to train men in responsible, future-oriented action, ungodly aid makes its recipients more helpless than ever. India is a case in point. Its large-scale trade deficits began after substantial foreign aid programs started (1956), and have continued ever since. "India has depended on foreign aid for so long that this dependence has come to be taken for granted. Indeed, the economic history of that country since about the mid-1950s has been one of progression from poverty to pauperism. Yet it was an explicit objective of Indian planning to reduce or eliminate economic dependence." 20
Second, foreign aid helps those who are better off, rather than the poor. This astonishing fact must be thoroughly comprehended. Remember that "tiny, wealthy elite" Sider speaks of? They, and not "the poor," are the recipients of aid. Simply stated by Bauer, "Foreign aid is paid by governments to governments." 21 Most of it never reaches the poor, and is used by governments for projects that have nothing to do with getting food, such as expensive airlines or universities or government buildings. "The situation... is plainly not that there is not enough food for the subsistence of the existing population or populations. If this were the position there could be no growth in numbers, much less a huge increase.
If there is starvation in some underdeveloped countries this must mean that part of the population cannot fend for itself, either because it lacks the ability to do so or because it is prevented from doing so by institutional factors, such as organized barriers to entry into wage employment or restrictions on access to land. Apart from occasional ad hoc emergency measures, foreign aid is irrelevant to the relief of starvation. As we have argued, it benefits primarily the better-off sections of the populations in the recipient countries, and these sections are certainly not threatened by starvation. And it leaves very largely unaffected, the poorest and most backward groups — both the poorest sections of the urban and rural proletariat and also the primitive tribal and aboriginal societies — who are most exposed to famine." 22
As UCLA's black economist (and former Marxist) Thomas Sowell points out, similar problems afflict welfare programs in the United States: "Despite the public image of a typical welfare recipient as a Negro mother with a large brood, most welfare recipients are neither Negro, Puerto Rican, nor Mexican-American. It is also worth noting that while government figures show that $11.4 billion would raise all the poor above the officially defined poverty level, in fact more than $30 billion are spent on programs to get people out of poverty, and there are still more than 5 million families below the poverty level. Clearly most of the money spent on the poor does not directly reach the poor, but is absorbed by the salaries of officials, staffs, consultants, and by other expenses of antipoverty organizations." 23
Third, foreign aid actually widens the gap between rich and poor nations. As we have seen, it inhibits those factors which would produce growth (e.g., by creating dependence rather than responsibility). More than this, it encourages explicit envy toward the rich, who are held to be responsible for the plight of those below them on the monetary scale. Unfortunately, envy cannot be contained. Once directed against the rich in other countries, it soon focuses on people who are better off in one's own country. The idea that it is evil to make personal economic progress takes hold of the people, and fear of being envied prohibits growth and encourages poverty.
Sociologist Helmut Schoeck writes: "One of the decisive factors in underdevelopment or nondevelopment is the "envy-barrier," or institutionalized envy among the population... Now when, as is quite patently the case, many of the politicians in developing countries make use of all their powers of rhetoric or persuasion for the crudest exacerbation of their people's envy of the rich industrial nations (even to the point of branding the latter as the cause of their own countries' poverty), these people's sense of envy — to which their cultures already make them over-prone — is intensified. Thus, the feeling and states of mind which inhibit development are not lessened but confined and given political sanction by the countries' leaders." 24
The Christian cannot support the unbiblical practices of government aid. But this does not mean we have nowhere to turn. There is much that we can do.
First, we can support Christian missionary activity, to bring the gospel to the poor and build biblical principles into the lives of converts. This is the basic and indispensable requirement; without regeneration, true cultural transformation is ultimately impossible. As these peoples conform their lives to biblical standards, their societies will experience the economic growth promised in God's law.
Second, we should oppose the really unjust patterns of both trade and aid in our world. We should abolish trade barriers of all sorts, and promote biblical law in all areas of government.
Third, we may invest in those economies which abide by God's law enough to restrain from "nationalizing" our properties. Private capital, for many reasons, is more productive than foreign aid. It goes to producers, not governments, and thus does not concentrate political power; it is more personal and local; it is more likely to be handled responsibly, in terms of profitable production rather than prestigious superfluity; and it is related to specific market conditions, rather than the political goals of bureaucrats.
Fourth, we can give to charitable causes for the relief of specific needs. As we saw in Chapter Two, biblical charity works toward responsibility in the recipient. And, being individual and uncoerced, it produces responsibility in the giver as well. Foreign aid is "charity" at gunpoint: our state officials force us to pay for it, through either taxes or inflation. It builds no moral character in either the "givers" or the receivers. Biblical charity is personal, prudent, and responsible. Because it is morally sound, it is economically sound as well. It genuinely enables us to "bear one another's burdens," and at the same time teaches the weak to be strong, so that "each one shall bear his own load."
Two opposing views, one Biblical, one, not:
"The constantly growing demand for food must stop — or at least slow down dramatically. That means... population control everywhere!" —— (Ronald Sider, Rich Christians in an Age of Hunger, p. 214)
"Populate the earth abundantly and multiply in it." —— (Genesis 9:7)
Although as we have seen, government-to-government (bureaucracy-to-bureaucracy) foreign aid cannot change the real factors of productivity, I do not mean to give the impression that it has no results at all. It has three very important results.
First, foreign aid produces irresponsibility and dependence. Capital is turned over to be spent by people who do not bear the cost. This creates waste. If you are spending your own money, you have an incentive to be careful, and to make sure that it is invested in productive, profitable enterprises. The executive with an unlimited expense account will be tempted to eat lavish dinners with the company money. He will use his own funds to save toward a new set of tires, reducing his personal spending in less important areas. Foreign aid beneficiaries are spending other people's money, and thus much of it goes to prestigious and wasteful government projects, such as universities that are not really needed. They produce professionals who are trained in nonexistent technological fields, and an increasing problem in underdeveloped countries is the high number of unemployed university graduates.
Socialism, being inherently rebellious, morally, wants the social rewards without the underlying base of gradual economic growth. The result is that socialist bureaucracies get everything backwards, imposing the fruit of generations of progress upon a society that is culturally unprepared for it — sort of like giving light bulbs to a tribe 1,000 miles away from a generator.
Where biblical aid seeks to train men in responsible, future-oriented action, ungodly aid makes its recipients more helpless than ever. India is a case in point. Its large-scale trade deficits began after substantial foreign aid programs started (1956), and have continued ever since. "India has depended on foreign aid for so long that this dependence has come to be taken for granted. Indeed, the economic history of that country since about the mid-1950s has been one of progression from poverty to pauperism. Yet it was an explicit objective of Indian planning to reduce or eliminate economic dependence." 20
Second, foreign aid helps those who are better off, rather than the poor. This astonishing fact must be thoroughly comprehended. Remember that "tiny, wealthy elite" Sider speaks of? They, and not "the poor," are the recipients of aid. Simply stated by Bauer, "Foreign aid is paid by governments to governments." 21 Most of it never reaches the poor, and is used by governments for projects that have nothing to do with getting food, such as expensive airlines or universities or government buildings. "The situation... is plainly not that there is not enough food for the subsistence of the existing population or populations. If this were the position there could be no growth in numbers, much less a huge increase.
If there is starvation in some underdeveloped countries this must mean that part of the population cannot fend for itself, either because it lacks the ability to do so or because it is prevented from doing so by institutional factors, such as organized barriers to entry into wage employment or restrictions on access to land. Apart from occasional ad hoc emergency measures, foreign aid is irrelevant to the relief of starvation. As we have argued, it benefits primarily the better-off sections of the populations in the recipient countries, and these sections are certainly not threatened by starvation. And it leaves very largely unaffected, the poorest and most backward groups — both the poorest sections of the urban and rural proletariat and also the primitive tribal and aboriginal societies — who are most exposed to famine." 22
As UCLA's black economist (and former Marxist) Thomas Sowell points out, similar problems afflict welfare programs in the United States: "Despite the public image of a typical welfare recipient as a Negro mother with a large brood, most welfare recipients are neither Negro, Puerto Rican, nor Mexican-American. It is also worth noting that while government figures show that $11.4 billion would raise all the poor above the officially defined poverty level, in fact more than $30 billion are spent on programs to get people out of poverty, and there are still more than 5 million families below the poverty level. Clearly most of the money spent on the poor does not directly reach the poor, but is absorbed by the salaries of officials, staffs, consultants, and by other expenses of antipoverty organizations." 23
Third, foreign aid actually widens the gap between rich and poor nations. As we have seen, it inhibits those factors which would produce growth (e.g., by creating dependence rather than responsibility). More than this, it encourages explicit envy toward the rich, who are held to be responsible for the plight of those below them on the monetary scale. Unfortunately, envy cannot be contained. Once directed against the rich in other countries, it soon focuses on people who are better off in one's own country. The idea that it is evil to make personal economic progress takes hold of the people, and fear of being envied prohibits growth and encourages poverty.
Sociologist Helmut Schoeck writes: "One of the decisive factors in underdevelopment or nondevelopment is the "envy-barrier," or institutionalized envy among the population... Now when, as is quite patently the case, many of the politicians in developing countries make use of all their powers of rhetoric or persuasion for the crudest exacerbation of their people's envy of the rich industrial nations (even to the point of branding the latter as the cause of their own countries' poverty), these people's sense of envy — to which their cultures already make them over-prone — is intensified. Thus, the feeling and states of mind which inhibit development are not lessened but confined and given political sanction by the countries' leaders." 24
The Christian cannot support the unbiblical practices of government aid. But this does not mean we have nowhere to turn. There is much that we can do.
First, we can support Christian missionary activity, to bring the gospel to the poor and build biblical principles into the lives of converts. This is the basic and indispensable requirement; without regeneration, true cultural transformation is ultimately impossible. As these peoples conform their lives to biblical standards, their societies will experience the economic growth promised in God's law.
Second, we should oppose the really unjust patterns of both trade and aid in our world. We should abolish trade barriers of all sorts, and promote biblical law in all areas of government.
Third, we may invest in those economies which abide by God's law enough to restrain from "nationalizing" our properties. Private capital, for many reasons, is more productive than foreign aid. It goes to producers, not governments, and thus does not concentrate political power; it is more personal and local; it is more likely to be handled responsibly, in terms of profitable production rather than prestigious superfluity; and it is related to specific market conditions, rather than the political goals of bureaucrats.
Fourth, we can give to charitable causes for the relief of specific needs. As we saw in Chapter Two, biblical charity works toward responsibility in the recipient. And, being individual and uncoerced, it produces responsibility in the giver as well. Foreign aid is "charity" at gunpoint: our state officials force us to pay for it, through either taxes or inflation. It builds no moral character in either the "givers" or the receivers. Biblical charity is personal, prudent, and responsible. Because it is morally sound, it is economically sound as well. It genuinely enables us to "bear one another's burdens," and at the same time teaches the weak to be strong, so that "each one shall bear his own load."
Two opposing views, one Biblical, one, not:
"The constantly growing demand for food must stop — or at least slow down dramatically. That means... population control everywhere!" —— (Ronald Sider, Rich Christians in an Age of Hunger, p. 214)
"Populate the earth abundantly and multiply in it." —— (Genesis 9:7)
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