Is Aid to Blame?

Above is a link to a good article which places some of the blame for famine in Africa on aid. I don’t think aid is to blame, per se, but I do agree that bad governance is at fault, and that is something which aid can’t fix.

There’s a fallacy amongst the anti-globalization/anti-capitalism factions that certain countries are poor because others, like the US, are rich. They seem to believe there is a finite supply of money in the world, and one country’s success means another’s failure. But what these socialist wannabes don’t understand is that wealth is created. Bill Gates didn’t steal money from anyone’s pockets when he built Microsoft – he created billions of dollars of wealth and products, and made the office more efficient in the process.

The main problem in the developing world is that there is so much corruption and so many disincentives to production (through over-taxation, tariffs, excess bureaucracy, poor infrastructures which increase costs, and the like) that citizens don’t have the opportunity to create wealth, food, and employment. I’ve noticed a direct correlation between poverty and corruption (check Transparency International’s corruption index). Or just look at the US – the states most notorious for corruption also have the worst schools and standards of living. Coincidence?

Handouts and aid can’t solve the problem of corruption unless, perhaps, they're linked to anti-corruption measures. Even then I’m dubious. But the more aid we give to corrupt countries with rotten systems, the less incentive there is for local governments to fix these internal problems which prevent their economies from functioning. The handouts enable them to continue limping along, conducting business as usual.

To bring this back to Afghanistan, this country has inherited the Soviet model of governance. Does anyone believe the Afghans will have more success with socialism than the Russians did?