Mercenaries, Not Musicians, for Africa
Anyone who has visited a shantytown in Africa can applaud the impulse behind Live 8 and the Make Poverty History campaign. It would be swell if, as we are repeatedly told, "for the price of a Big Mac" we could save 20,000 people a day who die from extreme poverty. But there is little reason to think that aging pop stars have figured out how to achieve a goal that has eluded generations of policymakers.
The solution being promoted by Live 8 is simple: Send beaucoup bucks. The anti-poverty campaigners are grouchy because the wealthy world spends only 0.25% of its gross national income on aid -- a mere $76.8 billion last year. They want to nearly triple that, to 0.7% of GNI.
The United States, in particular, is castigated for its stingy development budget -- only 0.16% of GNI. This obscures the fact that, in absolute terms, the U.S. government spends far more on foreign aid ($19 billion last year) than any other nation. And that's only a small part of our total contribution. Thanks in part to our lower tax rates, Americans give far more to charity than do Europeans. If you include private-sector donations, the Hudson Institute finds, U.S. foreign aid totals $81 billion, or 0.68% of GNI -- close to the U.N. Millennium Development Goals. And that's not counting the billions the U.S. spends to subsidize global security or the billions more it sends abroad as investment capital.
By any measure, the U.S. is extraordinarily generous, and President Bush is making us more generous still. He has already tripled development aid to Africa and plans to double it again. But for the anti-poverty campaigners it's not enough. It never is. Their animating idea is the same one that was behind Lyndon Johnson's Great Society: Massive transfers of wealth can eradicate poverty. It didn't work in the U.S., and it has even less chance of working abroad.
In the last 50 years, $2.3 trillion has been spent to help poor countries. Yet Africans' income and life expectancy have gone down, not up, during that period, while South Korea, Singapore and other Asian nations that received little if any assistance have moved from African-level poverty to European-level prosperity thanks to their superior economic policies.
Economists who have studied aid projects have found numerous reasons for the failures. In many instances, money was siphoned off by corrupt officials. Even when funds did reach the intended beneficiaries, the money often distorted local markets for goods and labor, creating inflation that drove local businesses out of business.
