Aid or Trade
Impoverished Countries Worsen
By Daniel Muniz
For a continent like Africa, there never seems to be enough
foreign aid to alleviate human suffering such as starvation,
disease, and poverty. In fact, after decades of so much aid,
economic conditions for the continent have continued to worsen
without any end in sight. Most poignantly, the African nations with
rich abundant natural resources seem to be stuck with a sinister
curse. That is, with all their raw materials, mineral deposits,
precious metals, and vast oil reserves, these countries are often
worse off today than they ever were before in the past.
As a result, quite a bit of international attention has now been
focused on reducing the debt of destitute African nations.
The logic is simple. Substantially reduce or eliminate a
destitute country’s debt, increase aid, and these economies will
prosper. And the result will be that human suffering on that
continent will eventually be reduced or eliminated.
Unfortunately, it is not as easy as it sounds.
Over the course of many years, Hollywood celebrities and rock
stars have repeated the mantra that debt forgiveness for Africa is
desperately needed. They have castigated wealthy countries for not
increasing their contributions of money and for not erasing enough
debt. And the celebrities have tried to bring global attention to
poverty and starvation through concerts and media campaigns which
are not necessarily a bad thing.
However, the single greatest flaw that the celebrities and the
general public have failed to grasp is that most of the problems
that many of these countries experience are often self-inflicted.
For example, since 1960, Africa has already been the recipient of
more than $400 billion in very generous foreign aid so where is the
progress? Where is the development of infrastructure and were any
vibrant economies created? But a better question is where did all
the money go?
For the countries rich in natural resources, after billions of
dollars of foreign investment and after many billions of dollars of
revenue to supply an energy hungry planet over the past couple
decades, where did all the profit go?
It obviously didn’t help the people in the impoverished nations
even though most of the governments tightly controlled all
expenditures and revenue receipts. And today, oil prices have soared
to an all time high and so has the demand for certain precious
metals. So why aren’t these African countries benefiting?
Too bad such questions are rarely asked by the Hollywood
celebrities and rock stars.
For decades, corrupt government officials siphoned off vast sums
of money so the poorest of the poor never got to see any of it.
However, the celebrities and Liberals rarely ever hold corrupts
government officials accountable. Many of them simply blame the
United States.
It is one thing to accuse Western European countries and America
if they were being too stingy but that is not the case. The
wealthiest nations on the planet have donated plenty of money, food,
and life saving drugs so it is not like nothing is being done to
help the destitute.
But take a look at the big picture.
Pacific Rim countries have experienced long term sustained
economic growth. In turn, their red hot economies have entirely
transformed their societies. In fact, many Far East nations are now
exceedingly wealthy and mostly importantly, they have become
economic powerhouses. But how is the Pacific Rim different from
Africa?
The simple answer is that they have allowed the free market,
instead of the government, to manage their economies. As a result,
their economies exploded in astounding growth when market forces
were permitted to do business without excessive red tape and heavy
taxes. Of course they have experienced growing pains throughout the
years but so did every wealthy country on the planet. It took
effort, hard work, risk, but it also took economic freedom for
businesses in the Pacific Rim to produce amazing results.
When the two most populous countries in the world, India and
China, began to strip away their socialist constraints to allow free
enterprise, their respective economies blossomed. At first China
resisted, especially since it was a dictatorship but India, the
world’s largest democracy, had the freedom to embrace change and
market forces.
However, when new leadership assumed more prominent roles in
China’s government (many of them were engineers), the country began
to adopt pro-growth policies and socialism has slowly eroded. Too
bad the same can’t be said of their authoritarian government.
But to the dismay of many of the world’s Liberals, the best way
for indigent nations to rise out of poverty is to faithfully
practice free market principles instead of using the government to
control their economies.
Look all around the world.
The places where free enterprise was allowed to exist, the
countries enormously benefited. The Pacific Rim nations are a
testament to that and so are many Eastern European countries which
may become the next set of economic powerhouses because of their
embrace to the free market after the fall of the Soviet Union.
But the places where the government made all the decisions, like
Mexico and Venezuela and other others, the economies have always
suffered.
The plain truth is that the free market works.
Many Left-Wingers cannot accept that assertion because they
ardently feel that it is the government, not free enterprise that
creates wealth. But time and time again has proved that socialism
has failed to bring the economic prosperity that many people in the
world crave. The free market has lifted the Pacific Rim countries
out of Third World status and propelled them to financial affluence.
Although liberals and poverty warriors may disagree, profit is
not a dirty word.
Greed and corruption are dirty words but not profit, especially
when profit was obtained through hard work, creativity, and risk.
Admittedly, the free market does have its bad elements such as greed
and corruption but so does socialism. The primary difference is
freedom instead of allowing the government to decide in the role of
commerce.
Massive foreign aid for Third World countries have largely failed
mostly because of corrupt leadership and because of the misguided
socialist economic policies. Socialism has never provided the
worker’s paradise that so many Liberals have envisioned. In fact,
Western Europe where socialism is practiced is a dismal failure due
to rampant unemployment and stalled economic growth.
Perhaps it is time for many African nations to consider using a
form of economics that is actually working across the world instead
of adhering to policies that continue to fail. Free Enterprise does
work and it has also been proven to be the sure fire way to lift
nations out of poverty.
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