Capitol Ideas/Aid Affects Everyone
Bethell, Tom
Aid Affects Everyone by Tom Bethell L ouis Menand, who teaches English at the City University of New York (formerly City College), published an interesting defense of professionalism the other day....
...There are fields in which the professional's competence is put to a real-world test...
...In the late 1960s the U.S...
...Thereupon, a Taiwanese minister recalled, "serious efforts" were made "to improve our investment climate...
...Wealth and economic liberty, it turns out, are highly correlated...
...Menand decries the term-limits movement as an attack on professionalism in politics, so perhaps we should not take him too seriously...
...Mix the Naked Inputs in the right proportions and then be sure to count the "outputs" as they come rolling off the assembly line...
...poured in aid and in return imposed collectivist policies on the government of Eduardo Frei...
...Governments don't invest, they spend...
...The real purpose of aid, undisguised in the case of Egypt, is political...
...The current Middle East "peace process" has been driven by U.S...
...Disapproval of the military government was a more important reason...
...Pinochet came to power, theaid was cut off and the country promptly moved in a market direction...
...Now they had their own sandbox where they could play about and claim immunity from the criticism of amateurs...
...John Prior Lewis, who argued formassive increases in foreign aid to pay for India's various five-year plans, noted in Quiet Crisis in India (1962) that those who deny the legitimacy of "centrally conceived and directed development" are "cast inescapably" as "crackpots...
...Thereafter South Korea moved to a market economy and surely wouldn't have done so if economic aid had kept pouring in...
...India's prime minister Nehru told a journalist in 1960: Planning and development have become a sort of mathematical problem which may be worked out scientifically...
...Communism was strengthened...
...In addition, Rosenthal reported, "there is no particular admiration for the decision of Korean businessmen to squirrel away their funds while the country is on the brink of a new economic disaster...
...The problem was that they never did have the first idea how wealth was created...
...Aid goes from government to government, and often insulates foreign heads of state from the need for change...
...We are only now 16 The American Spectator May 1995 beginning to understand that governments everywhere are guided by incentives that are very different from those of the private sector...
...Apart from Israel, the largest aid recipient is Egypt, which receives $2.1 billion annually...
...The trouble is, a lot of what they know is wrong...
...will cut aid to South Koreans," Abe Rosenthal reported in the New York Times in 1963...
...After the near-debacle in El Salvador a decade ago (under Reagan's nose), AID finally gave up on expropriation as an economic-growth technique...
...0 18 The American Spectator May 1995...
...If you're looking for places to invest . . .) The agency is also saying good-bye to: Ivory Coast and Botswana, Tunisia and Thailand, Afghanistan and Pakistan (the Pakis were suspected of using the money to build nukes...
...Paul Baran of Stanford wrote that "no planning worth the name is possible in a society in which the means of production remain under the control of private interests...
...Would you want your child taught by a professional educator...
...The underdeveloped world, later called the Third World, became the plaything of development economists and other experts...
...Education has gone downhill ever since...
...World War H. Looking back, the field is an embarrassment—but not of riches...
...Those who doubt the wisdom of the "process" might ponder the role of aid in driving it...
...Too much hoarding and not enough planning, in other words...
...Bauer of the London School of Economics, one of the few holdouts against the planning mania (he was made a life peer by Mrs...
...The sum covers 56 percent of the military budget," according to the Washington Post...
...The good news is that Chile is one of twenty-one countries where the AID mission will be shut down completely by the end of next year...
...Apply the analysis of domestic welfare's effect on the inner cities, and you get an idea of what went wrong as a result...
...My own suspicion is that the experts of our day have escaped lightly...
...The moment the scientist or technologist comes to the scene, be he Russian or American, the conclusions are the same for the simple reason that planning and development today are almost a matter of mathematics...
...Governments would "invest" it, which meant it would be used productively...
...They hadn't worked for their money...
...In Chile, we find a similar story...
...Anyway, the foreign aid was sent by the shipload...
...As Nicholas Eberstadt of the American Enterprise Institute has pointed out, both South Korea and Taiwan faced military threats from Communist rivals, and the U.S...
...Experts know a lot about their subject...
...But we may question whether the economic aid was ever needed—either there or anywhere else...
...He rapidly lost middle-class support and the Marxist Salvador Allende won the 1970 election...
...After he was deposed and the hated Gen...
...Since 1950, the rule has been that whenever AID arrives in force, trouble follows...
...By 1986, the American left was complaining bitterly about the country receiving so much as a World Bank loan...
...It would be worth listing the many areas in which the experts have plainly gone off the rails...
...Like oil poured into a defective engine, it disguises the true state of affairs...
...It's 1.3 percent of federal outlays—$13.7 billion this year...
...As the years passed and little was produced in the way of housing and consumer durables, the equations became more and more complicated...
...They were simply . . . inputs...
...The government of Taiwan likewise learned that economic aid would soon be terminated, as it was in 1965...
...Mexico has also popped up among the countries with an active AID mission, which is not a good sign...
...If a Russian planner comes here, studies our projects and advises us, it is really extraordinary how his conclusions are in agreement with those of, say, an American expert...
...Land and labor they had aplenty...
...Just scientists with slide rules, trying to get their equations right...
...went from strength to strength, were awarded World Bank sinecures, even won the odd Nobel Prize...
...Nehru exaggerated not at all when he said planning was thought to be "almost a matter of mathematics...
...When buildings fall down, engineers look bad...
...A lot of other African countries will continue to be mired in aid, though, and South Africa has predictably appeared among the recipients...
...Americans" were said to believe there had been "totally inadequate planning...
...Other South American countries where AID is leaving: Costa Rica, Argentina, Belize, and Uruguay...
...When the Berlin Wall fell, the Statistical Abstract of the United States included a table showing that GNP per capita was higher in East Germany than in West Germany...
...Adjusting for inflation, Western countries since the late 1940s may have sent as much as $2.5 trillion to the underdeveloped world...
...Middle-class farmers were expropriated and that was supposed to make everyone feel better...
...Education, for starters...
...That should help undermine such local agriculture as they have and make enemies of their fanners...
...T he defenders of foreign aid have been reduced to claiming that, really, as a percentage of GNP, it's not much...
...Perhaps the experts still do...
...But these articles, far from reflecting badly upon their professionalism, are thought to establish it...
...Often this is not so, however...
...Central planning...
...R are economic success stories in the postwar period were often preceded by cuts in U.S...
...The Heritage Foundation recently published a useful Index of Economic Freedom, ranking the policies of 101 countries...
...That is the world we live in...
...Too many variables, and too much time, come between the advice and the outcome...
...To a considerable extent they all agreed with one another and got off scot-free as a result...
...After World War II, American experts believed that countries were underdeveloped because they lacked capital...
...U.S...
...The pros loved the idea that there was this separate branch of knowledge called education...
...For no good reason that I can see, we are also sending billions to Russia and the former Soviet empire...
...surplus food aid is also en route to Gaza and West Bank...
...they're due to receive $76 million this year—no doubt that's just a down payment...
...For fifty years there has been this field called "development economics," telling underdeveloped countries how to play catch up...
...But to be productive, people have to expect reward for themselves and their families, and that means private property...
...Gunnar Myrdal, one of the great missionaries of planning (Nobel Prize in economics, 1974), exaggerated only slightly when he said in 1956 that "grand-scale national planning" was "unanimously endorsed by governments and experts in the advanced countries...
...security commitment "figured incalculably but importantly in their development...
...Development experts for a long time did not believe this...
...The real problem abroad has not been the lack of aid, but the lack of economic freedom...
...But it affects recipients more than donors...
...They did have the hundredth idea, and the ninety-ninth, but the fundamentals they either never grasped or actively repudiated...
...He worries that it is coming under increasing attack...
...Many probably still do not...
...Thatcher in 1982), called this the Investment Fetish...
...Judging by their contributions to professional journals, for example, perhaps half the English professors at American universities can barely write an English sentence...
...It is intended to give the State Department leverage in foreign capitals...
...There were models aplenty to prove it...
...I see from the Agency for International Development (AID) summary tables this year that "West Bank/Gaza" has joined the recipient list...
...Within a year, we read about the surprising new "stockholders' culture" in Chile...
...Both before and after the massacres last year, Rwanda was flooded with aid...
...In The Political Economy of Growth (1962), nonetheless, Prof...
...No ideologues here...
...The data had been compiled by well-paid professionals...
...aid are the ones that least deserve it because their government-controlled economies will misuse the money...
...Cockamamie agrarian reforms based on homeopathic analogies—a little dose of socialism to ward off a big dose of Communism—were imposed in country after country: Chile, South Vietnam, Iran, the Philippines, El Salvador, to name five...
...Heritage's Kim Holmes noted that "the countries that appear to most need U.S...
...Adjusted for inflation and population, aid to Latin America is now a fraction of what it was in the bad old days of the Alliance for Progress...
...What did the professionals advise...
...It is extraordinary how both Soviet and American experts agree on this...
...All the countries that allowed themselves to be used as laboratories by American development experts in this fashion were destabilized...
...The sheer arduousness of production was not understood—especially not by the better sort hired by the Ford and Rockefeller Foundations to pontificate upon economic development...
...Factories would be built and out would come the outputs...
...They also had the figures to back up their bogus world view...
...If savings could not be "forced," then capital could be shipped in the form of foreign aid...
...Aid's role in propping up regimes has been shown in cases where the aid was abruptly withdrawn and the head of state left in a hurry or was overthrown (Liberia, Haiti, the Philippines...
...If the wall had not fallen, many would still believe the figures...
...I mean that literally...
...it enables them to buy a palace guard and ignore the people...
...n general, however, foreign aid is withering away...
...Take economists, for example...
...That folly persisted for 25-30 years after Tom Bethell is The American Spectator's Washington correspondent...
...The economists' error was to believe that the "factors of production"—land (natural resources), labor, and capital—could be suspended in an institutional and legal vacuum and yet retain their essence and efficacy...
...Lord Bauer's generalization that the Third World could be defined as the collection of countries that receive foreign aid was a good one...
...aid to a larger extent than has been acknowledged: both the hope of gaining it and the fear of losing dollars...
...Planning's appeal was that it pretended to replace ideology with mathematics...
Vol. 28 • May 1995 • No. 5
