Against Aid

This post was published on Slugger O' Toole.

Walking by a lake you see a child drowning. There is no one else around- what should you do? The clear moral answer is to jump in and pull the child out without sparing a thought for potential inconvenience. It has long been argued that the same moral reasoning applies to world poverty- we must intervene to help the world’s poorest. The widely held view is that this help should be aid.  But does sending aid make the difference it is supposed to- what if we were offering our metaphorical child little more than a faulty life ring? Or worse still- is our aid merely dragging her down?

I came across a few articles this week about the money sent by wealthy countries to poor to assist development. The verdict wasn’t good. One was an article in Thursday’s Guardian showing how Somaliland, unable to receive international aid for legal reasons, had become more democratic and, ultimately, wealthy as a result. The other was a report by New York University (NYU) which found that billions of dollars of US military aid sent to Columbia had only worsened drug problems there. Depressingly, the articles argued, it seems that aid just doesn’t work.

This isn’t a popular idea, or an obvious one. Ireland especially is renowned for the difference its international assistance makes to the world’s poorest countries. Untainted with the guilt of empire (unlike Britain) and unconcerned with promoting ulterior political or economic goals (unlike the US) Ireland has been uniquely free to focus its development program on simply making a difference to those who need it most. The Irish aid budget is over 600 million euro per year and outside of government, Ireland is home to many large aid organisations such as Concern and Trocaire, working in dozens of countries worldwide. For a once poor country, this has been a source of pride for many.

But could this pride be misplaced? I want to discuss here the arguments against aid- the belief that poor countries are actually much better off without our financial support. This is obviously controversial, not least in the midst of a famine in Somalia and a global financial downturn that has hit the poorest the hardest. But if aid is in fact hurting these countries, this is an important debate to be had. The charges made by the sceptics against aid can be summarised as follows- removing democratic accountability, killing exports and rewarding tyrants.

Removing Accountability

America was founded on the principle of ‘No taxation without representation’; in international development the reverse is equally true- no representation without taxation. If poor countries become dependent on wealthier ones for providing basic services instead of taking taxes from individuals and local businesses, the need to remain accountable to one’s citizens is reduced and corruption and inefficiencies sink in. Somaliland provides an excellent example of this- it was forced into democratic reforms when port companies refused to pay taxes. Aid money would have significantly reduced the clout of these merchants.

Dutch Disease

Dutch Disease is a phenomenon named after the discovery of oil in Holland in the 1950s. The sudden influx of foreign money pushed up the relative value of local currency, devastating the country’s manufacturing industry, which had relied on exports. The same can occur with aid, which is also a sudden influx of foreign money. Exporting has been the key to growth for so many booming countries such as China, India, Japan and South Korea- aid may well keep this opportunity away from its recipients, damning them to poverty.

Rewarding Tyrants

Many of the world’s poorest countries also have the most reprehensible leaders and yet still receive aid. Mugabe’s Zimbabwe is a clear example of this, with aid essentially keeping the regime afloat. According to Professor Paul Collier, director of the Centre for the Study of African Economies at Oxford University, as much as 40% of African military spending is funded accidentally by aid.

This week’s NYU report found that US military aid found its way into the hands of the very drug barons they were targeting, due to corruption.

These are powerful arguments- aid can make a country less democratic, less competitive and more violent. Of course it is hard to argue against aid for emergency relief during a famine or earthquake but the larger argument that aid provides a clear path for a poor country’s economic development seems shaky at best. It seems clear that aid, as it is, is not working. The question for Ireland and the rest of the world is- will we continue dodging difficult questions or can real reform take place? Or is reform not enough; is now the time to make charity history?