Give a man a fish, and you will feed him for a day. Teach a man to fish and you will feed him for a lifetime. If you have the finances to give a man fish for a month or provide him with a fishing pole and sufficient tackle, which makes the most sense to do? Now, suppose that you have a very well-financed lobby of fishermen who will pay you off to give the fish away and retain the dependency of our hypothetical “man” on their industry’s supposed benevolence. That is the business model of USAID.
Humanitarian aid is a laudable development in modern times. The fact that so many organizations exist to help the unfortunate is a testament to the progress humanity has made over the years. Unfortunately, due to ulterior motives and misguided policies, the legacy of foreign aid is currently colonialism, anti-democratic totalitarian leaders, and a deep-rooted institutionalized dependency and anti-entrepreneurial sentiment.
Recently, the news cycle has been dominated by the fact that US foreign aid has unilaterally been ended by the executive branch. Countless stories have come out about how desperate and poverty-stricken people who relied on this aid day to day now have nowhere left to turn. While a very real and pressing issue, and the idea that so many people were cut off with no warning overnight is extremely ethically dubious, the news has tended to ignore one key factor. The fact that so many people are reliant on foreign aid as their only solution to begin with and the overall way that foreign aid has been handled.
A famous comedian once said, “Why are we giving these people in the desert a bunch of food? We ought to pay for a bunch of uHauls so that they can move to where the food is!” While on the outset this seems a bit unsympathetic and tone deaf, truth be told, this might even be a better solution than the way that aid is currently being handled. Why? Well, this proposed solution gives people the tools to become self-sufficient in their own right. Just giving people handouts does nothing to empower them to make a permanent fix to their situation. No one wants to live on welfare forever, so why do we create a system that enables this?
Power! If someone relies on you for food and essentials, you wield a significant amount of influence over them. USAID, while packaged to show benevolence to those less fortunate than us, has always been about propping up American foreign policy objectives. Ultimately, this has led to an increase in the influence of the US in underdeveloped regions of the world. If a country gains self-sufficiency for their populace, then they do not have to be dependent on the US. This means that the US would have to compromise and respect their sovereignty to a higher degree rather than simply treating them as a vassal state of a colonial empire.
In modeling a free market economy, no one anticipates that a company or corporation would be willing to give a product away for a long period. In a true free market, this is simply impossible as if a company does not charge for a good or service, they would simply go out of business. In the case of developing nations today, this is occurring as foreign governments and NGO’s directly subsidize companies that provide this aid. In an open and fair market, local products would be very competitive in developing nations because of the cost of transportation and labor. The issue is that while the cost would be low, it would not be free and thus impossible to compete with foreign aid.
Throughout this class, the idea has always been that tariffs are generally bad. Whether it is Hayek, Bastiat, or Milton, all seem to agree that protectionist tariffs are a net negative. However, in the instance of these nations, they seem to almost make sense. While it would serve to increase the cost of certain essentials within a country, it could provide enough room for an incentive to allow entrepreneurship to flourish. The tariff would have to be set by the country that is being exploited, and as we rely on the NGOs to police themselves. They have an entirely different profit incentive. Their customers are not the people that they are supposed to help, but the people that they rely on for donations. Thus, if they were supposed to “police themselves” and sell their goods and services at a price to “enable local businesses” they would simply lower prices just enough to undercut all local competition so they could continue to report back to their “donors” that they delivered all the goods and services they promised. In an ironic twist of fate, NGO’s have had the same effect on the economy of developing that many fear a monopoly would cause in the United States today.
