It was 10 years ago that Dambisa Moyo, in her book “Dead Aid”, recommended a 5 year plan to eliminate the dependence of African countries on foreign aid. Today Canadian aid spending is still growing, increasing from $5.6 billion in 2017 to $6.1 billion in 2018. This spending has nothing to do with development aid being good for Africa, and has everything to do with who benefits here in Canada.
In addition to the billions spent by our federal government, private aid agencies raise money directly from the Canadian public. To do that they spend on ads. The legacy media, already starved for money, is not likely to criticize one of their biggest sources of ad revenue. World Vision Canada and Plan International, two of Canada’s biggest international aid charities, together spent $85 million on fundraising in 2018.
Private contractors and private aid organizations are allocated funding from our federal aid budget. These companies and charities have an interest in lobbying the government to continue this funding. They also have an interest in seeing governments favorable to foreign aid increases get reelected.
This is dangerous combination for our democracy: private organizations with influence over the media receiving government money to fund their programs, then spending part of that money on lobbying the government for more money and influencing the media.
Governments that increase aid spending expect to get support in the form of votes at election time. This amounts to wasting taxpayer money on programs that harm foreign nations so that political parties can buy votes. The media and private aid agencies are happy to rally support for these policies and governments since this is an important source of their revenue.
The essential argument of Dambisa Moyo in "Dead Aid" is that aid is harming Africa because it subsidizes the failure of African Governments. Foreign aid pays for programs that should be done by the local government. The local government then does not need to collect taxes, spend wisely, and be responsible to their own people. They also don't have to put in place the structures needed for an efficient free market. They can remain corrupt and they can continue to experiment with failed strategies of central planning and government control.
This is not a new argument. Henry Hazlitt, in 1947, identified the same problem with the post-war Marshal Plan, which is often considered the earliest international aid program. Many European countries experimented with socialist policies after World War II. They tried to continue programs of rationing and state control of industry, imposed out of necessity during the war, transforming them into a system of central planning. This undermined their economies and made them less productive.
Hazlitt argued that Marshal Plan aid was making European countries weaker by subsidizing government failure. Without aid these countries would be forced to abandon their unsuccessful government interventions and allow the free market to grow the economy. With American subsidies they could keep these failed policies in place, funded by tax revenue from the American people.
William Easterly wrote another major critique of the aid industry, “The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good,” in 2007. In that same year he wrote:
“There is a sad law I have noticed in my economics career: the poorer the country, the poorer the economic analysis applied to it. Sub-Saharan Africa, which this month marks the 50th anniversary of its first nation to gain independence, Ghana, bears this out. …the same poor economics on sale to Ghana in 1957 are still there today. Economists involved in Africa then and now undervalued free markets, instead coming up with one of the worst ideas ever: state direction by the states least able to direct.”
In 2017 the president of Ghana, Akufo-Addo, famously rejected African dependence on foreign aid during a visit to Ghana by French president Emmanuel Macron.
The only political party in Canada promising to reduce foreign aid is the People’s Party of Canada. As with all PPC policies, this strategy is based on doing the right thing for Canadians. In this case, it is also the best policy for foreign countries - respecting their national sovereignty, their economic independence, and their integrity. And it just may be the best development strategy too.
The PPC foreign policy promises to continue disaster assistance and humanitarian aid, which is distinct form the development aid criticized by Moyo, Easterly and Hazlitt. But even here we need to tread carefully. We must avoid swooping in and paying for life-saving interventions while the president of a country buys new SUVs for all his ministers. If we do, we undermine the most important principle needed for the development of any country: the national will to promote and protect human life.
Humanitarian aid must focus on areas where government control has broken down or where there is a sudden increase in the humanitarian burden. These areas are exactly where we have seen recent famine – in countries like Yemen, South Sudan, and Somalia which are at war or have weak central government control.
Even with this narrow focus on humanitarian aid there is potential for failure. Canadian farmers, charities, and companies benefit when we ship sacks of grain from the Canadian prairies. But response time and adaptation to local needs are much better if we send money and facilitate purchases from nearby sources. Here, the opposition of the People’s Party to all forms of corporate welfare provides hope that we will do the right thing for those in desperate need – and for Canadians.