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Often in international summits, decision makers discuss the necessity of providing aid to developing countries. Rich countries should increase the percentages of national GDP devoted towards foreign aid, so they say. Yet despite these often generous efforts, experience shows that this is the wrong approach towards the fight against poverty: aid has failed to create sustainable growth in poor countries. Rather than send financial aid to poor countries, rich countries should send teams to institute training programs to develop educational and legal institutions, which lay the foundation for free market enterprise, the engine of dynamic growth. In addition, rich countries should support fairer trade practices by cutting subsidies and creating a fair playing ground for poor countries’ exports. Poor countries should then implement a gradual transition from agricultural and textile economies towards industrialized economies. These measures will create a foundation that will allow the poor to take control of their own destinies, and through personal responsibility, change the direction of their own fortunes.
I. Africa teaches that aid doesn’t work; it just disappears into dictators’ pockets.
Over the last fifty years, hundreds of billions of dollars have been funnelled into Africa, with $US20 billion given annually throughout much of the 1990s. Yet throughout this period of aid, civil war continued to ravage the continent, in Sierra Leone, Angola, the Democratic Republic of Congo, Somalia, and in many other countries. Often, funds and aid were given towards leaders who divert funds towards their supporters in order to continue to oppress their opponents. Aid rarely gets to the people it is meant to help. The stark evidence of the failure of aid is the devastating economic and political turmoil in Africa today.
II. Teach a man to fish and he’ll never go hungry.
For the poor of the world, other policies should be implemented. For long term, sustained growth, the focus must be moved away from aid and placed on individual responsibility. The north should take its aid money and invest it in programs such as the American Peacecorps, in which northern countries send training teams to the south to build sound institutions.
These training corps should have a simple mission: to enhance basic public goods and make sure that all sectors of the population, especially the poor, have access to these goods. What are the public goods? Justice, education, and the police. What are the institutions that training corps will reform? Courts, banks, schools, and police forces. These institutions should train the legal community, judges and lawyers, to consistently apply rule of law. Police forces should be trained to enforce justice upon perpetrators. Banking institutions should become developed and credit should become available to all sectors of the population. In addition, private property and intellectual property, the keys to the capitalist system, should be protected. If a ruler seizes private property, he should be impeached for blocking economic liberty. Finally, education should be reformed, requiring all children to attend twelve years of primary school, and learn how to read. If a country cannot afford in its budget twelve full years of free public education, then it should focus on the first seven years, or the first four years of primary education – that is where you get more bang for your buck. Everyone should learn how to read, and develop the basic faculties to learn how to use new technologies, another factor of productivity and growth. Children should be given a simple choice: go to school or go to prison.
At this point, the poor will be at the center of training programs that teach them how to read, use credit, access legal institutions, and protect property rights. They will now be empowered to invest in personal enterprise. This system of “inclusive, compassionate capitalism” will enable the poor to take personal responsibility to create the goods to trade their way out of poverty.
There remains, however, one large obstacle.
III. Fire northern farmers. Then dismantle southern tariffs.
The poor will specialize in textiles and agriculture, and will compete with subsidized northern economies which protect these goods. The south will remain greatly disadvantaged in free trade, even with the above reforms in place.
The north should end its double discourse on free trade and end subsidies. It should allow its farmers to compete with cheap southern labour and see how they fare. The costs will be heavy, causing job loss in agriculture throughout America and Europe. Yet the transition can be gradual and the actions will benefit all parties. Americans and Europeans will at last be freed from heavy tax burdens which support inefficient industries, and southerners will be able to develop wealth through exporting products which they can naturally produce more efficiently and at lower costs. Southern countries will be able to access northern economies and build revenue through exportation, thus increasing wealth, and fighting extreme poverty.
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John Michael Balouziyeh
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