Bev Oda and Foreign Aid

So apparently the International Co-operation Minister Bev Oda altered some document to deny funding to some Church based foreign aid group. The media is jumping all over this issue, doing what it does best: reporting the effects and ignoring the core problem. Or to paraphrase Henry Hazlitt: the media, politicians and most people following this are focusing on one group in the short run instead of all groups in the long run.

The one group in the short run: The controversy over Bev Oda's documents relating to this foreign aid NGO.

All groups in the long run: The uncompensated appropriation of wealth from Canadians to fund third-world criminals.



You'd think that after all these years and after all the money spent on third-world nations that Canadians would clue in to the fact maybe foreign aid isn't working. But alas, there doesn't seem to be any massive opposition to it. After the earthquake in Haiti when the federal government said it'd match dollar for dollar the amount Canadians donated there was widespread approval. A sense that this was one of the few humane policies of the Harper regime.

The problems with foreign aid are summed up nicely by von Mises himself:

“We must comprehend that it is impossible to improve the economic conditions of the underdeveloped nations by grants in aid. If we send them foodstuffs to fight famines, we merely relieve their governments from the necessity of abandoning their disastrous agricultural policies.”

That's about the gist of it. But considering the amount of Canadians that are still supportive of foreign aid, perhaps we better dig a little deeper into this issue.

Will Gairdner describes a perfect example of the unintended consequences of foreign aid in his book The Trouble With Canada... Still!

“Peter Worthington, then a columnist for the Financial Post, visited Ethiopia and took photographs of the operation. Stacked against the wall were a number of 50-kilogram sacks of flour marked “CIDA – Gift of Canada.” The refugees said it was normal for the Ethiopian army to grab and use such aid supplies. Other foreign aid, such as scare cooking oil, they said, was being sold by the government at $3.50 a gallon, also to help finance the army. By the end of 1987, Canada had given more than $65 million in aid to Ethiopia – $27 million of it in food (how much of it actually reached the hungry?). According to Worthington, there was widespread unhappiness among the people of Ethiopia that Canada was helping the oppressor government.” [emphasis added]

Just one bad example? Well consider Murray Rothbard's essay about foreign aid in Somalia. The process is identical. The US drops off large amounts of food and other supplies that are quickly appropriated by local governments and other criminals. Rothbard explains that this “free food” disincentives local farmers to grow their own and a famine develops that can only be relieved by more foreign aid (or stopping foreign aid altogether). In essence, aid created a man-made food crisis.

Recently the earthquake in Haiti caused similar conditions faced by poorer nations devastated by a natural disaster. And likewise, the disaster was made worse by government aid that was misguided and served a few at the expense of many. Ironically we can look to socialist Cuba for some common sense foreign aid. The Cubans were the first nation to respond to the disaster and instead of sending free food, they sent hundreds of doctors.

Of course, I'm sure nobody in Canada would want our government to coerce doctors into visiting third-world nations for relief. The best option here is the most sensible one, the option that screams common sense: let individuals donate voluntarily to privately run charities. We help those at home with private donations, we can do the same abroad.

The peaceful, voluntary market favours economic efficiency over political decisions. This current controversy with Bev Oda is precisely the problem with government foreign aid. Favouring one charity over another, then lying about it, transparency of the CIDA, etc., etc. Instead of focusing on Bev's mistakes we should focus on the overall issue: the effects of giving away free food and supplies.