CUT OUT THE MIDDLE MEN IN MAKE POVERTY HISTORY
by John O'Sullivan
Benador Associates
July 3, 2005

In two days time, several million anti-poverty campaigners,
progressive pop stars, socially aware bishops, labor union executives,
environmental radicals, "thoughtful" corporate statesmen,
anti-globalization net-workers, and young idealists of various kinds
will be gathering outside the G8 meeting in Scotland to urge the
assembled world leaders to "Make Poverty History."
They will have walked miles, slept in fields, wrapped white ribbons
around public buildings, attended globally-linked pop concerts, signed
petitions, cheered MPH's leader, Sir Bob Geldof, and generally fought
world poverty in a roundabout way.
Next to Sir Bob himself, British Prime Minister Tony Blair, the G8
host on this occasion, is the impresario of this vast worldwide
charitable pop concert. Mr. Blair is hoping to mark his presidency of
the G8 with an agreement to lift Africa out of poverty. He is happy to
have the pop stars and activists pressuring the other government
leaders to add in their aid billions. And he had the U.S. in his
pocket even before the G8 began.
Mr. Bush announced last week that the U.S. would be doubling aid to
Africa. He had already agreed to cancel the debts of the world's
poorest countries. Before that, he had significantly increased funding
to combat the AIDS epidemic in the Third World.
No doubt Bush wanted to repay the British leader for his unstinting
support over Iraq. But there is a deeper affinity between the two
leaders underlying these outlays. Bush and Blair are deeply religious
men who believe government should help people who are "hurting." And
as in Iraq, they believe this obligation crosses international
frontiers.
If, however, the U.S., Britain and the G8 countries government do
embark on helping poor Africans, they should first ensure that they
really are helping and not harming them. Yet no correlation can be
found between aid and economic growth. Tanzania under Julius Nyrere,
the saintly austeritarian dictator, received more aid per capita than
any other aid-receiving country. It languished in poverty and
backwardness.
The World Bank's generosity helped to prolong that poverty. Its wealth
transfers strengthened the Nyrere government and enabled it to
maintain its wealth-destroying socialist policies. Western charity
prolonged dictatorial misrule and ethnic cleansing.
Blair and Bush have some grasp of this reality. They accept that
previous aid failed in part because it failed to tackle the corruption
of aid-receiving governments—it often went directly from Western
agencies to the dictator's Swiss bank accounts—but say they will
ensure that aid will go only to virtuous governments in return for
ending such corruption. Or as the saying goes, this time it will be
different.
This sounds like over-confidence—a trait both men share—on a massive scale.
In the first place, aid has little or no connection with the real
factors that produce growth. As innumerable development studies have
demonstrated, nations, not unlike familes, become wealthier when their
people educate themselves, work hard, maintain intact families,
suppress crime, save prudently, and invest for the future. Aid cannot
directly assist these processes to a significant extent. It can even
obstruct them by encouraging self-destructive attitudes such as the
belief that wealth comes from luck and influential connections rather
than from hard work. And as the Tanzania illustrates, it tends to
increase the power of parasitic governments over their societies.
When poverty fails to vanish on cue, however, the Western aid agencies
and their showbiz allies in the Make Poverty History coalition will
demand not only more aid but sterner interventionist measures too. And
if the MPH manifesto is any guide, these will make matters worse.
MPH wants protectionist tariffs for agriculture in the Third World
that would raise food prices in those countries (thus penalizing poor
consumers) and choke off trade between poor countries as well as with
the West (thus reducing economic opportunities for producers.) It
wants to price poorer workers out of the labor market by erecting
higher "labor standards." And it wants to halt privatization
programs—ignoring the fact that government monopolies in the Third
World are over-staffed with relatives of influential people, treated
as private bank accounts by ministers, and thus forced to charge high
monopoly prices to the non-influential (i.e., the poor.) This is a
comprehensive program for increasing poverty.
Having summoned this aid-showbiz coalition to their aid this week,
however, Blair and (to a lesser extent) Bush will have to listen to
them when they demand sterner measures. Blair may not be politically
strong enough to resist. If so, more aid (and more poverty) would
follow.
By indulging these daft paleo-socialist panaceas, however, Western
governments are directing Africa, Third World governments and the poor
away from the only policies that are known to deliver growth and
prosperity. As scholars such as Hernando de Soto, Deepak Lal, and the
late P.T. Bauer have established, these are legally protecting private
property, dispensing justice honestly, reducing regulations that
obstruct small businesses, maintaining a sound currency that preserves
savings, and allowing the poor to market their goods without official
interference.
You may notice two things about that list. It conforms closely to the
traditional conservative idea of limited government. And it treats the
Third World poor not as helpless invalids who need our constant care
and supervision but as active decision-makers in their own economic
progress.
We are encouraged to think of them as helpless by all the aid posters
showing starving children. But a more realistic account of their
activity and priorities was recently given by the British educational
historian, James Tooley, who spent several years studying Third World
schools.
What he found was astonishing. Desperately poor people in Africa and
Asia, dissatisfied with the poor quality of state education, were
sending their children to small private schools for very modest fees.
Still more fascinating, the education they were receiving was both
good in itself and markedly better than that on offer in the free
government schools. And because they were paying, they got service
when they complained. The state schools ignored and patronized them.
Neither governments nor aid agencies like these schools which offer no
scope for their compassion and idealism. The proposal in the Make
Poverty History manifesto to spend more aid on [state] education, for
instance, would undermine the progress the poor have made on their
own.
If we really want to help them rather than their governments, we
should put aid directly into the hands of parents in the form of
educational vouchers—and cut out the middlemen in Make Poverty
History.
John O'Sullivan, former adviser to Lady Thatcher and former editorial page editor of The Post, is editor-at-large of the National Review and a member of Benador Associates.

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