onsdag 25 juli 2007

Giving aid to poor countries

There was an article on this subject in the Guardian today, with reference to India. It begged the perpetual question of precisely who pays and who benefits from aid.

There are many poor people in Britain and most other "first world countries". This is due to maldistribution. Because of the way tax structures are loaded against them, the poor in the rich countries contribute disproportionately to any aid that comes from their governments.

Conversely, there are plenty of wealthy people in "poor" countries. Indeed, some "poor" countries are blessed with great natural resources such as mineral wealth and the problem is one of distribution within the countries concerned.

It is also the case that the main beneficiaries of aid from "rich" countries to "poor" ones tend to be the wealthy people in the poor countries. There is no "trickle-down" mechanism. Again, there is maldistribution.

Ultimately, the problem can be resolved only by the people in the countries with the problems. Aid from governments can exacerbate the problems or delay the time when people actually get to grips with them intelligently.

This raises a further question. Given the marked failure of most "rich" countries to prevent undue and now growing inequalities, and the historic failure of socialist measures to address the problem either, it is evident that current accepted economic theory is not up to the task of explaining what is happening. Consequently, governments who genuinely wished to address the problem have no means of developing and evaluating policies that might be effective.

In the circumstances, the best that people in "rich" countries can do is to support the better charities, those which devote their efforts to front-line work rather than misguided political campaigning. Government should keep out of the picture.

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