måndag 8 september 2008

Aid to developing countries is immoral

There are two major objections to aid from first world governments to developing countries. First world tax systems, despite being notionally related to ability to pay, are in practice only so for the poor and not-quite poor, who cannot pay for advice to enable them to exploit the loopholes in their countries' tax systems.

The second objection is that development does not necessarily help the poor in the developing countries, any more than it did in Europe in the period after the industrial revolution. With each successive wave of technical development, from the advent of steam power, railways, internal combustion, electricity, information technology and communications technology, the productive power of labour was increased manyfold. But it did not produce a commensurate increase either in wages or in the return to capital. Wages remained stuck at the minimum that labour would accept.

The end product was a few fat-cat landowners and a mass of poor, a situation which was only alleviated in just a few places, by social democratic governments. Even in the most successful of these, Sweden, the situation is sliding back again with increasing inequalities.

Such a state of affairs was predicted and explained by the neglected economist Henry George. But unless developing countries acknowledge the problem and act on it, aid is a process for soaking the poor in first world countries, to enrich the privileged in the developing world.

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