January 14, 2005

Trade Not Aid

Is it right for governments to give foreign aid? In general, the answer must be no.

Government aid is counter-productive and wasteful. Much money goes to line the pockets of foreign politicians and officials, supporting and prolonging the life of corrupt and oppressive regimes, and their pernicious policies. The rest is liable to create dependency.

There is an exception in the case of natural disaster, where immediate humanitarian relief is needed - although even then it is better if the aid comes from private donors, partly because their motivation is purer and they are more likely to scrutinise what happens, and partly because it is better if people are not taxed any more than necessary.

Even in the case of natural disaster, the problem is to turn off the aid to avoid undue dependency without being callous.

Far better if governments promoted free trade. It is time for the EU to open up to foreign producers, including all those from the third world - it will do them (and us) far more good than any amount of aid, and is what they prefer. The present system serves vested interest groups. If the EU won't change and soon, it is another reason to leave the EU.

It is a great shame the Tories have pledged to match Labour spending on overseas aid - yet another area of spending they feel unable to cut, and yet another area of spending everyone would be better off without.

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