Ron Paul's Texas Straight Talk - A weekly Column


The Great Foreign Aid Swindle

Yet another ill-conceived foreign aid swindle has become law in the form of the “Millennium Challenge Act,” a disgraceful bill that sends billions of American tax dollars overseas even as our national debt explodes.  The Act combines the worst aspects of bad domestic policy and bad foreign policy, by wasting $2.5 billion taxpayer dollars in 2005 alone while meddling in the affairs of foreign nations.  Arrogant is the only word to describe a Congress that cares so little about its own taxpaying citizens while pretending to know what is best for the world.

The very name- Millennium Challenge Act- is highly insulting.  It sounds like a PBS fundraising slogan or car company sales pitch.  It’s like calling an old used car a classic or an antique.  Foreign aid welfare is still foreign aid welfare, no matter what jingoistic name is applied.  There is nothing new or noble about it.  The Millennium Challenge Act is just another shabby federal program that takes your money and gives it to somebody else.

Foreign aid doesn’t help poor people; it helps foreign elites and US corporations who obtain the contracts doled out by those foreign elites.  Everyone in Washington knows this, but the same lofty rhetoric is used over and over to sell foreign aid programs to a gullible public.  During a hearing about the new Act last week, I asked one of the witnesses how much of the $2.5 billion would actually go to US corporations.  He enthusiastically answered that much of it would, making no attempt to downplay the corporate interests promoting expansion of our foreign aid programs.  Naked corporate welfare is bad enough, but corporate welfare in the guise of helping poor foreigners is indecent.

In many cases, foreign aid money simply distorts foreign economies and props up bad governments.  In countries that pursue harmful economic policies, an infusion of US cash only exacerbates and prolongs problems.  No amount of money can help nations that reject property rights, free markets, and the rule of law. 

In developing countries that pursue sound economic policies, foreign aid money is not needed- the international financial markets will provide the investment capital necessary for economic growth.  This capital will be invested according to sound investment strategies - designed to make a profit - rather than allocated according to the whims of government bureaucrats.

Foreign aid encourages socialism and statism. Because it is entirely geared toward foreign governments, it mandates economically devastating “public-private partnerships” in developing nations. If the private sector wants to see any of the money, it must be in partnership with government.  Who knows how much of this money is wasted on those companies with the best political connections to the foreign governments in power? Foreign aid invites political corruption by creating a slush fund under the control of foreign governments.

The wisest approach to international economic development is for the United States to lead by example, by revitalizing the economic policies that led us to become wealthy in the first place. This means less government, less taxation, and no foreign meddling.  The greatest gift we can send overseas is a demonstration of the freedom and prosperity possible only with limited government and the rule of law.

Americans are the most charitable people on earth.  Those who wish to help fight AIDS, famine, and poverty overseas can choose from hundreds of private charities.  Americans don’t need a politician or rock star to tell them what causes are important.  Most of all, they don’t need to be forced to pay for foreign welfare at the barrel of a government gun.