Foreign aid, the late economist Peter Bauer reminded us, is a euphemism for forced government-to-government transfers of wealth. To be sure, someone is aided, but the beneficiaries do not include the perceived objects of the aid, namely, the common people of the target countries. Such transfers move wealth, taken forcibly from taxpayers, to the government leaders (and their cronies) in the recipient countries, centralizing power and politicizing life. As government becomes a more dominant force in those countries, power is coveted all the more fervently by people who will otherwise be on the receiving end of its coercive, even deadly, policies. This works against the peaceful evolution of civil society in poor and strife-torn countries that need it so desperately. In addition, aid can insulate a corrupt foreign government from pressures to open and reform its economythe only sure path to prosperity for its people. Moreover, aid can directly harm the economic interests of the common people, such as when massive government food donations ruin local agricultural markets.
The donor country experiences benefits, but again, not for average citizens. Rather, the beneficiaries include the political class, which gains in power, prestige, and patronage, and well-connected private-sector contractors who sell goods and services to foreign bureaucrats spending the forced donations, at least those that do not get deposited in foreign bank accounts.
Foreign aid has provided rationalizations for direct U.S. intervention in other countries. Continuing assistance program tend to create vested interests in the affairs of recipient nations. When one of those nations experiences turmoil, perhaps from an economic crisis or insurgency, forces are set in motion within and outside the U.S. government to prompt intervention in order to protect U.S. interests. The result can be a long and even violent involvement.
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