Why trying to help poor countries might actually hurt them

Why trying to help poor countries might actually hurt them, by Ana Swanson. In the notably PC Washington Post, Nobel-winning economist Angus Deaton argues against giving aid to poor countries.

[B]y trying to help poor people in developing countries, the rich world may actually be corrupting those nations’ governments and slowing their growth. … much of the $135 billion that the world’s most developed countries spent on official aid in 2014 may not have ended up helping the poor.

William Easterly, "Can Foreign Aid Buy Growth?"
William Easterly, “Can Foreign Aid Buy Growth?”. Source.

Deaton and other economists argued that it had to do with how foreign money changed the relationship between a government and its people.

Think of it this way: In order to have the funding to run a country, a government needs to collect taxes from its people. Since the people ultimately hold the purse strings, they have a certain amount of control over their government. If leaders don’t deliver the basic services they promise, the people have the power to cut them off.

Deaton argued that foreign aid can weaken this relationship, leaving a government less accountable to its people, the congress or parliament, and the courts.

So in the long run, accountability and good government are more important than money.

Some might argue for bypassing corrupt governments altogether and distributing food or funding directly among the people. Deaton acknowledges that, in some cases, this might be worth it to save lives. But one problem with this approach is that it’s difficult: To get to the powerless, you often have to go through the powerful. Another issue, is that it undermines what people in developing countries need most — “an effective government that works with them for today and tomorrow.”

hat-tip Matthew