“20 Ways to Giveaway” is the title of Henry Hazlitt’s Newsweek column from September 15, 1958. While US government bribes to corrupt foreign officials, so called foreign aid, has greatly diminished in real dollar terms since Hazlitt’s day, it still continues. Hazlitt points out that such welfare does not help recipient nations and is an affront to the hapless American tax payer. How such a scam can continue for decades says a lot about the nature of the modern nation state.
‘Administration policy is difficult to follow. On Aug.
27, President Eisenhower told reporters that he would
campaign for a Republican Congress this fall on the
issue of “getting down these deficits and keeping our
money sound.” On the same day he deplored the cut by
Congress in foreign-aid spending as “my greatest disappointment.”
On the day after that, the Administration
announced it would participate in a $350 million aid
plan to keep India’s grandiose socialistic development
program afloat. And on the day before that, in
an exchange of letters with Secretary Anderson, the
President had urged a still further addition to an expansion
of government agencies devoted to pouring U.S.
taxpayers’ money into foreign countries.
There is already a bewildering maze of agencies
for this purpose. There is the World Bank, the
International Monetary Fund, the International
Finance Corporation, the U.S. Export-Import Bank,
the Development Loan Fund, the Agricultural Trade
Development and Assistance Act. Now the Secretary
and President propose to set up still another agency, an
International Development Association, to make “loans”
so soft and dubious that even the existing government
agencies are forbidden to make them. In addition, larger
U.S. Government guarantees are to’ be made to the
World Bank and still more money is to be poured into
the International Monetary Fund.
All Piled on Top
The proposal to expand the facilities of the Bank and
the Fund might have something to be said for it, as
a transitional measure, if it were meant to replace our
foreign-aid program. But there is not the faintest suggestion
of such a replacement; all these new schemes
are to be piled on top of existing foreign aid. And that
foreign aid—which in all forms has already run to more
than $60 billion since the end of the second world war—
is presumably to be itself enlarged and perpetuated.
What is the purpose of all this aid? Does experience
show that the aid has helped to accomplish its purpose?
The President’s letter declares that two of the purposes
are to encourage “financial policies that will command
the confidence of the public, and assure the strength of
currencies” and “to avoid hampering restrictions on the
freedom of exchange transactions.”
We have now had these institutions and foreign
aid for more than a decade. The public never had less
confidence in the financial policies of governments. If
this were not so, governments could borrow all they
really needed from private sources. Inflation is still rampant
everywhere. The war that gets the blame ended
more than a decade ago. Latin America, where some
of the worst inflations are still going on, was relatively
untouched by the war. Restrictions on the freedom of
exchange transactions were never more widespread.
They are all but universal. They are built into the very
concept of the International Fund.
The truth is that not only have the Fund and foreign
aid done nothing to cure this condition; it exists largely
because of the Fund and foreign aid. If the restrictionist,
spendthrift, and socialistic governments of the world
did not know that these guardian angels were standing
by to rescue them from the results of their own folly,
if they knew that there would be nobody to go to but
hardheaded private lenders with a prejudice in favor of
getting their money back, or of getting solid guarantees,
they would long ago have been forced to return to the
path of fiscal sanity. In brief, dramatic “rescues” effected
by the Fund and our own foreign aid have encouraged
the very socialistic planning and fiscal irresponsibility
that have made the rescues necessary.
Instead of adding further to our foreign-aid and
intergovernment lending institutions, which subsidize
foreign socialism, inflation, and exchange control, we
should be thinking of how to taper off and terminate
such programs; how to stop confusing political with
economic goals, and how to return the business of foreign
investment to private hands. Not until we have
done this will the world get back to stable, hard, and
convertible currencies, to private enterprise, and to real