Capitalism has brought more people out of poverty than aid, says ANDREW MACLEOD
THE SEXUAL abuse crisis has cracked the facade of goodness in the aid industry. When we look behind that facade we find even more uncomfortable questions, such as: “Does aid work?”
While we all hope and assume that the work of Oxfam, Save The Children and the United Nations has been efficient, evidence to prove that is hard to find.
With the hope we all invest in aid, through donations and taxes, we could perhaps turn a blind eye to the negatives if there was evidence that we were actually pulling people out of poverty in an effective way. But there is not.
One of the challenges is that many people in the not-for-profit industry, including charities and the UN, are there because they are ideologically opposed to profit.
Yet historically it is the capitalist system, when regulated, that has brought more people out of poverty than anything in history.
Unregulated capitalism causes harm.
They go out of business.
When the aid workers leave there are no more free things but no more shop either, so where do people get their goods? They can’t.
So there is a problem and aid workers will return saying: “Oh dear! There is a famine.”
But perhaps the problem was caused by the aid industry itself.
Hence, this sex scandal, where Oxfam workers were found to be hiring prostitutes in Haiti, is forcing us to ask a bigger question.
Does aid work? For too long aid has been held to account by process.
By that we mean this: we see a charity build a school. Or a well. Or provide health.
As if health, education and water were an outcome. They’re not.
hey are process indicators by which we can boost people’s ability to break the poverty cycle.
But how do you break the cycle? You do so with a well-paid and well-regulated job. The outcome is employment. The process is health, education and water.
Around 50 per cent of capital from OECD to non-OECD economies flows through the private sector and 30 per cent through overseas workers sending money home, essentially the private sector.
Only 17 per cent flows through aid and philanthropy.
So when celebrities run around saying “The only way to bring the world out of poverty is to double foreign aid”, we’ve got to question whether that’s true.
Foreign aid is the smallest pot and perhaps not the best spent either.
Aid should create a regulated capitalist system so people can get jobs.
How do you create longterm employment without private sector investment? You can’t.
Maybe this sex scandal, in cracking the facade of goodness, makes us see that what we are doing doesn’t work in the long term.
But this is not a chance to cut aid.
The aid world can help create the environment for this.
Its role could be to create the regulatory environment to allow investment income from the private sector to create well-regulated jobs and thus end poverty.
If I could reinvent the whole aid world this is what I would do.
Look at Rwanda. In 1994 it was the world’s worst country.
We still think of it for the genocide but things have changed over the past 20 years.
Rwanda liberated the exchange rate mechanism, allowed repatriation of profit and introduced zero tolerance for corruption and enforceability of contracts.
It created a climate of certainty, so private sector capital flows, businesses are created, jobs come and more people are pulled out of poverty.
The problem is that the not-for-profit movement will find it hard to accept that one of their key performance indicators should be to make a profit-making company more profitable.
Andrew MacLeod, visiting professor of war and security studies at King’s College London, is former chief of operations at the United Nations Emergency Co-ordination Centre in Pakistan.
The UK gives aid to China, Pakistan and India all can afford theri own space industries. so why do we give aid? We give aid to countries that are enemies of the UK like Palistine and North Korea. Aid is used by dictators to buy militias who then cause more chaos to get more aid. These militias rob the food convoys and sell food on the black market. This food devalues the local farmers crops and the farmers in these lands given aid go out of business. The dictator like Mugabe get aid which they spend on themselfs buying luxury cars. Even Yassar Arafats wife lived in Paris on aid money received.
Aid is not the answer – education is. If we must give aid we should send out prefabs for locals to build into homes -creatign jobs in the Uk and in targetted country. We should send out livestock like chickens, rabbits, cows all could help poor people with food and get them out of poverty.
The aid industry is a big joke. UK people need beter NHS and soem people in Uk are staving. Aid money is borrowed from International banks incresing the UK’s debt yet we can’t afford this debt. We have a debt in trillions of pounds growing every minute.
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