Douwe Osinga's Blog: Foreign Aid is Theft

Wednesday, December 22, 2004

I'm all for helping the Third World. In fact, I think that if we could solve global inequality, most of the other problems would disolve too. However, there is something weird with foreign aid given out by governments. You could call it theft. To see what I mean, we'll have to visit quickly what government and taxation is all about.

Why do we tax? Well, there are some things that just make more sense to do collectively that individually. Take building dykes in the Netherlands. If only a few people would spend money on it, everybody else would still profit from not drowning. So it is better to share the costs and taxation seems the only solution so far for that.

In general this should hold true for everything the government does. If things could be handled better by individuals, it doesn't make sense to have the government do it. It just makes things more complicated, plus the government doesn't have much of track record when it comes to do things efficient. If the government taxes you and then goes out to spend it on something useful, that seems nice, but in essence it just means that you are forced to buy this useful service, instead of making up your mind whether you want it or not. For a lot of the stuff the government does, you can argue that it actually hold that these activities need to be done centrally. However, for foreign aid, I don't see it.

Foreign Aid is charity, so using the government to dole it out, just means that you force people to give part of their money to the Third World. Admittedly, it sounds nice, taking from the rich and giving to the poor, the government as Robin Hood, but it doesn't strike as very democractic. Their is no real reason to dole out aid centrally; actually it seems that governments in general are pretty bad at it and tend to give aid with strings attached. Why can't the people just give the money directly?

Ah, because they don't want to and probably won't. But if that is the case, why should the government in a democratic regime give when the people really don't want to?