Some Fallacies of Foreign Aid

Mr. Chamberlin is the well-known author, lec­turer, and contributor to the Wall Street Jour­nal and many nationally known magazines. His most recent book, The Evolution of a Conservative, (Chicago: Henry Regnery Co.) was reviewed in THE FREEMAN, June 1959.

Spring is open season on the hard-pressed American taxpayer for that annual raid that goes by the name of foreign aid. (The pre­ferred official characterization is "mutual security.") The pattern of this raid is familiar. The Ad­ministration sets a figure (in this year a little short of $4 billion) and protests that the most disas­trous consequences will follow if a penny less is appropriated.

On behalf of its program, it mobilizes the big guns of the State Department, the Pentagon, and other government departments and agencies. Congress—well aware of the widespread unpopu­larity of this program among con­stituents—listens a little skepti­cally, prunes a little here, clips this or that item, but ends by voting most of what has been requested. What has not been challenged as vigorously and effectively as it should be (although the Citizens Foreign Aid Committee has made a promising beginning in this di­rection) is a set of dogmatic as­sumptions which are supposed to justify lavish hand-outs to foreign governments. Among these as­sumptions are:

·   That foreign aid saves foreign nations from "going communist."

·   That it increases American se­curity, prestige, and popularity.

·   That it promotes international trade and prosperity and world peace.

These assumptions overlook cer­tain grave disadvantages, both to givers and recipients, which seri­ously undermine the effectiveness of government-to-government sub­sidies. They also do not stand up to the test of practical experience.

The dispensing of foreign aid in the shape of money and materials given freely to foreign govern­ments has become a major bureau­cratic enterprise. It employed 450 people in 1948. Ten years and $41 billion later this staff had grown to 12,000 directing 2,000 projects. In addition, some 9,000 persons are engaged in supervising the mili­tary assistance program, which has amounted to $23 billion.

Poor Plans Poorly Executed

There is an obvious yawning gap between the qualities neces­sary for successful administration of aid projects—often in countries which, in history, language, and customs, are extremely unfamiliar to most Americans—and the avail­able personnel. An advisory group, headed by William H. Draper, Jr., former Undersecretary of the Army, which came out with a strong endorsement of foreign aid, and which was probably selected because most of its members are known to favor the idea, made this significant admission:

"We have not developed the well-trained corps of personnel required to carry out such a far-flung pro­gram with absolute efficiency. Some projects have been imper­fectly conceived, inadequately planned, and poorly executed."

This seems to err considerably on the side of understatement. The defects pilloried in the novel, The Ugly American, were drawn from the life of American foreign missions, not made up in the au­thors’ imagination. Among these defects are insensitiveness and ig­norance in regard to local manners and customs, aloofness from the life of the people among whom the work is being carried out, and a tendency to live in self-created American ghettos as closely mod­eled on Peoria, Dubuque, and other American towns as possible. There are just not enough quali­fied people to go around for the efficient operation of a giveaway program in the neighborhood of $4 billion a year.

What can happen to your tax money and mine when administra­tion is loose and slipshod is evi­dent from this excerpt from the report of the House Committee on Government Operations about aid to Iran:

"United States aid and technical assistance programs in Iran which, between 1951 and 1956, totaled a quarter billion dollars, were ad­ministered in a loose, slipshod, and unbusiness-like manner …It is now impossible—with any accuracy—to tell what became of these funds."

Another example of "down the drain with the taxpayers’ money" was the financing of an ultimately unsuccessful French colonial war in Indo-China to the tune of $745 million. After the military disaster at Dien Bien Phu, the French threw up the sponge and Indo-China was partitioned between a communist-ruled North and an anticommunist South. Only some $95 million of the $745 million was ever recovered.

The scandal about corrupt mis­use of overlavish aid to the primi­tive state of Laos, adjoining Indo-China, is notorious, although the International Cooperation Admin­istration was not very cooperative in furnishing congressional inves­tigators with detailed information on the subject.

Even when no direct wrongdoing or culpable negligence is involved, there are serious psychological roadblocks in the way of effective American remolding of the econo­mies, social customs, and daily lives of Oriental peoples. The mis­sionary spirit, when it is a matter of unselfish individual dedication to a religious, educational, or phil­anthropic cause, is a fine element in the American heritage. But the missionary spirit, bureaucratized and supported by large appropria­tions of public funds, is something else again. Here is an excerpt from a recent report of Vermont C. Royster, editor of the Wall Street Journal, on a recent visit to Thai­land, perhaps still better known as Siam:

"Consider that here is a country which, for all that it may be back­ward by American standards, has managed to get along for a thou­sand years without United States dollar aid or United States aid ad­visers. Its people are proud of their independence, their tradition, their own way of life, and are probably as successful in the pursuit of happiness as any people can be.

"Yet here come the Americans with a program which, when you look at it, would remake the coun­try from one end to the other, from top to bottom. There is no area of Siamese life—schools, farms, business, language, homes, government, customs—left un­touched in some fashion by the United States aid program.

"No one, be he a visitor here among the ancient temples and palaces or a stay-at-home reading about it, need be surprised that a program so conceived rubs many Siamese the wrong way. Certainly, the evidence of it is not hard to find.. . .

"One friendly Siamese, with a twinkle in his eye, put it to his American visitor this way: ‘I sup­pose we ought to be glad that you are helping us, but we do wish you wouldn’t help us so hard.’ "

Backfire in Bolivia

The reaction to American lar­gess is sometimes much more neg­ative than this tepid, good-natured criticism. Consider the case of Bo­livia. This land-locked South American country, located on the high Andean plateau, has a long history of economic poverty (much of the population is com­posed of primitive Indians) and political disturbance. In 1952, Bo­livia experienced a left-wing revo­lution and has been in economic hot water ever since, despite United States handouts to the radi­cal regime in power to the amount of $129 million—$43 to every Bolivian.

Two measures of the revolu­tionary government were nationa­lization of the tin mines, principal source of Bolivia‘s wealth, and splitting up the large estates to provide small holdings for the In­dians. Neither has worked well in terms of productivity. There have been continual, sometimes violent, strikes in the tin mines. And the Indian small proprietors, whose wants are few and simple, show a tendency to knock off work as soon as these are satisfied.

The climax was reached in Bo­livia when—because an American weekly magazine published an un­favorable picture of the economic situation and quoted an unidenti­fied American diplomat as jokingly suggesting that Bolivia and its problems should be divided among its neighbors—mobs went on the warpath in La Paz, the capital, and other Bolivian towns. The United States Embassy was stoned. Diplomatic cars were burned. American citizens were evacuated to the suburbs for bet­ter protection. And the Bolivian government, whose members should have known that the United States government is not responsi­ble for comment in American pub­lications, filed formal protests with the State Department.

Questionable Diplomacy

This is not the first case when violent anti-American demonstra­tions have followed large Ameri­can subsidies. Part of the fault, one suspects, may rest with the new-fangled timid pussyfooting reaction to such outrages. There was a time when stiff diplomatic action would have followed the desecration of the American flag, attacks by lawless mobs on Ameri­can official representatives and American official buildings. Now, all too often, the reaction is a ner­vous self-questioning as to wheth­er our foreign aid program to the offending country was big enough, whether we should not think out some new handouts. That is not the road to friendship and respect.

A pointed comment on the dis­mal failure of our Bolivian policy is to be found in a letter published in Time by Roger A. Freeman, who was fiscal adviser to the Bo­livian government on a special United States mission in 1956-57:

"I returned with the conviction that a continuation of United States aid policies would lead to further economic and social dete­rioration and disaster…. The real power is in the hands of the armed and communist-led mine workers unions who will not permit the steps necessary to economic re­covery. United States aid policy has, for the past six years, been strengthening their hand."

Bribing the Beggar

Whatever may be the answer to Bolivia‘s economic and social prob­lems, lavish American aid has ac­complished rather less than noth­ing. It has not improved American prestige or popularity, rather the reverse. And it has not brought political or economic stabilization to Bolivia.

If the United States did not ex­ist or was not committed by its government to expensive, far-reaching, and indefinite programs of subsidizing the economies of foreign lands, there is no reason to assume that underdeveloped coun­tries would vanish from the map, cease to exist, or "go communist." They might very well be in a stronger and healthier position if they were obliged to face their problems realistically, without the constant hope that America would bail them out of all their diffi­culties.

A distinctly negative by-product of the too easy assumption that a plentiful transfusion of dollars is an easy way to check the spread of communism is the temptation to try to exert blackmail. This occurs when the representative of Back­ward area lets it be known—with more or less subtlety—that, unless his government receives a gener­ous handout from the United States Treasury, said government will turn to Moscow. A nation whose rulers are cynically pre­pared to sell out to the highest bidder is not worth buying, if only because there can be no assurance that it will stay bought.

Gives a Wrong Impression

An incident that occurred in the spring of 1958 shows the dangers and pitfalls of undiscriminating handouts. A representative of the small country of Lebanon, which had already received $38 million in economic help, along with some military aid, announced that this was not good enough. The United States must provide $170 million in the next six years—or else. In the event that Uncle Sam did not sign on the dotted line, Lebanon would deliver a truly crushing blow. It would refuse American aid altogether!

Something must have gone astray with our diplomacy when a foreign government can get the idea that it is conferring a favor by accepting the largess of the American taxpayer. One wishes we had more diplomats like the repre­sentative of a private business firm who, when questioned by re­porters in a Near Eastern country as to why the United States was not giving some additional re­quested aid, gave in substance the following friendly but frank reply:

"Do you really understand who is paying for this foreign aid? It isn’t the American government, which you think of as being so in­credibly rich that a few hundred million dollars makes no differ­ence. It is average American citi­zens like my son and my son-in-law, whose families can’t have meat every day, who must scrimp and save in many ways in order to meet the taxes which are the source of the aid."

The businessman reports that his remarks produced a sobering impression. And the Austrian gov­ernment, which, like other Euro­pean countries, has long been in a position to stand on its own feet, acknowledged in the dedication of a report on the Marshall Plan aid its indebtedness to the American taxpayer. Too often, however, it is assumed that money grows on trees in the United States; and this attitude in foreign countries is encouraged by the more reck­less advocates of unlimited foreign aid among our politicians and pub­licists.

Constructive Suggestions

It is a good thing that the advo­cates of foreign aid no longer have the field to themselves, that organi­zations like the Citizens Foreign Aid Committee are bringing to at­tention the argument against this substantial item in the national budget. The principal concrete suggestions of this organization are as follows:

·       That our traditional generous private charity and governmental grants to relieve disaster be con­tinued.

·       That in countries which we are morally obligated to defend and which are directly threatened by Red aggression military assist­ance—for the time being—should be continued, but on a realistic basis.

·       That until foreign aid is terminated, the Congress take steps properly to exercise close supervision and control over the manner in which all foreign aid funds are being spent.

·       That the $3.9 billion requested by the President for the fiscal year 1960 be reduced $2 billion, and that each year thereafter foreign aid be substantially reduced until terminated within three years. Foreign aid is no adequate sub­stitute for self-help. A nation, like an individual, stands straightest when it stands on its own feet.

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