President George W. Bush and Irish rocker and Live Aid promoter Bob Geldof seem an unlikely pair. Yet Geldof has praised Mr. Bush for his compassionate commitment to the people of Africa and his pledge of increased aid, saying he “has done more than any other president so far,” and without any self-serving motivation. This creates a cognitive dissonance for many on the left who tend to think they have a monopoly on compassion and care for the poor.
Bush and Geldof are not as dissimilar as some imagine. Both care deeply for the plight of those in Africa and want to see them lead lives that are more in accord with their worth as human beings.
Unfortunately, the battle often seems to rage over who has the purer intentions instead of whether the policies actually accomplish what they are supposed to. Bush and Geldof both are well intentioned—but good intentions don’t necessarily make good solutions. Exasperated by the plight of the poor, Geldof once said, “Do something, even if it doesn’t work.” That sounds inspiring, but Geldof seems to forget that doing something might not merely fail to fix a problem. It might make the problem worse.
President Bush said in Benin that aid money comes “with great compassion from the American people…We care when we see suffering. We believe we’re all children of God.” He is absolutely right. We are all children of God and such poverty demands a response. But is more aid the right one? For 50 years wealthy countries have given billions in aid to African governments, and while it has done some good, it has also done considerable harm.
Aid can actually subsidize corrupt governments while diminishing incentives for reform. If a government has a choice between, say, building new roads or funding an army, domestic political pressure may require the government to improve infrastructure. However, if aid arrives for the roads, the government can now use the money allocated for the roads to fund the army which it can use to oppress political opposition or wage war on a neighbor. Economists such as Lord Peter Bauer, Thomas Sowell, and William Easterly have documented the deleterious and corrupting effects of aid on recipient countries. Yet this is often ignored because aid agencies have incentives to keep themselves in business, and because their culture is too often focused on being compassionate rather than on addressing the real problems.
If we really want to help the poor, it is time to mix our good intentions with economic realities and start focusing on the causes of wealth. To his credit Mr. Bush has tried to move in this direction with his Millennium Challenge Account, incentives to reduce corruption, and support of free trade agreements—this time with Rwanda. He is trying to not just to give aid, but spur investment as well, something perhaps not fully appreciated by many on the left but welcomed heartily by Africans.
As James Munyaneza reports in Rwanda’s The New Times: Rwandans are enthusiastic about the possibility of new investment more than charity. He quotes Claire Akamanzi of Rwanda’s Investment and Export Promotion Agency saying that Americans have come “as philanthropists or social investors, but not as profit-oriented businesspeople. We need more profit-oriented American investors to come in.” Munyaneza also reports that Rwandan officials have “suggested that more capital inflows in developing countries are more rewarding in the long-run than the short-term, often conditional, financial handouts.”
President Bush knows what makes a country prosperous: rule of law, private property, free exchange, transparent governments, enforcement of contracts, and a virtuous citizenry. This is not a magic bullet, but it does create the foundation and institutions that allow for individuals and entrepreneurs to live out their freedoms and create businesses that meet the needs of the poor and create wealth.
I admire both Mr. Geldof and President Bush for their passionate concern and desire to help those less fortunate. It would be nice to see them put even more of their energy into wealth-creating reforms rather than toeing the line of “more aid equals more compassion.”
Having a heart for the poor is deeply important, but so is having a mind for the poor. It is time to move beyond feel-good policies and start pursuing what really works. That is the genuinely charitable thing to do.