Friday 27 November 2020

Foreign aid harms both Britain and those who receive it


There are two reasons for cutting foreign aid and indeed abolishing it entirely. The first is that we cannot afford it. The second is that it harms those who receive it.

Since David Cameron came to power there in 2010, there has been no austerity at all in Britain. Public spending in Britain has increased in every year since 2010 and has increased massively this year due to Lockdown and furlough.

Britain has run a deficit every year since 2010 and has very rarely indeed actually earned more than we spent in the past decades. This year the Government is predicted to spend £350 Billion more than we earn or 17% of GDP. Economically it is as if we are fighting a war. Our only good fortune is that our towns and cities have not been bombed flat.

 Britain’s National Debt has increased steeply since the financial crisis in 2008. On some measures it is now over 100% of GDP. The total of what we have borrowed is more than we earn. We owe more than two trillion pounds or two thousand billion. It amounts to a debt of more than £30,000 for every man woman and child in the UK.

These numbers are very hard to understand or conceptualise, but they have real world consequences. The interest we pay on the debt is money we cannot spend on something else. Recently Britain has spent £48 Billion on interest payments alone which is four percent of GDP. The budget for Scotland is £49 billion.

Imagine if there was a family in your street that had gone on a spending spree. It owed more than it earned and not only that it spent more than it earned so that every year what it owed the bank increased. But this year half of the family have been made unemployed and expenditure has increased massively. Such a family would not be expected to send foreign aid, rather it might hope to get aid from someone else.

Foreign aid is something that we can only afford when all our debts have been paid and we are making a profit. When we are in debt and spend more than we earn foreign aid merely makes British people poorer.

Britain’s first task is to live within our means. We must earn more than we spend. The second task is to gradually pay back the debt and then never let it rise so far again.

Why are some countries rich while other countries are poor? Some countries have access to natural resources. In the short term these may make a country rich. But many rich countries like Switzerland have few obvious geographical or natural advantages. What makes such countries rich is free market economics.

 If you provide people with democracy, security and the rule of law and otherwise leave them alone, they will naturally make things and grow things that other people want and they will become prosperous.  The only thing that will hinder this prosperity is bureaucratic intervention.  

Free trade will make everyone rich so long as Governments decide not to be protectionist. People will naturally work hard so long as they are working for themselves, but will prefer to do nothing if a Government raises taxes to the point that it is pointless to work, or if they can live comfortably on benefits that the Government decides to pay them.

In Britain a proportion of the population is economically unproductive, not because they are incapable of earning a living, but because they have lost all sense of working for themselves and prefer to live on benefits rather than improve their situation for themselves.

The more you increase benefits in cash or benefits in kind (free school meals, free tampons etc) the more you discourage people from doing what they would do naturally if you hadn’t intervened. You encourage idleness.

In a perfect free market situation, for example the Oregon in the 19th century, everyone worked because there were no benefits. If someone got sick the neighbours helped, just as they looked after the elderly. It was this that made such places prosperous. Not Government. If instead some foreign power had supplied these people with aid, they would not have struggled to build their log cabins, clear their land and create prosperity out of a wilderness. Instead they would have waited for the aid to arrive each year and they would have remained poor.

People are the same all over the world. No one person is better than any other person. We all respond to free market economics in the same way. If you pay people to do nothing, they will do nothing, because it is easier than working. If you give people aid, they will rely on it rather than create prosperity for themselves.

The best thing Britain can do for poor places in the world is to leave them alone. If there is a natural disaster somewhere, we might reasonably provide short term help, but otherwise we are doing people no favours at all by giving them money we cannot afford to send them. All we are doing is creating welfare dependency.

People in the poorer parts of the world are perfectly capable of becoming just as wealthy as we are. The only thing we should give them is free trade. That way with their own ingenuity and hard work they will naturally grow or make things that they can sell to us in exchange for things we can sell them.  

The task not merely for Britain but for everywhere else is to lower public spending as much as possible, not merely because public spending increases our deficit and our debt, but because it incentivises us to rely on the Government rather than on ourselves. It acts against the natural laws of supply and demand, interferes with how free markets work and makes us poorer.

Foreign aid is simply another form of socialism. Whenever people demand free this or free that, they are asking for the Government to pay rather than earn the money to pay for the goods themselves. But it is just this that keeps people from working hard. It is just this that make them poor.

We are not going to create a world like Oregon in the 1840s. No one in Europe intends to abolish public spending. But the higher we raise public spending the more we become like socialist countries and the poorer we will get. Communism made prosperous farmland barren in Eastern Europe. People didn’t care a damn for their free houses and were uninterested in tilling land owned by someone else. They did the minimum.

Cutting foreign aid will not merely make Britain more prosperous it will make the recipients more prosperous too. The last thing they need is aid, because it is the equivalent of giving them poverty.