How Help Hurts

This article from the August 18, 2007 New York Times describes what isn't exactly news; that certain types of well-intentioned aid can actually hurt the Third World:

MALELA, Kenya — CARE, one of the world’s biggest charities, is walking away from some $45 million a year in federal financing, saying American food aid is not only plagued with inefficiencies, but also may hurt some of the very poor people it aims to help.

CARE’s decision is focused on the practice of selling tons of often heavily subsidized American farm products in African countries that in some cases, it says, compete with the crops of struggling local farmers.
The charity says it will phase out its use of the practice by 2009. But it has already deeply divided the world of food aid and has spurred growing criticism of the practice as Congress considers a new farm bill.
“If someone wants to help you, they shouldn’t do it by destroying the very thing that they’re trying to promote,” said George Odo, a CARE official who grew disillusioned with the practice while supervising the sale of American wheat and vegetable oil in Nairobi, Kenya’s capital.
Under the system, the United States government buys the goods from American agribusinesses, ships them overseas, mostly on American-flagged carriers, and then donates them to the aid groups as an indirect form of financing. The groups sell the products on the market in poor countries and use the money to finance their antipoverty programs. It amounts to about $180 million a year.

As I said, this isn't exactly news. I think I remember learning something like this in Mr. Richards' Government class in 12th grade. There are certainly times when providing food aid is entirely a positive--for example, during a famine, when the local farmers can't produce enough food to prevent starvation.

On a regular basis, however, it makes a country dependent on that food aid, and discourages local production. Thus, farmers who might have made a living growing food for sale to their countrymen find themselves being undercut by subsidized American wheat.

One of the organizations that defends the practice in the article is World Vision, who I fund. While World Vision does distribute food, they also make efforts to buy food from local producers, and they fund various development activities intended to bolster the local economy. For example, they fund the drilling of wells to provide safe water, and engage in microcapitalism, such as lending money to a family to buy livestock for breeding.

I should have thought of this before, but I do find myself wondering if part of why black Africa is the basket case of the world is because so much European and American guilt about Africa caused us to give too much of this type of destructive aid. (Of course, the thugs in charge of many African countries certainly play a part as well.)