The late Peter (Lord) Bauer, a Hungarian-born economist who lived for much of his life in the UK, did outstanding work in demonstrating why markets and trade are superior to overseas aid, and pointed out how aid, and the organisations that often get involved in delivering it, frequently make problems of poverty worse, not better. Even aid advocates like Sir Bob Geldof will readily concede, meanwhile, that aid delivery becomes next to impossible during conditions of war, and when countries are under the rule of armed thugs. So last night’s Channel 4 programme on Somalia will have surprised few regulars at this blog.
What was interesting was how local traders were allegedly bribing some aid officials to take sacks of food and then sell it into the market. We were meant to be appalled by this, and part of me was. But also I also could not ignore the fact that this part of Africa seems to be buzzing with a sort of entrepreneurial class of men – one did not see many women – who trade in, and take great efforts to obtain, food and other stuff. That surely suggests that a market, of sorts, works in this part of the world. But what clearly does not work is the rule of law, or the enforcement of property rights. Without due protection for the latter, in particular, then the indestructible desire to “truck and barter” can all too easily degrade into a form of banditry. But let’s be clear here: while one can be nauseated at foreign aid being filched by some of the locals, that desire to trade is not, in itself, the problem. It is, in fact, part of the solution to the poverty of Africa.
Meanwhile, I strongly recommend William Easterly’s book on foreign aid and the mistakes that well-intentioned folk make about aid.