NCPA - National Center for Policy Analysis


June 17, 2005

Britain's Tony Blair will ask President Bush to join him in creating a "Marshall Plan for Africa." While his proposal is a genuine and generous idea, it is doomed to fail, says Investor's Business Daily (IBD).

The real Marshall Plan lifted post-World War II Europe back to prosperity. Ever since, the idea has been if a country's economy is suffering, all you need to do is sprinkle a little cash over it and it will grow, says IBD. However, postwar Europe was nothing like Third World countries today.

In the mid-1990s, on the eve of the 50th anniversary celebration of the Marshall Plan, the United Nations looked at how effective United States and European aid to Third World had been. The answer was, to say the least, depressing:

  • Since World War II, the United States has spent $1.2 trillion on foreign aid.
  • Of the 70 countries that received aid, all were actually worse off than they were in 1980.
  • Of those 70 countries, 43 were worse off than in 1970.

Study after study shows that many factors affect how countries climb out of poverty, including democratic government, property rights and low levels of taxes and corruption. But not aid. Aid can actually hurt nations that receive it -- a Band-Aid when radical surgery is needed, says IBD.

And Africa is no exception. Without those ingredients, aid is simply wasted -- swallowed whole by corrupt bureaucrats and warlords.

Yet Tony Blair still suggests spending $25 billion in aid, seven times what we will spend this year and 25 times what we spent in the last year of the Clinton administration. President Bush already has his foreign aid policy about right. He targets aid to specific purposes, like his $15 billion AIDS initiative for Africa, and to countries genuinely pursing reforms, says IBD.

Source: Editorial, "Marshalling Africa," Investor?s Business Daily, June 7, 2005.


Browse more articles on Tax and Spending Issues