Did the Nobel Prize Committee nod and inadvertently give the economics prize to an economist who says about foreign aid what conservatives have been saying for years?
Conservatives have long been arguing that foreign aid, like domestic welfare programs, sometimes actually harms those such aid is supposed to help.
Now, the newest Nobel laureate in economics is saying the same thing.
Hot Air, which had an excellent blog by Ed Morrissey on this subject, quotes from a Washington Post story (subscription required) on Angus Deaton, who just won the Nobel for economics:
It sounds kind of crazy to say that foreign aid often hurts, rather than helps, poor people in poor countries. Yet that is what Angus Deaton, the newest winner of the Nobel Prize in economics, has argued.
Deaton, an economist at Princeton University who studied poverty in India and South Africa and spent decades working at the World Bank, won his prize for studying how the poor decide to save or spend money. But his ideas about foreign aid are particularly provocative. Deaton argues that, by trying to help poor people in developing countries, the rich world may actually be corrupting those nations’ governments and slowing their growth. According to Deaton, and the economists who agree with him, much of the $135 billion that the world’s most developed countries spent on official aid in 2014 may not have ended up helping the poor. …
Think of it this way: In order to have the funding to run a country, a government needs to collect taxes from its people. Since the people ultimately hold the purse strings, they have a certain amount of control over their government. If leaders don’t deliver the basic services they promise, the people have the power to cut them off.
Deaton argued that foreign aid can weaken this relationship, leaving a government less accountable to its people, the congress or parliament, and the courts.
The idea that well-meaning Westerners are likely to do harm in developing countries comes as a surprise to the Washington Post reporter, which Hot Air's Ed Morrissey finds odd:
F. A. Hayek wrote about this mechanism in a more general sense in The Road to Serfdom, right down to the kind of people who succeed in an organization lacking any popular accountability. Even those who have of late tried to tackle the enduring poverty of African nations have awoken to the “corrosive” nature of foreign aid; music stars Bono publicly embraced capitalism almost three years ago, calling aid a “stop gap."
Bono hereticaly said, " Commerce [and] entrepreneurial capitalism takes more people out of poverty than aid."
What I am surprised about is that the Nobel committee awarded the prize to Deaton.
Meanwhile, I'd love to hear Bernie Sanders and Hillary Clinton on this.
Maybe at the next debate?