Britain’s Tony Blair is expected to ask President Bush to join him in creating a “Marshall Plan for Africa.” It’s a genuine, generous idea from a decent man—and sadly doomed to failure.
Let’s start with postwar Europe, the original recipient of our largesse. It was nothing like Africa is today. Yes, it was a bombed-out shell, but it still had many factories in more or less operating condition. Most important, it had a human capital base second to none—scientists, engineers, crafts workers, skilled laborers, bankers, business professionals—who were able to lift their nations back to prosperity. It also had governments that worked.
Unfortunately, policy-makers and wonks have short, inaccurate memories. That explains the repeated failure of Marshall Plan-like efforts—from Kennedy’s “Alliance for Progress” in the 1960s to the call for a “Marshall Plan” for the developing world at a 1981 summit in Cancun—to redress Third World poverty.
As for Africa, even massive capital infusions won’t help. Study after study has shown that many factors affect how countries climb out of poverty. They include democratic government, low levels of taxes and corruption, and clear legal protections for the ownership of property and capital. But not aid.
Virtually no evidence exists that aid does much of anything—other than make donors feel good.
Africa is poor because most of its countries are undemocratic, corrupt, lawless and lacking in property rights. Without those things, aid is simply wasted—swallowed whole by corrupt bureaucrats and African warlords.
Not that we haven’t already spent significant sums on the Third World. Going back to World War II, the U.S. has spent $1.2 trillion on foreign aid—with nothing to show for it.
What happened? In the mid-1990s, on the eve of the 50th anniversary celebration of the Marshall Plan, the U.N. looked at how effective U.S. and European aid to the Third World had been. The answer was, to say the least, depressing.
The U.N. found that the 70 countries that received aid were actually worse off than they were in 1980. And 43 of those were worse off than in 1970. It seems that, far from helping, aid can actually hurt nations that receive it—a Band-Aid when radical surgery is needed.