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Foreign Aid Forever?

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Tags Bureaucracy and RegulationTaxes and Spending

04/30/2018

[Newsweek column from May 16, 1955, and reprinted in Business Tides: The Newsweek Era of Henry Hazlitt.]

Once a government bureaucracy has been set up to do any job whatever, it will find endless excuses for expanding, prolonging, or perpetuating that job. This is the sad history of our postwar foreign aid.

Originally urged by Secretary Marshall in 1947, to meet what was then regarded as a temporary emergency situation, foreign aid has gone on and on, from year to year, constantly changing its stated purposes, constantly changing its name, but showing not the slightest tendency to terminate or even taper off. It may come as a jolt to some readers to discover that the President is actually recommending an increase in the amount to be spent in the next fiscal year even over the amount being spent in the current fiscal year. He wants foreign aid to rise from $4.3 billion in 1955 to $4.7 billion in 1956. Worse than this, far from even suggesting a tapering off, the President in his letter to Secretary Dulles of April 16 made it clear that he thought foreign giveaway should be a “continuing” program under “a permanent government establishment.”

The President’s April 20 message to Congress on foreign aid gives the perfunctory and mainly rhetorical arguments for it that we have been hearing for the last nine years. The message raises a hundred doubts about details. I can mention only one or two.

It is a program for scattering the taxpayers’ money over nearly the whole world — practically to every country outside of the Iron Curtain. To a few countries, in the world as it is today, continuance of military aid is unavoidable. This now applies most notably to Formosa and Korea. The President’s message makes out a less obvious but still persuasive case for aid to Iran, Greece, and Turkey. But having mentioned these specific countries, he suddenly plunges into the wholesale and unsupported generality that it is the duty of the American taxpayer “to promote welfare and growth for the peoples of Africa.” Next we find that it has become somehow our duty to shower money all over Latin America. Where a “critical situation” exists, as in Guatemala or Bolivia, we must toss in still more. Then we must continue to give to Yugoslavia and India, though there is not the slightest assurance that these countries will be on our side when the chips are down.

This is dangerous business. To scatter aid all around the globe is not only inexcusably wasteful, but its effect must be to reduce the aid we can give, for example, to Formosa, where it is urgently needed. The argument for such indiscriminate largess seems to be that having given aid to countries A, B, and C, we must give it to D, E, and F to prevent resentment.

The President’s foreign-aid program still allots substantial funds for “economic” aid, Truman’s Point Four, and all the rest. We are told that “three out of every four dollars” in our foreign giveaway program “will be immediately spent within the United States.” This is like trying to appeal to the self-interest of an automobile dealer by telling him that if he makes you a gift of $4,000, you will use $3,000 of it to buy one of his cars. Yet an “economic” argument that would be rejected as ridiculous if made to a private business firm can be solemnly made to a nation.

Again, the President tells us that we cannot be secure in our freedom unless, elsewhere in the world, we destroy “the conditions under which totalitarianism grows—poverty, illiteracy, hunger, and disease.” Are these really the reasons for Communism — or any other form of totalitarianism? Germany went Nazi with less poverty, illiteracy, hunger, or disease than any country outside the United States.

It is ironic, in the light of our foreign-aid program, to compare the budgets of the United States and Great Britain. In its last fiscal year Britain had a surplus of $1.2 billion; the U.S. will have a deficit of more than $4 billion. In the fiscal year ahead Britain plans a surplus of $414 million; we plan a deficit of $2.4 billion. Yet the country that had the surplus got $120 million of aid last year from the country that had the deficit. And we think it was Alice who lived in Wonderland!

Henry Hazlitt (1894-1993) was a well-known journalist who wrote on economic affairs for the New York Times, the Wall Street Journal, and Newsweek, among many other publications. He is perhaps best known as the author of the classic, Economics in One Lesson (1946).

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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