THE MILLENNIUM CHALLENGE ACCOUNT:
SOCIALISM & FOREIGN AID
By Dr. Ron Paul
I believe that the Millennium Challenge Account (MCA) may be one of the worst foreign policy blunders yet – and among the most costly. It is advertised as a whole new kind of foreign aid – apparently, an honest admission that the old system of foreign aid does not work. But, rather than get rid of the old, bad system of foreign aid in favor of this "new and improved" system, we are keeping both systems and thereby doubling our foreign aid. I guess it is easy to be generous with other people's money. In reality, this "new and improved" method of sending U.S. taxpayer dollars overseas will likely work no better than the old system, and may, in fact, do more damage to the countries that it purports to help.
We have been told that somewhere between 12 and 16 countries have met the following criteria for inclusion in the program: "ruling justly, investing in people, and pursuing sound economic policies."
It is a good idea to pay close attention to these criteria, as they tell the real tale of this new program. First, what does "investing in people" mean? It is probably safe to assume that "investing in people" does not mean keeping taxes low and government interference to a minimum so that individuals can create wealth through private economic activity. So, in short, this program will reward Statist and Socialist-style governance.
In fact, this program will do much more harm than good.
MCA will hurt recipient country economies. Sending U.S. aid money into countries that are pursuing sound economic policies will not help these economies. On the contrary, an external infusion of money to governments meeting the economic criteria will actually obscure areas where an economy is inefficient and unproductive. This assistance will slow down necessary reform by providing a hidden subsidy to unproductive sectors of the economy. In the long term, we thus do no favors for the recipient country with this harmful approach.
MCA is a waste of taxpayer money. Countries that pursue sound economic policies will find that international financial markets provide many times the investment capital necessary for economic growth. MCA funds will not even be a drop in the bucket, compared to what private capital can bring to bear in an economy with promise and potential. And this capital will be invested according to sound investment strategies – designed to make a profit – rather than allocated according to the whim of government bureaucrats.
MCA is corporate welfare for politically-connected U.S. firms. These companies will directly benefit from this purported aid to foreign countries, as the money collected from U.S. taxpayers can, under the program, be transferred directly to U.S. companies to complete programs in the recipient countries. As bad as it is for U.S. tax dollars to be sent overseas to help poor countries, what is worse is for it to be sent abroad to help rich and politically-connected U.S. and multi-national companies.
MCA encourages socialism and statism. Because it is entirely geared toward foreign governments, it will force economically devastating "public-private partnerships" in developing nations -- that is, create a situation in which the private sector of a country's economy will have to be in partnership with the government, if the private sector is to see any of the money. There should be no doubt that the foreign governments will place additional requirements on the private firms in order to qualify for funding. Who knows how much of this money will be wasted on those companies with the best political connections to the foreign governments in power. The MCA invites political corruption by creating a slush fund under the control of foreign governments.
MCA encourages a Socialist approach to health care in recipient countries. In rewarding a top-down government-controlled approach to health care, the program ignores the fact that this model has failed miserably wherever it has been applied. Ask anyone in the former Communist countries how they liked their government healthcare system.
Though the Millennium Challenge Account is advertised as a brand new approach to foreign aid – foreign aid that really works – it is, in fact, expensive and counter-productive, and will be very unlikely to effect real change in the countries it purports to help. The wisest approach to international economic development is for the United States of America to lead by example, to re-embrace the kind of economic policies that led us to become wealthy in the first place. This means less government, less taxation, more economic freedom, and rejection of Statism and Socialism. Demonstrating the effectiveness of limited government and the free market economy in creating wealth would be the greatest gift we could send overseas.
Dr. Ron Paul is a Republican member of the United States House of Representatives, elected from and representing the Fourteenth
Congressional District of Texas. Congressman Paul is considered to be one of America's leading spokesmen for constitutional
government, the rule of law, liberty under law, the private enterprise system,, free market economics, sound monetary policy, and
fiscal restraint on the part of the U.S. national government.
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