Any number of people would like to improve the lot of the less fortunate; however they also need to know that the money is spent correctly. And to that effect most efforts – both public and private – have failed. Foreign aid has shown to result in not much more than increased consumption by the wealthier people in recipient countries, and very little of that money has reached the intended recipients. And most private efforts see most of the money used to pay bloated salaries of the executives and employees of the charities.
One effort that has been successful is the microloan program. Designed by the mother of Barack Obama, the microloan program gives tiny loans to impoverished farmers so that they could buy equipment that increases their yields on the average by a factor of four. In Bengladesh, Indonesia and Africa, the microloan program has helped millions of people to rise out of abject poverty.
Export-led economic growth has been the most successful poverty reduction program in all of history. In just three decades, it resulted in close to a billion people in China alone rising out of abject poverty. In places that have functional governments and people willing to work, this is the solution to their problems. They have people willing to work and a working government, they can have the global market for their goods.
And what about places that don’t have working governments? If someone wants to improve – either privately or publicly – the lot of the people who are in the worst shape, then the money needs to be earmarked precisely for the intended projects. One needs to say, “Here is money to build wells in these villages. We will keep a strict record of all the expenditures. If a single cent of this money gets misappropriated, we will jail the responsible party.” The corrupt must be dealt with strictly, and this is the case especially with the officials who line their pockets with taxpayer and foreign money while letting their countries go to hell.
It is also important to be strict with private charities and make sure that they don’t waste the money that is given to them. People give in order to help the poor, not in order to enrich the corrupt. The people – both public and private – who take advantage of people’s goodwill to that effect deserve jail time or, at least, exposure. Generosity is a virtue; corruption isn’t. And it’s wrong that people’s generosity be abused to fuel corruption in either public or private entities.
Can there be effective public and private charity efforts? I believe that there can be; but they have to be properly managed. The money needs to go to where it is intended to go, and strict enforcement mechanisms to that effect must be put into place. An African big man is not a worthy target of charity, and neither are charity executives. It is the poor people that need the money, and it is the poor people that need to get it. And that means, strict enforcement mechanisms to that effect.
Only when this is done will people again be willing to support public and private foreign aid.