0:02 - Introduction to Foreign Aid
1:11 - Understanding Foreign Aid Motivations
5:38 - The Myth of the Marshall Plan
6:55 - The Absurdity of Aid Distribution
9:50 - The True Nature of Government
17:45 - The Boomerang Effect of Foreign Aid
19:59 - The Illusion of Helping the Poor
27:00 - Conclusion: The Need for Freedom
In this episode, I delve into the complexities and contradictions of foreign aid, a subject that has intrigued and puzzled me for years. Setting the stage with my personal reflections, I share my initial confusions about the motivations behind foreign aid, particularly how it seems disconnected from the realities of political incentives. While welfare programs domestically appear to serve to curry favor with voters, the notion of "buying" votes from people in distant countries like Tanzania is rather baffling. Drawing from my encounters with individuals like a woman who worked for Save the Children, I began to piece together the underlying mechanisms of foreign aid and its paradoxical role in international politics.
I argue that violence—so often mistakenly assumed to accomplish results—never truly works, especially not in foreign policy or humanitarian efforts. This is where I introduce the concept of foreign aid as a misnomer for what it really represents: a sinister blend of political maneuvering and economic exploitation. I reference the classic book, *Confessions of an Economic Hitman*, to illustrate how foreign aid is practiced, not as charity, but as a mechanism to benefit American corporations. These corporations reap the rewards from contracts involving foreign government projects funded by U.S. taxpayers, highlighting how politicians effectively funnel public money back into the pockets of private firms while simultaneously increasing their own power and influence.
Throughout our discussion, I unpack the notion of the Marshall Plan, a commonly cited example that supposedly epitomizes the notion of rebuilding after destruction. However, I dismantle this myth by emphasizing that the money allocated post-World War II largely benefited American companies rather than the intended nations, raising questions about accountability and effective resource allocation. By using Tanzania as a case study, I illustrate how the cycle of dependency is perpetuated through foreign aid, leading to the enrichment of corrupt governments while the people remain impoverished.
The crux of my argument centers on the belief that foreign aid amplifies the power of oppressive regimes rather than liberating their citizens. A key analogy I make likens this aid to giving money to organized crime, where the funds are not used to uplift society, but rather to maintain and exacerbate the existing systems of oppression. By proposing that instead of helping people, foreign aid often empowers tyrants, I underpin the need to reassess our approach to international relations and economic assistance.
I emphasize that what impoverished nations truly require is not financial aid but freedom—a liberating force that enables individuals to trade, grow, and flourish without governmental interference. Drawing a stark contrast between foreign aid and the real elements of economic development, I argue that the increase in government size and power, funded by foreign aid, has only served to worsen the plight of the people in these countries. This leads me to highlight how systems designed to help the poor often create incentives for corruption and impoverishment.
Moreover, we touch on the topic of agricultural subsidies, which I argue do more harm than good, decimating local markets and undermining the very farmers we seek to help. By critically analyzing the repercussions of these policies, I convey how the intended benevolence often degenerates into a system of dependency that stifles growth.
As I conclude, I invite listeners to reflect on the broader implications of foreign aid, the lack of genuine concern for development among the powerful, and the reality that real change requires the dismantling of oppressive systems rather than the reinforcement of them through misguided fiscal generosity. The fundamental truth remains: freedom is the only viable path towards prosperity and dignity for all people.
[0:00] Good afternoon, everybody. Hope you're doing well. It's Stef.
[0:02] It is the 16th of March 2006, quarter past four. I'm going home to have a little nap before going out tonight to see the fine rock band Queen. A friend of mine got me tickets, and away we go.
[0:19] So, I hope you're doing well. I'm going to try a new topic today. This is something that I've been meaning to talk about for quite a while. I haven't gotten around to it because I keep getting pulled off by my own ADHD approach to the emails that I receive. And so I think it's worth having a chat about this little topic of foreign aid, which is a very fascinating topic and something that baffled me for quite a while, because I couldn't really understand the motivations for politicians to get involved in something like foreign aid. It just never really kind of made sense to me. Like, I could understand why they would want to get involved in horrible things like the welfare state, because they get to buy votes, right? They need to buy votes with the money that they spend on the citizen. So that sort of made sense to me. What didn't make nearly as much sense to me was why they would be interested in buying the votes of people in Tanzania.
[1:11] It didn't sort of make any sense. I couldn't figure it out. And then I actually knew a woman who worked for Save the Children, and she sort of turned me on to a couple of the things that, helped me down the road of trying to figure this stuff out, so I'll sort of share, some of the things that I learned, and hopefully it will sort of make some sense of the world to you as well, because it certainly baffled me for quite a number of years, and it was only because I had not been sufficiently well-versed in libertarian principles that I had any doubts whatsoever, but it was sort of good to clarify it in my own mind. I think it'll be helpful for you. As I've said in another podcast, I've.
[1:51] You always have, in society or in people's minds, you always have this fantasy that somewhere, somehow, violence works. Somehow, somewhere, in some dimension, under some circumstances.
[2:05] Up is down, black is white, rocks fall to the sky, and rainbows are banana-shaped. Oh, wait, no, rainbows are mostly banana-shaped, but not perfectly. You see? That's my point. I can save the metaphor. Really? I'm going in after it. so violence is considered to work in some manner somewhere somehow and it is that little gap that most people and i put myself in this category up until about a year ago most people keep a door open a window ajar they absolutely retain this fantasy that violence works in some manner in some place under some circumstances and you just you have to find some way to tweak things so that violence can work now the sad fact of course is that violence never never never never never never never never works at all violence never works and i'm not even going to pick up the stick of self-defense here i'm just going to talk about the kind of violence that we know we're against as libertarians and forget about that other stuff because it's.
[3:12] Tiresome to keep repeating it. And I think we all know where I stand on that, at least. So violence doesn't work in any way, shape, or form. And if you want sort of a clear example of that, there's tons and tons of places to look. Anywhere where you see violence occurring, you know that there's predation, destruction, and horrendous things going on. Violence doesn't work. And one of the ways in which you can get for sure that violence doesn't work is to look into the realm of foreign policy. So I actually read a book once called Confessions of an Economic Hitman, wherein a gentleman described how foreign aid works in the real world.
[3:47] Now, foreign aid is generally considered to be the welfare, I mean, by libertarians or whatever, it's generally considered to be the welfare state for nations. That is not true. That is just not true. And it is sort of logically, you can figure out that it's not true, because the nation state is not something that votes, right? So people in Tanzania, and I will use Tanzania as an example off and on in this podcast, because it has received one of the largest donations throughout history of foreign aid, but people in Tanzania don't vote. So why are American politicians, or let's just use America, I mean, Canada's got its own foreign aid messes, as everyone does. Why are American politicians so eager to tax Americans to give money to the government in Tanzania? Sort of an interesting question, right? You're negatively affecting those who do vote for you by increasing their taxes, and you are positively affecting people who don't vote for you by giving them foreign aid. So it really doesn't make any sense, right? So the answer is I'm not going to be too cagey or coy. The answer is quite simple. The answer is that when foreign aid goes to foreign governments, they have to use the vast majority of it to buy services from American companies.
[5:05] That's the answer for you. So that is really it. Okay, I guess I'm done. Wow, I still got a long drive. What am I going to talk about? One of the ways in which this myth was pretty much cemented was with this bizarre fantasy of the Marshall Plan, right? And you heard this kind of nonsense from people who were pro-Iraq war saying that you can destroy a country and then rebuild it. And the example of that is the rebuilding of Germany and Japan after the Second World War.
[5:39] In 1945, under the Marshall Plan, oh gosh, $12 billion, I think it was, was earmarked to get all of these countries back up on their feet, and France got a good chunk of it, and so on. Well, it's all nonsense, as you can imagine. I mean, you just look into the facts of the Marshall Plan, you'll realize that very quickly what happened was, well, well, of course, the vast majority of the money never left the country, right? It went to US companies to do X, Y, or Z, and the vast majority of the money involved in the Marshall Plan went to corrupt state-slash-corporate entities on the home soil and never went anywhere remotely close to the areas that it was intended to go to. That's one of the answers about the Marshall Plan. The other one, of course, is that the money that did go, say, to the government of France, the French government simply used that money to fund a war in Indochina.
[6:25] I mean, it's bizarre. Even if you did get foreign aid to actually go to the government, and it does sometimes, but even if you did get foreign aid to go to the government, the idea that that government is going to use it for the benefit of its own people is just hilarious. I mean, if it wasn't so unbelievably destructive in terms of lives ruined and arms bought, and economies destroyed and wars fought and women raped and children destroyed, if it wasn't for all of that, it would be kind of like a grim joke, right?
[6:56] The logic of foreign aid is sad and funny at the same time. Because the logic of foreign aid is, okay, Mr. Mbatum, Mr. Leader of, I don't know, whatever that African clicking noise is, Urdu? I don't know. But, oh, Mr. Leader of Tanzania, you who are so mighty and wise, we're going to give you $100 million to use for the benefit of your people. You slip off that muumuu and we'll slip your ass something real nice for you to take care of your people with, which is really kind of interesting. Because, of course, if Mr. Leader of Tanzania had any interest in helping his people, then there would be a free market, and you wouldn't need foreign aid to begin with. Like, it's kind of funny, in a way. Like, it's kind of sad, but it's kind of funny, like a lot of these things.
[7:41] It's like going to the local mafia, Don, and giving him $10 million to go and help the shopkeepers in his neighborhood, when he's already charging them protection money.
[7:57] I mean, isn't that kind of funny? So the shopkeepers are desperately poor because they have to pay half their money or three-quarters of their profits to the local mafia, Don. And so what does the federal government do? it gives $10 million to the Mafia Don. Now, do you think that the Mafia Don in that situation is going to take that $10 million and hand it out to the shopkeepers that the Mafia Don is already taking the money from, who are only poor because of the Mafia Don? It's madness. It really And it doesn't take that much time to figure it out. I mean, I'm no epoch-spanning genius who can levitate and make spoons bend with his mind. It's just obvious. If people are poor, it's because they're oppressed. If you give money to the oppressor, what do you think he's going to do?
[8:55] I did not want to oppress my people. I just wanted $500 million in a Swiss bank account. And now that I have the $500 million, all the excess will go to the people. Of course not. I believe that if you know anything about African history, there's a little bit of French influence. And that's what I was trying to capture in that really, really weird accent. Honest, really, it wasn't just an accident. So I just think it's kind of funny, the idea that you're going to give money to dictators, and the dictators are going to use that money to help the people. Because of course, if they were interested in helping the people, oh, they wouldn't be dictators to begin with, I hate to tell you, but it seems to be the case. So the very premise behind the idea of foreign aid is just ludicrous to begin with. You're paying thugs, right? I mean, once you understand that governments in general are composed of thugs, sycophants, and rhetoricians, right? That's the people good with words, the people good with flattery, and the people good with guns, right?
[9:51] That's the tripartite nature of government. That's the Father, the Son, and the Holy Ghost of the Antichrist we call the state.
[9:59] So these people are not going to do any good with your money. They are not going to hand it out to anyone who's going to do any good with their money. There's not a lot of foreign aid going from America to Canada because Canada sort of has a free market to begin with, somewhat. So the way that the money actually goes in these situations, of course, is it goes from the taxpayers to the government. Now, the government wants to give as much money as possible to American firms so that it can buy their votes, it can get their money for the next round of re-elections, and it wants multi-year projects. I mean, that's sort of a basic fact with the government. so I'm just making up actually you know what I'm not even going to use real names because god knows I don't want to get sued so let's just say company XYZ is a builder of.
[10:49] Dams and what it's going to want if you're the government what you want to do is you're going to want to get foreign aid money earmarked for development in Tanzania and you're going to want to get XY company to go and build to have a contract to go and build five dams in Tanzania, for you know $50 million a dam. But it's going to take 10 years. And why do you want the 10-year funding? Well, because you want them to be around for re-election. Because the funding is going to be signed with the current administration. So you're going to want to bind this company into you for the long haul so that they will give you the money when it comes time for re-election. Because if somebody else comes in, why, that contract could just be cancelled.
[11:29] Now, of course, you can do it in other ways. I mean, you can just do a, say, build five dams in North America or in America. But the problem is that lots of people want to build dams in America. So if you're going to build five dams in America, then you're going to have what are called the request for proposals going out. You're going to have a whole bunch of competitors who are going to try and compete with each other to get the business. and if the business goes to an obvious political appointee, then you're going to look sort of not so good, right? They're going to raise fuss, they're going to file with the Ethics Commission, they're going to get all testy on you, but because they spent two months putting these RFPs together and it does take a long time for this kind of work, so if you hand it out to some overpriced crony, the competitors within the United States are going to get counter-cheased, bah. And that all makes sense. but I don't know that there's a whole lot of congressional oversight and RFP competitive situations going on in the badlands of Tanzania. So you can basically scoop that money up. You can spend it out there in Tanzania and you can buy all the troll heads and, you know, whatever you want. You can buy whatever you want. You can build yourselves a nice gym out there. you can pay everyone $1,000 an hour, you can do whatever you want.
[12:50] Nobody but nobody is going to go out and check up on you. And there's going to be no real competition or RFP situation, which is going to get you into trouble with domestic firms when you go with some blatantly political crony to do the work. So you kind of want to move the taxpayers, the American taxpayers money far, far away, so that they can't know in any way, show or form what the heck is going on. So there's great profit for the government in foreign aid and it occurs in sort of three levels one is that it gets to control the money of the taxpayer which is always a plus for the government the second is that it avoids competitive scenarios and it gets all of that money to be spent hog wild out of everybody's oversight far far away and the third thing is especially with multi-year contracts but it occurs with shorter contracts as well, that it binds companies to the success of the administration so that they really have to cough up some dough for the next round of political campaigning in order to hang on to their lucrative contracts out there in Tanzania. But the idea, of course, that any of it goes to anybody in Tanzania who might use it is unthinkable. And even if it did, what good would it do?
[14:08] I mean, it's just ridiculous how terrible the situation is for the people in Tanzania, because the money all goes to the government. The money goes to these American companies that do spend some of it there, but the majority, of course, goes back to the United States in the forms of obscene profits. They'll hire a couple of laborers. And even that's bad for the economy, because you hire a couple of laborers to do your dam building, but the country doesn't actually need dams. Or if it did need dams, they sure as heck doesn't need the kind and type and location of dams that are going to come through any kind of state program. That's a complete fantasy. So you're going to be putting people into getting them to move to locations where they're not needed and get them to train up on skills that they really don't need after the project, right? So let's say you have some fantasy jackhammer for creating these dams out in Tanzania. Well, what's going to happen? Well, you know, 1,500 Tanzanian guys are going to get real excellent at doing this fantasy jackhammering, and then you're all going to go home, and there aren't a whole lot of other fantasy jankhammers lying around Tanzania begging for their skills, so all the time that they spent learning that stuff is completely wasted and is negative, and they could have actually been doing something productive for the economy, right? So, sending the wrong signals in the economy is a double disaster. It's not just that you waste the time and money that you've got there, but you also send people off in the wrong direction, as I talked about, I think, two days ago in another context.
[15:27] So, the money goes to the government. The government uses the money, of course, to buy guns, right? So, this is another reason why foreign aid is very popular, because foreign aid allows American arm manufacturers to sell a lot of guns to foreign governments. This is something that also, you know, don't underestimate this as a motivation either. You know, there are lots of laws that restrict the direct transfer of arms from the government to other countries, right? Particularly if they're on a sort of blacklist. However, if you give foreign aid to these government heads, nudge, nudge wink wink no strings attached by the way along with this suitcase full of hundred million dollars you will also have brochures from joe psycho's house of infinite firearms and of course that phone call and that setup is easy now they've got all this cash and they've got all this contacts and by golly they'd be more than happy to go and buy themselves some american arms so foreign aid isn't it's all a boomerang it's a complete boomerang the money that goes to these foreign governments always comes back to the state. But it comes back to the state in an unverifiable way, right? It's instant money laundering. Where did you get this money from? Oh, this money came from the government of Tanzania. Well, isn't that just lovely? And of course, that's all anybody knows, right? Nobody can go and dig around and root around in the government of Tanzania's bank accounts and figure out just where the heck all that money came from. It may sort of be common knowledge, but it's kind of hard to prove.
[16:51] So, it's a way of laundering the money, right? If you give the money to some foreign desperate, then he can buy American guns and so on. And it's not just a police. I'm not picking on the Americans. It's everybody, right? I mean, this is how all governments work. I mean, this is not anything. There's no worse government or better government. Governments are simply either able to do things openly or they have to do things covertly because at some point in the past, people like us spoke up against the government and got the point across. But all governments are equally bad, right? All mafia people are equally bad. It's just if there's a cop cruiser going by, they won't actually kill the guy right there, right? They'll do something different or something later or something untraceable. So they don't become better. They just slightly conform to pressures in the short run and then immediately go back to their original behavior. So I'm not picking on American governments here. They have more temptation because they have one of the largest economies.
[17:45] But please don't for a moment imagine that any of this money is going to help people on the ground. It's unthinkable. What people need is freedom. What people need is freedom. They don't need the government money. They don't need state handouts. They don't need American taxpayers money. All they need is the same damn thing that you and I need which is freedom which is the ability to do what they want to buy and sell and grow and trade and do whatever the hell they want without the government shoving a gun down their throat if they don't have a license that takes 10 years to get. All they need is freedom. All the third world has ever needed is freedom. All that anybody ever needs is freedom. And you don't get that by funding government. You get the complete opposite. I mean, imagine if there was some, I mean, just picture this, if you like, if you want to sort of have a mental bit of funsies, imagine that there's some intergalactic trading company that has currency, which all the governments in the earth recognize, and the mothership opens up its load over Washington and it gives $100 billion to the government. It gives $100 billion to the government. Know what? It gives $5 trillion to the government. What do you think the government's going to do with that money? Do you think that they're going to give it to us? Do you think they're even going to pay off the debt? Of course not. If somebody just magically gave the US government or the British government all of this money, there's simply no chance that the government would do anything whatsoever to help the people.
[19:12] Because, of course, what you need to help the people is less to no government, and giving the government money just makes it bigger. So it's the exact opposite of anything that you would ever do if you had any kind of concern for these poor bastards in the third world who get by on a buck a day, if they're lucky, and live their entire lives watching their children starve to death and die of wreckage. If you had any, any concern About these people whatsoever The last thing you would ever conceivably do Is swell the size of their government Since it's the size of their government That is why they're poor to begin with, It's like trying to save somebody from cancer By injecting them with a tumor, It's completely bizarre, It's like trying to cure emphysema by chain smoking. It's exactly what got you there to begin with.
[19:55] So it's just important to understand if foreign aid has nothing to do with helping the people.
[20:00] In fact, it's quite the opposite because violence never works. And if you want to look this kind of stuff up, I mean, I can read off some more statistics in the morning, but I mean, if you want to look this stuff up, it's pretty easy to figure out, right? All you have to do is you have to look at the ratio of foreign aid to economic development, right? I mean, according to this theory, and, you know, you could say that if this theory is true, then economic development should be unrelated to foreign aid. And for it to be really true, it would have to be inversely related to foreign aid. Well, guess what, lucky folks, I've stacked the deck. I had an ace up my sleeve, and I've already looked it up. So, it is absolutely true. The amount of economic development, the amount of wealth generation that occurs within a society is inversely proportional. Yes, you heard me right. You heard it here first, folks.
[20:50] Inversely proportional to the amount of foreign aid a country receives, exactly as any logical, rational, moral, economically-based, libertarian-based, free-market argument for morality, free-domain radio-based argument would predict. Of course, giving the government money is going to make things worse for the people, because the government is an agency of violence. And when you fund something, you increase it. And when you increase the government, much, you increase the amount of violence. And when you increase the amount of violence, you decrease the free market. You decrease economic productivity. You decrease the happiness and value of people's lives. It's ABC, folks. It's just so obvious, I can't even imagine.
[21:28] Tanzania has had one of the largest infusions of capital in the known universe and is still, I think, the third poorest country in the world.
[21:39] It's active enslavement of foreign populations to give money to the governments. All you do is allow them to arm more people to point more guns at the population. That's all that's occurring. And the waste is unbelievable, as you can imagine. I mean, we call it waste only because the money could have been put to better use. But, of course, now we know enough about economics to know that it's not waste at all. In fact, it's very intelligently done in order to maximize the profits of the people who are the recipients of foreign aid. So when they build tennis courts up in the mountains where nobody goes, or they build a hospital when there's already five other half-empty hospitals in the village, why do they do that? They do that because they're not building for where they maximize their return on their investment in terms of having customers. They are building as cheaply as humanly possible where the resources already exist and the labor skill is already there so that they can get whatever they need to get built, built as quickly and easily and cheaply as possible so that they can make the most profit that they can. I mean, it's completely obvious, right? I mean, if somebody said, I will give you $5,000 to make me a shelving unit.
[22:51] And I don't care whatsoever what that shelving unit is like when you're done, and you can build it wherever you want, and you can use whatever materials you want, and I don't care how long it lasts, Are you going to go and build them some mahogany treasure piece with glass doors and lights and all this kind of stuff? Well, of course not, because you're getting $5,000 to build some shelves. What are you going to do? You're going to freaking nail up some planks in your own basement and then say, woohoo, $5,000. There you go. Took me 20 minutes and cost me four bucks.
[23:26] Anybody's going to do that. Anybody. And anybody who doesn't do that is kind of like stupid in a way, right? I would. And you would too. This is how violence corrupts everybody it touches. There aren't any customers, right? Who are the customers for the money? Well, the politicians have the money, which they obtain through force. They can wave the contracts around and do whatever the heck they want.
[23:53] And basically, governments control everything in this situation. And so they're the customers. And what do they want? Well, they want some kickbacks, of course, right? I mean, don't imagine that all of the foreign aid goes out to the countries or to the companies who are being paid. I mean, and a lot of it is going to come back in kickbacks. I mean, this is as true in the UN as it is anywhere else, right? You're starting to spend tens of billions of dollars on foreign aid. Well, how are you going to decide who gets the money? Well, you're going to decide based on who's going to give you the most money back, right? I mean, that's standard bureaucracy stuff. And don't, for a moment, imagine that it's not rampant within the US government, as opposed to any other governmental agencies. It's just not. I mean, if you've been to, and I won't even mention the name of the company, but a company that does business with the military, and if you look at the amount of, well, the salaries of people, which you have some idea about versus the cars they drive, you just know in your gut that there's a lot of kickback stuff going on. It's just inevitable. There's nothing you can do about it. There's simply no way, and there's no way on hell to track the money that the government spends. That's completely impossible. I mean, don't even imagine that anyone can try.
[25:01] And it's like trying to count atoms of air in a room with your bare eyes. I mean, it's just never going to happen. And even if you could, by the time you've counted like 20 of them, they've all moved anyway. I mean, the government is one giant, enormous money laundering mechanism. That's all it is, right? If it goes to the mafia, it has to be laundered. But if it goes to the government, it's pre-laundered. So everybody's much better off from that standpoint.
[25:22] So it's a lot of kickbacks. And those are the clients as well, right? The customers in that sense, you get the contracts because you give the kickbacks. And then you go and build your crap, whatever you do over in the third world, and you think that you're doing some good, and you do this, that, or the other, and you get some nice photos.
[25:39] And you also do other sort of ridiculous things. So for instance, one of the things that I'm sure you're aware of, which is very big in the World Trade Organization talks, is agricultural subsidies. Because one of the things that happens in the West, of course, is that agricultural subsidies, to the tunes of hundreds of billions of dollars, are dumped on the farmers. And what do they do? Well, they take all of their food and they dump it into the third world. And what does that do to the third world? Well, it destroys local agriculture, right? So, I mean, there is a, during a, I think it was a flood in Guatemala, the farmers were finally sort of finally getting back on their feet and grew some crops and wanted to sell them, they went to the market and they found that the Red Cross had dumped all the food in the world on the market and they couldn't sell anything because it was all dirt. Cheap, right, so to speak. So this kind of stuff happens all the time, that if the West had any interest whatsoever in helping the people in the third world, it would do two sort of three major things. The first thing would stop with the subsidies, because they're just crippling the people who are under the well-heeled boots of the state. It would stop the funding. It would stop agricultural subsidies, for sure, because the first thing you want to do to get out of poverty is to get a good, consistent food supply within your own country. And the third thing, of course, that it would do is it would open up trade barriers without any restrictions whatsoever. And then that would absolutely solve the whole problem right there. You can just check the paper tomorrow and see if that's been done.
[27:00] And then if you have any idea whether the government cares for these people, you can write and let me know. Thank you so much for listening.
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