We are fortunate. We live in a nation founded by people
who knew that aggression through-government creates poverty and strife.
Consequently, we have become the wealthiest nation on earth. How can we
apply our new understanding to help the developing nations, where people
still die regularly of starvation and disease?
Creating Poverty in the ThirdWorld
Before we can help disadvantaged nations, we need to know what creates their
poverty in the first place. In Chapter 2, we found that resource endowment
had little bearing on a nation's wealth. Indeed, most developing nations
have more strategic minerals than Japan, one of the wealthiest countries
in the world. Lack of natural resources cannot account for the plight of
the Third World.
Despite popular myths, rapid population growth and high
population density are not major factors in Third World poverty either.
Hong Kong and Singapore, with annual per capita GNPs in excess of $6,000
in 1985, had more than 10,000 people per square mile. In contrast, India
and China, with fewer than 1,000 people per square mile, have per capita
incomes of less than $400! (1) Developing countries that enjoy the highest
economic growth rate often have the highest population growth rates as well!
(2) Between 1775 and 1975, the United States had the biggest population
explosion in history, (3) yet Americans now earn the highest wages in the
world. Clearly, rapid population growth and high population density are
no more responsible for poverty than inadequate resource endowment.
Poverty in today's world is primarily due to aggression-through
government. When we look closely at Third World nations, we see this aggression
everywhere. Jobs, and consequently the Wealth Pie, are constantly limited
by it. In spite of all the examples given in the previous chapters, our
country still enjoys more freedom - freedom from aggression - than most
nations. The level of aggression in undeveloped countries is difficult for
most Americans to imagine.
For example, in Peru, it takes an average of 289 days to
obtain a business license. It takes the equivalent of 32 times a Peruvian's
monthly minimum living wage to open a small garment factory. (4) Small industrial
firms spend approximately 70% of their profits to pay taxes and meet legal
requirements. (5) A license to homestead state land takes an average of
83 months and the equivalent of 56 months of minimum wage pay. (6) Building
a market "mall" legally can take 17 years. (7) A license for a
new bus route takes approximately 53 months to arrange and is only rarely
granted. (8) Under such restrictions, it is surprising that Peru-vians create
any wealth at all! The pattern is repeated, with some variation, in the
poorer nations of the world.
Thus, the most effective way to help other countries is
to export a repugnance for aggression-through-government. The best way to
teach an idea is simply by living it and letting others observe the benefits.
When our country was founded, it was the first Western country to reject
monarchial rule in favor of a less-aggressive representative system. Today,
a scant 200 years later, the few remaining Western monarchs are mere figureheads.
Our system worked so well that it was emulated throughout the world. We
did little to produce this paradigm shift other than living our ideal.
Supporting Dictators
Today we reenforce the belief in aggression-through-government by practicing
it in our dealing with our Third World neighbors. First, we tax our neighborsat
gunpoint, if necessaryto provide foreign aid. Most of this money goes for
security assistance to underdeveloped nations. (9) To keep Third World governments
friendly toward us instead of aligning with the Soviets, we've supported
dictators such as Ferdinand Marcos (Philippines), Sergeant Samuel Doe (Liberia),
Mobutu Seko (Zaire), and Zia ul-Haq (Pakistan), to name a few. (10) Much
of this assistance was used to suppress the citizenry from protesting domestic
policies of aggression. For example, almost three-fourths of U.S. aid to
El Salvador during the early 1980s went to support the government's war
against protesting civilians. (11) The Shah of Iran's cruel Savak and Idi
Amin's "public safety unit" for internal security were trained
with our help. (12) In Latin America in the 1970s, U.S. foreign aid was
given to nations with the worst human rights violations. (13) Aid through
aggression promotes aggression.
Third World citizens see their dictators kept in power by our aidand hate
us for it. Licensing laws, prohibition of homesteading, and other aggressive
practices prevent the disadvantaged from creating wealth for themselves
and their loved ones. This aggression is so pronounced in Third World countries
that the rich have become immensely richer and the poor are barely surviving.
This system is kept entrenched largely through our massive security assistance.
Most of this aid goes to loans and grants for the purchase
of U.S.-made military equipment. (14) Security assistance becomes a subsidy
from the U.S. taxpayer to the weapons manufacturers and dictators of the
world. In the past, we've justified our aggression with the argument that
we are keeping the Third World "free from communism." The next
chapter shows that the opposite is true.
You can probably hear the representative from the weapons
factory explaining to your local congresswoman. "Ms. Congresswoman,
we charge top dollar for our weapons. Of course, our stockholders and our
employees, who are your constituents, profit handsomely as a result. In
fact, the local economy depends on us. If you don't vote for this aid package,
we might have layoffs. People in these parts could get mighty angry come
next election, and we couldn't blame them. In fact, we might even help them
by throwing our financial support toward someone who stands up and fights
for those who put them in office."
The congresswoman sighs and agrees to vote for the subsidy.
After all, if she doesn't, the weapons manufacturers will back someone who
will. Eventually the arms manufacturers will be successful, and the aid
package will pass. Why should she sacrifice her career for something she
can't stop? If the voters she represents care more about their paycheck
than the exploitation of the Third World, why shouldn't she?
Tomorrow she will vote for range land subsidies in exchange
for support on the foreign aid bill. Both sets of constituents will be happy,
even though they are simply subsidizing each other's special interests and
paying their congressional representatives handsomely to negotiate the deal.
The voters in both districts end up with less than they would have if they
had honored their neighbor's choice. The voters are reaping as they have
sown.
Purchasing Poverty
Security assistance is just the beginning. Even humanitarian aid ends up
subsidizing aggression. First, the aggression of taxation is used to subsidize
U.S. agriculture, creating a surplus. (15) Next, taxes are used to buy up
the surplus. The crops are shipped to foreign governments, which are given
tax-subsidized loans to finance the food purchase. Sometimes the food is
simply given away. (16) The governments dispose of the food as they see
fit.
In the famine of the mid-1980s, Bangladesh sold "free"
food at market price in urban areas and at one-fifth the market price to
its military. (17) Somalia allocated 80% of food aid to its military and
government employees. (18) During the famine in Ethiopia, the government
sold donated food or diverted it away from the hungriest provinces as punishment
to those areas for harboring rebels. (19) Haiti's Jean Claude Duvalier converted
aid into personal gain. (20) When we remember that poverty and starvation
in these countries are caused by the aggression of these same leaders, we
should not be surprised that our aid becomes a tool for more aggression.
When concerned Third World governments do give away donated food or sell
it cheaply to those in need, the results can be just as devastating. Local
farmers are undersold and put out of business. As a result, fewer crops
are planted the following year. To prevent such a disaster, angry Haitian
farmers chased away helicopters bringing in U.S. rice in 1984. (21) Some
farmers will turn to export crops and the uncertainty of the world market
to avoid the problems caused by our largess. The country becomes dependent
on imports to feed its populace.
Ironically, poor rural farmersthe ones we are supposed
to be helpingare hurt the most by food aid. If the peasant farmers manage
to survive our security assistance and food aid, however, our aggression
causes still more problems.
Subsidizing Environmental Damage
U.S. citizens are taxed at gunpoint, if necessaryto fund the World Bank.
The Bank, in turn, lends Third World countries money for development projects
that frequently promote environmental degradation. Forests were destroyed
to build subsidized dams in Brazil and India and cattle ranches in Botswana.
(22) Poorly managed irrigation projects have resulted in millions of hectares
becoming flooded, waterlogged, and salinated. (23) Development through aggression
results in projects controlled by those who wish to exploit rather than
by those who wish to serve.
Why does our government keep giving such destructive aid
in our name and with our tax dollars? Of every aid dollar, 82 cents is spent
on American products. (24) Thus, the aid programs are really a transfer
of wealth from the American taxpayer and the Third World poor to American-based
multinational firms. Like any special interest group, these firms have a
strong influence on our representatives, because they can commit large amounts
of money to the campaign chests of those who serve them best.
Not understanding how wealth is created, many sincere heads
of state agree to borrow money for such projects in the hope that prosperity
will follow. World Bank projects usually create subsidized government monopolies.
Because of the inevitable inefficiency and high cost, the project cannot
generate enough new wealth to pay for itself. The country ends up with a
debt to the World Bank that cannot be repaid.
Sometimes, the World Bank steps in with more loans for
agricultural development. In the early 1970s, Tanzania received more bank
aid per capita than any other country. Much of this money was used to support
the army's efforts to drive the peasants from their land to government villages
or communes. (25) Generous loans to the governments of Vietnam, (26) Indonesia,
(27) Ethiopia, (28) and Guatemala (29) funded similar resettlement programs
in these countries. The communes were seldom productive. (30) Land taken
from the peasants was awarded to political favorites. Once again, money
taken by aggression from the U.S. taxpayer was used to support more aggression.
In Indonesia and Brazil, peasants who were robbed of their
farms were often resettled on cleared rainforest land. (31) In some countries,
the newly landless cleared the forests themselves in an attempt to create
new farms. When the authorities caught up with them, the peasants simply
moved on, clearing more rainforest as they went.
Governments claim the rainforests as their own, just as
the U.S. government claims much of our western range land. The rainforests
are populated by natives who create wealth by using the rainforests sustainably,
just as the Native Americans once did on our Western Plains. Peruvian Amazon
dwellers, for example, cultivate the rainforest profitably and sustainably
by harvesting its fruit, rubber, and timber. They make up to three times
as much as they would if they cleared the forest for cattle ranching. (32)
Consequently, they have no incentive to destroy the forest that they have
homesteaded.
Governments in developing countries, in their eagerness
to repay the loans from the World Bank, use new loans to drive the natives
off their homesteaded lands in much the same way as the U.S. government
drove Native Americans onto reservations. The government rents the forest
to loggers so that payments can be made to the World Bank. Since neither
the loggers nor the politicians "own" the land and profit by caring
for it, both groups have every incentive to exploit and no incentive to
preserve or replant.
The Rich Get Richer with Our Help!
You can probably hear the public relations woman from the World Bank asking
your local congressman to support more taxes for her organization.
"You see, Mr. Congressman," she begins sweetly,
"those loans are guaranteed by the U.S. taxpayer. If these Third World
countries default, the United States will be plunged into a depression.
It's much better that we lend a bit more and restructure their economy.
With the resettlement programs, we can control what is planted on the farms
and the villages. By focusing on export crops and clearing the rainforests
for cattle grazing, we can ensure that we are repaid. In addition, the American
consumer will enjoy cheaper coffee and cocoa prices when more farmland is
devoted to export crops instead of food."
"But those poor peasants!" protests the congressman.
"We're playing God with their lives and their land. What about the
loss of the rainforests?" The congressman is clearly frustrated. He
had supported World Bank funding in the first place in the hopes of helping
the less fortunate. Because he doesn't understand that more aid through
aggression will make the bad situation worse, he once again supports the
World Bank's plan.
Even if the congressman had objected to throwing the taxpayers'
money down the World Bank's "black hole," he would have gained
little. The American-based, multinational firms that profited either from
the rainforests or from the purchases made by the dictators have every incentive
to generously fund his opponent in the next election if the congressman
doesn't cooperate.
When I was in high school, I could not understand why Third
World people called us "imperialists." Why would these ungrateful
primitives try to bite the hand that feeds them? Now, of course, I understand.
My tax dollars are used to exploit those who have so little in order to
benefit dictators, multinational firms, and banks. Our desire to control
our neighbors once again ripples outward, fueling the flames of poverty
and strife. We reap as we sow - the money that goes into the pockets of
the well-to-do comes, in the final analysis, from us by either inflation
or taxation.
Kicking Them When They're Down
Against the background of aggression funded by their rich American neighbors,
it's a wonder that the Third World nations createany wealth at all. When
they do, we once again knock out the lower rungs on the Ladder of Affluence
through the aggression of tariffs.
Tariffs are taxes paid by traders of foreign goods sold
in the United States. The price that consumers pay is raised proportionately,
so fewer goods are imported. If American citizens want to buy a product
directly from a Third World vendor, bypassing the tariff, they'll be stopped
- at gunpoint, if necessary. This form of aggression, which prevents Third
World people from helping themselves, is used to protect American jobs.
Like all forms of aggression, the outcome is very different from what was
intended.
A Lose-Lose Situation
Tariffs actually harm the American worker. The extra money consumers would
have saved by buying cheaper foreign clothing, for example, is not available
to purchase other goods and services. For every job protected in the textile
or apparel industry, at least one other American job is lost in another
sector. (33)
Instead of creating new wealth, regulators who enforce
the tariff law only stymie it. Thus, saving the job of one textile worker
costs 3 to 12 times that person's annual earnings. (34) The consumer pays
these additional costs. Tariffs and quotas increase prices for a family
of four by an average of $2,000 per year, (35) which represents a hefty
32% of the purchasing power of families at the poverty level.36 As with
all aggression, tariffs only make poor workers poorer.
Tariffs harm Third World entrepreneurs as well. Essentially,
the tariff is a license that those businesses are required to buy for every
item sold. The tariff is passed on to the consumer through increased prices.
Fewer consumers buy the tariffed item, discouraging trade. The underdeveloped
countries advance more quickly when they trade, (37) because division of
labor and specialization make wealth creation more efficient. When wediscourage
trade with tariffs, our aggression prevents Third World people from helping
themselves.
Free from aggression, the marketplace ecosystem favors
the entrepreneurs who serve their customers best. If a business enterprise
in a poorer nation uses inexpensive labor to keep prices down, American
consumers get more for their dollar. When Americans buy from the foreign
vendor, they create jobs for the underprivileged. When Americans support
the aggression of tariffs, they sacrifice the disadvantaged in a futile
effort to help more-fortunate American workers who produce the same goods
less efficiently.
Just because other countries foolishly harm themselves
with tariffs is no reason for us to do so. Japanese consumers, for example,
pay up to ten times as much for their rice as they would without the tariffs
imposed by their government. (38) When we follow Japan's protectionist lead,
we also pay more for less.
If other countries can produce certain items more economically,
we benefit by turning our efforts to businesses in which we excel. Yankee
ingenuity is our forte. By focusing on innovation, we focus on developing
a creative and intelligent populace. Our current protectionist position
means more menial jobs for our populace and fewer white collar ones. When
we buy goods manufactured with the cheap labor of Third World nations, we
help them while helping ourselves.
The Easy Way Out
If we truly wish to help Third World countries to attain peace and plenty,
our first goal is to set an example they can imitate. Once Edison showed
us how to make a light bulb, it was relatively easy to follow his blueprint.
Likewise, we can show the Third World nations the way to prosperity - if
we are willing to practice non-aggression.
To set this example, we must abandon the aggression of
tariffs and taxation that gives special interests and dictators control
of the Third World people. When we abandon these forms of aggression, we
will have set the stage for development in the Third World. If we continue
our aggressive practices, we will create poverty and strife abroad just
as surely as we are creating poverty and strife at home.
Instead of using our resources to make the poor nations
poorer, we can volunteer our support. Those concerned about the rainforests
can supply funds to native people who are defending their homesteading claims.
The Malaysian village of Uma Bawang, for example, recently took its state
government to court to legalize native homesteading rights. (39) Most native
people are much more careful in managing their homeland than distant politicians
are. When we encourage ownership of the environment, we increase the chances
that Nature's bounty will be nurtured, protected, and preserved.
Some people object to individual ownership of rainforests
for fear an unscrupulous, wealthy person might buy these sensitive environments
and destroy them. The marketplace ecosystem regulates such individuals with
the feedback of profit and loss. Daniel K. Ludwig, the richest man in the
world in the 1970s, cut down 250,000 acres of rainforest for a tree farm.
He lost billions of dollars because the new trees were not able to grow
well there; naturally, he stopped cutting down rainforests. (40) Few individuals
can afford to duplicate his mistake. Politicians, however, are more likely
to continue such practices, because they do not lose money by destroying
the rainforests; indeed, they profit by it.
When we stop supporting dictatorship, stop subsidizing
environmental destruction, start encouraging recognition of homesteading
claims, and start trading with Third World nations non-aggressively, we
will contribute significantly to their progress. Ultimately, peace and plenty
in these countries are a product of the hearts and minds of their people.
Until they, individually and collectively, forsake aggression, Third World
people will, like ourselves, reap its bitter fruits.
We hesitate to abandon our aggression overseas. We are
fearful that somehow selfish others will take control if we don't. In our
hearts, we still aren't sure that non-aggression works in the real world.
Let's take a closer look at the Communist threat that affected our foreign
policy over the past several decades to see if our fears are well founded. |
...economic studies have failed to demonstrate that
population growth has bad effects.
- Jacqueline Kasun, THE WAR AGAINST POPULATION
Generation after generation, the poor have streamed
to America and been lifted out of poverty. This "liberation theology"
actually does liberate.
- Michael Novak, WILL IT LIBERATE?
...human development is frustrated in most Hispanic-American
countries-and most Third World countries-by a way of seeing the world that
impedes the achievement of political pluralism, social equality, and dynamic
economic progress
- Lawrence D. Harrison, UNDERDEVELOPMENT IS A STATE
OF MIND: THE LATIN AMERICAN CASE
Let the Tao be present in your country and your country
will be an example to all countries in the world.
- Lao-tsu, TAO TE CHING
Giving countries money that will be badly used is worse
than not giving them any money at all.
- James Bovard, Cato Institute
When the U.S. makes fear of the Soviet Union the...
guide in policy decisions, it alienates Third World people.
- Frances Moore Lappe et al., BETRAYING THE NATIONAL
INTEREST
...it's impossible to go through the powerful to reach
the powerless.
- Frances Moore Lappe et al., BETRAYING THE NATIONAL
INTEREST
...the World Bank has contributed as much to agricultural
disaster in Ethiopia as the governments themselves.
- Yonas Deressa, President, Ethiopian Refugees Education
and Relief Foundation
...according to the U.S. Department of Labor's own statistics,
"protectionism" destroys eight jobs in the general economy for
every one saved in a protected economy.
- Vincent Miller and James Elwood, "Free Trade
vs. Protectionism"
It is no coincidence that some of America's most lethargic
industries-steel, footwear, rubber, textiles-are also among the most heavily
protected.
- Thomas DiLorenzo, WHY FREE TRADE WORKS
...our greatest contributions to the cause of freedom
and development overseas is not what we do over there, but what we do right
here at home.
- Frances Moore Lappe et al., BETRAYING THE NATIONAL
INTEREST
Genuine development cannot be imported or imposed; it
can only be achieved by a people for themselves.
- Frances Moore Lappe et al., BETRAYING THE NATIONAL
INTEREST |