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A tasty medley of foreign aid disasters

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Transcript
00:00Hello, everybody, it's Steph. I hope you're doing well. It is 1.21 p.m. on Friday the 17th of March, and sadly, I lost my morning podcast.
00:11I was trying to clean up the hard drive and accidentally deleted the Audacity temp files, which were currently being edited.
00:18So, no problem. I'm sure that the second time around it will be even better.
00:22And you didn't get to hear my gripping review of the Queen concert I went to last night, which was great, and has left me a little bit hoarse.
00:29Of course, when you're in the audience trying to sing these impossible songs, like, we are the champions and another one bites the dust,
00:35you're sort of croaking away, going, oh, yeah, that's why you're up there getting paid to do this, and I'm down here in the pits screeching along.
00:44So, if you get a chance to see them on this tour, it's a great show. Not the cheapest thing in the world, but very well done.
00:50And, of course, the singer, Paul Rodgers, used to be in Free and Bad Company, so there's a lot of his hits that they play as well. Very good.
00:55Anyway, so I know this is going to be a shock, but we're actually going to deal with some facts today.
00:59I'm in the office, and I wanted to get this done over lunch, so I'm going to read a little bit of an article called
01:06The Failures and Fallacies of Foreign Aid by David Osterfield. You can get this from libertyhaven.com.
01:12And I think that the information is good. It's jived with some other stuff that I've come up with before,
01:17so I'm just going to read a couple of points from his article, just to give you some sense of what it is that I'm talking about
01:24when I talk about the complete disasters of foreign aid.
01:27So, let's look at the years from – it's a 35-year period from 1950 to 1985.
01:32It's sort of only gone up since then, as far as I understand it.
01:36But the net transfer of capital, private and public, from the West to the Third World in this 35-year period was over $2 trillion in 1985 prices.
01:45Now, private investment was about 25% of this, but its share fell from about 40% in the 50s to only about 16% in the 80s,
01:53and it's even lower now. Now, just to give you a sense of what $2 trillion means in 1985 dollars,
02:00$2 trillion was enough to purchase not only all the companies on the New York Stock Exchange,
02:06but in addition, the entire American farm system, right? So, just picture that in your mind for a moment.
02:14If you had the foreign aid that went from the West to the Third World in a 35-year period in your pockets –
02:20okay, you'd have big pockets, but you would be able to buy all the companies on the New York Stock Exchange
02:25and the entire American farm system. Okay, so let's just say that that's a rather staggering amount of money.
02:32Well, okay, what has it been achieved? What has been achieved with this?
02:37Well, it's been directly responsible for destroying the economies, large sections of the population in Micronesia and elsewhere.
02:45It has driven enormous numbers of local farmers out of business in Micronesia, Bangladesh, India, Egypt, Haiti, Guatemala, Kenya,
02:54many other places. There are some experts who believe that food aid to India may have actually been responsible
03:00for millions of Indians starving. There are other studies that show that in Bangladesh,
03:05that malnutrition actually rose as food aid to that country increased.
03:10And there's countries such as Peru and Haiti and Guatemala have either refused to accept U.S. food aid
03:17or pleaded with the U.S. government to restrict such aid because they know how disastrous it is for their own economies.
03:23Now, Africa used to be a food exporter. Traditionally, throughout history, it's just such a fertile land
03:29that used to be a food exporter. And as Thomas Sowell has written, Africa lost the ability to feed itself
03:35exactly like down to the year when donor agencies began to, quote, smother Africa with project aid.
03:41And this relationship is not accidental. Africa's economic deterioration,
03:45which is one of the great disasters of the 20th century, is in particular in agriculture,
03:50was caused to a large degree by aid. Now, when you look at what happens to these countries
03:56when aid gets put out to them, just about every single case, as soon as you get aid,
04:01you get the immediate emergence of a massive parasitical government bureaucracy.
04:07And that's sort of very important, exactly what you would expect here.
04:10If you give the government $100 billion, it's just going to create all these agencies.
04:14So that's fairly important to understand. You give the government money, all it does is grow the government,
04:19which causes people to have less capacity to fend for themselves economically.
04:23Let's have a look at some other statistics. So in 1983, the World Bank did some studies
04:29and development assistance was 5% of the gross domestic investment of the low-income countries of South Asia.
04:35But it was over 40% in the low-income countries in Africa. So that's very important.
04:42It's, what is that, eight times higher, eight times more aid is going to Africa than to South Asia.
04:49Now, if you look at in the 1970s, per capita income in South Asia's low-income countries
04:53grew over five times faster than it did in the low-income countries of Africa.
04:58That's fairly important, right? The more aid you give, the less the economy grows.
05:02And in Africa, of course, the more it deteriorates.
05:05Now, if you want to look at successes, that's a very important thing, right?
05:09We know all the disasters, but let's look at the successes, not of foreign aid,
05:13because there aren't any, or violence never works.
05:16But if you look at Hong Kong and Singapore, two of the most economically vibrant areas
05:21over the 1950s to the 1980s, and, of course, even more now,
05:25they received only negligible aid from the West.
05:28And, of course, they are the most economically successful.
05:31And that's very interesting. Taiwan and South Korea are often also touted as big success stories.
05:37But if you look at the statistics, their amazing economic growth began only after
05:43the large-scale economic aid from the U.S. was discontinued, right?
05:46So once you stop drugging people with this kind of foreign aid,
05:49then they actually start to do better, exactly what you would expect.
05:52So, you know, despite this incredible sum of money transferred just in a 35-year period,
05:57it's gone on since, right, even more, there's no relationship that it succeeded
06:02in creating self-sustaining growth or anything like that.
06:05In fact, quite the contrary, it does quite the opposite.
06:08So let's have a look at something in a little bit more detail.
06:11This is Micronesia, the Micronesians.
06:14Micronesia was acquired as a trust territory in 1945 by the U.S.
06:18following its liberation from the Japanese.
06:20Now, of course, the U.S. Navy ran quite a bit of this,
06:23and outside private investment was discouraged,
06:25because according to the U.S. Navy officials, it would, quote,
06:28reduce the people to cheap labor.
06:30So instead, what were they given?
06:32Well, they were given free food, free clothes, other supplies.
06:35And, of course, what happened was everything being handed out for free
06:38bankrupted most of the local stores.
06:40It's kind of tough to compete with free, right?
06:42So it just destroyed the local economy.
06:44And, of course, there was no incentive to work.
06:46There was no incentive to get education.
06:49There was no incentive to growth.
06:51And so what happened?
06:52Well, you give people all this free stuff, and they become lazy,
06:55and there's no point going into business.
06:57There's no local economy.
06:58Working becomes a sucker's occupation.
07:00So, of course, productivity plummets, right?
07:02So you get this vicious circle.
07:04This happened in Micronesia, and it's happened enormously
07:06and repetitively in just about every foreign aid situation you can look at.
07:11Well, you get this vicious circle, right?
07:13So productivity plummets as a result of foreign aid,
07:16and the economy gets worse because it becomes unproductive to work,
07:19and local companies go out of business because they can't compete with the free stuff.
07:23And so as the economy deteriorates, you need more aid,
07:26and the more aid you give it, the more the economy deteriorates, and so on.
07:30So just between 1947 and 1985, Micronesians received
07:35it's just like 150,000 people, that's about it.
07:38They got $2.4 billion.
07:41And the people who inhabited Micronesia, eligible for close to 500 government programs.
07:47And that is very interesting.
07:49So if you just look at what happened in 1985,
07:52two-thirds of all the Micronesians were employed by island governments
07:56financed by American taxpayers, right?
07:58This is what happens, and this is what happens in Africa as well.
08:00The best thing that you can hope for is a government job funded by U.S. taxpayers,
08:04which, of course, what do you do when you get that government job?
08:06Well, you have to push paper around and pass regulations
08:09and invent all this stuff to further cripple what is the last vestiges of the free market.
08:13Between 1963 and 1973 in Micronesia,
08:16the acreage that was devoted to coconuts fell by 50%,
08:19vegetables went down 70%, citrus fruit nearly 60%.
08:22And during that same period, imports of food that were traditionally produced locally,
08:27like not stuff that was not native, it went five-fold up, right?
08:31So five-fold imports of food that they used to grow locally,
08:33exports declined by half, and that is fantastic.
08:38In 1984, despite the fact that massive amounts of trade and funds and subsidies
08:43and all that were infused into Micronesia,
08:45the local fishery sector was no more productive than it was in 1945
08:49before it became a trust territory.
08:52So that is something that is very, very interesting to think about.
08:56Now, hands up, everybody in the class who can tell me
08:59what happens to a government program which is failing miserably
09:03to achieve its stated objectives.
09:05In fact, if you can tell me what happens to a government program
09:08that achieves the exact opposite of its stated objectives, you get a bonus.
09:12You get a bonus free download of a podcast.
09:15Well, of course, when a government program achieves the opposite of what it's supposed to,
09:18then you naturally will increase and expand that government program.
09:22So what happened to the American response to this incredible deterioration?
09:26Well, as of the 1980s, they increased the rate of aid to Micronesia, right?
09:34So there was more than double.
09:35So the last 15 years, they increased the rate to more than double the average of the first 38 years.
09:40So this is exactly sort of what you would expect from this sort of government program.
09:46It doesn't work. Let's increase it, make it even worse.
09:48Now, let's have a look at food subsidies.
09:50And this is something that's ridiculous, right?
09:52I mean, the government pays the farmers to produce an enormous amount of food.
09:56And of course, you don't just want it sitting and rotting around
09:59because that would sort of look stupid and reveal just how ridiculously wasteful
10:02and destructive these farm programs were.
10:04So what do they do?
10:05Well, they ship it overseas and they dump it in the markets of the third world.
10:08And the governments of the third world are more than happy to let this stuff into the country
10:12because it's good for them, right?
10:14They get to sell it.
10:15So let's have a look.
10:17There was a sort of food for peace program that began in 1940.
10:21And this sort of program distributes surplus U.S. food overseas.
10:25Of course, the question is, why is there a U.S. food surplus?
10:28It's because of the farm programs in the U.S., which we can deal with another time.
10:31But basically what happens is that as soon as you hand over the food to Bangladesh or India, Haiti, Guatemala, and so on,
10:39it's that, well, you decrease the demand for locally produced food
10:42and you create an entrenched welfare class, which you need a lot of bureaucracy to manage.
10:45So consumers don't pay for what they can get for free, right?
10:48So all the local producers go out of business.
10:51And within a generation or so, it de-skills, right?
10:54De-skills the local population, which is sort of important
10:57because once you stop learning how to be a farmer, you can't just go and pick it up again.
11:00And if a generation has passed, you've had no need to farm because of all this free U.S. food,
11:04then you're not going to go pick it up. I wouldn't know how the hell to do it.
11:07So what about emergency famine relief, right?
11:10So you see Sally Struthers parading around with these stick insect children in the third world.
11:14And what about this sort of stuff, right?
11:17So in Ethiopia, there was a famine in 1973 to 1974.
11:21And this famine was somewhat artificially created in order to get this kind of aid.
11:25But we won't go into that right now.
11:27Let's just say it was a perfectly legitimate famine.
11:30Well, what happens?
11:32Well, they got enormous amounts of food from Europe and America.
11:35And the two provinces that were most affected were Eritrea and Tigra.
11:39But there were rebels in those, right?
11:42Rebels trying to take over the government.
11:44So food wasn't sent there so that they would get starved into submission, right?
11:48So you give all of this aid to the government.
11:50And the food was simply diverted from the places where people were hungry
11:54because those people were anti-government.
11:56And so they sort of starved them out.
11:58And the government of Haile Selassie sold a huge chunk of the donated food on the world market.
12:04And of course the money goes to line the pockets of the regime members.
12:08The Ethiopian government even offered to sell the US 4,000 tons of grain.
12:13The idea being that the US would then donate the money back to Ethiopia.
12:17And therefore it was going to help the US fulfill its pledge of 22,500 tons of donated food.
12:22The offer was declined.
12:24Now if you look at the Mangistu government in the 1984-1985 famine in Ethiopia,
12:30it's remarkably similar.
12:31So there are thousands and thousands of people starving.
12:34But, you know, while these thousands and thousands of people are starving to death,
12:37the government somehow manages to dig deep in its pockets
12:40and spend over $200 million to celebrate the 10th anniversary of the Marxist revolution.
12:45It also earned $15 million in revenue
12:48by charging ships loaded with donated food a port entry fee of $50.50 a ton.
12:54And if you couldn't pay this, too bad for you, you got turned away.
12:58The cargo was never able to be landed.
13:00And of course the Eritrea and Tigray area was sealed off.
13:04And anybody who tried to smuggle food into the actual areas where starvation was occurring
13:09was attacked by the army.
13:10Food shipments are seized.
13:12Some of it is used to feed the army.
13:14And some of the food was sold on the world market and the money was earned
13:18that from that was used to buy war equipment for the attack against the rebels.
13:22So that's all exactly as you would expect and terribly, terribly sad.
13:27And it's also important to understand that there's absolutely no reason for famines anymore, whatsoever.
13:31I mean there is a surplus of food within the world.
13:34And there's, you know, you've got aerial and meteorological surveillances.
13:39You've got local price fluctuations and where famine occurs
13:43you would normally expect that people would simply rush the money and the food
13:46and the excess food in there to feed people.
13:48Famines are always the result of government policies,
13:51are always the result of violence.
13:53Violence results in starvation just as it did in Europe and the West
13:56during the Middle Ages up until about the 18th century.
13:59The 17th century was called the sad century because about 5 to 15 percent
14:03of the European population starved to death every year.
14:06And you would actually get villages no more than 15 miles apart starving while
14:10one starving while another had an excess of food because it was illegal to transport food.
14:14And the church and the state were heavy hand in hand and completely controlling everybody's lives.
14:20So this is we all starved until we got a free market here.
14:23And it's exactly the same everywhere else.
14:25So why? Okay, so the starvation of millions of Russians in 1929 to 1939
14:31was a government program, Stalin's forced collectivization of the farmland.
14:35The starvation of at least a million Igbos in Nigeria in the late 1960s.
14:39100,000 Timorese after Timor's annexation by Indonesia in the mid-1970s.
14:44Two million Cambodians starved to death after the Khmer Rouge seized power in the late 70s.
14:49Mass starvation in Afghanistan following the deliberate destruction of the food system
14:54after the 79 invasion by the USSR.
14:57Massive famines in Eritrea in the 70s and 80s.
15:00All, all, all the result of deliberate intentions on the part of the government.
15:04You look at the starvation of 20 to 30 million Chinese
15:09during this sort of what's called the three lean years from 1959 to 1962.
15:13All of the endless famines that occurred in most of the sub-Saharan countries in the 80s.
15:18It wasn't the direct intention of the government perhaps,
15:21but it was the natural result of ill-advised government policies.
15:24You know, all the stuff, price controls, collectivization, marketing boards
15:28and all these other frou-frou interventionist measures.
15:31It destroyed local production while of course they banned imports of food
15:34and of course the pride of the leaders, they would never say it's not working
15:37so they'd rather that tens of millions of people starve to death
15:40rather than say, ooh, I think we need a bit of help.
15:43So that's another thing that occurs constantly, right?
15:46This sort of stuff occurs and now of course it is profitable to starve your people, right?
15:50After the creation of foreign aid it becomes enormously profitable to starve your people
15:54because you basically get all this free food which you can then go and sell for weapons
15:58and you can sell for money and this is why all these guys retire to Argentina
16:02and buy these incredible houses by the sea because through starving their own people
16:07you get economic gains, right?
16:09I mean, this is something that would never happen in the free market, right?
16:12Starvation is not profitable, but in this sort of violent-based coercive system of the states
16:17and so on, you have endless profits that come out of starvation.
16:21This is what results from things like violence, always, always and forevermore.
16:26There's other things that occur, of course, with foreign aid.
16:29One of the things that happens is that if you've ever been an entrepreneur
16:32you need to have a sense of price over the long run.
16:35You need to have a strong sense of how much things are going to cost
16:37both in terms of what you can sell your products for but also what your overhead is going to be.
16:41Now with foreign aid coming in and out and free food being dumped everywhere
16:46and free goods being dumped everywhere, you really can't tell how much things are going to be cost
16:50and as one person said once, I think,
16:52trying to determine whether costs exceed benefits in the absence of accurate cost data
16:57is sort of like trying to cut a piece of paper with a single blade of scissors.
17:00You can't do it.
17:02And so people generally become non-entrepreneurial
17:04in a situation where overhead, prices, costs and so on and inflation
17:08all fluctuate wildly and this is naturally what occurs
17:11in a situation where large amounts of government aid are flowing into a country or a culture.
17:15So that's another thing to understand
17:17that you completely destroy people's ability to calculate in the long run
17:20which of course completely destroys the free market and people's incentives to do so.
17:24Now of course another thing that's going to occur in a situation like this
17:27is that all of the really talented, ambitious and intelligent people
17:30are going to look at the survey of the situation and going to say,
17:33OK, well in the private sector there's no demand
17:35because all these free goods are coming in from outside the country.
17:37I can't predict prices. There's no capital investment.
17:40And even if I do end up magically getting one of these projects
17:43I'm going to build a dam in the middle of nowhere
17:45which is going to be sort of pointless and I might make money
17:47but it's not going to be that satisfying.
17:49Whereas they're going to look in the public sector and say,
17:51wow, here's where the real money is, here's where the real action is,
17:54here's where the real growth is, here's where the real opportunities are for my career
17:57and so you're going to sort of draw people in like a whirlpool to this state sector
18:02and government positions within the third world become these absolute meccas,
18:06these fantastic stuff that people just want to get a hold of.
18:09This draws all the talented people towards this area
18:12and so you don't want talented people in the government, right?
18:14You want as many idiots in the government as possible
18:16so that they just push paper back and forth.
18:18An energetic and efficient bureaucrat is a complete cancer of society
18:22so it's pretty bad.
18:24You want the government positions to be the lowest paid
18:26and least upwardly mobile positions in society
18:29and that's exactly the opposite of what occurs
18:31when you get foreign aid flowing into an economy.
18:35And so now we come to the friendly UN
18:38and all of the wonderful things that UN did
18:40to help these poor countries become better off.
18:43Well, what did they do?
18:45Well, in the UN passed a sort of new international economic order
18:48and it was directly designed to discourage private investment
18:51by encouraging these less developed countries to adopt policies
18:55that directly undermine the institution of private property within their cultures.
18:59So, for instance, in this new economic order of the UN
19:02specifically refers to nationalization as an inalienable right.
19:05The nationalization being the forcible transfer of capital and equipment
19:09and labor, I guess, too, from the private sector to the public sector.
19:12So, taking over the mines or whatever.
19:15I mean, this is an inalienable right, excuse me.
19:19So, of course, what else happens is that the International Development Association
19:23which was organized by the World Bank in 1960
19:25encouraged pretty heavy, hefty, large-scale borrowing
19:28by making soft or interest-free loans readily available
19:31to these less developed governments.
19:33That's pretty bad.
19:35So, what else happens?
19:36Private banks, the governments get to export credit insurance
19:40provided by the governments.
19:41So, in 1984, the U.S. Export-Import Bank guaranteed loans to private banks, right?
19:48So, it's free money, no risk.
19:50You lend them to the third world government
19:52and if that government goes down, you get paid back by the U.S.
19:55So, you get tax credits and so on.
19:57And so, naturally, you begin to, instead of getting foreign investment,
20:01these third world countries just borrow, right?
20:04So, instead of getting investment in where you have to prove a business case
20:06and you also have to prove the protection of property rights
20:09and all the things that would actually benefit your domestic people,
20:12you end up just borrowing.
20:14So, you're actually completely unaccountable to your people now
20:16and you don't have to do anything which is going to help them
20:18to increase their capacity to run the free market or anything like that.
20:23And this is pretty important, right?
20:25So, over the last three decades, private investment,
20:27and this is as of, I think, the late 80s,
20:29it fell from 40% to less than 16% of transfers, right?
20:33So, this is pretty significant.
20:35And this is, of course, what happens to countries that borrow excessively,
20:40that you get this incredible debt, right?
20:42You all know this bonus going around, whining about all this kind of stuff
20:45and wanting to steal our money to solve the problem of third world debt,
20:48like we're responsible for all these policies, right?
20:51But the new economic order, which was in 1974,
20:54immediately followed with this unbelievable debt, right?
20:57So, between 1975 and 1980, five years, five years only,
21:01Argentina's debt rose over 300%, Brazil's 250%, Mexico's 280%.
21:08And this is just astounding, right?
21:10I mean, this is a complete destruction of the economy.
21:12And you can see, of course, what's happened to Argentina's currency
21:15and Mexico had a default and Brazil was a mess.
21:18So, that's sort of very important as well.
21:21And this hostile environment to private investment that occurs
21:25results in what's called this capital flight, right?
21:28Capital flight is whenever money centralizes itself in the third world.
21:32The first thing you want to do is get it out of the third world
21:34where it's subject to state grabbing or coercion or a change in government
21:38or a coup or whatever.
21:39And you want to nestle it in a nice, safe, secure Swiss bank
21:42or something like that.
21:43I mean, heck, if you put it in a suitcase and handcuff it to your wrist,
21:46you're going to be a lot better off than leaving it in the third world.
21:49So, even in 1988, more than $10 billion in capital left Africa every year.
21:54That's more than came in in foreign aid.
21:56It's all booty.
21:57It's illegally shipped abroad by the ruling elites.
22:00Zaire's President Mobutu put more money in his personal Swiss bank account
22:05every year than the $45 million a year that the US contributed in aid to Zaire.
22:09It's really quite astounding.
22:11And if the economist James Henry observed, I think in the late 80s,
22:15that, quote,
22:17more than half the money borrowed by Mexico, Venezuela, and Argentina
22:20during the last decade has effectively flowed back out the door,
22:23often the same year or even month that it flowed in.
22:26So, it's a flow-through account.
22:28Basically, what happens is foreign aid can be summed up like this.
22:31Poor people in the first world, in the West,
22:35are subsidizing rich people in the third world.
22:38I mean, it's a net income transfer from poor, honest workers in the first world
22:42to rich, corrupt, vicious warlords in the third world.
22:46I mean, that's sort of the basic summary of the fact.
22:49So, there would be no third world debt, no capital flight problem,
22:53or anything like that, if we just left these countries alone.
22:56And therefore, by subsidizing all of these corrupt and bad
22:59and parasitical decisions of the rulers,
23:01all we're doing is encouraging people to continue in this kind of way.
23:04And so, finally, of course, what happens to people who are productive, right?
23:08I mean, if you've ever been part of a union and tried to work to exceed your quota,
23:11you'll have a pretty strong understanding of how corrupt people view productive people.
23:16But it's even worse in the third world, right?
23:19I mean, what happens in the third world is, if you're a productive group
23:21who's creating value in the economy that's going to directly impact the foreign aid
23:25that the ruler is going to receive, so you're going to be pretty much attacked, right?
23:30So, throughout the third world, entire occupations are being outlawed,
23:34and hard-working and industrious people are subject to unbelievable treatment,
23:38to discrimination, exclusion from choice occupations,
23:41and, of course, the outright genocide.
23:43So, Mobutu's expulsion of traders or middlemen that promptly reduced Zaire's per capita income,
23:49and, therefore, Zaire was qualified for increased aid, right?
23:53So, in 1983, Mobutu got rid of all these traders.
23:56He just threw them out of the country, which destroyed Zaire's per capita income,
24:00thus qualifying him for additional aid.
24:02So, of course, naturally, he did that, and everybody starved, and he got wealthy.
24:06So, in countries like Algeria, and Burma, Burundi, Egypt, Ethiopia, Ghana, Indonesia,
24:12Iraq, Kenya, Malaysia, Nigeria, Sri Lanka, Tanzania, Uganda, Zaire, and Zambia,
24:19all of these groups are all attacked, right?
24:22Economically wealthy, but politically weak groups are always attacked,
24:26and that is pretty savage.
24:29And what happens is that you end up with a sort of bureaucratic success,
24:33rather than economic success, which is how large can the bureaucracy grow,
24:38and this is all, of course, rather catastrophic.
24:40Well, it's entirely catastrophic for the countries that are subjected to this kind of stuff.
24:44And so, the last thing that I'll mention is that I dug up a little bit more on the Marshall Plan, right?
24:48The Marshall Plan was the money that was supposed to go to Western Europe and to Japan
24:53following the Second World War, which was supposed to have helped them build up their resources.
24:57And this is, of course, a huge myth, and sort of like the mission,
25:00the myth that FDR saved us all during the Great Depression and all that,
25:04and it's used to basically justify the money that is spent in Iraq, right?
25:09So, Bush sort of put it this way in his announcement.
25:12He said, America has done this kind of work before.
25:15Following World War II, we lifted up the defeated nations of Japan and Germany
25:18and stood with them as they built representative governments.
25:21We committed years and resources to this cause,
25:24and that effort has been repaid many times over in three generations of friendship and peace.
25:28America today accepts the challenge of helping Iraq in the same spirit,
25:32for their sake and our own.
25:35So, well, what did that mean?
25:37Well, of course, after the Second World War, West Germany, Hong Kong, Japan,
25:40much worse state than Iraq is today.
25:43The cities were leveled in discriminative bombing by the US,
25:46the Royal Soviet Air Forces just smashed these cities to bits.
25:50And, of course, West Germany, Hong Kong, Japan, really not so many natural resources.
25:55And, of course, unlike Iraq, which has an enormous oil reserves,
25:58I mean, these countries had almost nothing.
26:01So, what happened? Well, of course, Hong Kong has low taxes, minimal tariffs and regulations.
26:05And there was no welfare state, no large-scale foreign aid.
26:08And this sort of all worked itself out, so Hong Kong did beautifully.
26:12Now, of course, the Marshall Plan was like a tiny, tiny percentage
26:15of the German gross domestic product in 1948, I think it was.
26:19And, of course, West Germany had to pay reparations.
26:22It was much larger than the Marshall Plan aid, right?
26:25West Germany received military defense from the US and England,
26:28but it paid huge fees for this sort of, quote, service.
26:32And the German economic miracle just began with just the usual stuff that you would expect, right?
26:36All the usual suspects of economic growth.
26:38You get privatization, deregulation, end of regulatory controls.
26:41They blew away the tax system that had been imposed by Hitler and the National Socialists.
26:46And that actually is what occurred.
26:49Same thing with Japan. Low taxes, high savings rates, strong economic growth.
26:53Foreign aid intervention, all tiny, completely tiny.
26:56And it didn't need any massive intervention to recover,
26:59even though it's got no, as I mentioned before, it's got no oil fields like Iraq.
27:03So this is pretty much what happens is a lack of violence, right, is what grows economies.
27:10Foreign aid is cancer upon the throats of the people that it is sort of supposed to be, quote, helping.
27:16All the people you see in the ads for foreign aid never receive any benefits from the programs.
27:20All that happens is the programs, you know, American lawmakers get bribed.
27:24They also get to bribe American companies with lucrative foreign contracts,
27:27as I talked about in my last podcast.
27:29And the money all gets sort of swept out, and they get to increase taxes and controls over the American people.
27:34And the idea that there's any kind of interest in helping the poor in the third world is laughable.
27:39I mean, all you have to do is look at the statistics.
27:41Forty billion dollars flushed into the sewer of Africa with the simple result that, you know,
27:47a quarter of the population is dying of AIDS.
27:49This is all the kind of stuff that you would exactly expect from the use of violence.
27:52Violence never produces anything good, never has, never will.
27:55And foreign aid is just another example of this mess.
27:58So thank you so much for listening, as always.
28:01And I will talk to you soon.