LET CAPITALISM SOLVE WORLD POVERTY

The critics are after the United States again. This time it's about our “low” foreign aid budget.

United Nations studies indicate that over one billion people throughout the world live below the poverty line. Citing this tremendous problem, the critics point the finger at America and claim we are giving too little to solve the world's dire poverty problems. They claim that our total contribution is only about $7 a person, or less than the cost of one discount CD. Every American should rightly hang his head in shame, according to those who believe that government can end world poverty by throwing lots of money at it. Enthralled with its own study, the U.N. has hatched a plan which calls for every nation to commit annual poverty spending of 0.7 percent of its Gross Domestic Product (“GDP”). With a GDP of about $10 trillion, the U.S. would be hit with an annual bill of about $70 billion, just the thing to solve our federal deficit problem. While the administration is trying to stimulate the economy and create jobs by lowering taxes, the bureaucrats at the United Nations seem to be going in the opposite direction, working on strategies to increase our taxes or balloon our deficit.

Besides, history is against the U.N. It really wouldn't matter whether we increased our foreign aid to $70 billion or $700 billion, nothing worthwhile would come of it. What international corruption did not steal, governments would misuse. You see, governments are much more likely to create poverty than solve it. A history of Africa and Asia demonstrates how government leaders have impoverished their nations, even those like China, Indonesia and Nigeria, which are rich in natural resources. The same histories demonstrate that the nations which have eliminated poverty and prospered are those which have demanded capitalism, not foreign aid.

After World War II, when Europe was devastated, foreign aid in the form of the Marshall Plan rebuilt the infrastructure of Western Europe. But it was capitalism that brought Britain, France, Germany, Holland, Belgium and Italy to unparalleled economic prosperity. In Asia, Singapore, Hong Kong, Taiwan, South Korea and Japan embraced capitalism after 1945 and became economically powerful and prosperous.

Nations which rejected the disciplines and requirements of capitalism foundered. Eastern Europe fell far behind Western Europe. The Republic of China fell well behind Taiwan. South Korea is rich while North Korea suffers a famine-laced poverty. India embraced socialism and remained poor despite its stature as the world's largest democracy. The Soviet Union collapsed under the weight of its unproductive state-controlled economy.

Although one billion people subsist in dire economic straits, there is some good news. In the past few years, over 400 million people have been rescued from poverty. Curiously, almost all of those rescued reside in China and India. How did government action and foreign aid rescue all those Indians and Chinese? It didn't. Starting in 1990, China loosened the state controls over the economy and accepted capitalism. Many state industries were privatized. As a result, foreign investment poured in from corporations in Europe and North America. By the end of the millennium, China was well on the way to becoming an economic superpower. Today, China has become the world's factory and boasts the second largest economy on the globe – one which just might overtake the U.S. economy.

India stubbornly stuck with socialism ten years longer than China. Badly shaken by the rapid growth of its Northern neighbor, India started loosening the bonds of government control at the end of the millennium. With its English-speaking population and six fine technical colleges, part of India morphed into the world's “back office,” becoming the outsource capital of the world for white-collar work. Although the majority of its population is still mired in poverty, India's economy has leaped ahead of Germany's and is expanding rapidly.

There is no country in the world which has escaped poverty by becoming dependent on foreign aid. But there are many countries which have achieved prosperity by embracing capitalism.