The best reason to hate international aid

It's not just that so much of it is wasted on the bizarre priorities of woke federal bureaucrats; it's that it creates the worst possible dependency in the recipients, and that problem is unfixable.

You may have heard of what economists call the “resource curse.”

If you haven’t: the resource curse is a paradoxical problem for poor countries that are rich in minerals or oil. Despite their seeming bounty, those countries often wind up behind their neighbors and beset with political strife.

Why?

The quickest way for smart or powerful people in asset-rich countries to get rich is by getting their share. As leaders or bureaucrats, they can do so by demanding bribes from the companies extracting the oil or gold. Sometimes they go even further, by directly nationalizing and seizing the wealth for their countries (and themselves, of course).

The resource course is real, and it hits almost every country, from Nigeria to Venezuela to Iraq to Mexico to Russia. At best, it means that a country’s elites are spending their time and attention on wealth that by definition cannot grow — fighting over slices of an already-cooked pie, rather than building new bakeries.

At worst, it can drive civil wars.

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(Beverly Hills, that’s where I want to be)

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The key element that turns a resource into a curse is that the asset exists essentially outside of the nation’s local, productive economy.

Oil’s price is set on world markets, and he cost of extracting it is low relative to the cash it generates. The money for it flows from in wealthy countries, leaving windfall profits that politicians and bureaucrats fight over.

Maybe you see where I’m going with this.

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