Acton Institute Powerblog

‘Let them eat aid’: The error of a ‘Marshall Plan for Africa’

 

European Parliament President Antonio Tajani has called for Europe to provide an ambitious “Marshall Plan for Africa,” something they have debated for more than a decade. The proposed $47 billion aid package would emulate the U.S. plan that purportedly saved much of Europe from embracing Marxism after World War II – but Religion & Liberty Transatlantic author Ángel Carmona warns that historical and economic reality may put a damper on the outcome.

The efficacy and operation of the Marshall Plan, implemented under President Truman in 1948, has long been misunderstood by students on both sides of the Atlantic. Tyler Cowen found that economies that received the greatest amount of U.S. foreign aid had the lowest economic growth from 1947 to 1955. Jeffrey Tucker of FEE has explained the aid did little to benefit indigenous industries:

[T]he aid was used for purchases at distorted prices by American tax dollars in the hands of European governments. … The aid was also used to directly subsidize particular firms in recipient countries, whether or not there were viable markets for their products. Instead, the firms received money because their continued existence would artificially support “full employment” policies. And since American labor union groups were intimately involved in choosing who got the money, the lion’s share went to companies with closed union shops, paradoxically restricting the ability of labor markets to readjust to new economic realities. … The result was the largest peacetime transfer of wealth from the taxpayers to corporations until that point in U.S. history.

Clearly, European leaders should not look to this as a blueprint for building an enduring African economy. Government aid of itself cannot lift people out of poverty.

It should also concern people of faith than at least one prominent Europhile leader would like to link the forthcoming “Marshall Plan” to Africa’s “demographic transition.” The lure of foreign funds may be too strong for African leaders to resist implementing compulsory population control.

Instead, Europe should look to reduce economic intervention – in Africa’s economies and its own, writes Carmona in a new essay at R&LT titled “‘A Marshall Plan for Africa’ won’t help Africans; free trade will”:

Deeper, laissez-faire economic reforms are the only road to prosperity. At the same time, corruption must be fought efficiently. Botswana is a model, as one of the richest countries in Africa, the least corrupt African nation, and one of the 34 freest economies on the globe (Africa’s second freest).

The most effective way for Europe to help others, Carmona argues, is for its leaders to open its markets to more Africans exports, which are currently locked out of the continent by EU policies.

This kind of change will involve capital – political capital – from EU politicians. It’s easy to ask for money for another government program (especially from those who do not pay taxes). It’s harder to ask Europeans to give up the protective cocoon of policies that regulate their markets, in the process forcing Europeans to pay higher prices for food and forcing African farmers out of a nearby and lucrative market.

After citing abundant economic data to buttress his position, Carmona says that those who support the free market must understand that arguing about efficiency is not enough:

In a hypothetical campaign for agrarian market liberalization, politicians and supporters of liberty must not focus only on GDP statistics and other macroeconomic data. They must reinforce that Europeans would be able to buy cheaper products, since they are currently charged for costly regulations and subsidies, and they can exchange with a wider variety of non-European countries.

Most importantly, from a moral standpoint, as in real life, it’s easy to understand trade is a way to benefit oneself and one’s neighbor. Lower prices free up more capital for other family priorities. At the same time, Africans can begin to expand their export market and purchase more of the necessities of life. Everyone benefits. Trade is a way of giving life to others. On the other hand, commercial boycotts are a way to protest views that we wish to stamp out.

My fellow Europeans must come to see trade liberalization as a way to express solidarity with Third World farmers, to lift African people out of property, and to benefit their own families through lower prices. They must see it is a good and moral choice. When morality is engaged, human flourishing will follow.

Read the full essay here.

(Photo credit: EU2017EE Estonian Presidency. This photo has been cropped. CC BY 2.0.)

 

Rev. Ben Johnson

Rev. Ben Johnson is Executive Editor of the Acton Institute's flagship journal Religion & Liberty and edits its transatlantic website.