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Isn't America Bankrupt? Why Are We Subsidizing Other Countries?

The U.S. is effectively bankrupt, but every government department and program continues to be absolutely, completely, fully indispensable.  Like so-called foreign aid—which has done nothing to promote economic development in the Third World.

Naturally, Secretary of State Hillary Clinton is aghast at the thought that Congress might simply cut back (not end) the many programs transferring cash to foreign countries.  Reported the Washington Post:

Clinton noted that the State Department had over 1,000 economic officers around the world and 200 in Washington, as well as 400 foreign staff working on business and economic issues.

“Other countries are, very frankly, providing much greater direct support to their businesses, tilting the playing field in their favor,” she said.

She said diplomats helped American businesses by promoting U.S. exports, negotiating trade agreements and fighting regulations and practices that discriminated against U.S. firms.

Clinton also portrayed U.S. development aid as something that created stable export markets — and wasn’t just a helping hand. That is an argument others in the Obama administration have also sought to make.

“As we help these nations meet their own challenges and grow their own economies, their men and women will buy their first cars, their first computers, and everything from movies to medical equipment. And many new consumers will buy them from us,” she said.

 

But the proper response is, so what?  It's a dumb idea.  As the late British economist P.T. Bauer observed, giving foreign aid in the hopes that some will be spent in America is like a store owner tossing $100 bills on the street hoping some people will stop by and spend some of their windfall in his shop.

And even if U.S. companies benefit, so what?  Why should average Americans pay to pump up corporate profits from foreign sales?

Foreign aid long has been known as taking money from poor people in rich countries and giving it to rich people in poor countries.  Now, it seems, foreign aid is being promoted as taking money from poor people in rich countries to give it to rich people in rich countries.

How about a different approach?  No more subsidies for foreign governments or American corporations?


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