Foreign Aid: It’s (General) Electric
Last week, I blogged about President Obama’s decision to increase “security cooperation” and make “significant new investments in African peacekeeping” following the U.S.-African leaders summit. President Obama also announced that the federal government would be spending an “additional” three million dollars on the “Electrify Africa” program. This program provides taxpayer-backed loans to electricity projects in Africa that are oftentimes built by large U.S. Industries. In other words, it is another example of corporate welfare disguised as welfare for the needy.
The Electrify Africa program is not the only source of new economic aid to Africa coming from the Obama Administration as a result of this summit. The World Bank has also promised $5 billion of direct funding, a good chunk of which will come from U.S. Taxpayers. Meanwhile, the US Taxpayer-funded Millennium Challenge Corporation last week pledged to invest up to $498 million over the next five years to help overhaul Ghana’s power sector.
The summit also produced commitments by several businesses to increase investments in Africa. However, these investments might not have taken place without government aid. As General Electric chief executive Jeffrey Immelt said “Whenever the U.S. is even a small partner in a deal, it brings a lot of investors with it.”
These type of government financed programs distort and politicize the market, benefiting the political and business elites in both countries and harming taxpayers and workers in both countries. Also harmed are those entrepreneurs and businesses who might be more efficiently able to develop electricity for Africa but lack the political connections to take advantage of the government-backed programs and cannot get access to private capital because the capital is flowing to the programs with, as Jeffery Immelt said, have the U.S. Government’s “seal of approval.”
This is why Campaign for Liberty is working to end all foreign aid and corporate welfare.