Monday, March 11, 2013

US Aid to Africa

Policy in Africa. It's complicated, and so I'm going to try a quick cut at it. Let's start with some theory of political power. In order for a leader to gain and keep political power, she must assemble a winning coalition. This is a group of people who, together, have enough power to exclude rival coalitions. What does it take to form a winning coalition? How many people are needed to form a winning coalition? That depends on the political and social institutions in the society. For simplicity, consider democracy, vs dictatorship. In a true democracy, a winning coalition is formed by voters who get behind a leader. Depending on the specific rules (rules are one kind of institution) a winning coalition might need to be more than 50% of voters, or it just might need to be more voters than the next rival. In order to form a dictatorial winning coalition, the leader must attract a group of elites who can control armed forces and trade -- again, enough to be able to defeat rival coalitions.
Once a leader has formed a winning coalition and taken control of the commanding heights, then she must concern herself with maintaining the power she has won. Essentially, she must maintain her coalition, and prevent rival coalitions from gaining enough power to unseat her. Under democratic political institutions this means enacting policies that voters desire. Under dictatorial political institutions this means dispensing patronage to the group of elites who form the winning coalition. 
So right there, you can see already that political institutions matter, because those institutions will profoundly affect what kind of policy will be enacted by a successful leader. Even a good-hearted leader who rules under dictatorial political institutions must run a corrupt regime (using taxes to buy the continued support of coalition members), or face ouster as her coalition disintegrates with members fleeing to rival coalitions that promise more generous patronage. Conversely, even an evil-hearted and venal leader must embark on broad-based social welfare spending in order to maintain the support of large numbers of voters.
Now, assuming that you more or less accept the arguments I've made so far, consider the goals and impacts of western foreign aid in Africa. 
First the goals. From the point of view of the leader, the goal of ANY policy is the maintenance of political power. (There are exceptions, but I'm trying to be brief, so accept the simplification.) So, why should, for example, the American Congress choose to send foreign aid to nations in sub-Saharan Africa? How does giving away my money to aid people in Africa make me want to vote for you? Maybe because I'm altruistic. But even if I am, I don't need my Congress person sending my tax dollars to Africa for me. I can donate directly myself. So what's the real reason? The reason is that foreign aid is used to get African leaders to enact policies that are favorable to Americans. I'll vote for you because you made things better for me, and one of the ways you did that was by bribing foreign leaders so that they would, for example, open up trade with the U.S., or allow us to fly military planes over their country. 
Now, you have to remember that many sub-Saharan nations have dictatorial political institutions. That's important, because it tells us what strategies the leaders of those nations are using to maintain power. They are paying off the group of powerful elites who are their winning coalition. Foreign aid that enters the country doesn't just get dumped out on the street for the people to come pick up. It has to be distributed by someone, and it's usually distributed by agents of the government. So, some of the aid gets skimmed off to directly pay the members of the winning coalition. Some goes into the war chest of the leader. Some gets spent on military and police, in order to further strengthen the leader's power. And some does actually get distributed to the people -- but strategically in order to maintain the power of the winning coalition and to weaken rival coalitions.
Long story short, our government uses foreign aid to buy favorable policies from foreign nations. And those favors have to be bought because they are unpopular policies among the people in the nation where they will be enacted. The leaders of these foreign nations are willing to enact unpopular policies because they need the money to prop up their winning coalition. 
So, it should be fairly obvious why over the past 60 years foreign aid has failed to produce economic growth in sub-Saharan Africa. That aid has gone toward propping up dictatorial and kleptocratic regimes, not toward building a brighter future for average Africans.