Economic War Games: Coming Full Circle

It is ironic that as the U.S. Congress and public are starting to seriously re-evaluate the billions of dollars we send overseas for foreign aid and assistance, it was exactly 50 years ago that the 1961 Foreign Assistance Act was passed.

The act was in response to the need to set parameters when supplying aid to developing countries. It was an outgrowth of the post-World War II Marshall Plan which found the U.S. rebuilding the very countries we had just conquered during the war.

While Eisenhower tried to scale back foreign aid, his initiative came to a halt when a new Democratic president, John F. Kennedy, was elected.

The incoming Kennedy administration made reorganization of and recommitment to, foreign assistance a top priority. It was thought that to renew support for foreign assistance at higher levels, to address the widely known shortcomings of the previous assistance structure, and to achieve a new mandate for assistance to developing countries, the entire program had to be “new.”

In proposing an expanded United States foreign assistance program in 1961, President Kennedy provided a justification based on three premises:

• Then-current foreign-aid programs, “America’s unprecedented response to world challenges,” were largely unsatisfactory and ill-suited for the needs of the United States and developing countries;

• The economic collapse of developing countries “would be disastrous to our national security, harmful to our comparative prosperity, and offensive to our conscience;”

• The 1960s presented an historic opportunity for industrialized nations to move less-developed nations into self-sustained economic growth.

Kennedy famously remarked: “Although our aid programs have helped to avoid economic chaos and collapse, and assisted many nations to maintain their independence and freedom — nevertheless, it is a fact that many of the nations we are helping are not much nearer sustained economic growth than they were when our aid operation began. Money spent to meet crisis situations or short-term political objectives while helping to maintain national integrity and independence has rarely moved the recipient nation toward greater economic stability.”

His words resonate just as loudly today. We have poured billions into Iraq and Afghanistan but prophetically we are seeing no move “toward greater economic stability.”

In 50 years we still haven’t figured out that throwing money at other nations without a stable government and economic base will not work. Mix in a lack of oversight and corruption, and we continue to grapple with billions of dollars turning into trillions of dollars disappearing with little or no progress.

It’s time to run this government like a business. When a business lends money there are vital indicators to be monitored and results demanded.

A very basic consideration is return on investment (ROI). The recipient is expected to keep financial records so their expenses and cash disbursements can be tracked. Why are nations that receive our aid not being held accountable? The United States no longer is in a position to be the world’s piggy bank.

In the infrequent cases where aid may be justified, quantifiable American interests must be clearly measured. Those receiving our aid must maintain a government whose interests complement those of the United States. They must respect human rights and not exploit their people… and they must trade fairly with the United States. If you don’t like our rules, don’t expect us to keep bailing you out of financial ruin.

But if we truly did run our government like a business, we would quickly realize we do not have the funds to invest in other peoples ventures. Whatever financial resources we can muster must be invested in our country to alleviate the suffering of our people.

It is fitting on the fiftieth anniversary of the Foreign Assistance Act that we realize its folly and reinvest these funds where we get the highest return.

We have better ways to spend this money – right here at home.

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