Rob's Blog

I’ve written about the philanthropy of Bill Gates before, but I wasn’t aware of the extent of his generosity. Johan Norberg, in In Defense of Global Capitalism writes:

Capitalism does not force people to maximize their profit at every turn; it enables them to use their property as they see fit, free of political considerations. Microsoft’s Bill Gates, the very personification of modern capitalism, himself devotes more to the campaign against disease in the developing countries than the American government does. Between November 1999 and 2000, through the $23 billion Bill and Melinda Gates Health Fund, $1.44 billion went to vaccinate children in developing countries for common diseases and to fund research into HIV/AIDS, malaria, and TB, for example, in developing countries. That is a quarter of what all industrialized nations combined devote to combating disease in developing countries. So the fact that Bill Gates is worth more than $50 billion should give the poor and the sick of the world reason to rejoice. Clearly they stand more to gain from a handful of Gateses than from the whole of Europe and another couple of WHOs.

In fact the WHO, despite all its rhetoric, and even its own reports stating that these diseases account for 90% of all deaths under the age of 44, has moved vaccination down its list of priorities according to Norberg. Instead they devote more of their resources to campaigning against smoking.

Indeed, it seems as if when governments try to help developing countries they make things worse. The Drop The Debt people actually have a point. But not only should third world debt be cancelled, it should never have been lent in the first place, nor should it again, at least by governments. After all – if the loans had achieved their purpose – to build up third world economies – paying them back would not be a problem. As usual with government interference, loans often have the opposite effect to that intended. They prop up corrupt and impotent regimes, get squandered on worthless trophy projects and, when written off, actually encourage more borrowing as an alternative to fixing a country’s economy. As an example, Norberg quotes the Russian economist Andrei Illarionov:

[The $25 billion that the IMF and the WB lent Russia during the 1990s] substantially helped to postpone the implementation of a coherent economic strategy and reduced the willingness of national authorities to make painful but necessary changes in economic policies. … The Russian political elite is now firmly convinced that Russia will regularly receive international financing regardless of its economic policies.

The solution is to write off third world debt by all means, and then don’t lend any more money. It’s clear why government lending doesn’t work: governments don’t really care if it’s successful. If they don’t get paid back, so what? It wasn’t their money to begin with, and they still get to look good for being so generous. Investment in the third world, like so much else, should be left to capitalists who are more likely to lend wisely because they actually want their money back.

This entry was posted on Tuesday, July 6th, 2004 at 7:30 pm and is filed under Authorised Theft. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.