May 23, 2009 8:00AM

Foreign Aid Establishment Runs Scared

For years the foreign aid establishment has simply pointed at pictures of starving children abroad and said: give. Congresses and presidents have responded by tossing billions at the World Bank, International Monetary Fund, U.S. Agency for International Development, and other so‐​called aid agencies. The result, unfortunately, has been continuing poverty mixed with increased indebtedness. For good reason aid has been said to involve taking money from poor people in rich countries and giving it to rich people in poor countries. But the arguments against misnamed “foreign aid” advanced by Cato and other free market advocates have been largely ignored.

The latest challenger is Zambian economist Dambisa Moyo, who has gained significant public attention for her new book, Dead AidI’ve reviewed it in the Washington Times and Cato has hosted a forum for her. Dedicated to legendary British economist P.T. Bauer, the first recipient of Cato’s Milton Friedman Prize, Dead Aid excoriates the aid establishment for supporting policies that actually make recipients worse off. Foreign aid would be better called foreign hindrance.

Now, reports the Financial Times (full text hidden behind a subscription wall, alas):

A swell of opposition is building in the aid world to a new protagonist who has thrown down a strident challenge to the rock stars and liberal economists who have long dominated debate over foreign assistance to developing countries.

Galled by the ease with which Dambisa Moyo, a Zambian economist and former investment banker, has risen to prominence this year, activists are circulating detailed critiques of her ideas and mass mailing African non‐​government organisations to mobilise support against her.

Yet it is proving hard to suppress the hyper‐​active graduate of Oxford and Harvard, who pops up weekly in a new capital to promote her book, Dead Aid — the title itself an affront to rock star Bob Geldorf’s Live Aid campaigns.

Obviously the aid lobby is worried. Free market friends should jump in to back up Moyo. She has brought both attention and credibility to the case against foreign aid. This moment must not be wasted.