Why Africa is Being Destroyed by Foreign Aid

Over the past 45 years the US alone has given over $500 billion in foreign aid to the continent of Africa. The US even gave Africa $1 Billion last year, despite the fact that it has been facing it's own economic depression for the past several months. You'de think that with all the money sent to Africa, the poverty there would have been eradicated or that some sort of positive change would have occurred buy now, right? According to Dambisa Moyo, the author of the New York bestselling book Dead Aid, instead of helping Africa our efforts have hurt them even more. Moyo, who was born in Africa and has a PhD in Economics from Oxford University, says that despite the trillions of dollars the world has given Africa, it is still the poorest continent on the planet and poverty and disease there has more than tripled since we began sending them aid in the 1960's. Some 46% of Africans survive on less than $1 a day and half of them are surviving on less than 50 cents a day. Clearly Africans are not receiving any of the $$ that the world is sending them, so where exactly is it going then? According to Moyo, the money is ending up in the hands of corrupt African politicians, criminals, and individuals who serve to defeat the idea of a prosperous Africa, not the starving women and children we often see images of on the evening news.

Moyo also says that strict government regulations on African businesses have oppressed them economically. Many African leaders have established government monopolies, price controls, high taxes, nationalized foreign investment and excessively regulated foreign investors and even their own business class. As a result, African nations have seen huge losses in economic activity and foreign investment, a deteriorating infrastructure, and declining economic competitiveness with other developing regions. Basically, government interference in business has hurt Africa, the money we have been sending them is ending up in the wrong hands and helping these oppressive governments and the only way to save them is to help them find ways to trade with China, access the capital markets, and promote capitalism. That thing that everyone seems to hate these days called "capitalism" is the cure to a horrible and devastating system that is destroying an entire continent.

There is a way to put money directly into the hands of the African people, instead of their corrupt governments. An organization called Kiva, lets people like you and me give small loans over the internet to Africans, who are then able to start their own businesses. You can give a loan as small as $25 and as much as $1000, which is enough money to start a business in Africa. Not only are Africans able to start their own businesses with these small loans, but they are often able to live comfortably and support their entire families and sometimes even their whole village. And you won't believe this....99% of these people pay back their loans in full, and with interest (Forbes, 2009). A woman in Tanzania started her own juice business with a loan of $300 and was able to support her family and send her children to school as a result. So far, Kiva has assisted about 40,000 borrowers in 40 countries and provided a total of about $27 million in funding (Forbers, 2009). The founders of Kiva won a Nobel Peace Prize for their ingenuity in 2006. Foreign aid and strict governmental regulations have hurt Africa, but Kiva is an example of how capitalism and promoting the small business owner is the best way to empower Africans and help a person, a village, and an entire continent.

Read more about Kiva and how foreign aid is hurting Africa
http://www.forbes.com/2008/06/03/kiva-microfinance-uganda-ent-fin-cx_0603whartonkiva.html
http://www.kiva.org/
http://www.heritage.org/Research/MiddleEast/bg947.cfm

Why are the Rich Staying Rich While Everyone Else is Getting Poorer? You Need To Know the Truth

Did you know that 90% of all the jobs that were created in the past 10 years, were created by small businesses. Fourty-five percent of all the current employment in the US can also be attributed to small businesses, and you won't believe this.....98% of all the jobs in the private sector can be accredited to small businesses, not large corporations (Forbes, 2009). That’s amazing if you ask me. President Obama even said in March 2009, that "If small businesses fail, we all fail.” He says he wants small businesses to succeeded, but he wants to increase taxes on people making over $200K a year and what he fails to understand is that 99% of small business owners fill their taxes as individuals in order to save money for their businesses. It might seem like these individuals are making over $200k, but they have to pay their employees and their overhead fees and whatever profit is left they typically recycle back into their business. These aren’t wealthy people. They’re hard working middle class people and the more money they save, the more employees they are able to hire, which means fewer people will be out of work and the better off our economy will be.

Obama says that he only wants to increase taxes for "the rich" but the truth is the rich never pay taxes anyway because their accountants find loop holes in the system, or they stash their cash in foreign accounts. The billionaire Warren Buffet even admitted that he never pays taxes. Thus, middle class people and small businesses are stuck with the bruden and are never able to hire more people. Instead they have to lay off people or they eventually go out of business. And it's becoming more difficult for ordinary people to start their own business because of the ever increasing tax barrier, and are becoming stuck at dead end jobs were they have no opportunity for upward mobility. You might think that Obama's tax increase won't affect you but it will because when businesses suffer, unemployment goes up and the price of food, rent, utilities and everything else goes up as well. The economy gets worse, rich people stay rich and everyone else gets poorer.

If the president would instead enforce a low flat tax for all, then rich people would finally stop stashing their cash in foreign accounts and the government would be able to bring in huge amounts of revenue without hurting the rest of us. This was recently done in Slovakia, and the wealthy there couldn't find loop holes in the tax code anymore because it became so simple. Sales tax and all hidden taxes were abolished and remarkably, the poor didn't end up paying anymore then they had already been paying but their standard of living went up because the price of food an everything else went down (Forbes, 2009). When President John F. Kennedy enacted across-the-board tax reductions, including dropping the top tax rate, the economy boomed in the 60's (Forbes, 2009). Of course implementing a low flat tax will never happen because that would mean that the tax code would become too simple, so simple that no one would ever be able to evade it and politicians don't want that to happen because they use the tax code to hurt their enemies and reward those who are in step with their agenda. Why else would the government let Charles Rangel, the man you actually writes the tax code, and Timothy Geithner, the man who is actually in charge of overseeing the tax code, get away with not paying thousands of dollars in tax but will go after someone as irrelevant (but a perceived enemy none the less) as Joe the Plumber?

Obama is right that "If small businesses fail, we all fail," but unfortunately his tax increases on small businesses will be the very reason why they fail in the first place.

Read more about Slovakia's flat tax
http://www.forbes.com/free_forbes/2005/0606/031.html
http://hbswk.hbs.edu/item/5653.html