This weekend, the Eighties are back with a revival of the massive concert cum charity event experience. In London, Paris, Rome, Berlin, and Philadelphia multimillion dollar music acts will perform at Live 8, an event designed to pressure the G8 leaders to forgive Africa’s international debt of more than $40 million.
At first blush it seems like a great idea. How could these countries develop economically if all their money has to go toward paying the interest on their loans. Every person with a loan or credit cards can identify. But is just wiping out the debt the best solution?
World magazine echoes my own thoughts on this. It warns that a blanket forgiveness doesn’t help poverty stricken families, but rewards the corrupt and inept bureaucrats who caused the condition in the first place, setting the stage for them to get back into the debt they just go out of. After all, it happened once before. Between 1989 and 1997, $33 billion in debt was written off for 41 poor countries. As of today, those countries have incurred new debt totaling $41 billion.
They list the facts as opposed to the media hype on African debt:
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Debt relief goes to governments of poor countries, not to poor people.
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Debt relief rewards poor countries with high debt without assisting the impoverished in equally poor but low- or no-debt countries.
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Macro-goals make little room for the only kind of accountability that works: local supervision over the performance of specific programs on the part of bureaucrats, nongovernmental aid agencies, and church-based relief workers.
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Debt elimination would have a chilling effect on credit.
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Debt elimination would have a chilling effect on private charity.
Meanwhile, the US alone gave $16 billion in aid to Africa in 2003 and private charities gave more than $35 billion in 2000. Plus the billions given by other countries on top of those loans.
What Africa needs is not debt forgiveness, but democratic reform, the rule of law, free trade with the West, and an end to the brain drain of the best and brightest from those countries. Unfortunately, those don’t fit neatly on a bumper sticker, they take hard work over a long period, and they’re difficult to translate into grand gestures like tearing up a bill for $40 billion. And that’s why grandstanding politicians and rock stars don’t like them.
