Studying the Third World -- And Getting It Wrong

August 14, 1994|By JAMES A. DORN

In the shadow of Baltimore's renaissance lies the reality of inner-city life. Out-of-wedlock births, welfare dependence, poverty and crime have become eerily normal. Decaying family life -- nearly 80 percent of inner-city black births are out-of-wedlock -- and decaying economic life -- Baltimore has lost 20,000 jobs since 1983 -- have combined to create a nightmare that has derailed the American dream.

While the Inner Harbor thrives, the city's neighborhoods and communities are fighting to restore civility and revitalize economic life. Whether the forces of progress or the forces of decay win the battle will depend on the vision of Maryland's leaders, both in the private sector and in government.

The choices seem clear: Continue with the failed vision of the Great Society, in which government's main function is to transfer income, or rediscover the nation's founders' vision of society, in which government's main role is to safeguard citizens' rights to life, liberty, and property, so that the economy can grow along with civil society.

The reality is that after spending $5 trillion on means-tested welfare since 1965, we have only made people more dependent on the state. The task for Baltimore's leaders is to cultivate an ethos of independence and create the conditions for economic revival, so that individuals can break away from the parasitic state and accept responsibility for their own lives and those of their children.

Civil society, city life and economic development depend on private initiative and commitment to hard work, honesty, and reliability -- values that are acquired at home, in school, in church and on the job. People need jobs for dignity and self-respect, but they must also bring dignity and self-respect to their jobs. If Baltimore's economic life is to be revived, its civil society must also be revived.

Mayor Kurt L. Schmoke is trying hard to revitalize city life, but his overall approach is not so much to limit government as to reinvent it. Most strikingly, the mayor has given Baltimore the distinction of becoming the first U.S. city to enroll in "Lessons Without Borders," a program initiated by J. Brian Atwood, director of the U.S. Agency for International Development. Although the program is advertised as bringing Third World solutions to America's inner cities, a more realistic view is that the program is another example of bureaucracy in action. What Mr. Atwood is really looking for is a way to reinvent his agency after its history of failure.

Since its founding in 1961, AID has spent more than $114 billion but has had little impact on the plight of less developed countries. As a Clinton administration task force admitted last year, "Despite decades of foreign assistance, most of Africa and parts of Latin America, Asia and the Middle East are economically worse off today than they were 20 years ago."

Like the welfare state, AID has created a huge bureaucracy that has sought to perpetuate itself while inadvertently perpetuating poverty. No doubt the bureaucrats' intentions are good, but their intentions and their dollars have not paved the road to economic well-being.

With its reputation abroad tarnished and its budget cut over the last decade, AID is hoping to reinvent itself at home. And with Baltimore's Third World-type problems, the mayor is looking for help from any quarter. Even though the agency's mandate prohibits it from extending financial aid to America's "Third World," U.S. cities are hoping that AID's advice on such issues as health, poverty and unemployment will be followed by real money.

Eyeing AID's $7 billion budget, the head of Baltimore's Council for Economic and Business Opportunity, Michael A. Gaines Sr., told the New York Times, "If you were able to fold some of those AID resources and knowledge, with the Housing and Urban Development agency and the Commerce Department, and start working in a coordinated way in this country, oh man, the potential would be tremendous."

There may be important lessons to be learned from AID's experiences in the Third World, but those lessons are different from what Mr. Gaines, and others who favor a government-led approach to development, would like to hear.

The real lessons from AID's experiences in the Third World -- lessons that have direct relevance to Baltimore -- are the following:

* Official aid politicizes, and therefore retards and corrupts, economic development;

* Whenever government gets involved in development, the aid inevitably gets wasted and the aid bureaucracy becomes entrenched;

* Aid produces no goods; it simply redistributes existing income and wealth.

The conclusion of the report issued by AID Administrator Alan Woods in 1989 is telling: "Only a handful of countries that started receiving U.S. assistance in the 1950s and 1960s has ever graduated from dependent status. . . . Where development has worked, and is working, the key has been economic growth."

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