IREF - Institute for Research in Economic and Fiscal issues
Fiscal competition and economic freedom
This is the problem that government representatives are discussing at the United Nations antipoverty summit this week.
The French President Nicolas Sarkozy hurried up to announce that despite of its deficits France will increase its aid by 20% and become the second world contributor after the USA. Donating public money, he added, is not enough to help end poverty and meet other U.N. goals. He renewed France’s push for a small international tax on financial transactions. This proves, if anything else two things : that the French President has an interesting understanding of the concept of “donation” and that he has no understanding at all of how development works.
State aids have proven to be inefficient, subsidizing bad governance and keeping the poor in a position of dependence. This is why Africa is still struggling, despite of the billions and billions of state aid going there from decades. Trade, on the contrary, is helping poor people to bail themselves out of misery. The examples for that are not missing – China, India, South-Eastern Asia…
If he really wants to help, Mr. Sarkozy should rather suggest the abolition of the Common Agricultural Policy, which keeps African agricultural production out of the European market.