This book is not about specific development policy. It is not a book about whether one way of tackling the HIV–AIDS problem is better than another, or if one education strategy yields better results than another. It is about how to finance the development agenda so that, whatever the development policy, economic prosperity might be realized. Dongo will only change if its fundamental model of aid-dependency is abandoned and the Dead Aid proposal of this book adopted wholesale, in its entirety. The choice of development finance is at least as important as the policies a government adopts. You can have the best development policy in the world, but without the right financial tools to implement it, the agenda is rendered impotent. Put differently, it matters little whether Dongo is capitalist or socialist in development orientation – of paramount importance is how Dongo finances its economic development. Indeed, neither a capitalist nor a socialist economic agenda can be truly achieved in the longer term without a financing strategy based on free-market tools. Implicit in the proposals that follow are financing solutions that have their roots in the free-market system. This invites the question: is it possible for a government to raise money in a free-market way and spend it on a socialist agenda (for example, provide free education and healthcare)? The answer is yes: Sweden, Denmark and Norway are just three examples. Whatever the social, political and economic ideology a country chooses, there is a menu of financial alternatives (all better than aid) that can finance its agenda. Can a government use free-market tools and still maintain its core socialist values? The answer is not only yes, it can, but, perhaps more importantly, it has to. And even when a government finances itself using socialist-like tools (for example, high taxes), it must still rely on some market-based financing tools in order to successfully achieve its economic goals.
Last excerpt I’ll be sharing from this book. The key message is that economic ideology between socialism and capitalism is a false dichotomy when it comes to development. The financing solutions that are effective in developing a nation has to be grounded in free-market tools.
These include things like micro-finance, finance access to centralised banking services rather than the inefficient and informal methods, trade and direct investment. Without being able to build a sustainable middle class through these methods, any aid only increases the competition for resources and prevents a sustainable middle class from ever developing.
Another short passage from another aspect of the book that highlights this as follows:
An aid-driven economy also leads to the politicization of the country – so that even when a middle class (albeit small) appears to thrive, its success or failure is wholly contingent on its political allegiance. So much so, as Bauer puts it, that aid ‘diverts people’s attention from productive economic activity to political life’, fatally weakening the social construction of a country.”.
