Foreign Aid and the United Nations

In part one of this series, I introduced this discussion of Objectivist Peter Schwartz’s new book, The Foreign Policy of Self-Interest: A Moral Ideal for America. I outlined briefly his core argument and suggested that it was marred by ahistorical and rationalistic elements.

One example of what I’m driving at can be found in Schwartz’s discussion of foreign aid and the United Nations. “Multi-billions in U.S. foreign aid are doled out to countries that excoriate us as corrupt hegemonists,” Schwartz asserts. “America is routinely vilified at the United Nations, while we blandly continue to provide the financial and political support which makes the existence of that dictatorship-laden body possible” (9). Now, I’m certainly sympathetic to Schwartz’s repudiation of “that disgraceful organization” (44), and of any doctrine that compels the U.S. to act only with the U.N.’s “blessing”(49). I’m less inclined, however, to accept his argument that the U.S. financially sustains the U.N. “with a variety of welfare programs” that are steeped in an “altruist” ethos. Schwartz argues, for instance, that “if Africa needs money to deal with a medical crisis, America provides it. If Mexico needs another massive loan—America arranges it. If China needs nuclear technology—America furnishes it” (10)—all on the basis of the irrational principle that America somehow “owes” it to the world. This is, for Schwartz, an internationalization of the domestic redistributive welfare state (18).

That’s true, but not really in the sense that Schwartz means it. What Schwartz doesn’t quite get is that the U.S. typically enters into these arrangements under an ideological veneer—the “altruistic injunction to think of others before ourselves,” as he describes it (10)—while, in truth, it is embracing the other side of a lethal sacrificial coin. Instead of sacrificing itself for the good of other countries, it is actually sacrificing the wealth of its own taxpayers for the benefit of politically connected corporations and foreign “client” governments. This is not simply a left-wing “materialist” assertion; it is actually a claim made by Ayn Rand herself. (And, in this regard, Rand is part of a larger tradition of individualist, classical liberal, and libertarian thinkers who have exposed the biases at work in state interventionism. See especially part two of my book, Total Freedom.)

Schwartz does not focus on this reality because nowhere in his monograph is there any mention of the complex dynamics of American political economy. And make no mistake about it: The “mixed economy” that Rand derides as “neofascist” was most definitely a political economy. Rand had identified the “business-government ‘partnership’” as the “economic essence” of the U.S. politico-economic system, which she characterized as the “New Fascism.” (On the nature of this kind of “fascism,” see here and here.) As I have written in my essay, “Understanding the Global Crisis” (the parenthetical references here are to Rand’s articles):

This was—and is—a de facto, predatory fascism, the result of pragmatic expediency and of ad hoc, incremental policies that had enriched some groups at the expense of others (“The New Fascism: Rule By Consensus”). ... In such a system, [Rand] argued, we are all victims and victimizers; the whole society becomes a “class of beggars” (“Books: Poverty is Where the Money Is”). For once the rule of force begins to predominate, the institutional means for legalized predation expand exponentially. “If this is a society’s system,” writes Rand, “no power on earth can prevent men from ganging up on one another in self-defense—i.e., from forming pressure groups” (“How to Read (and Not to Write)”).

The New Fascism therefore “accelerates the process of juggling debts, switching losses, piling loans on loans, mortgaging the future and the future’s future. As things grow worse, the government protects itself not by contracting this process, but by expanding it” beyond its national borders. Just as pressure groups had slurped at the government trough in seeking domestic privileges, so too did they benefit from a whole global system of foreign aid, involving financial manipulation (through, for example, the Federal Reserve System, the Ex-Im Bank, and the IMF), “credits to foreign consumers to enable them to consume” U.S.-produced goods, “unpaid loans to foreign governments, and subsidies to other welfare states,” to the United Nations, and to the World Bank (“Egalitarianism and Inflation”).

Note here that Rand recognizes these global institutions as constituted parts of U.S. political economy. These constituents express the neofascist “economic essence” of the system, while also perpetuating it and extending it. (A constituent, in this context, is an integrated part of a larger system, an “internally related” part, if you will; it expresses the logic of that system, and, when taken together with other constituents, makes up the system of which it is only a part.)

Rand goes further: “If looting collectivists did not exist, America’s foreign aid policy would create them.” The overwhelming profiteers of this system were those peculiar “products ... of the mixed economy,” those statist businessmen who “seek to grow rich not by means of productive ability, but by means of political pull and of special political privileges.” Rand observes “that there are firms here and there, in various businesses and industries, who are growing prosperous by trading with foreign countries, the specific foreign countries who receive American aid. In other words, there are businessmen who are selling their products to the foreign countries receiving American aid and who are paid by American funds—who are paid by the aid money granted to those countries. In other words, some Americans are draining the money, the tax money, of other Americans, into their own pockets, via a longer tour through every corner of the globe which receives our foreign aid. This tax money is taken from some citizens, handed to foreign governments and pressure groups and then [it] comes back to some of our citizens, through those successful pressure groups who have pull in Washington.” This was a “siphoning” process, in Rand’s view, a “necessary corollary of a mixed economy, or rather the necessary expression of a mixed economy, now being carried to the international scene. It is a civil war gone international; it is pressure groups using foreign countries in order to destroy our own. That is the meaning of our foreign aid policy” (“The Foreign Policy of the Mixed Economy,” tape).

Rand may have viewed this as American self-immolation in the grander scheme of things, but it is most definitely the kind of self-immolation on which parasitic corporations feast. And the iron triangle here has awful implications: the U.S. government enriches certain politically connected corporations along with the host governments that purchase those corporate goods and services. This introduces additional pressures on the U.S. from foreign lobbyists who profit from the political arrangements. Summarizing Rand’s arguments, I write:

Thus, the New Fascism exports “the bloody chaos of tribal warfare” to the rest of the world, creating a whole class of “pull peddlers” among both foreign and domestic lobbyists, who feed on the carcass of the American taxpayer, causing massive global political, social, and economic dislocations (“The Pull Peddlers”). Whereas the Left derided “capitalist imperialism” for this state of affairs, Rand recognized that capitalism, “the unknown ideal,” had taken the blame for the sins of its opposite. She lamented the internationalization of the New Fascism; given “the interdependence of the Western world,” all countries are “leaning on one another as bad risks, bad consuming parasite borrowers.” She recognized how the system’s dynamics propelled such internationalization, but advised: “The [fewer] ties we have with any other countries, the better off we will be.” Suggesting a biological analogy in warning against the spread of neofascism, she quips: “If you have a disease, should you get a more serious form of it, and will that help you?” (“Egalitarianism and Inflation” Q&A tape, 1974). In discussing a section of the 1972 Communique between the U.S. and Red China, Rand suggests a universal principle. “[L]ike charity,” she writes, “courage, consistency, integrity have to begin at home ... [w]hat we are now doing to others ... we began by doing it to ourselves. We are the victims of self-inflicted bacteriological warfare: altruism is the bacteria of amorality. Pragmatism is the bacteria of impotence” (“The Shanghai Gesture,” Part III).

Regrettably, Peter Schwartz captures none of these insidious political processes in his monograph because he doesn’t even bother to ask the relevant questions on which Rand herself focused. And his analytical myopia is not confined to the issue of foreign aid.

Tomorrow: Saudi Arabia.

See also Part I, Part III, Part IV, and Part V.

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