Posted on 05/06/2002 1:10:35 AM PDT by Roy Tucker
PROFESSOR THE LORD BAUER, the economist who has died aged 86, argued that overseas aid is not only a waste of money but obstructs development and the relief of poverty in developing countries.
Bauer held the Chair of Economics at the London School of Economics from 1960 to 1983; he maintained that it was the character of a country's institutions and the aptitudes of its people, not the provision of Western aid, that determined its progress.
"Where peoples' abilities, motivations and social and political institutions are favourable," he wrote in 1972, "material progress will occur. Where these basic determinants are unfavourable, development will not occur, even with aid."
Marshall Aid had been effective after the Second World War, Bauer suggested, because the peoples of Europe had the attitudes, motivations and institutions favourable to development; thus it had encouraged private initiative.
Similarly, many poor countries, such as Malaysia and countries in Latin America, had transformed themselves without the need for aid. But where these factors were absent - in many parts of Africa and Asia, for example - Western aid often had a counterproductive effect, leading to the "politicisation of economic life".
Aid, he believed, had too often been linked to central planning, reinforcing the trend towards Socialist command economics and diverting energy from economic to political ends.
"The grim struggles including civil wars in Pakistan and Nigeria, massacres in Indonesia, Nigeria, Zanzibar and elsewhere, the expulsion of Asians from Uganda, are some of the fruits of politicisation of life, often promoted by aid," he argued in 1972.
Moreover, the inflow of aid tended to raise the country's exchange rate or increase the domestic money supply, thereby sucking in imports, raising export prices and hampering domestic industries.
Bauer also accused Western aid donors of propping up regimes which had persecuted, exiled and murdered their citizens: when Algeria expelled the French farmers and collectivised its agriculture, the effects were concealed from the population by massive American aid.
In India, under Mrs Gandhi, well over 10 million people were sterilised, many forcibly with often fatal results; yet the West continued to pour in aid and, at the height of the campaign, the World Bank had congratulated India for its "political will and determination in popularising family planning".
Nor, Bauer believed, did aid do anything to improve international relations: donors were left with feelings of condescension, superiority and guilt, and recipients with feelings of envy and resentment. Both sides had come to believe that aid represented the "righting" of past colonial "wrongs".
In fact, Bauer argued, places such as Africa owed an enormous debt to their former colonial overlords: "Westerners brought to Africa wheeled traffic, mechanised transport, roads, railways and man-made ports, modern forms of money, towns with substantial buildings and sewerage, public health and hospitals, control of epidemic and endemic diseases and the application of science and technology to economic activity."
Bauer's many critics among development economists and aid agencies accused him of extremism, and claimed he ignored the fact that aid programmes were increasingly being directed towards encouraging private enterprise.
But he rebutted charges of extremism: "Like Clive, I am astonished at my own moderation," he once said.
In the 1970s his ideas caught the tide of Right-wing intellectual opinion, and in 1976 his book, Dissent on Development, was included in a reading list circulated at universities and colleges by Sir Keith Joseph's Centre for Policy Studies as "a kind of bibliography of freedom".
Bauer was an unlikely academic: slim, neatly dressed and gregarious, he looked more like a dancing master than a professor of economics. He charmed Margaret Thatcher and, though she never acted on his advice that she should cut Britain's aid budget altogether, there were few who doubted where her real feelings lay.
In 1981, at a Commonwealth Heads of Government meeting, she reportedly advised her fellow leaders that, if they wanted to know how to get things done, they should either "ask Lee Kuan Yew" (of Singapore) or "read Peter Bauer". It was at her instigation that Bauer was created a life peer in 1982.
Peter Thomas Bauer was born on November 6 1915 into a Jewish family in Budapest, where his father was a bookie. After he had attended the Scholae Piae, Budapest, a friend of his father volunteered to pay for him to go to Gonville and Caius, Cambridge, to study Economics.
He arrived in Cambridge in 1934 with little money and less English but, after taking a doctorate, he became a reader in Agricultural Economics at the University of London in 1947. The next year he returned to Cambridge as a lecturer in Economics.
In 1948 Bauer prepared a report for the Colonial Office on the Malayan rubber industry, which led to a book - The Rubber Industry (1948) - and a change of policy. In 1954, he produced a further report for the Colonial Office on West African Trade.
From 1956 Bauer was Smuts Reader in Commonwealth Studies at Cambridge, and then, from 1960, Professor of Economics at the LSE.
Bauer refined his views on development and aid in a series of books, most notably The Economics of Underdeveloped Countries (with B S Yamey, 1957); Dissent on Development (1972); Equality, the Third World and Economic Delusion (1981); and Reality and Rhetoric: Studies in Economic Development (1984).
In Class on the Brain: the Cost of a British Obsession (1978), Bauer challenged the standard cliche that Britain's problems could be laid at the door of its class system.
He acknowledged that British society was acutely class conscious, but maintained that it was far from being socially rigid; indeed, social mobility had been a notable feature of English life since Tudor times, and there were numerous examples in history of "new men" who had risen from humble beginnings to become members of the Establishment.
The fact that there had been no violent revolutions since the 17th century, nor large scale appropriations of the possessions of the rich, however, gave the false impression of an impregnable and static ruling class; ironically, the cliche of a rigid class system had been reinforced by the ease with which new men had been able to rise "without trace" up the social scale.
It was not, therefore, the class system that lay at the root of Britain's decline, but new "egalitarian" restrictions: red tape and nationalisation that had hampered people trying to start up their own businesses; rent controls; and unionisation and employment protection that had reduced mobility.
After taking his seat in the House of Lords, he used his maiden speech in 1983 to express his regret that the Government had not yet begun to tackle the welfare state, recalling the words of Livy when Hannibal had Rome for the taking: "You know how to gain victories, but not how to use them."
During the passage of the 1991 War Crimes Bill which brought people accused of committing crimes against humanity during the Second World War under the jurisdiction of the British courts, Bauer expressed his emphatic opposition to the legislation.
Although he himself was Jewish, he said, and his father had been one of the millions murdered by Hitler, the Bill was "another step towards the erosion of the rule of law".
Lord Bauer was a Fellow of the British Academy. Earlier this month he received the first Milton Friedman Award for Advancing Liberty.
He was unmarried.
I would have to say that in retrospect Thatcher's impact in turning around Britain was greater than the impact the sainted President Reagan had on our own country. I think this was due to the fact that Britain was in a worse pickle than we were but also her reforms were far more far-reaching.
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