Government-to-government foreign aid promotes statism, centralized planning, socialism, dependence, pauperization, inefficiency, and waste. It prolongs the poverty it is designed to cure. Voluntary private investment in private enterprise, on the other hand, promotes capitalism, production, independence, and self-reliance.
Interpretation
The quote contrasts government aid with private investment and suggests that the former is harmful while the latter promotes prosperity.
Henry Hazlitt argues that government foreign aid leads to negative consequences such as increased dependency and inefficiency, ultimately perpetuating poverty. In contrast, he advocates for voluntary private investment, which fosters capitalism and self-reliance, leading to genuine economic growth and independence.
In practice
In a speech about economic policy, one could use this quote to illustrate the importance of private investment over government aid.
A man with a scant vocabulary will almost certainly be a weak thinker. The richer and more copious one's vocabulary and the greater one's awareness of fine distinctions and subtle nuances of meaning, the more fertile and precise is likely to be one's thinking. Knowledge of things and knowledge of the words for them grow together. If you do not know the words, you can hardly know the thing.
Mere inflation-that is, the mere issuance of more money, with the consequence of higher wages and prices-may look like the creation of more demand. But in terms of the actual production and exchange of real things it is not.
Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousandfold by a factor that is insignificant in, say, physics, mathematics or medicine - the special pleading of selfish interests.
The only way we could remember would be by constant re-reading, for knowledge unused tends to drop out of mind. Knowledge used does not need to be remembered; practice forms habits and habits make memory unnecessary. The rule is nothing; the application is everything.
The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice.
If a government resorts to inflation, that is, creates money in order to cover its budget deficits or expands credit in order to stimulate business, then no power on earth, no gimmick, device, trick or even indexation can prevent its economic consequences.
The economic dynamic in Zimbabwe is perversely robust: while ordinary people suffer, black-market dealers and people with foreign bank accounts prosper, making them powerful stakeholders in the perpetuation of devastating economic policies.
Although we work through financial markets, our goal is to help Main Street, not Wall Street.
In Europe and the United States the two decades following the Second World War will for long be remembered as a very good time, the time when capitalism really worked. Everywhere in the industrialized countries production increased. Unemployment was everywhere low. Prices were nearly stable. When production lagged and unemployment rose, governments intervened to take up the slack, as Keynes had urged.
The benefit of appointing a hawkish central banker is the increased inflation-fighting credibility that such an appointment brings.
To get back to the kind of shared prosperity and upward mobility we once considered normal will require another era of fundamental reform, of both our economy and our democracy.
Economic growth is the aggregate effect of the quest to accumulate capital and extract profit. Capitalism collapses without growth, yet perpetual growth on a finite planet leads inexorably to environmental calamity.
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