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Acton Notes - President Message

The Tsunami disaster in the Indonesian region represented a cataclysmic disaster for masses of people, but the response of the West was an inspiration.

Individuals, foundations, and other institutions gave hundreds of millions of dollars in aid. In-kind donations of material aid were given as well. Many people flew to the region to assist those in need. Prayers were offered by people of all faiths.

The outpouring of assistance was magnificent to behold. But it also drew some attention to a little known fact. Even for an international crisis on this scale, private international aid comprises a larger percentage of the overall spending than governmental aid.

Those who think governments ought to spend more cite this fact as a problem. To me, it is not a problem. It is a hopeful sign of a future when private aid takes over the job that government has done so long and so poorly.

Assistance at the national level is subject to all the pressures of domestic politics and bureaucratic inertia. The transfer of funds creates dependency, breeds resentment, and leads to corruption. It can do more harm than good by subsidizing the conditions that led to the need in the first place.

Just like when you give to your favorite local charity, your gift to an international aid organization goes to private individuals and institutions, not to the government. The funds are administered by people with a moral and legal stake in the outcome. The process is monitored by professionals. For all these reasons, private aid stands a greater chance of doing well.

Money and clothing and construction materials will never restore what was lost. The poorest regions hit by the tsunami need economic reform and long-term investment more so than a transfer of wealth. My experience suggests that it is not governments but private markets that are most efficient at making possible such reforms.

If any good can come from the ghastly losses of the tsunami, it will be a new appreciation for the power of the private sector to do great things. Both in the short and long term.