US Diplomat Dresses Down Kenya...

Kenya is frequently cited as one of the most corrupt nations on earth. And this just needs to be said....

William Bellamy, the U.S. ambassador to Kenya, startled an audience at a garden party at his official residence with sharp criticism of President Mwai Kibaki's government for its record on corruption and suggested that pleas for increased foreign assistance for Kenya and other African nations were misguided.

"Turning on the fire hose of international compassion and asking Kenya and other African nations to drink from it is not a serious strategy for promoting growth or ending poverty," he said.

"The United States is committed to helping Kenya defeat this menace and will provide any and all assistance Kenya requires. We seek from Kenyan authorities a corresponding measure of vigor and commitment in confronting this challenge."

These African leaders ask for help, the western nations oblige and give with the intention of helping the poor and it all gets stolen by the leeches running these governments.

I, for one, think that we are creating a continent of hopeless aid recipients and the moral hazard is that they will essentially be the wards of the developed world for the foreseeable future.

When I was in school, I did some reading of works by economist Arthur Okun who is best known for developing the justifications for cutting taxes to raise employment utilized by John Kennedy when he cut taxes in the early 1960's. I was particularly intrigued by his support of utopian government wealth transfer programs and his warnings on the costs of these programs. A wonderful summary, below.

Okun believed that wealth transfers by taxation from the relatively rich to the relatively poor are an appropriate policy for government. But he recognized the loss of efficiency inherent in the redistribution process. In Equality and Efficiency: The Big Tradeoff Okun introduced the metaphor of the leaky bucket, which has become famous among economists. He wrote: "The money must be carried from the rich to the poor in a leaky bucket. Some of it will simply disappear in transit, so the poor will not receive all the money that is taken from the rich."

Okun attributed the losses to administrative costs of taxing and transferring, and to incentive effects. The poor who are receiving welfare or other transfer payments have less incentive to work because their transfer payments are reduced as they make more money. The rich have less incentive to work because high marginal tax rates take a large fraction of their additional income (top tax rates were between 50 and 70 percent at the time he was writing). The relatively rich also have more of an incentive to spend on tax-deductible items and on tax shelters as a way of avoiding taxes. "High tax rates," wrote Okun, "are followed by attempts of ingenious men to beat them as surely as snow is followed by little boys on sleds." For these insights, Okun can be considered one of the original supply-siders (see Supply-Side Economics).

In Africa, the bucket isn't just leaky, it has no bottom!