Bauer argued foreign aid encouraged state ownership and bureaucratic growth in developing countries

Evidence

Bauer attacked foreign aid, even when it was dedicated to improvement of the infrastructure. Developing countries, he wrote, did not need elaborate infrastructures to enjoy rapid development, though he mostly feared “the propensity of many governments not only to try to finance roads and harbor developments, but at the same time to finance, and indeed own, all kinds of manufacturing enterprises from steel mills to chemical plants” (Bauer 1958a, 195). He presented resulting budgetary and foreign exchange difficulties as the real causes for the request of foreign aid. Although aid could initially be useful to set a process in motion, Bauer objected to supplying aid to countries that subsequently failed to severely limit the sphere of government activity. Bauer also attacked “forced savings” through taxation, because taxation would only lead to the growth of government bureaucracy. — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 1319

Categorization

• XREF: Connects to crowding-out theories and the broader anti-planning economics tradition; bears on the reader’s emerging picture of the neoliberal network’s critique of development aid. — connects to: Kennedy’s foreign aid extended New Deal state methods globally. — Quinn Slobodian, Globalists: The End of Empire and the…, 524; Bauer held that foreign aid cannot promote growth and persists mainly from Western guilt — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin: The Making…, 1769; Bauer anticipated the new political economy’s skepticism of predatory states — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin: The Making…, 1773 (+4 more)

Broader Connections

• Bauer championed private foreign investment and bourgeois virtues against development orthodoxy #expands (0.85) — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 1321
• Foreign aid has made recipient countries poorer rather than stable. #expands (0.80) — Hannah Arendt, The Origins of Totalitarianism, 31
• Peter Bauer reframed development economics to prioritize markets over security concerns #expands (0.80) — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 1334