To accomplish this, the Third World has found that the politics of confrontation work best. In their eyes, the world is divided between rich and poor, with the former having an obligation to help the latter. Individual Third World countries are often neutral or even friendly to the West, but the organized and articulate Third World is at best critical and more often hostile. The purpose of the Third World qua collectivity is to coax or extract money from the West. Finally, we must note that development aid significantly drains our own resources.
Many people support foreign aid because of the perception that it helps our export industries.
In fact, there are stipulations on most aid packages requiring the use of American goods whenever possible. Because foreign aid subsidizes American companies which deal with the Third World, it shifts assets from more efficient firms, thereby reducing our overall economic performance. Supporting aid in the hope that some of it might be spent in the United States is like a supermarket giving money away in the hope that consumers will spend part of it in the store-there is always a net loss. The basic problem with both types of foreign aid is that they strengthen the institutions which prevent progress while weakening the institutions of the Third World which could bring true prosperity. Aid increases the role of government and bureaucracy in the economic life of the Third World, while it minimizes the role of markets and private entrepreneurship.