This is the seventh in a series of posts discussing themes from The Aid Trap by Glenn Hubbard and William Duggan. In Chapter 3, the authors discuss despotism, which they say is the oldest enemy of business and the hardest to defeat. Because despots rule by force, military coups are reasonably common in poor countries. Those who overthrow the old despot are often welcomed until they become worse despots, as in the case of Idi Amin.
The authors assert that the best check on despotism is a thriving business class; other commentators refer to the importance of a strong middle class. Idi Amin expelled the Indians from Uganda in 1972, effectively destroying the business class and thereby cementing his own power, at enormous long-term cost to the country. Robert Mugabe has increasingly sought to destroy the business class in Zimbabwe to entrench his own power.
There are four basic reasons why the aid system is failing, according to the authors. Firstly, prosperity will never come if the charity system is bigger than the business system. Secondly, the aid system endures for its own self-interest. Thirdly, not enough people in rich countries are advocating the business sector in poor countries. And fourthly, there is no strong alternative way for rich countries to spend the money they have allocated to helping the poor.