IT is a “criminal organisation”, says Elon Musk. It is “run by a bunch of radical lunatics”, says President Donald Trump. As a prelude to shutting down USAID, America’s main aid agency, the Trump administration has denigrated it in absurd terms. That language may have prompted liberals to assume that all arguments against foreign aid are absurd, too. But some are not. And though the way America is cutting aid is unusually and needlessly chaotic, it is part of a global trend.

Mr Trump has axed funding, ignoring legal objections. An attempt to keep life-saving programmes running has been botched. Deprived of treatments for HIV, tuberculosis and other diseases, many poor people will die—some already have.

Other Western donors are less brutal, but they are cutting back, too. Sir Keir Starmer is slashing Britain’s aid budget by 40% in order to boost defence. France’s cash-strapped minority government plans to cut aid by more than a third this year. Germany, too, is scrimping. A new, more parsimonious era of aid is beginning. It brings with it agonising choices. But it also offers an opportunity to rethink an inefficient system that has long needed an overhaul.

For over 60 years rich countries have given money to poor ones in the hope of improving lives and advancing their own interests. When John F. Kennedy set up usaid in 1961, he talked both of national security and of a moral obligation to help the poor. At the start of this century aid rose, as donors sought to turbocharge economic growth in the global south. By 2023 rich countries were spending more than $250bn a year on it (excluding the amount spent on refugees at home).

Yet the benefits of all that cash are mixed at best. The biggest successes come from global health programmes and from humanitarian aid, such as relief for victims of floods and famines. Donor-financed vaccines and clinics have helped child-mortality rates in Africa fall by three-quarters since the 1960s. American-funded antiretroviral drugs helped cut AIDS deaths by half in the two decades to 2020, by keeping people with HIV alive and making them less likely to infect others, a global public good.

One problem is that development aid tends to be statist. Efforts to pick industrial winners and back them with donors’ cash rarely work. Another problem is the perverse relationship between aid and local elites, who set the conditions for growth. In some countries aid has paid for essential services, which has allowed governments to waste money on vanity projects. The idea that aid buys soft power is unconvincing, too. The conditions attached to it have been a source of tension for politicians and the public in Egypt, Kenya and Pakistan.

Because growth has been elusive, aid has become entrenched. In some recipient countries, a huge share of economic activity is aimed at fulfilling the multiple, overlapping commands of various donors. In 60 years of independence, Malawians have had more spent on them by aid agencies than by their own government. The country has many more officials managing aid contracts than overseeing foreign trade.

Meanwhile, the opportunity costs of aid for rich governments are rising. Fiscal deficits are too wide; public debts are too high. As societies age, more cash will be needed for pensions and health care. More must be found for security, too. To support Ukraine and deter Vladimir Putin, members of the European Union will need to double their defence budgets—an increase of more than €300bn ($320bn) a year. Rich governments may feel a moral duty to help the world’s poor, but they will prioritise keeping their own citizens safe.

The first is to act in areas where governments (or the UN agencies they fund) have special co-ordinating power, say because they have the security apparatus to reach disaster or conflict zones. Another is to get involved if they have information the public will struggle to assess, about adapting to climate change, say, or a new pandemic. Last, are they funding causes that generate positive spillovers, such as preventing the global spread of infectious diseases?

Sadly, this is not Mr Trump’s approach. His cutting of aid is not part of a careful plan, but knee-jerk anti-wokery. His USAID shutdown has affected good programmes as much as wasteful ones. Some Trump officials talk of using aid as a tool to win political favours from recipient countries—an idea that is unlikely to bring the greatest benefits to the poor. His assault on free trade will do them no favours, either.

Wanted: leaders who build ladders

All this leaves poor countries in a weak position. Non-Western donors such as China and the United Arab Emirates are unlikely to fill the gap that the West leaves; they tend to be more interested in infrastructure and political advantage than in positive spillovers. The public finances of recipient countries will therefore suffer—and the damage will be worst for the poorest.

The pain will be excruciating, but the old era is not coming back. Governments and elites in poor countries must seize the moment to strengthen their own bureaucracies, improve governance and press ahead with growth-friendly reforms. For better or worse, they must be masters of their own destiny. ■