Bauer's Law - Foreign aid is transferring money from poor people in rich countries to rich people in poor countries

From Turn Off Foreign Aid? by Richard W. Rahn.

Bauer noted that all too often foreign aid simply turned out to be “transferring money from poor people in rich countries to rich people in poor countries.”

A country that establishes the rule of law and largely eliminates corruption, allows free markets to operate, establishes free trade, maintains low taxation and government spending, does not excessively regulate, and establishes a stable currency will attract sufficient domestic and foreign investment to grow rapidly, without foreign aid. Countries that do not provide the rule of law and sound economic policies will not grow no matter how much “foreign aid” and development assistance they receive.

The great economic success stories of the last several decades, such as Hong Kong, Singapore, Taiwan, South Korea, etc., received little or any aid, but they did put in the right policies to attract capital and provide economic growth. The post‐​World War II Marshall Plan in Europe is often cited as the great success of foreign aid. But, in fact, the German and other economic miracles in Europe only began after the Germans and others, despite opposition from the Allied Control Commission, removed their extensive price controls and other restrictions on trade, production and distribution.

Most development economists now realize Bauer and his disciples are correct, and as a result there has been a big shift in the nature of most foreign aid coming from the U.S. government.