"Almost a billion people live below the World Bank’s absolute poverty benchmark of $1 a day, and about 3 billion line on less than $2.50 a day." - Rhian

These types of comparisons are very general. For instance if you visit these countries you would find $2.50 has much more buying power than in Australia as their labor costs are much less. Numbers can more deceiving than words.

In fact labor is the ONLY real cost to any product. On a primary level all materials and goods are free, it is only those who control the primary resources (or means of production eg landowners) who add the cost.

By injecting more money into their economy, inflation will become greater in these countries negating any positive effect you hope to achieve.

Yabby,
I agree we should spend aid more wisely, but I think contraception is preferable to starvation as a means of slowing population growth.

Phooey
You’re right, $1 a day goes further in developing countries than developed ones. It’s still not much money, though. Labour costs are less because productivity is less, which is also why those countries are poor.

If all we did with aid was to send money to developing countries then you may be right, it could lead to inflation (or appreciation of the exchange rate that could have other detrimental economic effects). But aid is almost always in the form of goods, and long-term aid is typically invested in physical or human capital with the aim of raising productivity. This kind of aid can be effective at and raising living standards, although Yabby is right to caution that it is not always well spent.

The labour theory of value is a Marxist fallacy that was debunked decades ago.

*but I think contraception is preferable to starvation as a means of slowing population growth.*

Well exactly, Rhian. Which is why we finally need to address the
former, when we do foreign aid. Merely lotfeeding people as we do
now, is hardly going to solve the problem, only increase it.

A number of points. Firstly, we don't possess a bottomless bucket of money, in fact there is a structural deficit. Simply put, we don't collect enough tax for the current essential outlays.
I agree in principle with the idea of more foreign aid; given, reduced poverty via various self help programs, creates trade and self reliance where none exists now.
Ever hear the expression trade not aid? What we also need to achieve is an entirely level playing field. The end of export subsidies by those who currently use them for domestic vote buying purposes. We are talking about many billions. Money which would be far better spent in addressing poverty in all its guises and forms, which in turn would help the developed nations to grow their own economies, without also growing the population base.
Poor people have no discretionary spending power. Whereas the better off have! Not all that long ago, it would have been unthinkable that a US major export market for American luxury cars, would have been China.
We for our own part need to mend the structural deficit via often proposed reform, which ends tax evasion and or avoidance.
With that done and a system so transparent and vastly simplified that compliance costs can be removed.
This simplicity would come as a single stand alone expenditure tax, which would grow with the economy; rather than shrink with the remaining tax paying demographic.
Adding over 100 billion to internal revenue, all while jettisoning all other tax measures, would add around 30% to the averaged Australian based business bottom line and around25% to household disposals. With that done nobody is going to bellyache about a truly miserly 0.5% of GDP being earmarked as our total foreign aid budget.