I think you missed my point about the size of the economy. I'm saying that a very small amount of aid being skimmed by the people in power can be used to keep a very large group of citizens down. The people may earn $50/year, but if it only costs $1 per person per year to maintain dictatorial control that keeps them at $50/year, then that's a very powerful $1. And, if 30 cents of that dollar are attained as the result of foreign aid proceeds, then that is a very powerful 30 cents.
The problem with self-sufficiency frequently isn't so much about lack of technology or information, but it's the result of a lack of property rights. If anything you have can be taken away, you're not going to develop any resources. If people have these rights politically & culturally, then they will quickly develop the tools. I think on the broad scale, seeing self-sufficiency as the problem is mistaking the symptom for the diagnosis.
g, I think I have 2 responses to your comment.
1) After a trillion dollars of aid, we still hear appeals for mosquito nets, etc., where just $2 per family or some such low number, would save millions of lives. My question is, if after a trillion dollars, if there are still lives that can be saved for a couple of bucks, then isn't something terribly dysfunctional going on?
2) I don't think it matters what the continent's GDP is. Let's say it's $2 trillion. If a dictator is trying to retain power & gain wealth, an important tool would be the establishment of property rights that lead to domestic markets and attract foreign capital. But if by denying those rights to the citizens, the dictator has a good chance of skimming off the foreign aid, while keeping the populace powerless, then the aid actually prevents the establishment of institutions that will improve people's lot on a permanent basis. In the absense of aid, the GDP might have been $20 trillion. Even in America, I wouldn't be surprised to see a useless $100 million bridge constructed by the taxpayer just so a contractor with connections could earn a $2 million profit on the deal. So, I'd be even less surprised if a dictator gladly helped himself to a few million in skimmed aid proceeds at the expense of billions in the nations economic development. As long as the dictator retained a satisfactory amount of power & wealth, the amount of wealth destruction that resulted would not be related to or limited by his quest.
I think this is why there will always be opportunities for high returns. Quantifiable correlations will always be bid away. But, there will always be unquantifiable uncertainty. Much of investing is earning rents on uncertainty, so that if you're even slightly skilled at picking the right uncertainties, you can make huge returns. It seems to me that finance seems to either quantify uncertainties into risk models or pretends they aren't important. But, for an individual investor they can be the most important thing to consider, and due to the very nature of uncertainty, it's not likely to be anti-inductive. That's why great investors like Buffett & Munger are as skilled at recognizing biases people have in the face of uncertainty as they are at doing finance. If you asked Charlie Munger what it took to be a good investor, I bet he'd be more likely to give you a rundown of biases than to offer anything quantitative.
"Pure capitalism is so cruel at times that it cycles rebellion"
That just seems like a blatant falsehood to me. In capitalist societies, expectations tend to rise and expectations can be more complicated, so there may be for disappointment or indignation, but I'd like to see a factual backup of that statement. Where have capitalist societies been objectively more cruel than any alternative? And where do you see more rebellion in capitalist countries versus non-capitalist? Has there been an uprising in Singapore or Hong Kong that I haven't heard about? Is the destitute condition of much of Africa the sad result of well-defended rights to property & self-determination?