Peter Bauer, 86; Economist Fought Foreign Aid

Peter Bauer, a Hungarian-born British economist who opposed development aid for poor countries as a waste of money, has died at age 86.

Bauer, who became a life baron in 1982, died May 3 at his home in London, the House of Lords said.

Before becoming a peer, the iconoclastic Bauer divided his professional life between the London School of Economics, where he was professor of economics, and his old Cambridge college, Gonville and Caius, where he was a fellow.

Bauer believed that governments of poor countries used Western aid more for self-aggrandizement than for the benefit of their people.

He maintained that the character of a country’s institutions and the aptitudes of its people, not the provision of such aid, determined a nation’s progress.

Peter Thomas Bauer was born in 1915 in Budapest, where his father was a bookmaker. He attended the Scholae Piae school there. When he was 18, a friend of his father volunteered to pay for him to go to Britain to further his education. Despite having little money and less command of English, he was accepted by Gonville and Caius College in 1934, where he studied economics.

After earning a doctorate, he went back to Hungary to complete a law degree and perform military service before returning to England.

Bauer, who never married, taught agricultural economics at the University of London in 1947, returning to Cambridge a year later to lecture in economics until 1956.

He undertook a study of Malaysia’s rubber industry in 1948 for the Colonial Office. In 1954, Bauer produced a further report for the Colonial Office on West African Trade.

Years of studying small-scale trade in Africa and Asia convinced him that the poor were held back rather than helped by central planning, large-scale government investment, trade barriers and foreign aid--solutions almost universally urged by other development economists.

Bauer was Smuts Reader in Commonwealth Studies at Cambridge from 1956 until he was appointed professor of economics at the London School of Economics in 1960. He gained emeritus status in 1983.

Bauer explored his views on aid to poor countries in numerous articles and books on applied economics, including “The Economics of Underdeveloped Countries” with B.S. Yamey, published in 1957; “Dissent on Development” in 1972; and “Equality, the Third World and Economic Delusion” in 1981.

Bauer’s contribution to economics was recognized last month when it was announced that he had been awarded the first Milton Friedman Prize for Advancing Liberty, for which he was to have received $500,000--prize money that has now gone to his estate.

The Cato Institute cited him for his courage in espousing an approach almost universally opposed in post-World War II international economic circles.

When the award was announced, Bauer told London’s Daily Telegraph: “I am truly honored. I have long admired the Cato Institute and Milton Friedman, and recognition by both could not be more delightful.”

Bauer’s views were considered similar to the Nobelist Friedman’s.

Bauer was admired by former British Prime Minister Margaret Thatcher, who instigated the granting of his life peerage.