gr34t3st:
barticles:
Who said it was “inevitable”? To the best of my knowledge, nobody. Ever.
The correct formulation is more along these lines: “Hard work and enterprise are more likely to lead to the accumulation of wealth than their opposites.” There are no guarantees. All other things being equal, it also helps to work hard producing something other people value highly. I can just about kill myself digging a deep hole in my backyard, for instance — but I’m not likely to make much money selling it.
Of course, all other things are rarely equal. People in Soviet Russia worked just as hard as U.S. laborers during the 1950s. Harder, in fact. But they did not get to keep any of the wealth they produced. Americans did.
Take a look at the Index of Economic Freedom. You will find a strong correlation between countries with high levels of economic freedom, respect for property rights, and so on, and high standards of living. You don’t encounter an African country on the rankings until you reach Botswana, at #40. Namibia comes in at #73. Most of them come in after the rankings reach 100, and are rated either “mostly unfree” or “repressed.”
There is a lesson there, for those willing to see it.
Agreed. The achievement claim also goes further than the higher probability of success. When you combine this with the other variables you mentioned, it often leads to a better way of living. When I look at my résumé, I have a sense of pride. I know that I’ve reached some accomplishments. I know that I’ve overcome adversity in spite of obstacles. It prepares me for my future. I’m much more confident because of it, as well.
As a university student, I see people that are trying to achieve. I see the people that make smart decisions knowing that every choice has consequence. I also see the people that are here just because society expects them to be. When college is as expensive as it is, why waste your education? I understand that people have different drives. Some people enjoy that lifestyle more. Unfortunately, there’s a difference between the way we’d like to live our lives and the reality of the workings of our world.
Give a man a fish and you feed him for a day.
Teach a man to fish and you feed him for a lifetime.
I wholeheartedly agree and can attest to the correlation between economic freedom and quality of life (in various economic studies), but I need to address an issue somewhat tangential to this thread, which I feel is of vital importance, none-the-less. I do take some issue with the implication of barticles’ hole-digging reference, which at least seems to imply that African economies are not succeeding because of a failure to produce a desirable product; the failures at hand are institutional, not entrepreneurial, in nature and need to be addressed at that level, regardless of how much I hate even thinking about bureaucracy.
But back to the tangent: I always hate it when people harp on political correctness, but when it comes to Africa, there really is just a gigantic knowledge gap for Westerners, even the most intelligent. Most Americans’ mental concept of Africa is pretty much encapsulated by the picture above, violence (sometimes political), and wildlife preservation. And the implications are extreme (otherwise I really wouldn’t care. Seriously). Why? No main stream media deems it relevant (unless bad things happen… sometimes). For example, The Economist has zero reporters on the ground in the entire continent and groups news about the continent in a section called ‘Africa and the Middle East’; that’s a massive grouping of diverse cultures, political states, and social realities—it usually takes up no more than two pages for an area which contains over 1/3 of the world’s languages.*
So let’s talk about African economies.
Mauritius was right after Chile on the Index of Economic Freedom (at least when I wrote my case study on Mauritius, Cameroon, Chile, and Venezuela, which was only last year). Mauritius, a country no one ever talks about, much less knows the location and economic/legal/social makeup of, is extremely liberal. From an economic and political standpoint, I actually consider it much more successful and viable than Chile, because it has experienced steady growth with high economic freedom despite low FDI (foreign direct investment, resulting from common misconceptions about the entire continent of Africa, such as high crime rates, little rule of law, and general political instability), foreign aid (which is, surprise surprise, completely uncorrelated with growth, but imposes external political and economic intervention), and natural resources. After the economic downturn, Chile’s growth fell by at least 5%, because its economy relies on FDI, mainly by US investors, into volatile exports, such as luxury agriculture and oil, which is imported mainly by the US. Mauritius was unfazed, because it doesn’t rely on a sugardaddy country.**
And now I’m going to put on my political scientist hat (because I’m apparently the only Economics major who takes those damn courses). So the cycle of poverty on the scale of countries goes generally like this:
Economic Intervention
The International Monetary Fund (IMF) gives the poor country a loan, to ‘aid’ in development (the interest rate likely being absurdly high). Were the country like a business taking out a loan, the extent of this exchange would be limited to the loaning and repayment of the funds. But the IMF is run based on its members’ wealth, meaning the US, which has obscenely large corporate interests, acts as CEO. This means that the IMF requires the recipient of this ‘aid’ (kind of reminds you of student loans as ‘aid’…) to follow a strict regimen, often in the form of Structural Adjustment Programs (SAPs), which require actions such as privatizing everything and ‘free trade’ among other things—solutions dreamt up by economists completely obscure to the political and economic realities of the countries their theories have been imposed. To clarify, I don’t know many people who rival my anarchocapitalist economic views. But if I know one thing about economists, it’s that they have absolutely no understanding (and often, even an awareness) of the systems within which their little graphs and theories are supposed to function. The real world is not a damn vacuum—not that most egghead economists know what that is anyway… Beware of an economist’s office. Anyway, essentially what these programs end up doing is providing protectionist environments for US multinational corporations (MNCs) and granting them excessive power over an already feeble government, significantly affecting any ability it did have to uphold the rule of law. They also give preference to the US in trade (the removal of trade barriers tends to be selective), often with the result of importing finished goods coupled with an inability to export to the US, due to the US’s excessive trade barriers. When nationalized industries are aggressively (without any warning, all at once) ‘privatized’, either they are taken over by a US-colluding MNC, stripped, and abandoned or they fall flat because, lest we forget, the whole reason they took the loan out in the first place was because their economy doesn’t work (usually not characteristic of ready-made entrepreneurs with ample capital they’re just dying to invest). So the government corruption might decrease, but unemployment skyrockets, crime spikes (without any law enforcement to respond), and the economy tanks. As you might have guessed, this repulses any existing investors and deters potential ones, creating yet another story of failure in Africa, contributing once more to the ‘bad neighborhood’ problem so many countries, especially countries like Botswana (otherwise relatively impressive) face in gaining the inertia for accelerating development. Most of the other programs are just ridiculous experiments, 95% of which typically fail, because they’re low-risk to the enforcers of the projects and provide a playing ground for humouring their perverse developmental fetishes and accruing some extra money in the process. These never work and usually result in the IMF coming to the delightfully unintelligent conclusion that obviously ‘they just need more programs’.
I will write much more on this later, but aid in the form of grants has the same negative implications on economic development (not as terrible in terms of government indebtedness, but the developmental outcomes are surprisingly similar). The Salvation Army is an example of a company which dumps a substantial amount of goods (i.e. clothes… 95% of them to be more specific (don’t donate to the Salvation Army, please)) into West African countries, flooding their economies, which drives out competition and creates a dependency on that as a source of that good—this actually resulted in the complete obliteration of the promising nascent textile sector in (I think) Liberia.
All of that being said, with countries as different as the DRC and Botswana in such close proximity, it’s unfair to generalize all African countries as failed states and hopeless economies. Urban areas are taking hold and China has begun a no-strings partnership with some countries to provide non-paternalistic loans and, even better, microloans provide completely private loans for budding entrepreneurial ventures. At the end of the day, the main economic obstacles to development are corporatism (primarily via IMF SAPs), underinvestment, and dumping (also called ‘charity’ by some). Without addressing these three issues, those small emerging solutions can’t affect the most important issue: the immense and completely unnecessary suffering of the bottom billion.
Political Intervention
When it comes to corruption, the US is first in line to engineer the ascent and persistence of oppressive personalist authoritarian regimes—as long as that clientele relationship is beneficial enough. When violence breaks out, the industrialized countries are first to champion ‘humanitarian causes’, violating any sovereignty they want, committing heinous war crimes for which they are not held accountable and destroying vital infrastructure and innocent human lives, by bombing things like schools and hospitals. Everyone reading this probably already knows about the political side, but I like to make sure I’ve covered my bases.
Forgive me for potentially rambling; I’m probably far too tired and generally out of it to be writing at all in the first place… Sorry.
If you’re interested in any of these issues, I can provide suggestions for further reading. The more you know about the developing world, the better equipped you will be to address some of the most serious issues concerning economic interventionism—intervention will always be at the expense of the marginalized and it will always cause more suffering.
*I recommend checking out The Fair Observer. I actually met one of the start-up members (Zachary Propert) on an airplane on my way home from Massachusetts and his long trip to Mali, who really brought my focus to the failure of the ‘investigative’ in investigative journalism, and was walking the talk by traveling to West Africa himself, to report.
**The relative scarcity of FDI is by and large one of the most significant reasons for delayed and reversed development in African countries, but it also exposes the complete illusion of development in many Latin American countries (specifically primary export heavy/highly concentrated exports (i.e. dominated by one or two goods)/ISI countries).
I’m an Economics major with a focus in development and a specific interest in African economies, which are largely considered atypical compared to developing Latin America and Asian economies, so my background and knowledge generally reflects that—I might leave out relevant information, but not intentionally, and if anyone has more insight, I’d really love to learn more.
thecheekylibertarian 