Africa and the Extent to Which Capitalism Is the Root of the Continent's Problems

A standard myth is there's a "vicious cycle of poverty" that makes economic development virtually impossible for the world's poor nations

writes Walter E Williams (emphasis added).

This myth holds that poor countries are poor because income is so low that savings cannot be generated to provide the kind of capital accumulation necessary for economic growth. Thus, it is alleged, the only way out of perpetual poverty is foreign aid.

Let's examine the "vicious cycle of poverty" myth and whether foreign aid is a necessary ingredient for economic development. The U.S., Britain, France, Canada and most other countries were once poor. Andrew Bernstein of the Ayn Rand Institute wrote in an article titled "Capitalism Is the Cure for Africa's Problems" that pre-industrial Europe was vastly poorer than contemporary Africa. …

Some economic development "experts" attribute Africa's troubles to its history of colonialism. That's nonsense, because some of the world's richest countries are former colonies, such as the U.S., Canada, Hong Kong and Australia. In fact, many of Africa's sub-Saharan countries are poorer now than when they were colonies, and their people suffer greater human rights degradations, such as the mass genocide the continent has witnessed.

One unappreciated tragedy that attests to the wasted talents of its peoples is that Africans tend to do well all around the world except in Africa. This is seen by the large number of prosperous, professional and skilled African families throughout Europe and the United States. Back home, these same people would be hamstrung by their corrupt governments.

The worst thing that can be done is to give more foreign aid to African nations. Foreign aid goes from government to government. Foreign aid allows Africa's corrupt regimes to buy military equipment, pay off cronies and continue to oppress their people. It also provides resources for its leaders to set up "retirement" accounts in Swiss banks.

What Africa needs, foreign aid cannot deliver, and that's elimination of dictators and socialist regimes, establishment of political and economic freedom, rule of law and respect for individual rights. Until that happens, despite billions of dollars of foreign aid, Africa will remain a basket case.

Thomas Sowell (the minority author who points out that indignation has replaced thought for many people) takes this further:

"Forgiveness" of foreign debts is always high on the agenda of those on the political left.

At any given moment, this would of course free up money that African governments could spend to help relieve their people's distress -- assuming that this is what they would spend it for. But why would anyone think that promoting irresponsible government borrowing by periodically "forgiving" their debts is going to help African countries in the long run?

…Promoting dependency and irresponsible borrowing is not the way to help the poor internationally any more than these are ways of helping the poor at home. Such policies benefit the bureaucracies that administer foreign aid and enable vain people to see themselves as saviors, even when they are doing more harm than good.

Sub-Saharan Africa has some of the most tragic geographic handicaps of any region of the world. Navigable waterways, which have been crucial to the development of nations and of cultures, are severely limited in most of Africa. Poor soil and inadequate and undependable rainfall patterns shrink the possibilities still further.

Ideologues love to think of African poverty as caused by "exploitation" on the part of Western countries. But, with a few notable exceptions, Africa has had little to be exploited. Even at the height of European imperialism, there was far less foreign trade or foreign investment in the whole vast continent of Africa than in a little country like Belgium or Switzerland.

In more recent times, so-called "foreign aid" has left many monuments of futility in Africa, from rusting machinery and the ruins of many projects to cows sent from Europe that keeled over in the African heat.

With all its handicaps, Africa used to feed itself and even export agricultural produce to Europe. In some of the more geographically favored parts of sub-Saharan Africa, iron was smelted thousands of years ago.

During the first two decades after African nations gained their independence in the 1960s, one sub-Saharan nation that stood out with its economic prosperity and political stability amid economic disasters and social catastrophes among its neighbors was the Ivory Coast under President Felix Houphouet-Boigny.

Yet neither the Ivory Coast nor its leader attracted nearly as much attention, much less adulation, as was showered on Julius Nyerere in Tanzania, Kwame Nkrumah in Ghana, or other big-name African leaders who led their countries into ruin.

The Ivory Coast in those days relied on markets instead of the kind of policies and rhetoric that the intelligentsia favored. When its policies changed, it became just another African basket case.

Today, too many people in the West continue to see Africa as an outlet for the visions and policies of the left that have failed in the West and are even more certain to fail in Africa.

Sowell adds that

many African societies have been isolated by that continent's dearth of both navigable rivers and harbors.

Isolated regions have almost invariably lagged behind regions in touch with a wider cultural universe. One among many signs of the isolation and cultural fragmentation of much of sub-Saharan Africa is that African languages are one third of all the languages in the world, even though African peoples are only about 10 percent of the world's population.

Small, tribal societies were another consequence of geographic isolation -- and the vulnerability of such societies to conquest by outsiders was another.

If cultural diversity was all that the multiculturalists claim, Africa would be a heaven on earth. Too often and in too many places it has been a hell on earth.

Many people expected great things from Africa when new independent African nations began to emerge from colonial rule in the 1960s, often headed by leaders who had been educated in Europe and America.

Unfortunately, what these new leaders brought back to Africa from the West were not the things that had made the West prosperous and powerful but the untested theories of Western intellectuals and ideologues who had taught them. Such African leaders by and large lacked both the common sense of the African masses and the technological and economic experience of the West.

The net result was that African leaders, full of confidence because of their Western education and the adulation of the Western intelligentsia, made their people guinea pigs for half-baked theories that had contributed nothing to the rise of the West and had contributed much to its social degeneration.

Poverty-stricken Africa could afford these economic and social disasters far less than the affluent West could.

As Jonah Goldberg asks, how exactly was Bob Geldof's Live8 concert "a monumental demonstration of support for helping Africa", Emmett Tyrrell opines that

surely, even the most drugged-up of the rock singers knows that most of the money that has been heaved at the continent since the chaotic end of colonialism has been either wasted or filched.

Britain's Royal African Society claims that in the past 50 years, Africa has received a trillion dollars in aid, 10 times the aid sent to Europe after World War II. However, more Africans live in deeper poverty today than when the aid began to flow. Recently, it was revealed that corrupt Nigerian officials pocketed 220 billion pounds in bribes over the past few years. How much the other corrupt officials throughout the continent have accounted for can only be imagined.

Nonetheless, the assembled rockers shouted -- some called it singing -- threats to the political leaders of the West to take action to end the evils afflicting Africa. None has been supportive of Tony Blair's and George Bush's attempts to end the evils recently afflicting Iraq. Yet, military action against Africa's corrupt potentates is about the only imaginable way Africa's suffering can be alleviated in the near future. Would they like us to commence "regime change" now, or after we have brought democracy to Iraq?

Herbert London chimes in:

…overlooked by well meaning rockers is that as long as tyrannical governments control the distribution of funds those targeted for relief never get it. Starvation is indeed a problem in many parts of Africa, most especially in the Sudan. But in this nation emergency food relief sent by the U.S. and others is used as a weapon to subjugate designated enemies of the government. This has been a pattern observed earlier in Somalia, Ethiopia and Eritrea.

Despite the claim of Jeffrey Sachs of the Earth Institute that America foreign aid to Africa is niggardly, the problem that neither he nor his colleagues consider sufficiently is how best to ensure that these foreign aid dollars end up in projects for which the money is earmarked rather than Swiss bank accounts for corrupt leaders.

As Peter Baur, the father of development economics once noted, "foreign aid is little more than poor people in rich countries giving money to rich people in poor countries."

Suzanne Fields is less charitable (so to speak):

While [the stars] were rappin' and rockin', James Shikwati, a distinguished Kenyan economist, was singing another song: "For God's sake, please just stop the aid."

In an interview in der Spiegel, the German magazine, Mr. Shikwati describes what he sees as the disastrous result of aid to Africa. Not only do African leaders exploit it for their own purposes, stuffing their pocketbooks and adding to their power, but aid weakens local markets, destroys incentives and fosters corruption and complacency. He scoffs at the motives of the United Nations World Food Program, "which is a massive agency of apparatchiks who are in the absurd situation of . . . being dedicated to the fight against hunger while . . . being faced with unemployment were hunger actually eliminated."

…Increasing numbers of Africans decry the damages of paternalism, but you didn't hear those voices at the Live 8 concerts. Rage and protest were not directed at corrupt local leaders, either.

Star Parker brings all the above together:

A study just published by the International Policy Network in London reports that, despite $400 billion in aid expenditures in Africa from 1970 to 2000, the correlation between the aid and economic growth was negative. Increases in aid resulted in worse economic performance.

The general explanations for this negative correlation between aid and economic performance are that aid discourages the very activities that produce economic growth and vitality — savings, investment, and incentives for government policies that encourage and sustain positive economic activity.

If we change the question we ask regarding poverty, the picture of the problem becomes clearer. We should examine the conditions that allow prosperity to occur rather than asking how to spend money to eliminate poverty.

…The data show clearly that the less economically free a nation is, the more likely it will be poor. The more likely a nation is economically free, the more likely it will be prosperous. …

As President Bush prepares to discuss global poverty in general, and in Africa in particular, with other world leaders, he is under great political pressure to agree to address poverty with aid money rather than pressure for policy reforms. As I noted earlier, the aid issue lends itself readily to politicization.

The Europeans are forever looking for angles to blame America for the world's ills. Recently, pastors from some of the largest black churches in the United States wrote to the president urging large increases in US aid to Africa.

As we celebrate the 229th birthday of the United States, we should remember two things. First, we are the most generous nation in the world. Americans delivered $80 billion to the developing world in aid and assistance last year. Of this $80 billion, over $60 billion came from private rather than government sources. Second, Americans have the capability to provide this largesse because we are free and freedom is what produces prosperity everywhere.

Leading Paul Jacob to conclude that

a cure for poverty has already been found. Yes, a cure!

Freedom.

And by freedom I mean more than just the right to buy rock 'n' roll records. I mean the right to private property, to buy and sell, to compete for any peaceful business. And more. Free markets and free individuals — communicating, trading, praying, working, with maximum liberty and minimum harassment from criminals or governments.

…Dictators destroy economies. And too often they take the aid we send to help the poor and use it to stay longer in power.

Africans know this well. Asked about more aid, a Kenyan health care worker quickly and depressingly predicted that "the aid money will go into the pockets of corrupt officials to buy their fully loaded Mercedes-Benzes."

"For God's sake, please stop the aid," Kenyan economist James Shikwati bluntly told a German weekly. "If the West were to cancel these payments, normal Africans wouldn't even notice. Only the functionaries would be hard hit."

… Ousmane Sembene, a Senegalese-born filmmaker, called the efforts "fake." Nigerian musician Femi Kuti called Live 8 a "waste of time."

These men and others are looking elsewhere for solutions. Kuti cites a need for new leadership, saying, "Africa has very many old leaders who do not want to leave office. They are the ones who have made our debts reach billions of dollars through corruption and stealing. And they are still asking for more so that they can steal to their graves and leave the youth with the burden of paying the debts."

Mr. Shikwati says Africa "must take the first steps into modernity on its own. There must be a change in mentality. We have to stop perceiving ourselves as beggars."

Sembene states what is obvious and overlooked, "The only way for us to come out of poverty is to work hard."

True, the Live 8 campaigners are on target in demanding that Western governments end the agricultural subsidies that hurt African farm products in the world market. This is precisely where Americans can make a difference for Africans — by demanding a free market system here at home.

But the rest of the Live 8 agenda rehashes the same old snake oil: the West, with wealth produced by the freedom we have, must bail out countries in Africa, where government corruption and tyranny make progress impossible.

Luckily, Africa's future does not depend on Western aid. Or even rock 'n' roll.

Africa simply needs freedom. It won't be easy to come by. Never is. But it is a crusade that can and must be won by Africans themselves.

Time for a new campaign to make poverty history? Call it "Liber-8."