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July 03, 2005
Bob Geldof Should Read This
Here's a fascinating and informative article on the state of African poverty and the attempts to eradicate it. Writing in The Business Online, Allister Heath chronicles a group of African economic dissidents who hold some different views from Bob Geldof (hat tip: Andrew Stuttaford at The Corner):
Wearing a white wristband and calling for hand-outs or debt relief is not the answer, says a growing band of young and educated Africans. The money will merely be frittered away, diverted into the Swiss bank accounts of a corrupt ruling class and do little or nothing to bring about prosperity, they say. While still a minority view, these African pro-capitalist rebels are the voice of the future; one of the leading lights in this movement is June Arunga, a Kenyan law student currently based at the University of Buckingham in the UK. The African dissidents even held a well-attended conference in London last week, adding their voices to a growing chorus of Western analysts who argue that there is no robust statistical or economic evidence that aid boosts growth. [...]
Geldof and all those marching in Edinburgh could start by reading a report out this weekend from the International Policy Network. Its author, Moeletsi Mbeki, happens to be the brother of South Africas president, Thabo Mbeki, as well as an entrepreneur and political analyst. Mbeki argues that since the end of colonialism, most countries in Africa have been exploited by predatory national political elites who see the state as a means to acquire personal wealth through taxation and regulation.
The history of Africa since the 1960s is the history of groups of elites seeking the political kingdom with the primary purpose of enriching themselves, Mbeki says. To rectify this situation, he believes that Africas poorest people must be empowered through the institutions of the free society: property rights and markets: It is necessary that peasants who constitute the core of the private sector in sub-Saharan Africa become the real owners of their primary asset: land. To enable such ownership, freehold must be introduced and the so-called communal land tenure system, which is really state ownership of land, ought to be abolished.
Read the whole thing.
Capitalism can be ugly; although it's better at generating wealth than any other economic system, it can't guarantee prosperity for everyone. But I think it's the only system that has a positive chance at long-term success, because the driving force is maximally distributed, yet operates at the shortest distance possible: internally, inside the individual. It is the individual's drive for self-betterment that drives the entrepreneur. External, centralized direction just seemed to be doomed to failure.
According to [Herando] de Soto, who runs the Institute for Liberty and Democracy, the reforms associated with establishing capitalism in developing countries and long endorsed by Western-dominated groups such as the World Bank and the IMF low inflation, a limited budget deficit, openness to trade and capital flows, and privatisation are necessary but not sufficient. They gloss over the crucial factor that has made capitalism such a successful system in the United States, Western Europe, Japan and the Asian tigers: respect for property rights, contracts and the rule of law. Without the latter, the former will often lead only to chaos, the rule of the mob, corruption, the rise of Mafias and Russian-style, gangster capitalism.
Respect for property rights, contracts and the rule of law...that's what should have been shouted from the Live8 stage.
UDATE 08/01/05: I fixed the link to The Business Online story.
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