"The worst thing that would happen is if people decide to stop exploiting Africa"

[Axulus]

[youtube]https://www.youtube.com/watch?v=6cuvvPrFP14[/youtube]

Summary:

"Thank goodness people are 'exploiting' Africa by buying things from it, by investing in it, by employing people in it," says Leon Louw, author, policy analyst, and executive director the South Africa-based think tank The Free Market Foundation. "The worst thing that would happen is if people decide to stop exploiting Africa."

The statement might sound provocative, but Louw is responding to a a pair of critiques he hears often: That economic development is akin to exploitation and that the gap between rich and poor is growing dangerously large. But Louw says that the focus on economic inequality is a distraction from a more important metric.

"The world is experiencing the most amazing accomplishment of humanity: The virtual elimination of poverty," says Louw. "It's strange that as that happens, we are talking about it as if there is more of it."

Reason TV's Zach Weissmueller interviewed Louw about how his anti-Apartheid activism turned him from a Marxist into a libertarian, the factors driving Africa's incredible growth, the lessons other countries can learn from Botswana, South Africa, and even Rwanda, and how mobile phones and digital currencies are changing life in the developing world.

 

[Jolly_Penguin]

There is so much resource richness in Africa. If Africans can get all those resources under the control of themselves instead of under the control of foreign companies, could that be the key to great progress there?

 

[ksen]

Axulus, are you here all week?

 

[dismal]

There is so much resource richness in Africa. If Africans can get all those resources under the control of themselves instead of under the control of foreign companies, could that be the key to great progress there?

Not sure this is true. Trade between Western economies and Africa is remarkably small.

The US for example imports about $50 billion per year of goods from Africa. This is about 2% of total imports.

By contrast it gets $610B from North America, $460B from Europe, $770B from the Pacific rim, and 160B from South America.

http://www.census.gov/foreign-trade/Press-Release/2014pr/12/index.html

 

[Trausti]

There is so much resource richness in Africa. If Africans can get all those resources under the control of themselves instead of under the control of foreign companies, could that be the key to great progress there?

Not sure this is true. Trade between Western economies and Africa is remarkably small.

The US for example imports about $50 billion per year of goods from Africa. This is about 2% of total imports.

By contrast it gets $610B from North America, $460B from Europe, $770B from the Pacific rim, and 160B from South America.

http://www.census.gov/foreign-trade/Press-Release/2014pr/12/index.html

It may be $50B from Africa directly, but how much of the raw materials needed to produce consumer electronics we import from Asia came from Africa? Why have the Chinese initiated a soft colonization of Africa?

 

[dismal]

Not sure this is true. Trade between Western economies and Africa is remarkably small.

The US for example imports about $50 billion per year of goods from Africa. This is about 2% of total imports.

By contrast it gets $610B from North America, $460B from Europe, $770B from the Pacific rim, and 160B from South America.

http://www.census.gov/foreign-trade/Press-Release/2014pr/12/index.html

It may be $50B from Africa directly, but how much of the raw materials needed to produce consumer electronics we import from Asia came from Africa? Why have the Chinese initiated a soft colonization of Africa?

I dunno, but I doubt the raw materials account for much of the value of what we get from China.

Here is data for Germany:

https://www.destatis.de/EN/FactsFig...anyTradingPartners.pdf?__blob=publicationFile

You see the same pattern. Western nations have the bulk of their imports from other western nations and the pacific rim. Africa is negligible.

ETA:

Here is some info in China.

https://atlas.media.mit.edu/en/profile/country/chn/

Again, Africa is pretty small percent.

 

[dystopian]

but how much of the raw materials needed to produce consumer electronics we import from Asia came from Africa?

Not as much as you might think. Africa's share of world production for most of those kinds of minerals isn't very high. Of the materials used in electronics manufacturing, only gold is one that Africa produces in large quantities, representing around 20% of world production. China isn't investing in Africa because of raw materials for electronics manufacturing. It's investing because Africa has enormous growth potential across the board.

 

[Togo]

What an odd video. The speaker makes a number of odd declarations, such as 'communists hate street traders', effortlessly equating repression with socialism, and claiming that free market polcies have never failed. He credits Botswana's growth to a campaign of privitisation and reduction in regulations, rather than the more commonly cited efforts by the government to subsidise start ups and improve technical infrastructure, funded by taxing the diamond trade.

I guess hearing your own political ideology repeated by others is comforting to some, but this is pretty lightweight stuff.

 

[untermensche]

The Industrial Revolution has created great prosperity. Capitalists have exploited that prosperity.

There is nothing saying the prosperity created by the Industrial and then the Computer Revolutions couldn't be spread around evenly.

What stops that is capitalism.

 

[ronburgundy]

Since others have highlighted various ideological and unsupported assumptions of the OP, I'll focus my attention on one particular problem: The claim that the poverty and inequality relationship is the same in the poorest parts of Africa as it is in developed western nations. The speaker is talking about areas where the vast majority of a population are unemployed and/or desperately poor to the point of starvation, and there is not enough wealth within the country to be redistributed to address those problems. When there is little variance in wealth to begin with, because most people are at the very bottom, then anyone getting off the that floor of poverty is going to increase variance and thus increase metrics of wealth inequality. In such a context, increasing inequality is not an index of something negative.

None of that has any application to developed countries like the US with massive aggregate wealth and only a minority % living in poverty. In those contexts increasing inequality has many negative consequences, is an index of economic injustice, and is not at all necessary (and likely an obstacle) for the kind of economic health and growth that improves the lives of the majority.

 

[Loren Pechtel]

There is so much resource richness in Africa. If Africans can get all those resources under the control of themselves instead of under the control of foreign companies, could that be the key to great progress there?

It's a competitive marketplace to access those riches, they aren't going to be given the short end of the stick in such deals. It doesn't make that much difference who actually does the mining.

 

[ZiprHead]

There is a difference between exploitation, stealing resources out from underneath the feet of the people of Africa, and fair trade, giving the people of Africa a fair price for their resources.

 

[ronburgundy]

There is so much resource richness in Africa. If Africans can get all those resources under the control of themselves instead of under the control of foreign companies, could that be the key to great progress there?

It's a competitive marketplace to access those riches, they aren't going to be given the short end of the stick in such deals. It doesn't make that much difference who actually does the mining.

The odds of the people getting ripped off by a backroom deal between a company and a handful of bribed politicians is very great. They should declare all the minerals public property with each citizen getting an equal share, as a predetermined % of whatever the market value is of the minerals when they are extracted with strict oversight to how much is extracted.

 

[bilby]

It's a competitive marketplace to access those riches, they aren't going to be given the short end of the stick in such deals. It doesn't make that much difference who actually does the mining.

The odds of the people getting ripped off by a backroom deal between a company and a handful of bribed politicians is very great. They should declare all the minerals public property with each citizen getting an equal share, as a predetermined % of whatever the market value is of the minerals when they are extracted with strict oversight to how much is extracted.

Yeah. Good luck implementing anything in sub-Saharan Africa that involves any kind of effective oversight.

The problem is that the politicians have a choice between selling the stuff openly at market value, and distributing the profits to the people; Or selling it under the counter at a sharp discount, and keeping the loot for themselves.

Given the option of, say US$1,000,000,000 to spend on the people, vs US$10,000,000 to spend on themselves plus a few top army officers and influential tribal bosses, few can resist taking the cash; and even if they tried to choose the first option, then the top army officers and/or tribal bosses would simply stage a coup.

There is probably a solution to this; But so far, nobody seems to have found it.

 

[Loren Pechtel]

It's a competitive marketplace to access those riches, they aren't going to be given the short end of the stick in such deals. It doesn't make that much difference who actually does the mining.

The odds of the people getting ripped off by a backroom deal between a company and a handful of bribed politicians is very great. They should declare all the minerals public property with each citizen getting an equal share, as a predetermined % of whatever the market value is of the minerals when they are extracted with strict oversight to how much is extracted.

The people ripped off by their own politicians almost certainly happens--the money goes to the corrupt rather than to the people. Whether it's foreign developers or not has nothing to do with this.

- - - Updated - - -

The odds of the people getting ripped off by a backroom deal between a company and a handful of bribed politicians is very great. They should declare all the minerals public property with each citizen getting an equal share, as a predetermined % of whatever the market value is of the minerals when they are extracted with strict oversight to how much is extracted.

Yeah. Good luck implementing anything in sub-Saharan Africa that involves any kind of effective oversight.

The problem is that the politicians have a choice between selling the stuff openly at market value, and distributing the profits to the people; Or selling it under the counter at a sharp discount, and keeping the loot for themselves.

Given the option of, say US$1,000,000,000 to spend on the people, vs US$10,000,000 to spend on themselves plus a few top army officers and influential tribal bosses, few can resist taking the cash; and even if they tried to choose the first option, then the top army officers and/or tribal bosses would simply stage a coup.

There is probably a solution to this; But so far, nobody seems to have found it.

Except you're missing the third case--selling the market value but some of that money is paid to the politicians rather than to the people. That produces the most profit for the politicians.

 

[fromderinside]

The odds of the people getting ripped off by a backroom deal between a company and a handful of bribed politicians is very great. They should declare all the minerals public property with each citizen getting an equal share, as a predetermined % of whatever the market value is of the minerals when they are extracted with strict oversight to how much is extracted.

Yeah. Good luck implementing anything in sub-Saharan Africa that involves any kind of effective oversight.

The problem is that the politicians have a choice between selling the stuff openly at market value, and distributing the profits to the people; Or selling it under the counter at a sharp discount, and keeping the loot for themselves.

Given the option of, say US$1,000,000,000 to spend on the people, vs US$10,000,000 to spend on themselves plus a few top army officers and influential tribal bosses, few can resist taking the cash; and even if they tried to choose the first option, then the top army officers and/or tribal bosses would simply stage a coup.

There is probably a solution to this; But so far, nobody seems to have found it.

I'm thinking we offer protection to the powers that be only if we distribute the aid directly to the people.

 

[boneyard bill]

Yeah. Good luck implementing anything in sub-Saharan Africa that involves any kind of effective oversight.

The problem is that the politicians have a choice between selling the stuff openly at market value, and distributing the profits to the people; Or selling it under the counter at a sharp discount, and keeping the loot for themselves.

Given the option of, say US$1,000,000,000 to spend on the people, vs US$10,000,000 to spend on themselves plus a few top army officers and influential tribal bosses, few can resist taking the cash; and even if they tried to choose the first option, then the top army officers and/or tribal bosses would simply stage a coup.

There is probably a solution to this; But so far, nobody seems to have found it.

I'm thinking we offer protection to the powers that be only if we distribute the aid directly to the people.

So you want US to do something about crony capitalism in Africa. What about here at home? We have the same problem in this country only it is much bigger over here because there's so much more to steal.

Africa will not become wealthy because Westerners will invest so much money there. They will end poverty because Africans working for those Western companies will save their money and start businesses of their own. As Louw stated in the OP, Africa is developing because African governments are dismantling many of their regulations which inhibit the formation of small businesses. Westerners simply indirectly provide the seed capital for these kinds of things to occur.

 

[Togo]

Africa will not become wealthy because Westerners will invest so much money there. They will end poverty because Africans working for those Western companies will save their money and start businesses of their own. As Louw stated in the OP, Africa is developing because African governments are dismantling many of their regulations which inhibit the formation of small businesses.

Right, so nothing to do with taxing established industries with a narrow focus and using the money to help the development of SMEs and micromarkets. There's been no finance reform to force large banks to handle small credit customers, or operate in remote areas as a condition of their license, no push by the government to connect remote areas to water, electricity, or education at below market rates, and certainly no increase in the monitoring of markets to ensure a fair trading enviroment for all.

The basic problem is that there are two models for African development. The first is a top down approach, making the comparitively wealthy cities richer, by investing in well-established projects, like shopping malls, highrise buildings and similar. The money is easier to track, this route attracts the most private investment, and so the impact is comparatively large. The only two problems are that you're using funds to promote projects that might well have gotten local investment in any case, and that the majority of the country gets totally left out.

The second is to promote the sole traders and SMEs, typically by taxing the larger established industries and passing laws to prevent larger businesses from using the police or their own security to intimidate potential competitors. This involves the twin horrors of redistributive taxation and government regulation. But it works, because it allows the formation of what Africa has traditionally lacked, free markets.

Here are some examples of some of the market legislation that Botswana has been passing in the last few years.

http://www.gov.bw/en/Business/Topic...tions/Financial-and-Development-Institutions/
http://www.bankofbotswana.bw/index.php/content/2009103012019-legislation-and-regulations
https://www.kpmg.com/BW/en/IssuesAn...uments/Botswana-Funds-Mtg-regulation-2010.pdf
http://www.bocra.org.bw/sites/defau...ssessment on National Roaming in Botswana.pdf

Far from sweeping away government regulations, as the OP would dearly love to believe, Botswana has taken a very hand-on approach to market regulation, and has aggressively passed restrictions on some forms of development, such as restrictions on the mobile phone development, to ensure it benefits the majority of the population.

 

[Loren Pechtel]

Here are some examples of some of the market legislation that Botswana has been passing in the last few years.

http://www.gov.bw/en/Business/Topic...tions/Financial-and-Development-Institutions/
http://www.bankofbotswana.bw/index.php/content/2009103012019-legislation-and-regulations
https://www.kpmg.com/BW/en/IssuesAn...uments/Botswana-Funds-Mtg-regulation-2010.pdf
http://www.bocra.org.bw/sites/defau...ssessment on National Roaming in Botswana.pdf

Far from sweeping away government regulations, as the OP would dearly love to believe, Botswana has taken a very hand-on approach to market regulation, and has aggressively passed restrictions on some forms of development, such as restrictions on the mobile phone development, to ensure it benefits the majority of the population.

Botswana is far better run that the rest of Africa.