Posted on 06/10/2005 11:16:56 AM PDT by dead
NOW Tony Blair and George Bush have sorted out the overdrafts of Africa's poorest nations perhaps they could turn their attention to the more pressing issue of the debts of the poor themselves. Here the problem is quite the opposite of what you might expect. The problem for Africa's poor is not too much debt, but too little.
Why is the West rich? This question has vexed economists, historians and sociologists for many years. Max Weber famously put it all down to the Protestant work ethic, which must have been a shock to the capitalists of France, Spain, Italy and Bavaria.
In recent years economists have put forward a much more mundane explanation for the astonishing, but little remarked upon, rise in living standards that occurred on this continent over the last few hundred years.
Put, very, simply the West is rich because of its early development of strong private property rights. Having a demonstrable claim to property allows the brave among us to borrow against their assets and set up in business, and provides the incentive to do just that because it guarantees they will be allowed to hang on to their profits. Luckily they have to pay us cowards to transform their dreams into reality, so we also get a slice of the action.
For us in Britain our home is not just our castle, it is a fantastic resource on which we can draw to make money. The humble title deed, when recognised and respected by society, is the engine which drives progress in the West. It encourages investment, creativity, innovation, and has brought us wealth and stability. It is not that long since European peasants also faced starvation if their crops failed.
This, too, is little commented upon, because it is so deeply embedded in our culture that it is considered totally unremarkable, despite the remarkable benefits it has brought us. It is also a bit depressing to discover our wealth is not explained by the fact we are more intelligent or harder working, or indeed more Protestant, than the poor of the developing world, but by the fact we can get a loan on the high street and they can't.
Hernando de Soto, the Peruvian economist whose obsession with this issue is such that he named his dogs Marx and Engels because they were hairy, German and had no respect for private property, estimates that the poor in Africa have around $1 trillion of assets in the form of their self-built houses, shacks and strips of land.
In our capitalist economy they could borrow against these, set up in business and, Protestant or not, start running sweatshops and paying what we think are terrible wages to employees who prefer any money at all to the joys of subsistence farming. They could build up wealth and then invest and spend it in the same virtuous circle that got us where we are today. But in Africa people cannot easily get into debt because they cannot easily prove they own their property, so that money stays locked up as dead capital, and they stay poor.
This may sound dull and technical. As a slogan "Better Title Deeds for the Poor" is not going to get Sir Bob Geldof's million marching on Edinburgh. It is not as much fun as calling for the cancellation of debt. It is not very appealing to patronising or guilt-ridden Westerners who like to think that backwards Africa will never solve its problems without their cash. However, the value of the poor's assets is 40 times the aid handed out since 1945. What could they do to help themselves if only they could get their hands on their money?
One hint comes from a recent documentary, Africa: Open for Business, which premiered at Cannes last month to widespread indifference, probably because it lacks the two main ingredients expected from a film about Africa: footage of starving children with distended bellies, or smiling children expressing gratitude for Western aid.
It tells the stories of ten successful African entrepreneurs, such as Mohammed Yassin Olad who set up an airline in Somalia, spotting an opportunity when the national carrier collapsed, along with the government. Talk about brave. Olad says Somalia's chaos was good for his business. This may sound weird, but we in Britain established our property rights during a century when we beheaded one king and deposed another.
And this is the problem. Establishing the rights we take for granted is not easy. What appears straightforward and legalistic today has its roots in tradition and years of struggle. In Africa's case it involves formalising existing arrangements. Strong central government is not necessarily the solution, and may be part of the problem if it seeks to impose off-the-shelf solutions which do not fit local custom.
Much of the work will have to be done by Africans on the ground. We can help - the Norwegian government is funding de Soto to do such work in Tanzania - but it is not as glamorous as a nice big aid project. It is not a problem that lends itself to solution by text message. There again, what does?
In the meantime the best way for the millions of us who care about Africa's poor to help is not by wasting money on texts or trips to Edinburgh, but by scouring the shops for goods made in their sweatshops. Alternatively, those of us like Sir Bob with large properties in Chelsea could take out a second mortgage and lend the proceeds to an African entrepreneur currently struggling to get himself into debt.
Hernando de Soto, the Peruvian economist whose obsession with this issue is such that he named his dogs Marx and Engels because they were hairy, German and had no respect for private property
That line alone was worth the price of admission.
There has been a great deal published on the efficacy of "micro-loans" to provide a seed capital for small business in Africa that is otherwise unavailable. These loans, of course, are either unsecured or are secured by assets to which the owner has at best tentative title to begin with.
Of course, with one common ploy of the "anti-colonial" fascisti to expropriate property that seems inconveniently prosperous, it isn't the title itself that is significant but its permanence. I'm thinking some dictators (no names *coughcoughMugabecoughcough*) are going to have to swing from lampposts before this happy situation takes root in the poorest and unhappiest corners of that continent.
Yes...imperialism and colonialism are not all bad.
Apparently, there is a similar problem in the middle east. A Palestinian who owns a gas station here, says he won't go back because he could never get clear title to family land.
Much of Latin America as well.
No, Africa needs to modernize and become more capitalistic. The continent has tons of natural resources. Blame the tin-pot dictators, I say.
In a small Ugandan village in 1980 I had an old woman ask me, "Please, when are the British coming back?"
In another village in Mali in 1990, a middle aged blind Malian man said to me, "What this country really needs is recolonization!"
Kinda makes you think, huh?
de Soto in Peru and Flores in Chile may yet change the way S. America makes a contribution to the world.
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