Africa: Toward Self-Inflicted Prosperity

My favorite economist, Walter Williams, has a great article about how African socialism brings despair. He shoots down myths about why some nations are rich while others are not.

"Did you learn that the United States is rich because we have bountiful natural resources? That has to be nonsense. Africa and South America are probably the richest continents in natural resources but are home to the world's most miserably poor people. On the other hand, Japan, Hong Kong, Taiwan and England are poor in natural resources, but their people are among the world's richest.

Maybe your college professor taught that the legacy of colonialism explains Third World poverty. That's nonsense as well. Canada was a colony. So were Australia, New Zealand and Hong Kong. In fact, the richest country in the world, the United States, was once a colony. By contrast, Ethiopia, Liberia, Tibet, Sikkim, Nepal and Bhutan were never colonies, but they are home to the world's poorest people."

As Williams shows, there is a correlation between free markets, higher wealth and human rights protections. He goes on to state that measures that lower trade barriers to U.S. markets - such as the Africa Growth and Opportunity Act, which Congress recently expanded - is the best way that the West can help Africa. This is true, as free trade sets up a much more equitable relationship than foreign government aid's donor and recipient setup. AGOA imports rose to $14 billion last year, a 55% increase over 2002.

My criticism of Williams's article is that it doesn't compare African nations who are on the road toward prosperity vs. ones who are not, which would be an even more illustrative comparison. For example, he could've compared Zimbabwe (which he mentions) with its neighbor Botswana. Botswana is a member of the Common Customs Area, which lowers trade barriers among southern African countries; Zimbabwe is not. Botswana's far more open economy, pluralistic political system, low individual and corporate taxation, and stability have helped it become among the world's fastest growing economies. Instead of money flowing directly into their leaders' pockets (as in Zimbabwe), 90% of Botswana schoolkids get primary education and it is a pioneer on AIDS/HIV health care.

In 1970, Botswana's per capita GDP was US$590, less than the sub-Saharan average of US$609. After three decades of relatively high economic freedom, Botswana's per capita GDP is now $9,500 while in Zimbabwe it is $2,400. A 2003 Fraser Institute (Canada) report ranks Botswana 26th on economic freedom, tied with eight other nations including Japan and Norway. A World Economic Forum report ranks Botswana as Africa's most competitive economy, which is why it's attracted $7 billion in private investment to further employ people. Botswana also has a fairly free press; well-managed diamond mining, livestock, and tourism industries; and is one of Africa's leaders on human rights. People are fleeing Marxist Zimbabwe en masse, they are not from free-market Botswana.

What would help African countries like Botswana even more is for the U.S. to eliminate or at least significantly reduce its agricultural trade barriers. In addition, corporate welfare which aids agribusiness, hurts market competition and efficiency, and artificially inflates product costs. Such a strategy enables African farmers to competitively sell their goods, and would lower food costs for U.S. consumers. Black Americans should lead the way to push more for such measures with Congress and the White House for our ancestral continent, so economic and political freedom can reign.