RALEIGH – Greg Mills, who directs the Brenthurst Foundation in South Africa, has just published an essay on a subject in which I have long been interested: Why is Africa poor?
The usual explanations offered by the usual suspects don’t wash. Africa isn’t poor because it lacks raw materials. Africa is a treasure trove of raw materials. The continent isn’t poor because of the ravages of the African slave trade, which ended generations ago, or even of European colonialism, which had a longer hold on other regions of the developing world such as South Asia that have had great economic success in recent decades.
Racist cranks expose their idiocy by insisting that Africa is poor because its people are inherently inferior. The only clearly inferior people I know are racist cranks. And socialist cranks expose their idiocy by insisting that Africa is poor because of the defects of international capitalism, the spread of which has lifted hundreds of millions of people out of poverty in East Asia, South Asia, and Latin America during the same period that Africa has stagnated.
If it isn’t geography, history, exploitation, genetics, or the spread of capitalism that explains Africa’s heartbreaking poverty, what does?
Mills surveys the data, discards the faulty explanations, and zeroes in on the main problem: institutions. Africa has failed to keep pace with the rest of the developing world because of a debilitating lack of effective leadership, honest and efficient governments, secure property rights, and individual freedom. Rather than reforming and building the modern institutions that make societies prosper, too many African leaders have monopolized power, squandered revenues from their country’s commodity exports, and manipulated international donors to keep the leaders in power and their subjects impoverished.
Institutions matter. If people are free to make their own decisions, choose their own educational paths and professions, start and manage their own businesses, make their own investments, choose their own political leaders, and enjoy the fruits of their own labor under secure property rights and a stable rule of law, progress becomes possible. People benefit from their good decisions and learn from their bad ones. They accumulate capital – physical, financial, human, and social. Capital formation is the key to future growth in productivity and, therefore, real income.
If, however, the only way to get jobs, educations, business opportunities, or other services is to pay bribes and play electoral or tribal politics, progress becomes improbable. No one feels secure. Entrepreneurs find it hard to launch new enterprises. Domestic and foreign investors lose confidence that they’ll get their money back, plus a return. Large-scale infrastructure projects turn into expensive boondoggles rather than valuable investments.
Africa is poor because it is unfree. Asia and Latin America are less poor than they used to be because they have begun the hard but indispensable work of reforming their public institutions in ways that maximize freedom and minimize intrusion in markets.
In North Carolina, which by African standards is fabulously wealthy and free, policymakers need to confront the state’s many challenges with a clear understanding of what makes societies prosperous. Human nature is unchanging and universal. North Carolina won’t become a better place to live or work by trying to change the fundamental character of North Carolinians. But we can make North Carolina a better place by making it a freer place – by reforming our public institutions to increase competition and innovation in the delivery of public services, while strengthening our commitment to personal freedom and its necessary companion, personal responsibility.
In a sense, I started this column with the wrong question: Why is Africa poor? In truth, the vast majority of human beings during the vast majority of human history have been poor. Only recently, within the past two centuries, has a substantial percentage of humanity become prosperous. The real question is: How do societies ever escape poverty?
The answer is clear: they embrace freedom in all its forms. If you think fighting for freedom is a just and noble cause, please consider joining it as soon as possible. We need all the help we can get.
Hood is president of the John Locke Foundation.