African Debt Relief

[Jon_in_london]

As an aside on that point. You often hear politicians and other waffling about democracy being an important condition to improving economic welfare. Actually, all the economic research indicates that democracy or not makes no difference, it is all in the competence, or governance.

No, I am not advocating oppressive regimes, but trying to draw attention to what are the true causes of poverty and hence what we really need to try and change (not just throw more money that would perpetuate the inderlying causes)

As to democracy- what it can do is to ensure that a government/president doesnt have carte blanche to rip off the country to his/its heart's content in the sound knowledge that there will be no come-back, no investigations and no prosecution for being a stinking kleptocrat. People in a decmocracy can demand transparency and value for money- in a dictatorship, this cant happen. Of course, this doesnt always neccesarily happen- look at the UK for example. And you idiots voted for him!

As to the true causes of poverty in Africa- in my experience it is fundamentaly down to failure by a government to invest in the country and rather use the revenues for the purpose of personal ambition and self-agrandisment. And likewise with policy- to choose those policies that are int he best interests of the country rather than the best interests of the ruling elite.........

 

[Beancounter]

As to the true causes of poverty in Africa- in my experience it is fundamentaly down to failure by a government to invest in the country and rather use the revenues for the purpose of personal ambition and self-agrandisment. And likewise with policy- to choose those policies that are int he best interests of the country rather than the best interests of the ruling elite.........

I agree that this is a key factor, particularly since the African countries obtained independence. However, a variation of this, during the colonial times, also helped to make the countries poorer than they should be upon independence. Replace "personal" and "self" with the appropriate colonial power or related company and you also have another key factor.

Viz. Foreign company/government A pays chief/king/government B stuff all for an area of land that just happens to sit on massive mineral resources. Said resources are dug up, taken overseas and sold off with the proceeds going to Foreign company/government A, B sees nothing more due to his/its ignorance of what was there and hence the true worth of the land. Had those resources been fairly valued B's country would have retained far more wealth within itself. (What it chose to do with that wealth then becomes your point).

 

[Jon_in_london]

Viz. Foreign company/government A pays chief/king/government B stuff all for an area of land that just happens to sit on massive mineral resources. Said resources are dug up, taken overseas and sold off with the proceeds going to Foreign company/government A, B sees nothing more due to his/its ignorance of what was there and hence the true worth of the land. Had those resources been fairly valued B's country would have retained far more wealth within itself. (What it chose to do with that wealth then becomes your point).

Perhaps. However there are a number of points here:

1. Most sub-Saharan nations still sit atop massive mineral wealth. Angola, DRC and Namibia are pretty good examples, but in the case of DRC in particular, this doesnt seem to be helping. Nigeria is another fine example.........

2. Minerals can only do so much. One the revenue from the minerals stops flowing- either by a market price crash or by depletion of said minerals- you are back to square one. A good example of this is the UK. The UK's wealth used to be based on coal- its what made Britain a world power. Once the price of coal crashed post WWI Britain suddenly found itself in dire straights. In the 1920s starvation was a reality for many in the UK. Continued prosperity depends on a great deal more than what you can dig from the ground. So minerals might help Africa for a while but only if the revenues are correctly invested by a competent government otherwise....... well look at Nigeria. All that oil and yet all that poverty!

3. In the case of the British at least, the aim of empire was not a simple mining operation. The ideal was to build each colony into what would eventually be a self-governing Dominion- Australia Stylie- retaining the Monarchy as heads of state while enjoying de facto home rule. This is why India, for example, was criss-crossed with roads, canals and railways while Indians were educated to run the Civil Service and so on....... So in many ways, the Imperial Civil Service wallahs were very competent governors because they saw thier aim as building nations. On the other hand you have people like Mugabe who is perfectly prepared to destroy his own country if he believes that this will allow him to hold onto his power, his palaces and his Swiss bank accounts...

 

[Beancounter]

I have to confess my lack of historical knowledge means that I had not realised the colonists were so benevolent!

I agree fully, hence my comment that had the wealth remained within the country we then move onto your point regarding how that wealth is used. My only point was really that having the wealth to do with what you will is a better starting point than not having it all.

Unfortunately, many countries in Africa are going through the same learning curve that Europe did many years ago. A largely ineffective electorate (if there even is one), due either to disenfranchisement, undue influence, a lack of education or all of the above, is not quickly going to influence people in power with access to untold riches.

 

[Jon_in_london]

I have to confess my lack of historical knowledge means that I had not realised the colonists were so benevolent!

My only point was really that having the wealth to do with what you will is a better starting point than not having it all.

Well, they certainly thought they were.... just read some Kipling! Unfortunately, most African leader do make them seem benevolent- nobody has treated the Africans worse than the Africans.

I suppose if the big hole in Kimberley was only now being mined, the revenues could be used to combat TB or HIV, or provide housing or some such..... but then Mbeki could just use it to up-grade his own personal Airbus and own personal terminals at each of SA's major airports........

 

[a_unique_person]

Well, they certainly thought they were.... just read some Kipling! Unfortunately, most African leader do make them seem benevolent- nobody has treated the Africans worse than the Africans.

That is debateable. I hear the DRC has been one, ongoing disaster.

The thing I find curious is, that, these societies functioned well for many thousands of years. They might not have been my cup of tea, but I don't believe a society can be as dysfunctional as they are these days and have had any hope of surviving more than a few hundred years.

Australian aboriginals were incredibly successful, for example, from the point of view that they had just about the longest surviving culture in the world.

Since the arrival of europeans, their culture has disintegrated to a large extent. Drug abuse, violence and suicide are rife. Many choose to blame them for it, but I wonder, how could it be that for so long they had a stable society, now they are degenerating so rapidly. It is clearly anything but all their fault. Ditto for Africa.

A culture is a fragile thing, it takes a long to build itself to a self sustaining entity. It takes only a few generations, it appears to destroy it and leave it's former owners adrift.

 

[Drooper]

As to democracy- what it can do is to ensure that a government/president doesnt have carte blanche to rip off the country to his/its heart's content in the sound knowledge that there will be no come-back, no investigations and no prosecution for being a stinking kleptocrat. People in a decmocracy can demand transparency and value for money- in a dictatorship, this cant happen. Of course, this doesnt always neccesarily happen- look at the UK for example. And you idiots voted for him!

As to the true causes of poverty in Africa- in my experience it is fundamentaly down to failure by a government to invest in the country and rather use the revenues for the purpose of personal ambition and self-agrandisment. And likewise with policy- to choose those policies that are int he best interests of the country rather than the best interests of the ruling elite.........

But as far as democracy goes, the simple fact is there is no causality between it and reduction in poverty. It is another red herring in the drive to reduce global poverty.

 

[Jon_in_london]

That is debateable. I hear the DRC has been one, ongoing disaster.

The thing I find curious is, that, these societies functioned well for many thousands of years. They might not have been my cup of tea, but I don't believe a society can be as dysfunctional as they are these days and have had any hope of surviving more than a few hundred years.

Australian aboriginals were incredibly successful, for example, from the point of view that they had just about the longest surviving culture in the world.

Since the arrival of europeans, their culture has disintegrated to a large extent. Drug abuse, violence and suicide are rife. Many choose to blame them for it, but I wonder, how could it be that for so long they had a stable society, now they are degenerating so rapidly. It is clearly anything but all their fault. Ditto for Africa.

A culture is a fragile thing, it takes a long to build itself to a self sustaining entity. It takes only a few generations, it appears to destroy it and leave it's former owners adrift.

What is now the DRC was once the personal fiefdom of the King of Belgium- by all accounts, he was an extremely brutal and unpleasant (read "The Heart of Darkness"), overlord. However, what really caused the problems in the DRC is how it was de-colonised and the leader that came after..... when it was de-colonised every lawyer, banker, engineer, doctor, nurse, farmer etc... was compelled to leave. In an instant, the entire country was stripped of its entire machinery for the generation of wealth... Mobuto Sese-Seko did little to help things along afterwards with his regime being almost a caricature of what an African leader should not be.

As to "these societies functioning well for many thousands of years" well, I question that. The human dynamics of sub-Saharan Africa were much more fluid. You may make such a claim for a hundered years but not many thousands. The Zulus for example, swept into what is now Kwa-Zulut-Natal slaughtering the native bushmen as they went. They wernt known as the Zulus then- the Zulus were just one small tribe amongst many. Shaka changed that by waging "The Crushing" a brutal war in which other tribes had the stark choice of leave (for eg. the Matabeles in Zimbabwe), join the Zulus or be annihilated. Meanwhile, the Zulus along with the Europeans quite literally exterminated the Bushmen as if they were vermin.

I cant really comment about the Abo’s but I think its not too far out to say that what they are now experiencing is not too far distant from what the average Londoner experienced not so very long ago.

 

[Jon_in_london]

But as far as democracy goes, the simple fact is there is no causality between it and reduction in poverty. It is another red herring in the drive to reduce global poverty.

How would you confirm or deny such causality?

 

[Drooper]

How would you confirm or deny such causality?

There are very many economic papers written on this. Trying to explain how and why economies grow is a major area of academic study.

Iy including factors such as type of government into econometric work can help to find any explantory power berhind such factors. Of the many factors that can be found to help explain income growth in economies, democracy ain't one.

If you want to learn some more about way to reduce poverty, the best place to start is with an understanding of what drives income growth (which is effectively what we are trying to achieve here).

One good text is Barro and Sala y Martin, Economic Growth

 

[Orwell]

Did you know that interest isn't paid on most of this debt?

Did you know that foreign aid is specifically increased to cover the remainder?

Imagine I lent you $1 million, then said don't worry about half the interest payments and then Darat and Jon said, don't worry about the rest we'll give you some money to cover that.

That is why the debt issue is falsely presented. That is why it is not a cause of poverty and that is why it is not an obstacle to the eradication of poverty.

You keep saying this, but you're not backing it up. Here's what I said:

I think that foreign debt is an obstacle to the eradication of poverty in Africa.

http://www.50years.org/factsheets/africa.html
It was not an emotive claim. The quote above backs that claim up.

Many people claim (including Gordon Brown) that it's debt interest payments that prevent many poor countries from investing in health and education.

There are some countries who have had partial debt relief:

In Benin, 54% of the money saved through debt relief has been spent on health, including on rural primary health care and HIV programmes.
In Tanzania, debt relief enabled the government to abolish primary school fees, leading to a 66% increase in attendance.
After Mozambique was granted debt relief, it was able to offer all children free immunisation.
In Uganda, debt relief led to 2.2 million people gaining access to clean water.

http://en.wikipedia.org/wiki/Debt_relief

Things are often not black & white. You have to put up the potential good things that come out of debt relief and aid against the potential bad things that these actions may cause. Overall, I think that debt relief and aid will do more good than bad.

 

[Orwell]

Try a test of logic. These country didn't always have this debt, but they plummeted into poverty, or remained poor as they accumulated it. SO it didn't cause the poverty in the first place did it? It was a symptom of poor governance and policy. It still is a symptom of poor governance and policy and a cause of nothing.

Here's what I think, juts to give you a general idea:

The ex-colonising powers, and the post colonisation influence of the west is, in part (it depends on the country) responsible for the bad governance and policy of many African countries. The ex colonisers left these countries with artificial borders, a habit of corruption and exploitation, and unresolved internal conflicts (in part caused by the artificial borders). The bad African governments just perpetuated and exacerbated the bad governance of the colonisers. I talk about the "bad governance" of the colonisers because, in all European colonies, politics were made for the benefit of a small european elite. All European colonies were, to different degrees, racially segregated. The African population was generally poor, ignorant and exploited. When the small European elite left, a small African elite, usually educated in the west, took their place. But since they were less powerful local dictators, and their power was new, these African kleptocrats were unable to control their countries as efficiently as the Europeans. And then, to top it all, many of these countries became the stage for a proxy conflict between the old USSR and the west, sometimes even before complete independence (as in Angola and Mozambique). The west propped up the dictators and rebel groups on its side, the soviets supported the dictators and rebel groups on theirs.

 

[Shane Costello]

Irish TV did a feature on Zimbabwe last night. It looks like all the colonial guilt, apologies and aid in the world won't make a blind bit of difference there while Mugabe and his odious regime remain in power. Food was being witheld from those sections of the population out of favour with Zanu-PF, while Victoria Falls, once the cornerstone of a vibrant tourism sector was now deserted.

I've read that Botswana has bucked the economic and humanitarian trend in Sub-Saharan Africa in terms of government stability and economic growth. How true is this?

 

[a_unique_person]

I think a lot of groups, determined to rid themselves of some oppressor, such as the natives of Zimbabwe, become tempted by the strength of the tough guy. They don't realise at the time that, even though the tough guy is capable of ridding them of the problem at hand, in the long run, he is a problem all of his own.

That doesn't make the original cause any less just.

Ref, The King, The Mice, and the Cheese.

 

[a_unique_person]

As to "these societies functioning well for many thousands of years" well, I question that. The human dynamics of sub-Saharan Africa were much more fluid. You may make such a claim for a hundered years but not many thousands. The Zulus for example, swept into what is now Kwa-Zulut-Natal slaughtering the native bushmen as they went. They wernt known as the Zulus then- the Zulus were just one small tribe amongst many. Shaka changed that by waging "The Crushing" a brutal war in which other tribes had the stark choice of leave (for eg. the Matabeles in Zimbabwe), join the Zulus or be annihilated. Meanwhile, the Zulus along with the Europeans quite literally exterminated the Bushmen as if they were vermin.

I cant really comment about the Abo’s but I think its not too far out to say that what they are now experiencing is not too far distant from what the average Londoner experienced not so very long ago.

If you look at the recent history of Europe, it is one of continual wars and bloodshed, so I don't think that the propensity to wage war is necesarily a measuring stick for a society.

PS. 'Abo's' is the equivlent of n****er.

 

[Drooper]

You keep saying this, but you're not backing it up. Here's what I said:

Well, you do quote advocacy sites and Wiki, which isn't exactly robust or impartial data.


Debt servicing does not and has not been a constraint on the government of Benin from spending on important public projects.

They simply don't pay any debt interest. Did you know that they have interest arrears for more than $250million on a total debt of $1,500 million; that this doesn't include periodical write-off of arrears (1989, 1991, 1996) after this arrears begins to build up.

Did you know that their public finances have been in such a parlous state (tax revenues account for less than 15% of GDP)?That is why they have had nothing to spend on important public projects. Why are they spending now? Not because they have the money all of a sudden, but because they have been told to by the IMF/World Bank. See, all about good governance, not a lack of resources. It has always within their power to fund important project (not least due to the massive aid that has flowed into the country for many many years).

It brings us back to the central point here. The way to reduce proverty is improve governance in these countries, not to through more money.

I am not saying cut foreign aid, just that doubling it isn't the solution to poverty, neither is debt wrote-off per se. Moreover, throwing more money can make things worse by inflating the economy and reducing even further any incentive for these countries to reform.

 

[Orwell]

Well, you do quote advocacy sites and Wiki, which isn't exactly robust or impartial data.

Well, yeah maybe! It's not easy to find numbers on these things. But even if you don't agree with the numbers, at least you know that I'm not pulling them out of a hat.

 

[Drooper]

Well, yeah maybe! It's not easy to find numbers on these things. But even if you don't agree with the numbers, at least you know that I'm not pulling them out of a hat.

Just quoting somebody else who is pulling them out of their hat?

IMF

 

[Orwell]

Just quoting somebody else who is pulling them out of their hat?

IMF

To me (and many others), the IMF is a less reliable source than Wikipedia...

The IMF is is also an "advocacy group", you know?

 

[Drooper]

To me (and many others), the IMF is a less reliable source than Wikipedia...

The IMF is is also an "advocacy group", you know?

If you say so.

On that basis, it seems our discussion has reached a point of closure.