Posted on 09/23/2023 4:33:24 AM PDT by MtnClimber
It’s now more than sixty years since the independence movement in the late 1950s and early 1960s transformed nearly all of sub-Saharan Africa into independent countries. Hopes soared for a new era of progress and prosperity. But six plus decades on, with essentially no exceptions (maybe Botswana?), the 49 countries of sub-Saharan Africa are about as poor as ever.
The New York Times treats the subject in a big piece by Patricia Cohen a few days ago on September 18. Sorry if this is behind their paywall, but I subscribe to this stuff so that you don’t have to. In the treatment at the Times, this is just a case of the sad cruelty of nature, an extreme instance of “bad luck.” But we can learn a good deal about the true source of the bad luck by looking at clues that Ms. Cohen and the Times inadvertently drop in the course of their reporting, without even noticing that they are doing it.
The funny thing about the bad luck of sub-Saharan Africa is that it seems to afflict all 49 countries at the same time, even as elsewhere in the world at least a few countries (South Korea, Taiwan, Thailand) are able to find the magic recipe to rise out of poverty.
This week’s piece in the Times focuses particularly on the country of Ghana. The headline is “Crisis and Bailout: The Tortuous Cycle Stalking Nations in Debt.” The sub-headline is “The government of Ghana is essentially bankrupt, and has turned to the International Monetary Fund for its 17th financial rescue since 1957.” Seventeen financial bailouts in 66 years since 1957 would be more than one bailout every four years.
In Ms. Cohen’s reporting, the “tortuous cycle” of debt is just an inevitable fact of life for poor nations, one that somehow persists despite the best efforts of the very best and cleverest people. A few excerpts:
The government is essentially bankrupt. After defaulting on billions of dollars owed to foreign lenders in December, the administration of President Nana Akufo-Addo had no choice but to agree to a $3 billion loan from the lender of last resort, the International Monetary Fund. It was the 17th time Ghana has been compelled to turn to the fund since it gained independence in 1957. This latest crisis was partly prompted by the havoc of the coronavirus pandemic, Russia’s invasion of Ukraine, and higher food and fuel prices. But the tortuous cycle of crisis and bailout has plagued dozens of poor and middle-income countries throughout Africa, Latin America and Asia for decades.
The piece proceeds with heart-rending stories of Ghanaians seeing their lives up-ended as the currency collapses and the government defaults on its debts. For starters, here is the situation at a big construction project of an amusement park in the capital of Accra:
Emmanuel Cherry, the chief executive of an association of Ghanaian construction companies, sat in a cafe at the edge of Accra Children’s Park, near the derelict Ferris wheel and kiddie train, as he tallied up how much money government entities owe thousands of contractors. Before interest, he said, the back payments add up to 15 billion cedis, roughly $1.3 billion. “Most of the contractors are home,” Mr. Cherry said. Their workers have been laid off. Like many others in this West African country, the contractors have to wait in line for their money.
It’s a very sad story for the thousands of contractors who have done major work and are going unpaid. But wait a minute! The government is constructing an amusement park? And taking on upwards of a billion dollars of public debt to do it? Moreover, the full cost of the project must be well more than the $1.3 billion, since that is just the amount of unpaid bills currently outstanding. How could government financing of this project possibly make sense in an impoverished sub-Saharan country where the people lack for basic things like food, housing and electricity?
I would say it is completely obvious that no government should be in the business of financing and building amusement parks. Here in the U.S., I’m sure that a Disney or a Universal can hit up Florida or California for some tax breaks or other baksheesh from time to time for their big parks. But financing the whole thing with central government bonds? That’s ridiculous. And yet somehow Ms. Cohen and the Times don’t notice anything out of line.
Read a good deal farther into the article, and you come to this:
As Ghana’s foreign reserves skidded toward zero, the government began paying for refined oil imports directly with gold bought by the central bank.
OK, why is the government paying for refined oil imports? Does the U.S. government pay for the imports of oil products into the U.S.? Maybe yes for a tiny percentage, perhaps for an overseas military base; but almost entirely, oil imports into (or exports out of) the U.S. are done by private parties. Again, Ms. Cohen and the Times don’t evidence any awareness that government pre-emption of such an economic sector can come to no good.
Obviously the government is way too involved in what should be private sector businesses, running up debts for uneconomic endeavors and then inevitably defaulting when the government lacks the ability (as all governments do) to run the businesses profitably.
So Ghana is falling back into the suffocating embrace of the IMF for the 17th time since independence. After all, as the Times says, they have “no choice.” And we all know what is the universal prescription of the IMF for impoverished countries: more government spending and higher taxes.
How could that possibly make sense? If you don’t immediately grasp the logic, you need an education in IMF-speak. I had a post back on June 19, 2017 covering this subject. The title was “The Important Work Of International Agencies: Keeping The Poor Poor.” That post highlighted a quote from then IMF head Christine Lagarde as to how higher taxes and higher government spending are the magic elixir for alleviating poverty. Note Ms. Lagarde’s weird bureaucratic terminology:
[W]e are here to discuss an equally powerful tool for global growth — domestic resource mobilization. . . . [T]axes, and the improvement of tax systems, can boost development in incredible ways. . . . So today, allow me first to explain the IMF’s commitment to capacity development and second, to outline strategies governments can use to generate stable sources of revenue…
“Domestic resource mobilization” — that’s IMF babble for higher taxes and higher government spending. After all, you need to get the resources out of the hands of the layabout private citizens and into the hands of the brilliant government bureaucrats to make sure that they are “mobilized” appropriately. Multiple decades of this, and every one of the 49 sub-Saharan countries remains poor.
Meanwhile, Ms. Lagarde has failed upward to become the head of the European Central Bank. Her replacement at the IMF, Kristalina Georgieva, has not changed anything as far as I can discern. After all, if poor countries did not default regularly, and need bailouts, what would the functionaries at the IMF do?
I would not expect the “tortuous cycle” of debt and poverty for Ghana, or for other poor countries, to change any time soon. Too many well-paid people at international bureaucracies have a vested interest in keeping the game going just as it is.
Bell Curve don’t lie
You beat me to it!
I'm looking at my copy of this great book sitting on my bookshelf even as I type. A very well-researched and profound book.
The Bell Curve factor is a major contributor, but there is much more to this story. Much more.
Why Do The Poor Countries Always Stay So Poor?
Corruption recall for years the tons of food and supplies the U.S. sent to 3rd work countries and it all ended up in warehouses by the leaders and it’s still going on.
Kickbacks is a long term game plan.
Poor countries remain poor for the same reason that corrupt and incompetent leaders of companies go bankrupt.
I agree wholeheartedly with the theme of your comments.
I do wonder, though, what is your source that genetics is not a contributing factor and, in particular, your source for the increased IQ since published by the Bell Curve almost 30 years ago (Polish vs. Germany, etc.).
While I agree in theory, in reality if you have little money and mouths to feed and shelter to secure you don’t have a lot of time to think about building things. You’re in survival mode. If, on the other hand, you’re spending your meager excess on smokes, dope, alcohol or shiny things then I agree wholeheartedly with your contention.
We used to have a term for that when I was young, but it uses a derogatory term not allowed to be uttered in polite society.
Discuss among yourselves.
In my opinion, even if you are in survival mode, you sometimes have to say “fckt” and do what you have to do. If you just buy one thing wholesale to resell at retail and then do it again, you’re on the road to long term prosperity.
You sometimes have to hurt yourself more than you are hurting to create the conditions to end up hurting yourself less.
They aren't Cleaning up, or doing anything but sleeping....
they aren’t that smart or motivated to work maybe.they keep having babies they can’t feed to add to the not smart or motivated population.
is that the capital? the leaders and the diplomats have to live somewhere.
Thomas Sowell, “New Light on Black I.Q.” New York Times Magazine, March 27, 1977, pp. 57ff
James R. Flynn, “Mean IQ of Americans: Massive Gains 1932 to 1978” Psychological Bulletin 95 (1984): 29-51.
“Massive IQ Gains in 14 Nations” Psychological Bulletin 101 (1987): 171-91.
Eka Roivainen,“Economic, educational, and IQ gains in eastern Germany 1990-2006” Intelligence 40 (2012): 571-75.
William T. Dickens & James R. Flynn, “Black Americans Reduce the Racial IQ Gap: Evidence from Standardization Samples” Psychological Science, October 2006.
I have come to believe that it is not so simple as IQ, although IQ plays a major part.
It is certainly not a black/white issue, either. One of the authors noted the Ashkenazi Jews were the most highly rated group, followed by East Asians, as noted in the book. The evidence certainly seems to support the hypothesis.
Of course, the next question is, is it genetics or environment? My belief is that it is both. Not a simple answer.
Anyway, as someone who has studied and read extensively on this topic for decades, I'll share my opinion later.
Yep. Evolution as it affects DNA is tough and the Left doesn't want to acknowledge real science.
Kumbaya is such a sweet way to think of things but nature and reality destroys all that sugar coated crap.
While I don't dispute your comment regarding black IQ, I also note that all IQs, in general, throughout the world have risen over the decades since that book. In fact, they have risen steadily since IQ was first identified and tracked.
IQ by itself isn’t a good predictor. Combine IQ with conscientiousness (from the Big 5) and we’re talking. Analogously, SAT and high school GPA.
Regarding blacks catching up, you can trust that Flynn knows that whites have advanced, and that blacks have been catching up to a moving target.
Um, you're wrong. Environment can overcome a lot of genetic deficiency but abstract thinking requires a high IQ, above 110-120 IQ.
I am not wrong. IQs of groups change. Neither are you wrong. IQs of individuals are predictive of their individual success. In support of your point, I don’t care how much time Jane Goodell spends with gorillas, they’ll never approach a human-level of intelligence. We humans are off the charts. The missing link is between us and non-human animals. I hate Charles Darwin and other evolutionists who argue that some groups of us are more evolved that other groups of us.
To return to my point (IQs of groups), nobody questions that a diet deficient in protein, and even in calories, contaminated water, and inadequate sanitation result in stunted human physical and mental growth; and, so, can keep an entire group down.
The open questions are: (1) how important is upbringing (prior to school), (2) early schooling, and (3) a vigorous, free market economy? The progressive left thinks they can use Head Start and Pre-K to make up for single-parent, welfare-dependent families. No.
That’s not the way white ethnics rose up in this country early during the 20th Century. And, that’s not what enables eastern Europeans to quickly catch-up to northern Europeans in IQ since the fall of the Berlin Wall.
If I may continue, over in Germany, they administer a test to incoming students to primary school. Can they read and do they know their numbers? Basically, the children of ethnic Germans do well on these tests and are placed in the second grade. They learn to read and their numbers at home, whether through some kind of formal education or simply from the culturally-rich environment provided by their families.
The ethnic Turk and Arab children, no, they don’t do well on the entrance tests and are placed into the first grade. It is very infrequent that any of the second group of children catch up to the German kids.
But. does their poor performance mean Turks and Arabs are genetically-inferior to Germans? Possibly, if this were all the evidence we have. But, taking all the evidence into account, the poor performance means the Turks and Arabs are socially-dysfunction. Their families are seeing to their youngsters starting to learn while at home.
If you love your children, make sure they are brought up in a culturally-rich, physically- and mentally invigorating household.
Accra is the capital.
I’m sure it’s near there.
Lots of international business folks live in Accra.
i know that but i will bet the rest of the cities do not look like that. could be wrong though. i had friends that lived in Ghana and they said for Africa it was an okay gig.
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