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.
Is that where the government employees live?
experience with poor people is that most lack the skills to view money as a tool to build something.
BINGO, and not only poor people. I recall the Obama Administration paying 10 times the usual cost to build the health care website that very few visited. They think business is easy “build it and they will come”. It is not.
Not sure, but Ghana has one of the most expensive cost of living ranges in Africa.
Behind gated communities I’m sure, but some folks live deliciously over there.
They eat each other.
Ghana has problems, but it has moved, as a nation, from low income to lower middle status.
GDP per capita, ppp-basis, has approximately doubled since the 1990s.
https://tradingeconomics.com/ghana/gdp-per-capita-ppp
Ghana has now had several changes of government via elections. It scores well on Freedom House’s index of freedom in the world.
https://freedomhouse.org/country/ghana/freedom-world/2023
Ghana is a little better than the world average on corruption (and one of the least corrupt African countries).
https://www.transparency.org/en/countries/ghana
There is, in fact, a tendency of countries that embrace democracy, free market and the rule of law to grow relatively fast and to catch up to the well-developed countries. Singapore is maybe the most famous example of this. But, think about Chile, Estonia and - today - India.
Don’t be so negative-minded that you deny progress where we are achieving progress, albeit at what may appear to be a slow rate. Instead, remember the old adage, slow and steady win the race. Also, it takes twenty years of hard work to become an overnight success.
Europe/Asia. Both have structures wether it be family or just as important education.
All the tribes do is dance. Ever watch Soul Train?
Hernando deSoto explained the problem in definitive detail years ago in The Mystery of Capital. Rule of law, enforcement of contracts, deeds to land for a start. But you can’t graft these western principles on to closed minded tribal thinking. Same as Haiti, btw, not just black Africa.
Government corruption!!
Not only that, but Europeans decided that wasn't even killing and decided to spread marxisim and communism around the world. The black book of communism is littered with examples of death and destruction from those influences. Praise be to European ideals!
Even now, whitey as a individual is much better at killing than inner city youth. White men almost always have a higher body count per try than most in killing sprees. Merit matters. Cheers!
Since the publication of the Bell Curve, black IQ has halved the black-white IQ gap. IQ has a lot of inertia, but it isn’t genetic.
Think about it: are we going to accept that not one child in 13 Baltimore high schools is proficient in math because IQ is, after all, genetic? Or, are we going to be angry at the Democrats and the teachers unions for dumbing-down our children?
When I was a kid, Polish jokes were rampant here in the U.S. I can tell you that in Imperial Russia, when Poland was part of it, they too had a low opinion of Polish intelligence. Yet, since the fall of the Berlin Wall, Polish IQ has sky-rocketed. Polish IQ is today about the same as German IQ.
Is this increase of Polish IQ due to genetic evolution? No, obviously. The increase is due to what democracy and free markets are capable of doing.
Let’s get our people off the plantation of welfarism, and get them to breath of the fresh air of freedom!
Because the people are unequal and just not up to the task of getting any better
Brains rule
Let me take a WILD guess... "Because their political leadership INTENTIONALLY keeps them in that position, so they can STEAL from the "public purse" and continue to make themselves WEALTHY!
“BINGO, and not only poor people. I recall the Obama Administration paying 10 times the usual cost to build the health care website that very few visited. They think business is easy “build it and they will come”. It is not.”
That would be a massively naive view of Obamacare. CGI was hired on purpose — their whole history was fouling things up. (https://www.dailydot.com/debug/cgi-federal-healthcare-gov-history/)
Like the ‘green’ companies who absorb big grants and vanish without result, like the companies hired with IMF money to build amusement parks in squalor, the *point* is to waste money on corruption.
Every dollar, euro, lira or yen created out of nothing and sent to projects like this steals the value from everyone who produced something good, without knife or gun. It obviously obliterates any chance for Africans to build something — why save up 100 “cedi” when tomorrow the government will spent 100,000,000 cedi on corruption and make your money worthless again?
It’s not accident or lack of skills, it’s intentional policy from the central planners — whether EUrocrats in the IMF or Brandon here.
Geography.
Because their leaders stay so rich?
Hati is Black Africa
Demographics.
Yes, I watched Soul Train. Also, American Bandstand. Ginger Rogers and Fred Astaire weren’t too shabby at dancing. And little Shirley Temple and Bojangles were the best. One day, hopefully soon, we’ll be able to enjoy this wonderful, dynamic American culture that we’ve been making these past several hundred years.
As for family structures, the black family used to be strong. Then came welfare. The progressive left have been committing a new and diabolical form of genocide against black people for about a hundred years; and, now they’re coming after white people.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.