Show Your Tongue

A loyal MR reader asks about Africa:

What are your long term predictions? Which policies should rich countries adopt? Which will they adopt? What can I do?

As before, let me address the last question first. What you should do depends on whether you wish to help Africans, or to keep their plight in the Western eye. The latter cause is admirably well served by donating to any of the highly advertised charities which claim to be helping Africans; what your money will really be used for is to pay Westerners to persist in informing us of Africa's plight. If this is not what you want, I think the best course is to donate through a long-established and lightly advertised charity; Catholic Relief Services and possibly Christian Children's Fund come to mind. I do not know whether secular equivalents exist.

Rich countries should desist from agricultural subsidies. This is a good idea in all kinds of ways. Obeying the rule, "First, do no harm," we should stop spending money to further immiserate the world's poorest. Note that undermining the livelihood of African farmers inevitably sends them to the already swollen and hellish cities.

This outcome does not seem likely. In America, the Senate (which I generally admire -- the institution, not its members) ensures overrepresentation of rural areas, and this power imbalance enables them to extract subsidies. The case in Europe may be still worse: Spain, in particular, garnishes 8 billion Euros annually from the EU CAP, and any attempt to push them away from the trough could well lead to their abandonment of Europe.

But the biggest problem for Africa is governance. As Tim Harford writes of Cameroon in The Undercover Economist:

The rot starts with government but it afflicts the entire society. There's no point investing in a business because the government will not protect you against thieves. (So, you might as well become a thief.) There's no point in paying your phone bill because nobody can successfully take you to court (so there's no point in being a phone company). There's no point in getting an education because jobs are not handed out on merit (and in any case, you can't borrow money for school fees because the bank cannot collect on the loan, and the government doesn't provide good schools). There's no point setting up an export business because the customs officers will be the ones to benefit (and so there is little trade, and so the customs office is under-funded and looks even harder for bribes).

No amount of aid from individuals or governments can correct this. I will offer a solution, less unsavory than Kim du Toit's, in a future post.

[Mr. Cowen's answers are here.]