Category: Uncategorized

How to Ruin a Debt Crisis

Yesterday afternoon, money folks around the world exhaled.  American lawmakers, through no fault of their own, came to their senses and voted to extend the American debt ceiling to a number beyond the comprehension of mortal man.  The crisis was averted, and now we can all go about our business again.  Crap!  This is only a temporary truce.  The real war is still going on.

For the last couple of months, there’s been a media laser beam zeroed in on the House, the Senate and Barack Obama, as each one, in turn, demonstrated their inability to grasp simple economics.  As in, if Johnny has 14 trillion apples and he eats every single one of them, his kids are basically screwed on the apple front.  There have been any number of talking head solutions: stop spending my money; tax that guy over there; blame the Chinese; sell the Grand Canyon — and the etceteras just get stranger after that.  It’s hard to imagine that anybody (politicos or pundits) within limousine distance of Capital Hill has the foggiest idea of what’s going on.  Perhaps they should ask the servants – who would probably tell them you can’t borrow yourself out of debt.

Everybody knows that once money gets a nickel past a billion, it’s no longer real.  It’s figures on a page, triangles on a pie chart or bars on a graph – that’s all.  There is no real connection between Sangee’s Daycare money in Lincoln Nebraska and firing off million dollar missiles in war-torn Katphoodistan.  Try as they might, even the brainiest of America’s elected representatives can’t conceive of how much money they’re playing with.  Nor can they understand the simple dollars and cents or it.  The concept that it’s Sangee’s money they’re spending is overwhelmed by the magnitude of the mortgage.  So let’s quit with the rhetoric, folks, and get on with it.

Outside the media glare, there’s a whole different round of battles going on between the House, the White House and the Senate. (What I like to call The Axis of Feeble)  It’s these battles that are dictating the course of events in Washington, not any lawmaker’s inherent concern for Sangee, her money or her well-being.  (FYI, Senators Johanns and Nelson, I’m not picking on you.  I just think Lincoln represents America more than Miami does.)

One of these is the never-ending war between the Executive and Legislative branches of government.  This firefight has flared and died throughout US history, depending on how tough the president is.  These latest skirmishes started when Richard Nixon and Rose Mary Woods destroyed 18.5 minutes’ worth of audiotape — and 184 years of White House prestige — one afternoon in 1973.  Currently, President Obama’s hands-off approach to leadership, has opened the door for crybabies like Boehner to stride around as if they’re on their way to the OK Corral.  Unfortunately, none of them could win an audition on Buffalo Bill’s Mild West Show.  This is where ineffective governance comes from: half a dozen wannabes, whine-slapping each other across the media.  Like it or not, at least Pelosi had the cojones to tell Obama what Obamacare was going to look like.  This crew is scared of their own shadows, and America is whispering because of it.  There’s enough naked power in Washington at this moment to light the entire world — and not three people in town willing to reach for the switch.  Expect more of the same until somebody quits signing pledges to do good and actual does it.  Or until somebody in the White House hotwires the podium to the teleprompter and Obama has to come up with a policy beyond, “We hope to change.”

Furthermore, for the last year or so, the only issue American lawmakers seem interested in fighting for is infighting.  The two-party system is rapidly dissolving into a four, six or eight party fiasco, bent on emulating a 1920s Balkan republic.  The beauty of the two-party system is consensus has to be reached within the party before it ever goes to the electorate.  Whether it was Republicans, Democrats, Whigs or Free Soilers, historically, parties have always fought it out among themselves, long before election time.  They came up with a coherent plan, presented it to the people and let them decide.  This allows for some pretty big umbrellas; different constituents can gather together in general agreement to advance a common purpose.  These days, every Tom, Ron and Michele has their own agenda.  Every issue is a consensus-building minefield.   Every petty opinion demands a voice in a St. Vitus Dance of disagreement.  And every time you turn around, nothing is getting done because every cockeyed notion available needs to be considered.  Propelled by deluded self-importance and an ever-present phalanx of self-serving lobbyists, lawmakers have abandoned ideals in favour of narrow topical ideas which have no connection to the common good (beyond the next election.)  They disdain compromise, in favour of self-proclaimed principles whose shelf life is tied to FOX, CNN and MSNBC.  How can I make these statements?  Easy!  I’ve witnessed the last six months of Washington tomfoolery.

Yesterday, American lawmakers raised the debt ceiling because they had to.  They had no choice.  The very best, well-informed, educated, supported, principled government on the planet ran out of time — like a sophomore with a term paper.  Why?  It’s not like they didn’t know the deadline was coming.  There are several versions of what just happened in Washington, depending on which side of the aisle your sympathies lie.  However, it was John Adams who said, “Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence.”  The facts are those in America charged with maintaining and enhancing the common good have turned their considerable skills, resources and attention away from that task to fight the uncivil wars of petty politics.  They haven’t abandoned Sangee in Nebraska so much as ignored her.  Honestly, if I were
she, come November 2012, I’d shake their buttons off.

Western Aid isn’t Working in Africa Part III

These days, it’s gotten so bad in Africa that the discussion doesn’t bother with “What’s wrong?” anymore.  It runs immediately to “How bad is it?”  Human suffering in less than biblical proportions isn’t even reported in the Western press and aid agencies answer their phones with “What fresh Hell is this?”  The expectations for the continent are so low that the stated purpose of most international organizations is merely to minimize the damage – recovery and stability are no longer on the table.  The recurring cycle of aid and disaster has destroyed everything in its path except the rhetoric. And that just regurgitates “We need to deal with the root causes of poverty and hunger.” without ever looking beyond the Zeitgeist of well-meaning dollars donated for wrong-headed reasons.  One economist, Dambisa Moyo, however, has looked at the roots of poverty and hunger in Africa.  Using undisputable numbers, she has drawn a direct connection between Western aid and widespread African suffering.  She states categorically that aid is the problem and it needs to be stopped.

Moyo believes that the West should quit thinking of Africa as a basket case and start thinking of it as an economic opportunity because, in strictly economic terms, Africa is the Garden of Eden.  The continent is huge.  It has a bounty of natural resources.  Its climate for the most part is made for unlimited agriculture. Africa could, and should, be able to feed itself within a generation.  It has safe renewable sources of energy from the sun and the wind.  Its people are willing to learn, willing to work and they want to improve their lives.  The labour force is abundant and inexpensive.  Africa is, in fact, the last economic frontier where locally developed commerce could challenge the multinational strangle hold industry has on our world.  Moyo says that all we need to do is change our attitude.

For example, tourism, the world’s largest, cleanest and most sustainable industry could bring untold billions to the continent.  Wild Africa could become a primo destination for Western and Asian tourist dollars.  Photo safaris alone could generate employment for hundreds of thousands of people directly and possibly millions more indirectly.  The potential is virtually unlimited because Africa is overflowing with zoological diversity and botanical wonders.  Camels wander the deserts of the north and penguin colonies thrive along the southern seas.  Nature could be Africa’s ticket out of poverty without ever having to chop it down or dig it up.  And this is only one example; there are thousands more.

Moyo says that these opportunities are everywhere across Africa waiting for seed money, expertise and the vision to realize them — clothing manufacturing in Ghana, solar power in Mali, water pumps in Zaire and on and on.  The problem is Western attitudes are stuck in a time warp forever revolving around charity.  Moyo says Africans don’t want charity.  They want electricity, clean water and a job.  They want to be able to feed their kids and send them to school.  They want to drink beer on Saturday and watch the football game.  They want the stability and safety good government brings to local lives so their kids can have a better life than they do.  And Moyo says the only way that’s going to happen is if local people have a vested interest in their community and use the resources available to improve it.  Ownership breeds pride and responsibility, literally and symbolically, whether it be individual property or villages, towns and cities.  Aid, handouts, charity or whatever we want to call it this week, kills that.

Moyo maintains that the best solution to the massive problems of Africa is relatively easy.  People in the West have to quit thinking about Africans as half witted cousins who can’t seem to get it right.  They need to see Africa and Africans as poor cousins who need some assistance, which is not free for the asking.  Africans should be considered equal partners in development not just unequal recipients of well-meaning Western generosity.  She suggests that all developmental aid to Africa should be phased out over a five year period.  She believes that with a Western attitude adjustment, this is enough time to replace aid money with investment money.

This isn’t just theory and chatter.  Here’s a curious example.  Somaliland, an independent rebel province of Somalia, is not recognized as a legitimate government.  It receives no aid from anybody.  Yet, situated on the top end of the train wreck that is Somalia, this area has not only survived, it has thrived.  The people there are building a nation.  They have a responsible government which is, in fact, one of the few Islamic democracies in the world and the only one – so far – which was home grown.  Surrounded by famine, warlords and pirates these people seem to be doing something right without the benefit of Western largesse.

Meanwhile, in other parts of the continent, China, which gives very little direct aid to Africa, is investing billions developing industry and agriculture – and it’s working.   Wherever Chinese money goes, Africans are benefiting.  They’re working, feeding themselves, sending their kids to school and demanding better services from their government.  All the things Western aid is supposed to do but doesn’t.  The Chinese model is less than perfect but it’s better than what was there before.

In the end, Moyo’s theories may be a bit radical but, whether you agree with her or not, you have to admit that what we’ve been doing in Africa isn’t working.  Maybe it’s time to try something else.

Western Aid isn’t Working in Africa Part II

If there’s anyone on this planet who doesn’t think Africa is totally screwed, I haven’t met them.  At any point in the last fifty years all you had to do was mention Africa and somebody would say, “Oh, those poor people!”  Trouble is to Africa what fire is to Beelzebub: they’re inseparable.  Ever since the colonial powers packed up their oppression and went home, Africa’s been falling apart.  If it isn’t the AIDS epidemic: it’s famine, and when there isn’t enough famine, there’s always good-old-fashioned civil war.  And all this is covered with a layer of soul eating poverty so thick it defies belief (unless you see it, you have no idea.)  To wax poetical, the history of post colonial Africa is written in the ink of despair.

In the West, the prevailing wisdom is Africa’s problems come from a combination of neo-colonialism, corporate greed, despicable leadership and …  What else?  Oh, yeah!  Did I mention neo-colonialism?  Any discussion of Africa eventually works its way back to European exploitation – whether it’s the slave trade or the rubber plantations of the King Leopold’s Belgium Congo.  This kind of talk makes people in the West uncomfortable.  They tend to get quiet and reach for their wallets and, after half a century, that has become an automatic reaction.  The standard solution to African problems is financial aid.  It’s almost as if the people in the West think that if they throw enough money at Africa it’ll just kinda go away.  Unfortunately, that’s not going to happen.  If aid to Africa worked, we wouldn’t be having this same conversation we’ve had since before Patrice Lumumba was delivering mail.

Recently, however, there have been a few people who are saying, “Hey, wait a minute.”  They’re looking at Africa with a critical eye.  They see the disaster and the perpetual ineffectual response and wonder what’s going wrong.  One of those people is Dambisa Moyo.

Moyo says that institutionalized aid to Africa has created a Frankenstein of dependency and corruption.  African governments simply don’t have to act responsibly because they have a goose that continually lays them golden eggs.  They can waste Western money; it’s reliable and free.  They can toss quick-fix dollars at problems rather than building long-term solutions.  They have hundreds of millions of dollars flowing into their counties every year — with minimal accountability attached.  The temptation for corruption is too great for local authorities (legal or otherwise) to pass up and it’s no wonder ordinary Africans see little or none of it.  In essence, Western dollars pouring all over the continent have, according to Moyo, made good African leaders bad and bad ones even worse.

Moyo goes on to say that because of all this money kicking around, African countries don’t have to work from the bottom up.  They don’t have to build locally feasible economic strategies or self sustaining infrastructures.   They can, and mostly do, take a random approach to development.  Schools, roads, hospitals, sanitation facilities etc. — the bare necessities of a burgeoning economy – are not part of any coordinated plan.  When Oprah wants to build a school or Save the Children wants to dig a well, they do it — usually without any reference to anything else.  There is no interconnected system of institutions that assist each other.  Roads can be built but not maintained.  There are hospitals with no staff; schools with no teachers etc. etc.  In short there is no big picture.

Nor is there any need for African governments to cultivate an atmosphere that encourages the creation of wealth.  They don’t need a local taxpaying middle class to provide revenue.  They can stumble along on Western handouts.  Therefore, there is no need to build the kind of safe and stable institutions we in the West take for granted.  In fact, a blossoming middle class, no matter how small, would be a hindrance because they would begin to demand standards and facilities their governments are not willing to provide.

Moyo also explains that Western aid is actually killing local initiatives.  Independent craftspeople and artisans are being driven out of business because the goods and services they would normally provide are being given out free by Western aid organizations.  These tiny enterprises are the fundamental building blocks of a developing society.  Without them, there’s no hope of creating wealth, paying taxes, hiring neighbours or modernization.  Individual workers or local family businesses simply can’t compete when Western NGOs roll into town.  The problem is the NGOs go home and the locals have to start all over again.  Usually they don’t.  Moyo uses the example of the Spread the Net campaign which provides free bed nets to Africans to prevent malaria.  While the campaign has worked miracles, cases of malaria are down all over the continent, it has also killed the local bed net industry.  It’s the same with brick makers, transportation, clothing, banking etc. and even, in some cases, farming.  Huge amounts of no-strings-attached money have upset local economies so badly that it could take generations to recover.

Finally, Moyo says that no matter how well-meaning Western aid is, the unwanted consequences are far more destructive than the original problems.  She also says that this situation is well known both in Africa and in the West as well.  Yet, the aid industry is so well entrenched it has become self generating.  No pun intended, but Western aid is now part of the food chain and literally millions of jobs depend on it.  However, Moyo offers a solution.

Friday: Why the West must cut off aid to Africa.