Self-Inflicted Poverty
by Walter E. Williams

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Did you learn that the United States is rich because we have bountiful natural resources? That has to be nonsense. Africa and South America are probably the natural resources richest continents but are home to the world's most miserably poor people. On the other hand, Japan, Hong Kong, Taiwan and England are natural resources poor but its people are among the world's richest.

Maybe your college professor taught that the legacy of colonialism explains Third World poverty. That's nonsense as well. Canada was a colony. So was Australia, New Zealand and Hong Kong. In fact the richest country in the world, United States, was once a colony. By contrast, Ethiopia, Liberia, Tibet, Nepal, Sikkim and Bhutan were never colonies but they are home to the world's poorest people.

There's no complete explanation for why some countries are affluent while others are poor, but there are some leads. Rank countries along a continuum according to whether they were closer to being free market economies or whether they're closer to socialist or planned economies. Then rank countries by per capita income, we will find a general, not perfect, pattern whereby those having a larger free market sector its citizens enjoy a higher standard of living than those at the socialist end of the continuum. What is more important is that if we ranked countries according to how Freedom House or International Amnesty rates their human rights guarantees, we'd see that citizens of countries with market economies are not only richer but they tend to enjoy a greater measure of human rights protections. While there is no complete explanation for the correlation between free markets, higher wealth and human rights protections, you can bet the rent money that the correlation is not simply coincidental.

With but few exceptions, African countries are not free and most are basket cases. My colleague, John Blundell, director of the London-based Institute of Economic Affairs, highlights some of this in his article "Africa's Plight Will Not End With Aid," in The Scotsman (6/14/04). Once a food exporting country, Zimbabwe stands on the brink of starvation. Last week President Robert Mugabe declared that he's going to nationalize all the farmland. You don't have to be a rocket scientist to figure that the consequence will be to exacerbate Zimbabwe's food problems. Sierra Leone, rich in minerals, especially diamonds, highly fertile land, the best port site in west Africa has declined into a condition of utter despair. It's a similar story in nearly all of south-of-Sahara Africa. Its people are generally worse off now than they were during colonialism both in terms of standard of living and human rights protections.

John Blundell says that the institutions westerners take for granted are entirely absent in most of Africa. Africans are not incompetent; they're just like us. Without the rule of law, private property rights, independent judiciary, limited government and an infrastructure for basic transportation, water, electricity and communication, we'd also be a diseased, broken and starving people.

What can the West do to help? The worst thing is more foreign aid. For the most part foreign aid is government to government and as such it provides the financial resources that allows Africa's corrupt regimes to buy military equipment, pay off cronies and continue to oppress their people. It also provides resources for the leaders to set up "retirement" accounts in Swiss banks. Even so-called humanitarian aid in the form of food is often diverted. Blundell reports that Mugabe's thugs rip labels off of wheat and corn shipments from the U.S. and Europe and re-label it as benevolence from the dictator. Most of what Africa needs the West cannot give and that's rule of law, private property rights, independent judiciary, and limited government. The one important way we can help is to lower our trade barriers.

Walter E. Williams
c28-04
June 21, 2004
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