The late Peter (Lord) Bauer, a Hungarian-born economist who lived for much of his life in the UK, did outstanding work in demonstrating why markets and trade are superior to overseas aid, and pointed out how aid, and the organisations that often get involved in delivering it, frequently make problems of poverty worse, not better. Even aid advocates like Sir Bob Geldof will readily concede, meanwhile, that aid delivery becomes next to impossible during conditions of war, and when countries are under the rule of armed thugs. So last night’s Channel 4 programme on Somalia will have surprised few regulars at this blog.
What was interesting was how local traders were allegedly bribing some aid officials to take sacks of food and then sell it into the market. We were meant to be appalled by this, and part of me was. But also I also could not ignore the fact that this part of Africa seems to be buzzing with a sort of entrepreneurial class of men – one did not see many women – who trade in, and take great efforts to obtain, food and other stuff. That surely suggests that a market, of sorts, works in this part of the world. But what clearly does not work is the rule of law, or the enforcement of property rights. Without due protection for the latter, in particular, then the indestructible desire to “truck and barter” can all too easily degrade into a form of banditry. But let’s be clear here: while one can be nauseated at foreign aid being filched by some of the locals, that desire to trade is not, in itself, the problem. It is, in fact, part of the solution to the poverty of Africa.
Meanwhile, I strongly recommend William Easterly’s book on foreign aid and the mistakes that well-intentioned folk make about aid.
Good post J.P.
Of course aid should be sold. If you give it away, the farmers are unable to sell what little they have, and go bust. Next year there’s even less food.
Perhaps what Somalia, and much of Africa, needs is to go through a fully fledged industrial Robber Baron phase. As the west becomes ever more socialist and timid, those with the entreprenurial urge may need to take over somewhere like Somalia, corrupt the existing government, such as it is, into giving them free rein to exploit both the workers and any natural resources the country may have, and bootstrap it into the twenty-first, or even twentieth, century.
Ideally, this would be done via new entities, rather than the Nikes and Adidas that drove much of the Asian tiger economies, and better yet, involve new technologies that the West and the rest might deem ‘dangerous’ or ‘polluting’, but might drive the technological development of the human race onwards.
The existing local entrepreneurs could be tempted away from their current piracy and banditry and co-opted into the new industrial class, and the middle class could expand enough to give them a major stake in such concepts as the rule of law and respect for property rights.
Eventually, the Robber Barons would evolve into Captains of Industry, though hopefully not into Industrial Statesmen, and the middle class would start demanding such things as clean air and a less polluted environment, and even workers rights, and the entrepreneurs would be forced to move elsewhere.
Probably Titan.
Have you been reading Hernando DeSoto?
http://www.cato.org/special/friedman/desoto/index.html
Markets are always at work, because, they are the manifestation of Supply and Demand, regardless of the political system attempting to control them.
Somalia has collectively dug itself so deep a hole that many things need to fall into place before a Pirate Captain of sorts can unite and pacify the country and get predictable commerce functioning again. Once that occurs, then, all sorts of goodies start to crop up without the bother of killing everyone around oneself.