Archive for January, 2008

African libertarians need to revisit their classics..

January 31, 2008

Franklin Cudjoe, editor of African Liberty, a CATO-sponsored african libertarian platform offers us yet another of those convulted long essays mixing up a bunch of different arguments in order to attack some government policy. The policy, a plan to directly give $8 to $15 every month to the poorest Ghaneans, is described as a “centrally-planned waste”.

See, as far as I know, the libertarian critic of central planning is that markets, the sum of individual decisions, are the most efficient way to allocate ressources. And that’s why, if there has to be social policy, poverty-alleviation measures, direct cash transfers are usually prefered to more market-disrupting measures. School vouchers, for instance, are considered a better way to provide education to the poorest than public schools. After all giving vouchers or money directly to the poor is trusting individuals to make their own decisions instead of governments inefficiently allocating ressources. That’s why I’m confused when I read:

How much of all the money sourced above and the one for merry-making every other month will go into agricultural reforms? Would it ensure secure land tenure for farmers to enhance large scale production? Train agric extension officers to advise farmers on best farming practices, provide soft loans, reduced prices of agricultural inputs, support infrastructure to facilitate storage and movement of goods, so that our energetic rural youth will not flock to the cities in search of absentee jobs?

My guess is not much. But then again, that’s because I’m one of those socialist/collectivists/statists Cudjoe is supposed to rant about. One who think that government intervention, via infrastructure, via education, via fertilizer subsidies, would work faster and may be better than market-based allocation. However if you value freedom, liberty and all that, why would one be concerned about how the money is used. And why would one think the energic rural youth would flock to the cities and not use their cash to buy agricultural inputs, build storage facilities, roads or invest in training ? Isn’t that the magic of the market ?

So yeah, I’m disappointed. Can’t the western libertarian network find smarter and more principled writers and thinkers to promote their cause in Africa ? May be, we’d get some interesting debates and may be one or two good policy initiatives could be squeezed out of it.

PS: to be fair, most of the article is dedicated to describing make-work schemes, utilities subsidies and other programs that are more deserving of libertarian attack but I did call it a “convulted long essay mixing up a bunch of different arguments” for a reason.


So is it happening ?

January 25, 2008

Nyassa Times suggests that my doubts about the Malawi fertilizer program were not unfounded:

Malawi’s ‘governing’ Democratic Progressive Party (DPP) has hatched a plan to entice chiefs in the eastern region to work as agents of membership mobilization for the party in readiness for 2009 general elections.
“The chiefs are being palm oiled with government money to peddle the DPP political strategy. They will support DPP and frustrate their subjects from associating with opposition parties, of particular target is UDF which has a strong base in the targeted zone,” said the source.

Of course, it’s possible that these allegations are false. And nothing in the article connects the bribing of the chiefs with the chiefs being responsible for the subsidy distribution but I do.

criticizing the results of one’s own actions…

January 21, 2008

Every now and then, for laughs, I quickly browse the website of the Republic of Congo’s semi-official pro-government newspaper, les Depeches de Brazzaville. Its publisher, the french political consultant Jean-Paul Pigasse writes those hilarious editorials ranting about neo-colonialism and french arrogant involvement everytime there’s a negative mention of his boss in the french media.

So while looking for my funny irony fix, I stumbled upon something even weirder. This article (in french), beautifully titled “Minister Criticizes Cement Price”, discusses the speech Minister of Industrial Development and the Promotion of the Private Sector Emile Mabonzo gave at the official annual ceremony its ministry (and others) organizes to exchange new year wishes or something (i have a really hard time translating the concept, but yeah it’s stupid and wasteful and pointless and stupid). He apparently attacked cement traders and retailers for charging high prices in Brazzaville and in rural areas, particularly the enclaved North. Current prices apparently (loosely transpated quote) “don’t guarantee peace and social egality those populations are entitled too” and traders were encouraged to “provide cement to Brazzaville, be fair and equitable, ask the right price for cement, show solidarity with your countrymen“.

What’s really interesting is that in Congo-Brazzaville, cement production and importation is a (semi-private) monopoly and so is transport to Brazzaville. The northern rural areas are dependant on air transport from Brazzaville and some recent decisions didn’t really help reduce transport costs.
And guess what ? Our smart minister says “huge parts of the nation’s industry has suffered and keeps suffering from CFCO’s (the railroad) troubles. The slow delivery of cement to the cities helps a frightenning and shameful speculation on a basic product” and adds “our production has been limited to 40% of its capacity due to a lack of fluidity between input importation and production areas, cement production areas and cement sale areas.“.

Now let’s get it right. Because of “difficulties” in the government-owned and managed railroad, production of cement is low. Delivery to main cities is irregular for the same reason. On top of that, non-existence of roads and railways makes more expensive air transport the only choice in some parts of the country. But then air transport itself gets irregular because of recent policies. That’s without mentionning the fact that the option of importing cement through other sources is made impossible. And with all that, our dear minister blames traders and their shameful and terrifying speculation for rising prices ?

See, that’s why the talk about corruption and swiss bank accounts and missing oil money bores me to death. Incompetence and ignorance of basic economic concepts is a much, much better explanation.

Is it the audience ?

January 17, 2008

The Bayesian Heresy (approvingly) quotes my post on Ayittey and adds:

I think another way to think about it is that his main audience is western not African– his talks are geared to the style of those of his main audience.

I have doubts about such causality but most importantly I’m really not sure the West is his main audience. Ayittey does have an African audience, if not on the continent, at least within the immigrant communities. I do get the feeling that most of it is young, western-educated (if not living in the west), technology-friendly and rather prosperous but it’s not impossible that, in anglophone African countries, or at least in his native Ghana, a bigger (and less-priviledged) audience that I’m not directly aware of is reached by him through local newspapers or any other form of intervention public intellectuals use. And that’s not counting the fact that Ayittey has a certain stature among africanist scholars.

I would bet that both audiences validate each other. The African one viewing the western audience as proof of expertise and the western one viewing the African audience as a authenticity/legitimacy signal. Not that it really matters to what I’m trying to say.

If you really want to play the signal game and guess who is Ayittey targetting instead of assuming he says what he says because that’s what the hell he thinks, I’m still not sure the West is his main target.

Yes, his position on aid does look like part of the West would like it. But then again, the debates on aid to Africa in the West are always framed in a very particular way. Either one wants to save poor helpless Africans or one thinks it’s too expensive or useless or that Africa needs to save itself. Ayittey’s position somehow doesn’t exactly fit. He’s not asking for less aid, he’s asking for smarter aid, he’s not saying “Africans are hopeless” or “farewell to alms”, he’s arguing against “No Dictatorship (or mismanaged economy) Left behind”, he’s asking for a different sort of ties to the aid instead of arguing for or against tied aid. And on top of that, one shouldn’t ignore the fact that both aid itself, or the recent campaigns (form and content) aren’t as popular among Africans, especially middle-class Africans, as westerners usually think. It’s seen as humiliating and useless at best and racist and a-tool-of-neo-colonial-imperialism-domination (*breathes*) at worse.
Yes, Ayittey uses a lot of free-marketer/pro-capitalist/libertarian/economic right vocabulary and one could see how his ideas about the lack of economic freedom in Africa would be attractive to the IMF, the Cato Institute or the Heritage Foundation but then he does something no self-respecting western right-wing or libertarian would do or like: he talks, a lot, about political freedom and ties to economic freedom. I suspect his african audience wouldn’t very receptive to Bryan Caplan-like arguments against democracy or to one that would replace Pinochet with Museveni or Ian Smith or Houphouet-Boigny and argue that a pro-market dictatorship is a good thing.
And then you have little details like Ayittey’s distrust of multinational corporations, foreign investment in natural ressources and other things one would expect western audiences to like a lot (and libertarians to find refreshlingly counter-intuitive). Honestly, who is really supposed to get excited by the idea of “small-scale indigeneous people-based market solutions” to Africa’s economic woes ? And what kind of non-african is supposed to be moved by his attacks on colonial, post-colonial, western (mostly french) and chinese economic involvement in Africa (good example) ? Had the western audiences been so important, he would probably have written something called “In Praise of De Beers (or UMHK or Zambia Mining Agreements)” with arguments parallel to those of Paul Krugman’s famous piece and mentions of the economic performance of Botswana or pre-independance Katanga.
And finally, Ayittey does argue again and again that contrary to what Nkrumah, Senghor or Nyerere have argued, pre-colonial African societies were not socialist but free-market and capitalist. Here too, I have a very hard time imagining anyone but Africans thinking that whatever pre-colonial societies were has any relevance on our societal choices. (and if you want my opinion, anyone who thinks that somehow all the economic or political systems in pre-colonial Africa perfectly fit into modern western categories like socialist/capitalist/freemarket/statist/democracy is at best wrong, at worse a crank. And Nyerere would have been the closest, had he added more market interactions, more voluntary settlement and more political decentralization to his villagization scheme.)

So in short, no matter I disagree with Ayittey, I don’t think his western audiences have much to do with it. Unless we decide that they really really love long detailed anecdotical tales of high-level corruption in Africa. But then, Hollywood would have produced more “King of Scotland”-like movies. Whatever happened to Oliver Stone’s project on Mobutu ?

Question about migrant labour in apartheid South Africa

January 17, 2008

There’s something I have trouble understanding: why did apartheid South Africa import labour from Botswana, Lesotho and Swaziland in such big numbers (we’re talking about millions of workers here) ?

Usually, such migrations have something to do with shortages of labour as the local population moves up the social ladder (as it happened in Europe or in the Gulf) and happen in situations with minimal unemployement. But from my understanding, there has always been unemployement (and therefore a labour reserve) in the black south african population.
Then it could have been about wages, labour from Lesotho or Botswana being cheaper than local workers. But with a system designed to depress black wages, with the black workers having little political or union power, with limitations on black freedom of movement, with residency tied to employement (continuous AND in the same firm) in cities, I have a hard time picturing an inflation of black worker’s wages. Unless… such a rise managed to slip through the cracks because black workers were that productive or the demand for labour that high or labour somehow pressured for it through (illegal) strikes or other political actions.
The other explanation could have been that imported labour was used to depress the cost of labour even further. After all, foreign migrant workers had even less chances of organizing themselves as they had even less rights than south african blacks and probably felt little solidarity with the plight of the locals (and local labour most likely had little sympathy for them). Divide and conquer basically.

Other suggestions ?

(This is also a nice way to find out if I have southern african readers.)

The size of government fallacy

January 8, 2008

Ben Ofosu-Appiah makes the mistake in a long article on the socio-political and economic environment in Ghana :

Again, government needs to downsize. The current size of the government is too big and costly, in fact over bloated. Japan runs the World’s second largest economy with just 17 ministers. How come a country like Ghana has over 70 ministers and deputy ministers not counting the nephews and nieces who double as special assistants? (..) The people are overburdened with taxes while government displays a great deal of fiscal indiscipline. (..) Elsewhere taxes are cut to spur growth, but in Ghana, an economic team that lacks fresh ideas always look up to increased taxation as a way of generating revenue. Government needs to simplify taxes, lower tariffs on imports, and clear away red tape to encourage entrepreneurial skills. Too much taxes stifle growth.

It’s far from being a frindge opinion. Ugandan journalist and activist Andrew Mwenda has similar views in his infamous TEDTalk speech (for some reason, I can’t embed the video). His argument about government waste in Uganda is based on a few facts:

    – 25% of the government budget goes to “public administration”
    – 70 cabinet ministers
    – 114 presidential advisors
    – 81 units of local government
    – 333 members of parliament
    – 134 commissions and semi-autonomous government bodies

The fact is, in Africa, cabinets do tend to be extraordinarly large. 40, 50 ministers is the norm with many countries having more. The notable exception (apart from loose federation that is Comoros where only 9 ministries cover all federal competences) being Africa’s growth and governance success story: Botswana and its 14+3 members cabinet.

Of course, years of budgetary crisis and payment emmergencies, millions in aid and debt without much to show for it have made us all wonder where the money went. And since anyone on the continent can tell you long stories of state largesse, especially at the highest level a narrative based big governments and big cabinets is appealing.

What makes it even more appealing is that Botswana is a success story and even bigger and richer countries like Japan or the US (or even France and the UK) are indeed governed by small cabinets. So yeah, Mwenda, Ofosu-Appiah and many other think that growth, government expendure and cabinet size are perhaps correlated.

The problem is that such correlation simply doesn’t exist because government are usually a bit bigger than Cabinets.

Take a look at goverment expendure as a percentage of GDP which in my opinion says a lot about the importance of government in the economy.
According to the Heritage Index of Economic Freedom Ghana and its 50 ministers stand at 33% which is slightly lower than the USA’s 36% or Japan’s 37% but higher than the 23% of GDP spent by Uganda’s 70 ministers and much lower than Botswana’s wooping 43% (and just for your information, Zimbabwe is 25%). And the tax revenue as a percentage of GDP ? 25% in the US, 25% in Japan, 22% in Ghana and then 11% in Uganda and 40% in Botswana.

While the 2 to 1 ratio between government spending and tax revenue in Uganda definetly support Mwenda’s narrative about Aid and free-lunch politics, the fact remains that Uganda’s government is a low spender by international standards. And Ofosu-Appiah’s comparision between Ghana and Japan is problematic as Ghana is neither spends nor taxes more than Japan. It’s not particularly more fiscally irresponsible either (though the 15% inflation has to come from somewhere).

The focus on the number of ministers is indeed strange as it says nothing about the size or the cost of civil service or the budget. And I mean, when one even implies that technocratic Japan could be an example of limited government, you have to be suspicious.

Yet, the size of cabinet is not totally irrelevant. While it says nothing about expendure, it does say a lot about affectation of those ressources. Mwenda’s best argument is the fact that a quarter of Uganda’s budget goes to what is basically overhead costs. Now that could be related to the size of the cabinet.
Basically, when you take a closer look at the ugandan cabinet, you see a lot of doubles and a lot of specialization. A president, a Vice-President, A Prime Minister and 3 deputy Prime Ministers is a bit much, especially when there’s a Minister for the Presidency and (*takes a long breath*) a Minister-for-General-Duties-Office-of-the-Prime-Minister. At best those are people paid to do nothing. At worse, they are actually doing something: producing a lot of bureaucratic white noise.
The other issue with such configuration is the political appointees to technocrat issue. In short, when Japan limits its cabinet to 14 ministers, it actually limits the number of non-civil servants in the government. Everyone below the ministers are professional technocrats. And to an extend when you have a Minister of Roads & Highways, a Minister of Ports, Harbors, & Railways, a Minister of Transportation, a Minister of Aviation like Ghana does, instead of just a Minister of Works & Transportion like in Botswana that means a lot of political micromanagement and probably serious coordination issues.
And even assuming the political appointees are technocrats, a new ministry means more investment at the top level, that is a building in the capital, a ministerial staff, cars, whatever. Each of those dollars is one that doesn’t go to doing real government work that the population actually needs.

But see, the issue is that talking about inefficient government doesn’t hit the same way. After all, what could happen is your government actually listenning and getting its thing together. And when you’re a professional barker or you have your own political ambitions, that’s not acceptable.