Friday, February 24, 2012

Forget the Orient, There are Fortunes to Possibly be Made in Sao Tome, Guinea Bissau, Guinea Conakry, Gambia or Benin

A fascinating discussion between Doug Casey and Louis James:

Doug: Lobo, you were in Africa – the Congo – last time we talked. How did that go?

L: I saw a lot of changes from my previous visit to the DRC in 2006. That brings up an interesting question, as we do invest in companies working in several African countries, and you've described the continent as "a perpetual basket case." What's your take on Africa today? Is it doomed to remain the heart of darkness, or could things be looking up at a last?

[Ed. Note: The reference here is to the Democratic Republic of the Congo (DRC), not the Republic of the Congo (ROC).]

Doug: I think it's very much an open question at this point, as to whether Africa has a dim or bright future. It's all about management, not resources. Africa has always had plenty of resources, but the worst management possible. Resources are actually a liability for most places. The classic examples of places not needing natural resources for success are Japan and Hong Kong. They have essentially zero natural resources, but became immensely prosperous because they had good property rights and predictable laws. On the other hand, you've got countries like Venezuela and Nigeria that have been blessed – or cursed, as the case may be – with great mineral wealth, but are absolute basket cases. And they'll stay that way until the governing philosophy changes.

Success of a society is totally a "people" thing – management. Without social systems that encourage prosperity – which is to say, encourage personal freedom – natural resources are counterproductive. They just become something for the strongest thugs to steal. Since the mineral rights in Africa all belong to the state, the best way to steal the diamonds, gold, oil, or whatever, is to get control of the government. Governments are obstacles to prosperity almost everywhere, but in Africa they are totally counterproductive. They're exclusively vehicles for theft and repression.

All across the continent, every regime – and I can't think of a single exception – became a hellhole after the colonial powers left. They exported nothing but minerals – the farms and plantations all went back to the bush – and imported nothing but crazy ideas and luxury goods for the rulers, mostly from Europe. Then, to compensate, Western governments have shoveled a trillion dollars of "aid" into the continent over the last 50 years. That was all money stolen from poor people in rich countries that ended up lining the pockets of rich people in poor countries. It cemented the poor Africans to the bottom of the barrel. Crucifixion is too good for people who promote foreign aid.

I attribute almost all of Africa's disastrous problems to colonialism. If Europeans came there as traders, it would have been beneficial to everyone. But they came as conquerors, destroyed the existing native cultures, engaged in horrendous wholesale slaughters – the Congo being perhaps the worst example – and imposed alien religions and political systems on the natives. 

1 comment:

  1. In the case of Hong Kong, it also had a Financial Secretary called Sir John Cowperthwaite, a colonial administrator of genius because he did hardly anything to get in the way of life. This from one of a number of educational obituaries about him which can be found online:

    "Asked what the key thing poor countries should do, Cowperthwaite once remarked, "They should abolish the office of national statistics." He refused to collect all but the most superficial statistics, believing they led the state to fiddle about remedying perceived ills, thus hindering the working of the market. This caused consternation: a Whitehall delegation was sent to find out why employment statistics were not being collected, but the financial secretary literally sent them back on the next plane [...] He opposed giving special benefits to business; when a group of businessmen asked him to fund a tunnel across Hong Kong harbour, he argued that if it made economic sense, the private sector would pay for it (as indeed it did)."