By poor I mean the general standard of living.
I have heard before that Africa is 'the most mineral rich continent in the world'. While I find proving this seems to be exceedingly difficult (if even possible), I would at least concede that, in terms of mineral wealth, the African continent is probably no worse off than any of the others ...
So what gives? Why do I see TV personalities selling the plight of these starving people? Are Africans really unable to develop any sort of infrastructure to provide basic necessities like food, clothing, shelter, and medicine?
All costs are associated with what if not investments in capital?
hayekianxyz:You guys are naively assuming that there are very negligible costs associated with learning new technology
Who is assuming that? learning new technology requires capital. It's part of the roundabout process.
hayekianxyz:and the matter is simply as easy as opening a few schools to teach farmers the best irrigation methods or whatever.
Nobody said it was easy. A school requires capital investment.
hayekianxyz:I don't think it's that simple, to use Hayek's phrase there is knowledge that is very specific to time and place and there are very real costs to learning this knowledge
The costs are what if not capital investments
hayekianxyz:Clearly, since the newest technologies aren't being adopted the incentives to do so aren't there, I think the likelihood of expropriation and such goes a long way to explain this.
So perhaps they are lazy. There is capital ready to flow in from abroad but the locals just don't want to work. Even if this were true, it still about capital not being accumulated due to lazy people not willing to work.
hayekianxyz:No matter how you've arranged the capital structure, if there aren't enough workers any additional piece of capital is likely to yield very low returns.
This doesn't make any sense. What is there some natural physical law that limits the amount of added productivity of tools and machines in general per capita? So there is some theoretical limit on how, say 10 people, can be productive no matter what tools they invent and how much savings they are ready to invest.
Go do your empirical research and try to discover this amazing natural law of yours. Don't worry about not being able to conduct any control experiments. In this day and age, all you have to do is play scientist or play expert, and perhaps you will win your noble prize. Unlike de Soto, who according to you, has nothing original to contribute.
I'm joining this discussion late, and I have a side question: Are African nations open to foreign firms? Maybe Africans themselves don't have the capital to industrialize or increase production of their farms, factories, etc., but foreign investors would (seemingly) be able to "capitalize" on local resources.
hayekianxyz:I think you guys are largely missing my point when it comes to technology. You guys are naively assuming that there are very negligible costs associated with learning new technology, and the matter is simply as easy as opening a few schools to teach farmers the best irrigation methods or whatever.
Technology is like any other kind of capital - it can be rented.
Global corporations would love to set up industries in Africa and exploit the local labor. It's just not safe.
The fallacies of intellectual communism, a compilation - On the nature of power
pauiel: I'm joining this discussion late, and I have a side question: Are African nations open to foreign firms? Maybe Africans themselves don't have the capital to industrialize or increase production of their farms, factories, etc., but foreign investors would (seemingly) be able to "capitalize" on local resources.
Check out this map:
http://www.fraserinstitute.org/commerce.web/product_files/Nov06ffEFWmap.pdf
And notice how brig red are many African countries.
And this statistic data:
http://www.freetheworld.com/2009/reports/world/EFW2009_BOOK.pdf
You will see how poor are African nations rate in terms of economic freedom, and understand this condition, over many, many years, leave them very impoverished and prevent any economic growth.
Stranger:Global corporations would love to set up industries in Africa and exploit the local labor. It's just not safe.
I don't know what to think about this. If foreign capital investment ultimately leads to opening factories in some African country, and many Africans ditch their subsistence farming to labor in a factory, is this really exploitation? I can't imagine anyone previously living at the subsistence level and who takes a job change would do so to be worse off. I'm pretty sure anyone who changes their line of work voluntarily is doing so out of a perceived benefit to themselves. If this is true, there really isn't any exploitation since both parties feel as though they are better off. If its not, then I guess even wealthy westerners are being exploited by these corporations.
Other than the part about safety, which I believe is a good lead on my original question, this quote doesn't sound very Austrian, imo.
Chinese firms are, incidentally, beginning to move into Africa. I've not looked into why but perhaps they're more able to secure their investments there?
Freedom of markets is positively correlated with the degree of evolution in any society...
Jon Irenicus: Chinese firms are, incidentally, beginning to move into Africa. I've not looked into why but perhaps they're more able to secure their investments there?
That is quite interesting. Perhaps the Chinese are silently negotiating some Hong-Kong style free zone under Chinese/English law with some African country (Sudan comes to mind). Or perhaps the word is spreading that the Chinese plan to declare some sort of “Monroe Doctrine” on Africa. Otherwise I find it difficult to see why Chinese firms would throw themselves at the hand of the unbelievably corrupt local governments and gangs. Any possible gain in lower labor costs (vis-à-vis Chinese wages) would appear to be largely offset by bribes and risk.
I'm trying to go around the circularity of the answer, as I understand it so far:
The reason that Africa is poor is that it lacks capital (i.e. "It's poor") and its uneducated population (because it's poor) keeps allowing corrupt governments to stop capital from coming in while sustaining themselves on foreign aid. Sort of a "circular symbiosis of misery" converging to: It's poor because it's poor.
How does one break a circle like this? Is it as simple as stopping foreign aid?
Then lack of a concept for property and property rights was proposed. How natural are natural rights, then?
No agenda here. Just some thoughts on a very interesting thread.
Z.
z1235: I'm trying to go around the circularity of the answer, as I understand it so far: The reason that Africa is poor is that it lacks capital (i.e. "It's poor") and its uneducated population (because it's poor) keeps allowing corrupt governments to stop capital from coming in while sustaining themselves on foreign aid. Sort of a "circular symbiosis of misery" converging to: It's poor because it's poor. How does one break a circle like this? Is it as simple as stopping foreign aid? Then lack of a concept for property and property rights was proposed. How natural are natural rights, then? No agenda here. Just some thoughts on a very interesting thread. Z.
I think that's a good question, and we can look at how Europe developed its own culture of respect for property rights, freedom from the state, and enforcement of contracts: by centuries of radical de-centralized political entities (think of the 300+ independent german states, for example, the italian city states, etc...).
So I think what the solution is, is 1) for Western government to stop exporting to them our corrupt system of government (welfare democratic demagoguery), stop supporting their corrupt government, intervening in their affairs, and let African organize themselves the way they see appropriate.
Any solution imposed on them is doomed to failed. Especially when those solutions are cooked up by socialists experts, such as LSE graduates.
z1235:The reason that Africa is poor is that it lacks capital (i.e. "It's poor") and its uneducated population (because it's poor) keeps allowing corrupt governments to stop capital from coming in while sustaining themselves on foreign aid. Sort of a "circular symbiosis of misery" converging to: It's poor because it's poor.
Im not sure it is circular, if the problem were circular then no society could have become weathly. Every continient and group of people were in the exact same boat at one point or another. It seems to me its more like "Africa is poor because it lacks capital, it lacks capital because its people never saved, its people never saved because ?????
Incidentally this problem is not unique to just Africans living in Africa, but to African populations living throughout the world.
Southern:It seems to me its more like "Africa is poor because it lacks capital, it lacks capital because its people never saved, its people never saved because ?????
Bingo, that's the billion dollar question. Perhaps one could go one step further: Africans don’t save because they would not reap the benefit of their investment due to their predominantly communally owned land and/or banditry. But why is that Europeans developed a sense of property rights while African are not? This is, I’m afraid, as far as we’ve come until now. Let our imagination run free and push that a step further.
Southern:I'm not sure it is circular, if the problem were circular then no society could have become weathly. Every continient and group of people were in the exact same boat at one point or another. It seems to me its more like "Africa is poor because it lacks capital, it lacks capital because its people never saved, its people never saved because ?????
Isn't "lacks capital" = "it's poor" ? To me, "lack of capital" is more of a definition than a reason for "being poor", hence the circularity.
z1235: Southern:I'm not sure it is circular, if the problem were circular then no society could have become weathly. Every continient and group of people were in the exact same boat at one point or another. It seems to me its more like "Africa is poor because it lacks capital, it lacks capital because its people never saved, its people never saved because ????? Isn't "lacks capital" = "it's poor" ? To me, "lack of capital" is more of a definition than a reason for "being poor", hence the circularity. Z.
Ok, "Africa is poor because its people never saved, its people never saved because ????" now are you saying they dont save becuase they are poor? Creating the circular dilemma.
Then question becomes why did poor Europeans and Asians save while poor Africans didnt? After all European and Asian populations lived in the save poverty at one time too.
Someone said it earlier in this thread that the rise of Africa should be easier than the rise of Europe simply because the ideas and technology that allows development dont have to be invented. If you look at east Asia (parts of China, Tiawan, Korea, Japan), thier develpment over the past 50 years has been at break neck speed. Why have these people embraced western ideas and technology?
Southern: Someone said it earlier in this thread that the rise of Africa should be easier than the rise of Europe simply because the ideas and technology that allows development dont have to be invented. If you look at east Asia (parts of China, Tiawan, Korea, Japan), thier develpment over the past 50 years has been at break neck speed. Why have these people embraced western ideas and technology?
liege:I don't know what to think about this. If foreign capital investment ultimately leads to opening factories in some African country, and many Africans ditch their subsistence farming to labor in a factory, is this really exploitation?
The question you should be asking is what is wrong with exploitation?