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Chuck the Lucky

I realize that the growth in the "gap between the rich and poor" is not a bad thing since a poor country can not become a rich country all at once and what really matters is that the status of the poorest people continues to improve, but as great as this news is, from a security point of view, what matters is how much wealth (especially measured in job opportunities, educational opportunities and health care availability) that the poorest fraction of the population is getting. It is people who have less security in these matters who become most fanatical in their religion (I know that the terrorists are often well off and well educated but they are still coming from countries where a vengeful God seems to be the only hope). I have heard that the percentage of the world's poor is decreasing but is it doing so fast enough? Is there an exponential trend in poverty reduction?

GK

Chuck,

There is a steady decline in poverty, in all regions except Africa. Africa is pretty much a lost cause, and they have few to blame but themselves at this point.

Check out the human development index.

usnjay

Excellent article, thanks. The political question it brings to mind is whether the increased world wealth will translate to less socialism and more individual freedom. My initial reaction is that greater wealth leads to less socialism, but that may be wrong.

This is because of a fact of human nature and a fact of economics. The aspect of human nature is that people do not judge their wealth by objective measures, they use relative measures by comparing themselves to others. Most people today would say they are much worse off than was King Henry VII; despite the fact he lived in comparative squalor, simply because he lived better than anyone else in his time.

The fact of economics is that relative inequality increases as a society prospers. The US had the least inequality during the Great Depression. So as world prosperity increases, you could see a perverse effect of more people seeing themselves as relatively poorer than others.

So the increase of wealth could result in a greater tendency to vote for socialists/Democrats.

GK

Perhaps, but note how the world has moved greatly away from socialism in the last 15 years. Even as entitlements and taxes creep into the US, India and China are storming in the capitalist direction.

Plus, entire societies move higher in Maslow's hierarchy of needs through economic growth.

Leftists may clamor for equality, but any measure to increase equality will greatly stunt economic growth, and will be opposed. Entitlements will rise, but not enough to weigh down the whole GDP.

Chuck the Lucky

While there is lots of reason to be discouraged about Africa and there has been lots of false optimism about the prospects of Africa in the past, I can not help remember that about one billion Asians went from poverty to middle class during my life time and they did not have some of the http://technology.timesonline.co.uk/article/0,,20411-1732539,00.html> tools and http://agbe.typepad.com/the_african_uptimist/2006/06/smart_phones.html> technology we have today. Foreign investment is starting to return to those African nations who have clued into modern economics and the world is starting to look at Africa as the new source for low wage manufacturing since wages in Asia's developing economy are starting to rise.

I will grant that Africa is still messed up with many problems but I would not write it off for future development.

GK

Chuck,

The difference is culture. While India, China, Taiwan, Korea, etc. were poor, when people from those nations came to the US (a free-market level playing field), these groups quickly became wealthy in the US. Indians and Chinese are the two richest groups in the US, richer than whites.

That shows that there was something innate in Indian and Chinese culture. Their system was holding them back, but once they got out of that and into the US, they did well.

That is why these countries are doing well now. Their diaspora became large and wealthy, and is transfering business expertise and knowledge back to the original country.

Regarding sub-saharan Africa, there is no place in the world where Africans have achieved wealth. There is no big African network in Silicon Valley, Wall Street, or the Medical profession in the US like there is with Indians and Chinese. There are a tiny few Africans that are in the US as successful white-colar people, but the number too tiny to affect anything.

This shows that it is not just their system that is limiting, but something innate to their culture that limits modernization and progress. With the exception of Bermuda and some Carribean nations, there is no place in the world where African descendants are not the poorest group in their particular nation.

That is the big difference between Indians and Chinese, and Africans (and Mexicans for that matter).

I predict only stop-start, unspectacular progress in Africa in the next 30 years - nothing like we have seen in Asia.

Josh

This shows that it is not just their system that is limiting, but something innate to their culture that limits modernization and progress.

It shows nothing of the sort. Can anyone think of any other differences in the immigration patterns of the groups mentioned in that comment that might be relevant?

GK

Josh,

Think beyond just the US.

In ALL developed countries where Indians or Chinese live, their income exceeds that of the host country, whether the US, Britain, Australia, Canada, etc.

In ALL countries that have people of African descent, they are much poorer than the average of their host country, whether in the US, Brazil, Cuba, etc.

This is spread across many nations, and thus cannot be attributed to American Jim Crow laws, etc. These are cultural habits. All cultures are NOT equal.

Josh

I'm sorry to inform you that it does not follow from the fact that you assert something that your assertion is true. Your argument has two obvious weaknesses: (1) it ignores the aforementioned immigration patterns (and your Brazil and Cuba examples do not help you in this regard, for reasons that should be obvious; (2) it is premised on a commonality across African cultures that you have not even attempted to establish. Sweeping claims such as the ones made here require far more rigor and empirical support to be taken seriously.

GK

Josh,

Slavery aside, there is no example of a diaspora voluntarily leaving Africa and achieving wealth greater than their host country. Avoid this all you want, this is the crux of the matter.

Indians and Chinese have achieved this in many countries, and not just educated Indians and Chinese are successful. Many are motel owners, shopkeepers, etc. who are wealthy.

The differences in African culture are meaningless for this discussion. Despite language and attire differences, they have one thing in common - an inability to produce economic value. Whether Nigeria, Zimbabwe, Sudan, or Kenya, all of them manage to be far poorer than the rest of the world, despite differences in their culture, language, and attire. This is true whether they are Yoruba, Kikuyu, Hutu, Tutsi, Masai, Khoisan, Bantu, Dogon, etc.

Corruption is synonymous with Africa. Why do those 'URGENT and CONFIDENTIAL' email scams come exclusively from African countries like Nigeria, Liberia, etc?

Chuck the Lucky

It was not so long ago (historically speaking) that Europe was a cesspool of corruption with the church controlling property rights and it being illegal for a worker to leave his feudal lord to work for someone else. Whether it is the entire culture or the inertia of past corruption that is to blame, the fact remains that things can be changed. Strange how few people wrote off the countries of Eastern Europe given that they were corrupted to the core by the Communist system. It takes a lot of effort to root out corruption and it does not happen over night but if everyone had given up on Eastern Europe where would it be today?

The Chinese and Indian immigrants were coming in very different patterns of immigration and were entering different communities once they got here and even experiencing different racial stereotypes from the culture at large so it is no better to draw conclusions on their culture of origin and its potential for future development than it is to look at Chinese immigrants from the eighteen hundreds and not that they all came over as laborers and they did not produce many Rockefellers.

There are a lot of countries that are experiencing growth while not having completed the job of tackling corruption. And doom-saying about Africa ignores a lot of trends that are changing the continent: Urbanization continues which, while bringing about challenges, makes providing services easier. Cell phone use is soaring even among the poorest because it opens up economic niches which were not there before. A middle class is still growing (strongly among Black South Africans) which tends to want more accountability and better economic performance. While the global trade talks have stalled, countries are pursuing regional trade liberalization. Growing tourism revenue is putting pressure on governments to offer stability which is another positive feedback for nations who start to get things right. Finally, while some nations are in free fall due to classic dictatorship practices, others are growing strongly.
http://www.africafocus.org/docs05/eca0505.php

In short, if Africa completely stagnates or regresses over the next twenty years I will buy everyone a here a Coke.

GK

The growth rate of most African countries is actually slower than the world average. Their human development indices have stalled.

AIDS alone has actually shortened life expectancies in many countries. Plus, at least 3 genocides have occurred there in the last 15 years.

Some places there are progressing, but it is not enough to offset the other trends toward disaster. I don't think Africa will progress at even the world's average rate over the next 25 years.

Chuck the Lucky

"The growth rate of most African countries is actually slower than the world average."

Someone has to be below average by definition, it does not mean that development is not happening.

As for the human development indices:
A) It is used by the UN
B) As a Canadian I can tell you that any rating system that keeps putting Canada at the top is somewhat off.
C) It is used by the UN
D) Life expectancy is included which as you mentioned is skewed by AIDS which, it is claimed is beginning to peak and by many other less fatal diseases which hold potential for gains to be made on.

"Plus, at least 3 genocides have occurred there in the last 15 years"

Bosnia and Kosovo would make two for Europe right? I realize that it is not exactly comparable but the point is that judging the whole continent by what you see in the news is like would be like writing off Europe as a disaster because you see French youth rioting or judging America as high risk because of the La Raza protests I seem to remember Europe and America being involved in several massive wars while going through the industrial revolution and some of them were monarchic, socialist and fascist.

As with the situation in Iraq, the image projected by stats and headlines does not always reflect all of the facts on the ground.

Here is a blog that highlights the innovations, new companies, and entrepreneurial ventures that are sprouting up.

And as far as there not being a lot of diaspora communities around making conspicuous wealth, just because they are not all in one community does not mean that they are not out there and there are projects being developed to capitalize on their skills and desire to develop their homelands.

"I don't think Africa will progress at even the world's average rate over the next 25 years." If wealth creation is really accelerating as you say than even being far behind the world average would be a gift horse that I would not look in the mouth. Does modern economic theory not promote the concept that growth is not a zero sum game?

Chuck the Lucky

PS. I notice that the industrial revolution moved like a wave from Britain across the continent and that Asian countries began to reform when they saw how good Japan was doing. Would this not support the theory that as conditions begin to improve in one country it causes the neighboring populations to start pressuring their own leaders to follow suit since they can see what is possible next door? Is that not the whole point of removing the barriers to democracy and entrepreneurship in Iraq - as an advertisement to the rest of the Middle East? If so it would mean that those places in Africa that are getting things right are not just exceptions to the rule but are analogous to seed crystals in a solution that can promote a further crystallization of reforms.

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