Montreal, March 15, 2005 No 152

 

OPINION

 

Bradley Doucet is a writer living in Montreal. He has studied philosophy and economics, and is currently completing a novel on the pursuit of happiness.

 
 

POOR COUNTRIES NEED THE BENEFITS
OF ECONOMIC FREEDOM

 

by Bradley Doucet

 

          We all do it, from time to time. Whether from lack of sleep or simple moodiness, we get frustrated by something insignificant and we start to bitch and moan, as though we have it rough. If we're lucky, something reminds us of just how good we've got it before we annoy too many of our friends. Reading a page or two of world news will usually suffice, because out there in the world, there is real suffering.

 

          Two stories in the February 26th weekend edition of the National Post had this effect on me. One of them was entitled "Modern slaves" and the other bore the headline "Greedy owners assailed over 'boats of death'."

          The modern slaves in the first article are some 10,000 children being forced to work in fishing communities in the African nation of Ghana. Many of them are abused, and many also drown.

          The greedy boat owners in the second article hail from the Asian country of Bangladesh. They are condemned for dangerously overloading their vessels, contributing to the loss of some 3000 lives over the last 30 years.

          What is being done to address these ongoing tragedies? In Ghana, the International Organization for Migration is doing what it can, and has rescued 544 children since October 2002. Unfortunately, this is a mere fraction of the total. A proposed bill to ban human trafficking is expected to reach Ghana's parliament this year, but even if it passes, it is feared enforcement will be spotty.

          In Bangladesh, tough new measures to reduce the number of lives lost in ferry accidents were already proposed last year, and are to come into effect presently, but there too, there is great skepticism about whether the measures will be adequately enforced.

          How can this be? How can these kinds of problems still exist, and why do they seem so hard to solve?

          A more revealing question, perhaps, is why it is next to impossible to imagine either of these tragedies occurring in the industrialised nations of the world. Of course, we have laws forbidding slavery, and we have a whole network of strict safety guidelines, but such things are being proposed in Ghana and Bangladesh, yet are expected to fail. In fact, even if we suddenly dropped our slavery laws and safety guidelines, does anyone imagine that a brisk market would emerge for the buying and selling of children in North America? Or that in Europe and Japan, demand would surge for dangerously overcrowded ferries? Of course not.

          But then why do these things occur in Ghana and Bangladesh? Are the people of those countries more morally depraved than we are?

Desperation born of poverty

          There are unscrupulous individuals in every country. What makes the situation worse in some places is that there is more desperation for those individuals to exploit. That desperation is born of poverty.

          The GDP per capita in both Ghana and Bangladesh, adjusted for purchasing power parity, is roughly $2000, compared to $30,000 in Canada and $38,000 in the United States. A comparison of infant mortality rates similarly illustrates the wealth discrepancy: around 50 or 60 deaths per 1000 live births in Ghana and Bangladesh, whereas the numbers in Canada and the US are around 5 or 6 per 1000.

          Simply put, we would not ride on dangerously overcrowded ferries because we are wealthy enough to afford safer alternatives. We would not even consider selling our children because we are not desperate enough to want to do so.
 

"It is often said that if you give a man a fish, you feed him for a day; if you teach a man to fish, you feed him for a lifetime. But clearly, it is not enough to teach a man to fish. We must also teach him about economics."


          We in the industrialised world have so many attractive choices open to us. The desperately poor have very few choices open to them, which is why the choices they do make are sometimes desperate ones. It is also why enforcement is expected to be so difficult: without an increase in more attractive options, the demand for buyers of children and for suppliers of dangerous ferry rides will remain high despite their illegality.

          If poverty is at the root of these problems, then we must ask two further questions: Why are these people so poor? and how can they become wealthy?

          These are complicated questions, of course, exercising the minds of economists the world over, but a few hours of internet research provides some clues.

          Although Ghana is relatively rich in natural resources, its recent history has been an unstable and violent one. The country is on its fifth constitution in less than fifty years. The first post-independence government, that of Kwame Nkrumah, destroyed much wealth through ill-conceived investments in monumental public works projects and mismanaged state schemes in agriculture and industry. A series of coups failed for a long time to improve the situation, leading instead to long-discredited protectionist measures such as self-reliance in food production. (While 'self-reliance' has a nice ring, it amounts to restrictions on imports, which lead to less competition, which in turn leads inevitably to less-than-optimal use of resources, and therefore to less wealth creation.)

          There is some room for optimism, though. The most recent republic, a constitutional democracy, has lasted since 1992 and is engaged in such salutary measures as the privatisation of inefficient state enterprises and the lifting of import restrictions. Still, the road out of poverty is a long one. Not easily forgotten are the superstitions of pre-colonial culture, the inferiority complex inherited from colonialism, and the authoritarian control and abuse of Ghanaians by Ghanaians. They comprise a hobbling, three-tiered legacy, which a local pastor recently urged the country's journalists to address more openly and constructively.

          Bangladesh has also had a tumultuous recent history. It was a part of British India until its independence in 1947, whereupon it suffered under Pakistani rule until finally fighting a war for its own independence in 1971. There too, as in Ghana, the first post-independence governments destroyed much wealth, in this case by nationalising much of the country's industrial sector. A series of coups followed, keeping the country destabilised for the next twenty years, so that it was 1990 before they at last achieved a parliamentary democracy.

Teach a man about economics

          If there is cause for optimism in Bangladesh, it is, as in Ghana, due to recent political stability and to market reforms such as privatisation and reduced restrictions on international trade. The garment industry in particular has benefited from the increased access to world markets, and interestingly, has apparently managed to eliminate the use of child labour in recent years. Still, overall reforms are slow, and to make matters worse, Bangladesh consistently ranks as the most corrupt country in the world according to Transparency International's yearly reports. (Ghana fares better, but still not well.) It is often said that if you give a man a fish, you feed him for a day; if you teach a man to fish, you feed him for a lifetime. But clearly, it is not enough to teach a man to fish. We must also teach him about economics.

          When people are allowed to make their own decisions about what to buy and sell on the open market, they will by and large make their decisions based on the most efficient use of resources, and wealth will grow. When property rights are protected and people are allowed to keep the product of their efforts, they will have an incentive to work harder and smarter, and again, wealth will grow.

          When we teach enough men about the benefits of economic freedom, they will demand these benefits for themselves, and in so doing, they will liberate the productive energies of whole nations of men so that they can lift themselves out of poverty and stop worrying about just feeding themselves!

          If the IOM can save a few hundred children in Ghana over the course of two and a half years, they are certainly deserving of praise. If some albeit spotty enforcement of laws can save a few hundred more, all the better. Likewise, if safety regulations can have some positive effect in Bangladesh, it will be a small step in the right direction.

          More significant progress, though, is only likely to occur when these countries finally make the climb out of dire poverty. As much as we agitate for social justice in these places, it is even more important to agitate for the private property rights, access to world markets, and overall economic freedom that underpin the creation and accumulation of wealth. Only when the poorer people or the world have become less desperate will slavery and reckless endangerment be as unthinkable to them as it is to us.
 

 

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