ALOD Policy

A Book Is a Tool, Not a Trophy

 

I once had coffee with a guy who told me that he read Rich Dad, Poor Dad six times. He said it with such pride too. I was really excited since this was one of the first resources to influence me to think about financial literacy.

It’s been over ten years since I’ve read the book, but I still remember a few of the core concepts. So I started to discuss Robert Kiyosaki’s concept of assets as income-generating resources versus the traditional notion of “things you own,” and his mind was blown. He never heard the idea before. This surprised me because it was one of the main points of the book and it was repeated over and over. No big deal. Maybe that concept wasn’t important to him. After a few minutes of discussion, however, it was clear that he couldn’t recognize anything from the book. Again, no problem. Maybe he doesn’t remember the details, but he has an emotional memory of being impacted by it.

In a Relationship with Books

I have no opinions about that one guy’s relationship to that one particular book, but our conversation made me think about the purpose of reading books and how that might differ from the social rewards we sometimes get from claiming to have read certain books.

In How to Talk About Books You Haven’t Read, Pierre Bayard makes a fascinating distinction between internal (psychological) and external (physical) libraries:

In truth we never talk about a book unto itself; a whole set of books always enters the discussion through the portal of a single title, which serves as a temporary symbol for a complete conception of culture. In every such discussion, our inner libraries — built within us over the years and housing all our secret books — come into contact with the inner libraries of others, potentially provoking all manner of friction and conflict…For we are more than simple shelters for our inner libraries; we are the sum of these accumulated books. Little by little, these books have made us who we are, and they cannot be separated from us without causing us suffering.

I see the aim of reading as the construction of an inner library. The books in our outer library provide the tools for construction. When we face a problem, set a goal, or have a need, what matters most is our ability to retrieve something useful, relevant, or pleasant from the inner library we’ve gradually built through our studies. In this sense, books are not status symbols, they’re soul stirrers. We don’t read them because we wish to brag about ourselves. We read them because we wish to build ourselves.

The Brag Shelf

A book is not a trophy. It’s a tool for personal transformation.

Wherever learning resources are shared, there’s usually at least one person who’s quick to say something like “oh, I’ve already read that book” or as in the case I mentioned earlier “I’ve read that book multiple times.” My question is, can you say something intelligent about it? Can you use the ideas to create a result that matters to you? Can you advance the discussion started by that book with your own ideas? The purpose of reading a book isn’t to say you’ve read it.A book is not a trophy. It’s a tool for personal transformation. For Kafka, “A book must be the axe for the frozen sea inside us.” Education isn’t a name-dropping contest. It’s a paradigm-shifting process. It’s an opportunity to have our perspectives and presuppositions challenged from every angle.

If the process of scanning your eyes across the words on a page isn’t contributing to personal transformation, start over. If the process of letting sound waves pass through your ears isn’t leading to critical reflection, start over.

Reading isn’t about how much technical detail you remember nor is it about how much time you spend on books. It’s about what you’re able to retrieve from your inner library during those moments of need when no book, author, thought-leader, or friend is within grasp.

Keep reading great books. Keep sharing great books. Keep taking beautiful photos of great books. Keep tweeting and talking about great books. But don’t forget to let those books disturb you, provoke you, and transform you.

As Mortimer J. Adler wrote, “In the case of good books, the point is not to see how many of them you can get through, but rather how many can get through to you.”

Reprinted from tkcoleman.com

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The Best Fantasy Has Roots in History

By James Walpole

This week I came across a popular Reddit thread exploring how Game of Thrones author George R.R. Martin created his fictional land of Westeros.

It looks remarkably like England.

Landmass shape isn’t the only thing Martin borrowed from the British Isles. The whole history and characterization of the book/show bears strong impressions from England’s War of the Roses. These similarities lend the story a remarkable sense of realism and depth that you might normally find in one of Shakespeare’s histories.

This set me to thinking. The best fantasy I’ve read – the kind that really sticks with me – feels like it was deliberately made to be like our world.

The many nations and cultures of Robert Jordan’s Wheel of Time are curious but obvious remixes of different cultural periods of our world. The Lord of the Rings’saccount of hobbits ties itself to the pre-history of the pre-history of man. The Chronicles of Narnia embeds itself within a medieval worldview and classical mythology, albeit with talking animals, that parallels many of the practices and beliefs of our own.

If these stories – some of the most well-regarded fantasy writing of all time – root themselves in history, then we had better notice why.

It turns out that we need familiarity in our most escapist fiction. And we need to believe (or be reminded) that the fantastic is not so distant from our history and our experience.

Fantasy doesn’t, after all, help us escape our world. It takes us more deeply into it.

I doubt very much if it is possible to create a really successful fantasy story in America or Europe that does not have some medieval elements. The Middle Ages are the prehistory of the West. Our founding myths are myths of knights and saints – the individualistic hero tales of good vs. evil, dragons and holy men. Similarly, successful fantasy in a place like Japan will likely hearken back to the samurai age.If we lived at a different time and a different place, the archetypes we use might look different. But they would be consistent with what made up our culture and with the same struggles that affect us.

You’ll rarely find a fantasy story so different and distant from human history that really succeeds in embedding itself in our memories. You won’t find people lining up for a fantasy based in a world without swords, or even one based in our own world a hundred years from now. You might have science fiction, but you would not have a good fantasy or a memorable one.

In short, good fantasy make us think “the world could be like this.” The best fantasy makes us think – on some level – that “it should be like this.” Fantasy doesn’t, after all, help us escape our world. It takes us more deeply into it.

Reprinted from JamesWalpole.com

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A Libertarian Paradise in Nigeria

By Daniel Mitchell

Whenever someone accuses me of being too dogmatically opposed to government, I tell them that I only got 94 out of 160 possible points when I took Professor Bryan Caplan’s Libertarian Purity Quiz.

That’s barely 70 percent, which makes it seem like I’m some sort of squishy moderate even though I have a nice list of government departments and agencies I want to abolish.

And whenever someone accuses me of being insufficiently opposed to government, I point out that my score on Professor Caplan’s quiz is good enough – albeit just barely – for me to be categorized as a hard-core libertarian.

So does this mean I’m a principled moderate, if such a creature even exists?

Actually, it simply means that I’m not an “anarcho-capitalist,” which is the term for people who think all government can be abolished (sort of like the “more libertarian than thou” character in this amusing list of the 24 types of libertarians). If you want to get a perfect score on the Libertarian Purity Quiz, you have to favor abolishing the Department of Defense, the court system, and every other vestige of government.

That being said, I like that there are people pushing the envelope for more liberty. And I tell my anarcho-capitalist friends that we should all work together to get rid of 90 percent of government and then we can quibble over the rest.

Moreover, when I spoke earlier this year at the conference celebrating the 2nd-anniversary of Liberland, I pointed out that there are plenty of examples of how the private sector successfully carries out functions that most people think can only be handled by government.

Which leads me to the focus of today’s column. The U.K.-based Guardian has a fascinating story about a very successful Nigerian church.

The Redeemed Christian Church of God’s international headquarters in Ogun state has been transformed from a mere megachurch to an entire neighbourhood, with departments anticipating its members’ every practical as well as spiritual need. A 25-megawatt power plant with gas piped in from the Nigerian capital serves the 5,000 private homes on site, 500 of them built by the church’s construction company. New housing estates are springing up every few months where thick palm forests grew just a few years ago.

To most people, this story is probably interesting because of what it says about Nigeria and religion.

But since I’m a wonky libertarian, what grabbed my attention was the fact that the church – for all intents and purposes – was building an anarcho-capitalist society.

Education is provided, from creche to university level. The Redemption Camp health centre has an emergency unit and a maternity ward. …“If you wait for the government, it won’t get done,” says Olubiyi. So the camp relies on the government for very little – it builds its own roads, collects its own rubbish, and organises its own sewerage systems. And being well out of Lagos, like the other megachurches’ camps, means that it has little to do with municipal authorities. …according to the head of the power plant, the government sends the technicians running its own stations to learn from them. …the camp’s security is mostly provided by its small army of private guards in blue uniforms.

To be sure, it’s not a purely anarcho-capitalist society. The Nigerian government still has ultimate power to enforce laws.

But from a practical, day-to-day perspective, the church has set up a private city governed by private contract and voluntary cooperation. Sort of a Nigerian version of Galt’s Gulch.

And it’s definitely worth pointing out that it is far more successful than traditional Nigerian cities (and it sounds like it works better than many American cities!).

 

Daniel J. Mitchell is a Senior Fellow at the Cato Institute who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending.

Republished from International Liberty.

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There’s a Hole in the Middle of Doughnut Economics

By Steven Horwitz 

The last 30 years have seen the demise of the Soviet Union and its administrative-command economy as well as a revolution in technology and trade that has reduced the transaction costs of using markets.

Many governments around the world have recognized the reality of the power of markets, liberalizing international trade and de-nationalizing production to benefit from the power of domestic competition. The Scandinavian countries have understood that even supporting a generous welfare state requires domestic economic growth, which has led them to cut business regulation and taxation in ways that have given them freer markets than in the US.

The result of all of these events has been an unprecedented reduction in human poverty. The number of people living on less than $1.90 per day (the current standard for extreme poverty) fell from 1.9 billion people, or about 37 percent of the world’s population, to about 700 million (9.6 percent) between 1990 and 2015.

In other words, severe poverty fell almost 75 percent in a mere 25 years, thanks to the freeing of global markets, especially in China and India. No government policy in human history has even come close to what markets have done over that period.

The success of that basic economic insight, that markets improve human well-being, has generated immense cognitive dissonance among many progressives.

Instead of recognizing the ways in which markets have addressed one of the left’s major concerns (severe poverty around the world), progressives, most of whom are not formally trained in economics, continue to attack both economics as a discipline and economists’ belief in the power of markets to address the condition of the least well-off.

Enter the Doughnut

The latest entry in this endeavor is Kate Raworth’s Doughnut Economics. Raworth’s indictments of the discipline are a familiar list: homo economicus is unrealistic, economics doesn’t predict crises, it cannot account for the use of natural resources and the damage economic growth does to them, and it equates economic growth with “human well-being.”

Her contribution is a new visual model of the economy that sees it embedded in the center, with the state, the household, and the commons, as a series of concentric circles (like a doughnut) including “society” and the earth.

The idea is that we need to live “within the doughnut.” That is, economic activity should not harm the social or ecological relationships that provide the necessary context for that economic activity.

Unsurprisingly, the political wish list that her new model produces is pretty much the same list that progressives have wanted for the last century or more. In George Monbiot’s summary:

Wealth arising from the gifts of nature would be widely shared. Money, markets, taxation and public investment would be designed to conserve and regenerate resources rather than squander them. State-owned banks would invest in projects that transform our relationship with the living world, such as zero-carbon public transport and community energy schemes. New metrics would measure genuine prosperity, rather than the speed with which we degrade our long-term prospects.

With this new model, he and Raworth believe, all of these are actually possible in ways they haven’t been before.

Food for Growth

Unfortunately, Raworth’s new model does nothing to improve the likelihood that such measures will address the problems she identifies, and often misdiagnoses.

Her unwillingness to confront the question of whether real world actors, especially politicians, have sufficient information and the proper incentives to behave the way her theory says they should makes her doughnut economy model intellectually unappetizing.

Like so many critics of economics, Raworth misunderstands the discipline’s concern with economic growth. Growth is not desired for its own sake, but precisely because there is both theory and evidence to demonstrate that it is a necessary, but not sufficient, condition for reducing poverty and ecological damage, not to mention increasing the level of education, health, and longevity of the population, especially for women. Market-driven growth has turned women from baby machines, effectively owned by their husbands, into educated, full participants in the modern economy.

You can’t eat GDP, but economic growth is what enables us to feed, clothe, and shelter each other better and better. Economic growth makes it possible for all of humanity to expand our capabilities so that we can live healthy, comfortable, meaningful lives.

Canards Galore

Raworth also mischaracterizes the legitimate problems that she identifies. For example, the claim that markets produced the financial crisis and Great Recession. That canard has been refuted endlessly by various economists.

At the very least, people who make that argument have to explain how a housing boom produced by the combination of government central banks, government-enforced housing policies, and government-sponsored enterprises like Fannie Mae and Freddie Mac in the US, was somehow caused by “free markets.” The claim that markets are responsible is made as if it were obviously true, despite legitimate counter-arguments.

The claim that markets have destroyed the environment is subject to a similar response. Aside from the fact that, by many measures, the environment is faring better than it was a generation or two ago, Raworth’s claim ignores the environmental damage done by the same sort of state-directed economies that she wants to expand. The role of economic growth and the power of property rights to provide the means and institutional structure to encourage better management of resources is a better story.

The more fundamental problem with Raworth’s argument is that aggregate models such as her doughnut fail to account for the most fundamental question of political economy: how well do social, political, and economic institutions provide people with the knowledge and incentives they require to know when they have made mistakes and guide them about how to correct those mistakes?

Her model is at such a high level of aggregation and abstraction that there is no room for asking how and why real flesh-and-blood people act and make choices.

In that way, it is no improvement on the circular flow model and the various other aggregative macroeconomic models that, as she rightly points out, fail to explain the world. It’s odd that someone would criticize modern economics for a misguided model of human behavior and then introduce a model in which there appears to be nothing that resembles a human actor.

Imperfect Knowledge

In reality, the question facing all political economy is how to help individuals with limited and imperfect knowledge discover and correct their errors so that economic and social coordination is possible. We see such coordination all about us thanks to the market.

After all, Paris does get fed, and global poverty continues to fall. It is the price and profit signals of the market that serve, in the words of Ludwig von Mises, as “aids to the mind” in making possible such coordination and the riches it brings to all.

What Raworth and others like her also overlook is whether the political actors are able or willing to produce the outcomes they prescribe on their blackboards and computers. Even if it were theoretically desirable to have state-owned banks determine the direction of investment (which is hardly a new idea, as it can be found in Keynes among others), the real question is whether we can imagine a political process actually producing that outcome.

That is, would real, human actors within the institutional context of politics have the right incentives and information to produce the outcome that theorists like Raworth say they should?

For over 50 years, economists have deployed the set of ideas known as “public choice theory” to analyze the group decision making under political and other institutions. The results clearly indicate that there is no a priori reason to think that politics will produce the ideal outcomes that economists wish for. In fact, there are many reasons to think political institutions are unable to provide the information and incentives to do so.

This is why Keynesianism failed. The theory said politicians should run surpluses in the good times and deficits in the bad times. Doing so was not compatible with the incentives facing politicians who prefer to spend more and tax less in order to stay in office. The result has been decades of deficits.

Good intentions are not enough, nor are aggregate models that do not account for how the information and incentives produced by the institutional environment will enable people to turn those good intentions into good results.

That people like Raworth simply assume that politicians will do what theorists think best, regardless of whether political actors have the incentives and information to do so, means there is a giant hole in the center of their intellectual doughnut. And like real doughnuts, models like Raworth’s might look wonderful and delicious, but they end up containing very little in the way of intellectual nutrition.

Steven Horwitz is the Schnatter Distinguished Professor of Free Enterprise in the Department of Economics at Ball State University and a Distinguished Fellow at the Foundation for Economic Education (FEE).

Republished from FEE.org

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Adeleke David: On Free Market and Equality

The following was one of the top essay entries in our 2017 Adam Smith Challenge on the topic “How Does Free Market Promote Equality According to Adam Smith?” 

In simple terms, free market is a market economy which is operates without undue and active interference by the government. Various authors have given various opinions on the principles of free market but the most detailed explanation was given by Adam Smith, who specialized in the field of economics.

His propositions on the principles of free-market can be traced to one of his books written in 1776 titled ‘The Wealth of Nations’. Instead of unnecessary interference by the government, Adam suggested ideas and set down various principles which according to him are guidelines to guarantee the success of a free market economy in achieving objectives such as the promotion of equal opportunities. Despite restricting government interference, he maintained that they can provide help in certain aspects in relation to performing normal function as the government such as the banking regulation.

How does free market promote equal opportunities?

One role the government is permitted to perform is to ensure everyone who is a consumer of public good or service should enjoy equal consumer satisfaction without the enjoyment of one causing deprivation of satisfaction for another. Therefore the free market economy advocates for selflessness, equality and fairness in the market. It can therefore promote equal opportunities by following the principles laid down by Adam Smith;

The Principle of Division of Labour: This provides equal chance for labourers to put their various professions into practice towards a particular objective and earn a living therefore ensuring a balance in the society. Sometimes it has to do with the use of invented machineries to carry out a job required. This means the opportunity is also extended to the inventors and not just the labourers physically at work.

The Principle of Trade by Barter: This simply involves the exchange of goods or services between people to ensure all parties acquire equal amount of satisfaction based on the wants and needs of each person. It also provides an atmosphere to explore the skills of one another.

The Principle of payment for government services based on ability: This can be in form of imposition and payment of tax to ensure the provision of good roads and other infrastructure. Good roads would benefit the members of the society generally and serve as a means of transporting goods and rendering services by traders. This therefore ensures equal opportunities for all traders in the market.

The principle of payment for government services based on utility: Here, the government charge based on the usage by consumers. It simply means the amount paid by consumers is directly proportional to the benefit enjoyed. This ensures equality and fairness in the society.

Free market should be adopted by various countries as it promotes the economy of a country if the guidelines of Adam Smith are followed. Taking Chile as an example, free market economy indeed promotes equal opportunities.

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Property Rights In Nigeria: An Untapped Tool For Economic Growth

“… Law, Liberty and Property are an inseparable Trinity.” – Friedrich Hayek.

There are three dimensions to property rights, they are: 1) legal and political environment, 2) physical property rights and, 3) intellectual property rights. The dimension which I will elaborate on and discussed in this article is the physical property rights.

Property rights here can be defined as the body of laws created by a country’s government to define how individuals can own, benefit from and alienate property. A property right is the definite and inalienable right to control the use of resources on a property. This right can be exercisable by either individuals in a state or the government of the state.

In addition to the right to use and control the use of the resources derivable from a property, the concept of property right also includes the right to delegate the right to use the resources, the right to sell, rent or otherwise alienate the property. Where there is the absence of private property rights, there is a general lack of interest in preserving the land, property or its resources. The individual sees no need to manage the land or crate value on it since he has no right to ownership on it. This apathy eventually leads to over-consumption of resources, waste, mismanagement and lack of development. Lack of property rights can also bring about destructive competition among individuals in the community for control of economic resources available on such properties.

In light of the foregoing, it becomes evident that private property rights and exclusive ownership by individuals rather than government is a desirable component in any country. There are several positive benefits derivable from private property rights. This view is backed up in the findings of the 2014 International Property Rights Index. According to the IPRI, countries with a high IPRI score are associated with high levels of household income per capita, receive more investment from foreign economic entities and have superior GDP growth rates compared to low IPRI scoring countries.

Sadly, African countries scored poorly on the International Property Rights Index with an average score of 4.8 out of 10. Though countries such as South Africa (6.7), Botswana (6.3) and Mauritius (6.3) performed reasonably well; of the ten bottom countries on the Index, seven were African. According to a World Bank Survey, if African countries can revolutionize the complex procedures surrounding land ownership and management in the continent, there will be a significant increase in the amount of food grown within the region and a transformation in development.

One of the greatest challenges of property rights in Sub-Saharan Africa is that most of the land has no registration of who owns it or has a right to use it.  According to the World Bank Report, it is estimated that as much as 90 percent of Africa’s rural land is undocumented.

In Nigeria, the stance on private property rights is quite obvious. It is firmly entrenched in the Section 1 of the Land Use Act (cap. L5 LFN 2004). This section vests ownership of all land situate in a state in the Governor of the state. All urban land is in the ownership, control and management of the Governor, while ownership, control and management of rural land is vested in the local government.

On the Global Property Guide Property Rights Index, Nigeria attained a score of 30 with 100 being the highest attainable score. This property rights index measures the degree to which a country’s laws protect private property rights, and the degree to which its government enforces those laws. Higher scores here mean that the property rights in such country are better protected.

The benefits which protection of property rights yields cannot be overemphasized. It brings about a complete overhaul of economic growth. In order to attain protection of private property rights, Nigeria must

  1. Call for a Law Reform to amend the first section of the Land Use Act which vests control and management of all land situate in a state, in the government of such state.
  2. Strive for better land registration policies and regulations. Land registration must be achievable with ease.
  3. Educate the rural populace on land tenure, land registration and private property rights.

If the foregoing is achieved, Nigeria will be sure to experience,

  1. Increase in economic growth and entrepreneurship; where proper land registration policies are put in place, individuals will have better access to title deeds which can be used as collateral to secure loans from banks and other financial institutions. Such loans can then be invested in business and entrepreneurship ventures.
  2. Increase in investor confidence and investment; where land use and tenure is secure, there will be an increase in foreign investment in the country by investors from within and outside Africa. This will arise as a result of the confidence investors will have to build and develop land, knowing fully that such land and tenure is secure.
  3. Healthy Competition and Proper Management of Available Resources; unlike the current clime of general apathy towards land preservation, land use reform will bring about healthy use of the land by individuals who know fully that they have a stake in the land and stand to benefit from it. This is contrary to the destructive competition for land and resources that happens when there are no specific owners.

The above is not in any way exhaustive. For Nigeria to attain a state where liberty and freedom is the order of the day, property rights cannot and should not be ignored. The words of Friedrich Hayek, seen above, ring true.

 “…Law, Liberty and Property are an inseparable trinity.”


Oyinkan is a Local Coordinator at ASFL. She is also the president, All Nations United Nations Students Association (ANUNSA) at the University of Ibadan, Nigeria where she is currently studying for a degree in Law. 

Republished form Africanliberty.org

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Stop Conflating Inequality With Poverty

By  Bryan Cheang

The problem of inequality has often been considered to be one of the biggest social problems of our generation.

Widespread concern about the great disparities of income and wealth have fueled anti-globalization sentiments all around the world, and threaten to undermine the advances in trade, investment, and immigration we have seen.

One key problem is that contemporary discussions of inequality have often conflated it with poverty. Not only are inequality and poverty conceptually distinct, a failure to distinguish between them can lead to problematic policy conclusions. Additionally, when market advocates criticize redistributive policies and government welfare programs, they are seen as anti-poor. Thus, separating these two concepts can help market advocates regain the moral high ground in this debate.

Conflating Inequality and Poverty

It is generally assumed that inequality implies poverty, i.e. the rich people are prospering, so poor people must be suffering. This conflation is very subtle and is best seen through the presentation of inequality in the widely-used high school economics textbook Economics (7th ed) by John Sloman (2009). According to Sloman (2009, p. 276):

Inequality is one of the most contentious issues in the world of economics and politics. Some people have incomes far in excess of what they need to enjoy a luxurious lifestyle, while others struggle to purchase even the basic necessities. The need for redistribution from rich to poor is broadly accepted across the political spectrum. Thus the government taxes the rich more than the poor and then transfers some of the proceeds to the poor, either as cash benefits or in kind.”

The chapter seeks to explain the phenomenon of inequality but, almost imperceptibly within this opening paragraph, implicitly suggests that under such unequal situations, there are poor people who “struggle to purchase even the basic necessities.” In fact, this is not necessarily the case.

Inequality in relation to income simply means the existence of a gap between those who earn the most and those who earn the least. The mere existence of an income gap, even if it’s widening, says nothing about the actual income levels of those who do earn the least. In other words, an income gap does not necessarily mean that those at the lowest income brackets are poor. Just because Bill Gates is loaded with greenbacks and is many times richer than I am does not, by itself, suggest that I am “poor” in an absolute sense.

It is clear that a society with a very uneven distribution of income can still be one with high levels of absolute prosperity, in such a way that even those who earn the least (relatively) have enough to survive – comfortably.

Implications of the Conflation

Not only is it possible that the least well-off in unequal societies have enough to survive, it is actually likely for them to be much better off in unequal societies than in more equal ones.

Assuming the absence of crony capitalism, income inequality is a corollary of a free, dynamic, and growing economy that increases prosperity for all.

Attempts to close inequality through standard welfare-state policies such as redistributive taxes, subsidies, minimum wage laws, price controls, and the public provision of “free social goods” like health care can, and often have, slowed down economic growth. Thus impacting the generation of wealth that the least-well-off depend on.

If poor people were truly at the centre of our attention, we should endorse inequality.

Put another way, policy attempts to fight inequality retard economic growth, slow down poverty reduction at best, and exacerbate poverty at worst.

Aside from the economic costs of state-centric welfare programs, there are less quantifiable human costs as well. Generous welfare programs often trap individuals in a state of dependency on the government, which not only disincentivizes them from working but robs them of the dignity and sense of achievement that comes from earning their own income and being independent and self-sufficient.

Consequently, if poor people were truly at the center of our attention, we should endorse inequality, or at least the market system it is based on. When people are left free to trade, invest and innovate in the market, inequality is inevitable simply because people are different, and some may be more adept at spotting profit opportunities. Yet, if this system is left largely unhampered, it generates vast amounts of wealth that benefits everyone, including the least well off.

This is precisely why poverty rates have fallen dramatically in the recent age of globalisation, and, to that extent, so has global inequality.

The above does not mean that there is no role for government in social policymaking. Yet there is a need to ensure that implemented policies facilitate wealth-creation for all rather than redraw the relative shares of the economic pie. The social policies implemented in the country of Singapore provide useful lessons on how best to help the least well off in any society.

Social Policies that Reward Working

Singapore’s main “welfare” scheme is titled “Workfare”.

Singapore’s social-welfare system is based on the fundamental principle of meritocracy,considered a cardinal principle in the Singaporean psyche. It has been said that one of the shared values in Singapore is “work for reward, reward for work.” Even where government assistance is provided to the least-well-off, such schemes are carefully designed to promote and encourage work and thus to promote self-reliance. The belief is that Singaporeans should work and take care of themselves, rather than solely depend on the government.

These principles are reflected in several key initiatives. A testament to its pro-work orientation, Singapore’s main “welfare” scheme is titled “Workfare”. One of its components is the Workfare Income Supplement, which provides a cash payment to low-income individuals who are working. It is not a “free handout” but essentially an incentive to encourage work.

A further illustration of Singapore’s pro-work orientation is the other component of this policy: a training support scheme, which incentivizes workers to upgrade their skills in order to increase their productivity and thus their earning potential.

Singapore has also deliberately rejected a national minimum wage law. In its place, it has instead introduced a targeted “Progressive Wage Model” in several low-wage sectors such as cleaning, security, and landscaping. Employers in these sectors are expected to pay their workers a minimum but are also incentivized to send them for retraining in order to increase their productivity. Where typical minimum wage legislation simply expects employers to pay the mandated wage, Singapore’s take on it goes further in its encouragement of productivity improvements.

Singapore’s leaders have opted to pursue growth-oriented policies.

Subsidies are also provided but only in a limited and targeted fashion. In the healthcare sector, for example, individuals are expected to make co-payments for their medical expenses and cannot rely on government subsidies to simply cover 100% of their bill. More aid is in fact given to the neediest individuals who cannot afford even basic essentials, but the principle of self-responsibility looms heavy in the Singapore system. Not surprisingly, health outcomes in Singapore far exceed those of the United States, even though it spends only a fraction of its GDP on health care in comparison to the USA.

Growth-Oriented Policy

These Singaporean social policies might remain anathema to purist libertarians, who prefer to eliminate all social assistance entirely, but if we must have social welfare policies in the world of here and now, there is a lot to admire in this system.Particularly when observing its targeted, limited nature and its pro-work, pro-responsibility orientation.

Singapore’s leaders have managed to identify the difference between inequality and poverty, and have opted to pursue growth-oriented policies, sometimes even at the expense of the income gap. The Prime Minister Lee Hsien Loong said in 2013:

If I can get another ten billionaires to move to Singapore, my Gini coefficient will get worse, but I think Singaporeans will be better off because they will bring in business, bring in opportunities, open new doors, and create new jobs.”

In conclusion, there is cause for concern about most societies’ obsessive focus on inequality at the expense of the very poor. Conflating inequality and poverty can ironically lead to misguided policies that ultimately hurt the poor.

The next time you’re asked about whether you care about the “problem of inequality”, respond in the negative and that you care too much for poor people instead. Market advocates should always frame markets as a powerful, poverty-killing device, and regain the moral high ground in this most essential debate.

References:

Sloman, John, & Wride, Alison (2009). Economics (7th ed.). Edinburgh Gate: Pearson Education.

Republished from FEE.org

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The Core of Liberty Is Economic Liberty

By Deirdre McCloskey

Since the rise during the late 1800s of socialism, New Liberalism, and Progressivism it has been conventional to scorn economic liberty as vulgar and optional—something only fat cats care about. But the original liberalism during the 1700s of Voltaire, Adam Smith, Tom Paine, and Mary Wollstonecraft recommended an economic liberty for rich and poor understood as not messing with other peoples’ stuff.

Indeed, economic liberty is the liberty about which most ordinary people care. 

Adam Smith spoke of “the liberal plan of [social] equality, [economic] liberty, and [legal] justice.” It was a good idea, new in 1776. And in the next two centuries, the liberal idea proved to be astonishingly productive of good and rich people, formerly desperate and poor. Let’s not lose it.Well into the 1800s most thinking people, such as Henry David Thoreau, were economic liberals. Thoreau around 1840 invented procedures for his father’s little factory making pencils, which elevated Thoreau and Son for a decade or so to the leading maker of pencils in America. He was a businessman as much as an environmentalist and civil disobeyer. When imports of high-quality pencils finally overtook the head start, Thoreau and Son graciously gave way, turning instead to making graphite for the printing of engravings.

That’s the economic liberal deal. You get to offer in the first act a betterment to customers, but you don’t get to arrange for protection later from competitors. After making your bundle in the first act, you suffer from competition in the second. Too bad.

In On Liberty (1859) the economist and philosopher John Stuart Mill declared that “society admits no right, either legal or moral, in the disappointed competitors to immunity from this kind of suffering; and feels called on to interfere only when means of success have been employed which it is contrary to the general interest to permit—namely, fraud or treachery, and force.” No protectionism. No economic nationalism. The customers, prominent among them the poor, are enabled in the first through third acts to buy better and cheaper pencils.

Economic liberty, that is, is part of liberty. Of course.

Mussolini and Hitler won elections and were popular, while vigorously abridging liberties.

Indeed, economic liberty is the liberty about which most ordinary people care. True, liberty of speech, the press, assembly, petitioning the government, and voting for a new government are in the long run essential protections for all liberty, including the economic right to buy and sell. But the lofty liberties are cherished mainly by an educated minority. Most people—in the long run foolishly, true—don’t give a fig about liberty of speech, so long as they can open a shop when they want and drive to a job paying decent wages. A majority of Turks voted in favor of the rapid slide of Turkey after 2013 into neo-fascism under Erdoğan. Mussolini and Hitler won elections and were popular, while vigorously abridging liberties. Even a few communist governments have been elected—witness Venezuela under Chavez.The protagonist of Forever Flowing by Vasily Grossman (1905–1964), the only example of a successful Stalinist writer who converted wholly to anti-communism, declares that “I used to think liberty was liberty of speech, liberty of the press, liberty of conscience. Here is what it amounts to: you have to have the right to sow what you wish to, to make shoes or coats, to bake into bread the flour ground from the grain you have sown, and to sell it or not sell it as you wish; . . . to work as you wish and not as they order you.”

The blessed Adam Smith was outraged by interferences in 1700s Britain in the right of workingmen to move freely to find profitable work. “The property which every man has in his own labor, as it is the original foundation of all other property, so it is the most sacred and inviolable. To hinder him from employing this . . . in what manner he thinks proper without injury to his neighbor, is a plain violation of this most sacred property.” Not as they order you.

And economic liberty, surprisingly, has massively enriched the world in goods and services. How much? In 1800 the income per person of a country like Sweden or Japan, expressed in 2018 prices, was about $3 a day. Now it is over $100 day, a 3,200 percent increase. Not one hundred percent or even two hundred percent, but thirty-two hundred percent. The enrichment was not a factor of two, as had been routine from time to time in earlier spurts, such as the glory of Greece or the prosperity of Song China, to fall back to $3 a day. It was a factor of thirty-three. No starvation. Taller people. Doubled life expectancy. Bigger houses. Faster transport. Higher education. If you doubt it, see the late Hans Rosling’s startling videos at Gapminder.

We became rich by giving ordinary people their economic liberty.

The usual explanations of the Great Enrichment from economists and historians don’t compute. Accumulation of capital or the extractions of empire were not the causes. Ingenuity was, and the ingenuity was caused in turn by a new liberty after 1800. The liberal plan of equality, liberty, and justice made masses of people bold–first the free and wealthy men, then poor men, then former slaves, then women, then gays, then handicapped, then, then, then. Make everyone free, it turned out (the experiment had never been tried before on such a scale), and you get masses and masses of people inspired and enabled to have a go. “I contain multitudes,” sang the poet of the new liberty. And he did. He and his friends had a go at steam engines and research universities and railways and public schools and electric lights and corporations and open source engineering and containerization and the internet. We became rich by giving ordinary people their economic liberty.And now the “we” has extended far beyond its heartland in northwestern Europe. China after 1978 and India after 1991 began to abandon the illiberal European theory of socialism, devised in the middle of the 1800s and exported by the 1970s to a third of the globe. The result of turning towards economic liberalism was that the annual growth of goods and services per person available to the poorest in China and India rose from its socialist level of 1 percent a year, and sometimes negative, to 7 to 12 percent per year. At such rates, it will take only two or three generations for both countries to have European standards of living. Such a prospect for this four in ten of humans is no pipe dream. Similar enrichments were achieved over a similar span in Hong Kong, South Korea, Singapore, and Taiwan, with other startling success stories for new liberalism and a reasonably honest government in Ireland and Botswana.

An economically illiberal government can, of course, borrow from countries honoring liberty. The USSR did from 1917–1989, for example, and for a long time even many economists in the West believed its fairy tale that Central Planning Worked. When communism fell in 1989 we discovered decisively that planning did not work, not for the economy or the environment or for other liberties. Singapore is sometimes cited as an example of intelligent tyranny. And so is China, dominated still by an elite of communist party members. Both, however, practice substantial economic liberty, despite their lamentable practice of jailing political opponents.

And enrichment, in the end, leads to demands for all liberties, political as much as the economic liberties, as it did in Taiwan and South Korea. Enriched people will not long put up with serfdom. And anyway the average record of tyrannies is economically disastrous, such as in Zimbabwe, next door to prosperous Botswana, or for that matter in the long and dismal history of illiberalism worldwide from the invention of agriculture down to 1800.

The ethical habits of commerce are expressed daily in the way an American shopkeeper greets his customer: “How can I help you?”

The Christian gospel says properly, “For what shall it profit a man, if he shall gain the whole world, and lose his own soul?” The claim against economic liberty has always been that even if we gain the world in goods, we lose our souls. We are told from the radical left that free exchange is intrinsically evil. Any extension will merely extend the evil. From the radical right, we are told that free exchange is ignoble compared with the glories of rank and war. But the radical left and right, and also the middle complaining about “consumerism,” are mistaken. The evidence is that economic liberty does not corrupt us, but rather makes us rather virtuous as well as very rich. It enriches in both senses, material and spiritual.For one thing, mutually advantageous exchange is not the worst ethical school. It is better than the violent pride of aristocrats or the violent insolence of bureaucrats. And in economic liberalism, the human desire to excel is provided millions of honorable paths, from model railway building to show business, as against in illiberal societies the narrow path to eminence at the court or politburo or army. We do not lose our souls in commerce, but cultivate them. The military, admired nowadays even in liberal societies, is commended daily for its “service.” But every economic act among consenting adults is service. The ethical habits of commerce are expressed daily in the way an American shopkeeper greets his customer: “How can I help you?”

The upshot? The concert halls and museums of well-to-do countries are full, the universities are flourishing, and the seeking of the transcendent, if not in the established churches, is expanding. One cannot attend much to the transcendent of art or science or baseball or family or God when bent over in a paddy field from dawn to dusk.

Protection of existing jobs has created worldwide a massive and politically explosive unemployment of youths.

The best way to make people bad and poor is the illiberality of communism and fascism, and even the slow if sweet socialism of over-regulation. Women among the theocratic despots of Saudi Arabia are quartered at home, unable to flourish so much as driving an automobile. The economic nationalism of the new Alt-Right is impoverishing, and anyway closes us to ideas from the wide world. If betterment is slowing in the United States—a widely held if doubtful claim—we need the betterment coming from newly enriching countries such as China or India, not cutting ourselves off to “protect jobs” at home. Protectionist logic would have us make everything in Illinois or Chicago or our local street. Breakfast cereal. Accordions. Computers. It is childishly silly as economics, though stirring as nationalism.At the heart of communism and fascism, and the regulating impulse from the middle of the spectrum of governmental compulsion, is massively messing with other people’s stuff. In the United States, over one thousand occupations require licenses from the government. Opening a new hospital requires the existing hospitals to grant a certificate of need. In Tennessee, if you wish to open a new furniture moving company—two men and a truck—you are required by law to ask permission of the existing moving companies. Protection of existing jobs has created worldwide a massive and politically explosive unemployment of youths. One-quarter of French people under 25 and out of schooling are unemployed. It’s worse in South Africa.

Yet true and humane liberals are not anarchists (Greek an-archos, no ruler). One can admit that it can be good to abridge economic liberty a little to the extent of taxing the well-to-do to give a hand up to the poor, such as publicly financed education. No serious argument there—Smith and Mill and even Thoreau agreed. (True, big government routinely gives also a hand up to the rich and powerful, such as protections for farmers in the U.S. and the Common Market. Big governments follow the nasty version of the Golden Rule, namely, those who have the gold, rule.) And one can admit that if the Canadians invade the United States, economic liberty might usefully be abridged for the duration, if prudent for defense. No argument there, either. (Yet big governments routinely break the peace for glorious conquests. Fear those Canadians.)

Better keep the government leashed.

The solution, liberals believe, is to restrict the power of government, even when the government is popular. Fascism often and communism sometimes, unhappily, are popular. Moderate versions of both, in nationalism and socialism, are very popular, until they go wrong. People favor for the nonce the alleged glory of governmental aggressions against foreigners (see Europe in August 1914) and the alleged free lunches of governmental control of the economy (see Venezuela in August 2017).Better keep the government leashed. Of the 190 or so governments in the world ranked in honesty from New Zealand at the top to North Korea at the bottom one might generously take the top 30 as adequately honest for the task. Spain is the marginal case. Britain and the United States qualify. Italy, ranked 75th, just above Vietnam, does not. But the top 30 moderately honest governments serve merely 13 percent of the world’s population. That is to say, 87 percent of the world is governed corruptly and incompetently, by a relaxed standard of goodness. The calculation shows why the optimism among amiable people on the left and among not so amiable people on the right about extending the illiberal powers of government is naïve. Thoreau wrote, in true liberal style, “I heartily accept the motto,—‘That government is best which governs least,’ and I should like to see it acted up to more rapidly and systematically.”

Yes, with a few modest exceptions.

This essay will appear in a volume for the Renew Democracy Initiative. 

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Poverty Breeds Nigeria’s Next ‘Boko Haram Mother

By Mercy Abang

“Over 134 suicide bombings have occurred since 2009 when Boko Haram unleashed a campaign of terror on Nigeria’s northeast region. According to research by Combating Terrorism Center at West Point and Yale University, at least 244 of the 338 attacks since 2011 where gender is identifiable, have been young girls under the age of 7 – 13.

And the trend does not seem to be ending soon.  On August 6th, 2017, the Nigerian Army issued a statement appealing to religious and traditional leaders in communities within the region to help dissuade people from donating their daughters or female wards, to the terrorists for indoctrination and suicide bombing missions.

It came off as one of the many announcements made to the media that the public has become numb to over time because of the series of unabated killings by Boko Haram.

Beyond the surface however, it reflected the disturbing state of situation in Northern Nigeria and Nigerians moved on like everyday tales in recent years since the beginning of insurgency. “The statement became expedient in view of recent revelations by some intercepted female suicide bombers during interrogations”, the military wrote.

37-year old Hadiza is a mother to three girls and a missing boy; she loves her children but is willing to offer her teenage daughter to the insurgents for the monetary benefit.

“I can’t say NO to the insurgents, can you?” she asks, speaking in Hausa with the help of a local interpreter who doubled as a fixer. “What has government done for us since we’ve been displaced?”

Hadiza is a nervous wreck, uncoordinated for most of the interview.  Hadiza and her husband were displaced after the deadly attacks on Biu in July 2015 that left 78 persons killed including the insurgents.

Hadiza’s home was raided along with other residents but they hid themselves in the bush as the terrorists looted and torched houses, carting away food produce. That attack forced them out of their home and they walked kilometres from home and slept in the bush for more than six nights to avoid being killed – that journey led them to finally move and settle in Maiduguri.

Boko Haram has killed more than 20,000 people and forced some 2.7 million others including her family to flee their homes since 2009.

Like every other woman in the neighbourhood, she has been through trauma and is a victim of the crisis that has forced her out of her home.   She lights a smoke while seated in the wooden chair shaking her legs constantly and can easily be mistaken for a crackhead.

“I have lost everything, I can’t feed these kids – we hear accounts of stolen foods and items sent to those of us suffering but who are those taking it back? The wealthy”.  Aisha sobs.

“And you think Boko Haram will come here (pointing to the other lady by her side) and any one of us will say NO”?

As disturbing as her accounts may sound, the remarks by Aisha are not so much in contrast to the statement issued by Brigadier General, Sani Kukasheka Usman- Director Army Public Relations.

The military described the motive for some parents donating children to Boko Haram as barbaric and unacceptable, but not for Hadiza. Cases abound like hers, where the insurgents paid off the parents in exchange for their daughters and in less diplomatic situations, threatened with death. At every point of questioning Hadiza, she kept asking who is protecting them from the insurgents?

“It was discovered that most of these hapless minors were “donated” to the terrorists sect by their heartless and misguided parents and guardians, as part of their contribution to the perpetuation of the Boko Haram terrorists’ dastardly acts against the Nigerian society and humanity” – The army statement read.

It appealed to Nigerians to have a responsibility and obligation to “collectively mold our children and wards and define a better future for them rather than condemning them to death by the criminal Boko Haram terrorists and their sympathizers through suicide bombings”.

For Hadiza , the conversation isn’t much about a home, care, or future, it is about the perils of living in the present “It is a war zone here, you survive”, she tears up.

The story of Hadiza can be likened to most of the families in the community, with no breadwinner; she begs to survive along with her kids and refused to move to the IDP camp miles away. She says “staying out here means I can eat whenever I want to but in there you eat once in a day and you’re not sure when the food will be served”

“The place is chaotic” she added.

According to her, she was a one time Biu resident before moving to Maiduguri. Hadiza said her family narrowly escaped the night the insurgents raided their community sometime in 2015 –“they burnt all the houses and left with our farm produce”.  Speaking through an interpreter, Hadiza recounts, as she shrugs, in attempts to put up resistance ignoring the stare from her husband who looks on from the window of the crudely built shack where they reside.

Hadiza’s husband didn’t want her to grant this interview for fear of getting killed in the process, but she insisted.

Hadiza  and her husband were farmers back in Biu – the farm provided not only subsistence but also a little cash crop – now too scared to continue. She said the idea to begin a small farm to survive has again been suspended as a result of the resurgence of terrorist’s activities.

Poverty and Inequality have been blamed for most of the Boko Haram crisis in the Northeast and Hadiza, also a victim of the insurgency suffers same fate of poverty – willing to trade her child for same reasons.

Earlier in the year, the Borno State government warned of the massive baby boom factory in Gwande area of the state – women selling babies for money to survive.

Oxfam, in its 2017 latest report entitled, “Inequality in Nigeria, Exploring the Drivers,” presented an alarming picture of the Nigerian economic situation, stating that 112 million Nigerians are living in abject poverty.

Presenting a picture of extreme inequality in Nigeria, Oxfam argued that the combined wealth of the five richest Nigerians, put at about $29.9 billion, could end extreme poverty in the country. According to the report, economic inequality was a key factor behind the conflict that had led to the severe food crisis in Nigeria’s North East states, especially as the UN estimates that about five million people in North East Nigeria will suffer from severe food shortages this year.

Analysts have suggested varied reasons for the Boko Haram crisis but poverty and inequality remain the prevalent factor. In Northern Nigeria for instance, unemployment and underemployment is still at the highest levels as compared to Southern Nigeria. According to UNICEF report released in year 2015, Nigeria accounts for 10.5 million out of school children, of which the North alone is responsible for 8 million of that number.  For instance, the former Central Bank of Nigeria Governor, Sanusi Lamido Sanusi, blamed the rise of Boko Haram partly on the way revenues from the nation’s Federation account are shared. Sanusi, now an Emir in Kano, argued that the sharing is done in such a manner that disadvantaged the North.

He maintained “there is clearly a direct link between the very uneven nature of distribution of resources and the rising level of violence”.

On 2nd August 2016 there was a crack in Boko Haram that led to two factions between Abubakar Shekau and Abu Musab al-Barnawi.

Security analysts believe that al-Barnawi is the son of Boko Haram’s original founder, Mohammed Yusuf, and was previously the spokesman of Boko Haram under Shekau. He is said to have been responsible for most of the deadly attacks currently being carried out by the sect and the abduction and killings of oil workers and some lecturers from the University of Maiduguri.

“Al-Barnawi has the capacity to carry out attacks on a larger scale” according to an Abuja based security expert who doesn’t want his name mentioned in this report.

The resurgence of the terrorist activities forced 70 lecturers teaching at the University of Maiduguri to resign and also forced then Acting-President Yemi Osinbajo, to order military chiefs to move to Borno, in a bid to “scale up their efforts”.

Though the Nigerian Army is offering a reward of the sum of Five Hundred Thousand Naira  (N500,000.00) to anybody who provides information about suicide bombers. Young girls are allegedly still being used in carrying out deadly attacks in the troubled Northeast region.

This article was written as part of the 2017 BudgIT Media Fellowship.

 

Mercy Abang is a Freelance Journalist, focusing on development Journalism – She doubles as a media fixer with Sunday Times of London, BBC, Aljazeera and a former Stringer with the Associated Press – She tweets at @abangmercy.. She is the 2017 United Nations Journalism Fellow and budgIT Media fellow for 2017  

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No thanks to Ghana, Ivory Coast is at risk of losing fifth of next coca harvest to smuggling

Ivory Coast’s cocoa regulator forecast the nation may lose a fifth of its cocoa crop to smuggling during the next harvest if neighboring Ghana refuses to cut payments to farmers after international prices fell, according to a person familiar with the matter. 

The prediction by Le Conseil du Cafe-Cacao comes after the world’s biggest cocoa producer cut farmers’ pay by 36 percent to the equivalent of about 700,000 CFA francs ($1,251) per metric ton in April to cope with global prices that dropped more than a third in a year on expectations of oversupply. Ghana, the second-biggest grower, has kept farmer payments at the equivalent of 7,600 cedis ($1,708) per ton since October and has ruled out any cuts for the main harvest that starts next month. Cocoa is harvested twice a year in West Africa.

The Ivorian regulator expects losses of as much as 400,000 tons of cocoa next season, said the person, who asked not to be identified because he’s not authorized to speak publicly about the matter. One of the nation’s biggest exporters has a similar forecast, according to a separate person familiar with the matter.

Ivory Coast President Alassane Ouattara conveyed his concern about the pay discrepancy to his Ghanaian counterpart, Nana Akufo-Addo, according to two other people familiar with the matter. The two countries agreed in May to cooperate on plans to counter volatile prices and officials of their regulators were locked in talks about the partnership at a meeting on Wednesday and Thursday in Ghana’s capital, Accra. Read the full story here.

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