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Education

Africa Grapples With Huge Disparities in Education

May 20, 2018 ALOD Policy Blog

By Zipporah Musau

At the dawn of independence, incoming African leaders were quick to prioritize education on their development agendas. Attaining universal primary education, they maintained, would help post-independence Africa lift itself out of abject poverty.

As governments began to build schools and post teachers even to the farthest corners of the continent, with help from religious organizations and other partners, children began to fill the classrooms and basic education was under way.

Africa’s current primary school enrollment rate is above 80% on average, with the continent recording some of the biggest increases in elementary school enrollment globally in the last few decades, according to the United Nations Educational, Scientific and Cultural Organization (UNESCO), which is tasked with coordinating international cooperation in education, science, culture and communication. More children in Africa are going to school than ever before.

Yet despite the successes in primary school enrollment, inequalities and inefficiencies remain in this critical sector.

According to the African Union (AU), the recent expansion in enrollments “masks huge disparities and system dysfunctionalities and inefficiencies” in education sub-sectors such as pre-primary, technical, vocational and informal education, which are severely underdeveloped.

It is widely accepted that most of Africa’s education and training programs suffer from low-quality teaching and learning, as well as inequalities and exclusion at all levels. Even with a substantial increase in the number of children with access to basic education, a large number still remain out of school.

A newly released report by the United Nations Development Programme (UNDP), “Income Inequality Trends in sub-Saharan Africa: Divergence, Determinants and Consequences”, identifies the unequal distribution of essential facilities, such as schools, as one the drivers of wide income disparities.

Ayodele Odusola, the lead editor of the report and UNDP’s chief economist, makes the following point: “Quality education is key to social mobility and can thus help reduce poverty, although it may not necessarily reduce [income] inequality.”

To address education inequality, he says, governments must invest heavily in child and youth development through appropriate education and health policies and programmes.

Higher-quality education, he says, improves the distribution of skilled workers, and state authorities can use this increased supply to build a fairer society in which all people, rich or poor, have equal opportunities. As it is now, only the elites benefit from quality education.

“Wealthy leaders in Africa send their children to study in the best universities abroad, such as Harvard. After studies, they come back to rule their countries, while those from poor families who went to public schools would be lucky to get a job even in the public sector,” notes Odusola.

Another challenge facing policy makers and pedagogues is low secondary and tertiary enrollment. Angela Lusigi, one of the authors of the UNDP report, says that while Africa has made significant advances in closing the gap in primary-level enrollments, both secondary and tertiary enrollments lag behind.

Only four out of every 100 children in Africa is expected to enter a graduate and postgraduate institution, compared to 36 out of 100 in Latin America and 14 out of 100 in South and West Asia.

“In fact, only 30 to 50% of secondary-school-aged children are attending school, while only 7 to 23% of tertiary-school-aged youth are enrolled. This varies by sub-region, with the lowest levels being in Central and Eastern Africa and the highest enrolment levels in Southern and North Africa,” Lusigi, who is also the strategic advisor for UNDP Africa, told Africa Renewal.

According to Lusigi, many factors account for the low transition from primary to secondary and tertiary education. The first is limited household incomes, which limit children’s access to education. A lack of government investment to create equal access to education also plays a part.

“The big push that led to much higher primary enrollment in Africa was subsidized schooling financed by both public resources and development assistance,” she said. “This has not yet transitioned to providing free access to secondary- and tertiary-level education.”

Another barrier to advancing from primary to secondary education is the inability of national institutions in Africa to ensure equity across geographical and gender boundaries. Disabled children are particularly disadvantaged.

“Often in Africa, decisions to educate children are made within the context of discriminatory social institutions and cultural norms that may prevent young girls or boys from attending school,” says Lusigi.

Regarding gender equality in education, large gaps exist in access, learning achievement and advanced studies, most often at the expense of girls, although in some regions boys may be the ones at a disadvantage.

UNESCO’s Institute for Statistics reports that more girls than boys remain out of school in sub-Saharan Africa, where a girl can expect to receive only about nine years of schooling while boys can expect 10 years (including some time spent repeating classes).

More girls than boys drop out of school before completing secondary or tertiary education in Africa. Globally, women account for two-thirds of the 750 million adults without basic literacy skills.

Then there is the additional challenge of Africa’s poorly resourced education systems, the difficulties ranging from the lack of basic school infrastructure to poor-quality instruction. According to the Learning Barometer of the Brookings Institution, a US-based think tank, up to 50% of the students in some countries are not learning effectively.

Results from regional assessments by the UN indicate “poor learning outcomes in sub-Saharan Africa, despite upward trend in average learning achievements.” Many children who are currently in school will not learn enough to acquire the basic skills needed to lead successful and productive lives. Some will leave school without a basic grasp of reading and mathematics.

Overcoming

The drivers of inequality in education are many and complex, yet the response to these challenges revolves around simple and sound policies for inclusive growth, the eradication of poverty and exclusion, increased investment in education and human development, and good governance to ensure a fairer distribution of assets.

With an estimated 364 million Africans between the ages of 15 and 35, the continent has the world’s youngest population, which offers an immense opportunity for investing in the next generation of African leaders and entrepreneurs. Countries can start to build and upgrade education facilities and provide safe, non-violent, inclusive and effective learning environments for all.

The AU, keeping in mind that the continent’s population will double in the next 25 years, is seeking through its Continental Education Strategy for Africa 2016–2025 to expand access not just to quality education, but also to education that is relevant to the needs of the continent.

The AU Commission deputy chairperson, Thomas Kwesi Quartey, says governments must address the need for good education and appropriate skills training to stem rising unemployment.

Institutions of higher learning in Africa, he says, need to review and diversify their systems of education and expand the level of skills to make themselves relevant to the demands of the labour market.

“Our institutions are churning out thousands of graduates each year, but these graduates cannot find jobs because the education systems are traditionally focused on preparing graduates for white-collar jobs, with little regard to the demands of the private sector, for innovation or entrepreneurship,” said Quartey during the opening of the European Union–Africa Business Forum in Brussels, Belgium, in June 2017.

He noted that if African youths are not adequately prepared for the job market, “Growth in technical fields that support industrialization, manufacturing and development in the value chains will remain stunted.” Inequality’s inclusion among the Sustainable Development Goals (SDG 10: Reduced Inequalities) serves as an important reminder to leaders in Africa to take the issue seriously.

For a start, access to early childhood development programmes, especially for children from disadvantaged backgrounds, can help reduce inequality by ensuring that all children begin formal schooling with strong foundations.

The UNDP, through its new strategic plan (for 2018 through 2021), will work to deliver development solutions for diverse contexts and a range of development priorities, including poverty eradication, jobs and livelihoods, governance and institutional capacity and disaster preparedness and management.

*Africa Renewal is published by the UN’s Department of Public Information (DPI)

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Adam Smith’s Concept of Justice

October 14, 2017 ALOD Policy Blog, Philosophy

by Dr. Vernon Smith

One of the best-known quotations from Adam Smith’s The Wealth of Nations (1776) defines natural liberty: “Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man.”

Smith inserted the condition “so long as he does not violate the laws of justice” ahead of the directive because it was central to his conception of liberty. What everyone remembers is “free to pursue his own interest,” with the last often turned into “self-interest.” But Smith’s conception of human sociality and economy—I like the word “humanomics”—was far deeper than modern utilitarianism.

Justice is the infinite set of permissible actions remaining after specifying the finite limited set of prohibited actions and corresponding penalties.

What did Smith mean by justice, and why is it so important for understanding his message? The carefully articulated answer was in his first book: The Theory of Moral Sentiments (1759, pp. 78-91).Justice for Smith was the negative of his proposition on injustice, which stated that improperly motivated (that is, intentionally) hurtful actions alone deserve punishment because they are the objects of a widely shared sense of resentment.

Rules that punished in proportion to resentment emerged naturally in pre-civil society as a means of defense only against real positive evil and to secure innocence and safeguard justice.

Hence, justice is a residual. Justice is the infinite set of permissible actions remaining after specifying the finite limited set of prohibited actions and corresponding penalties.

Imagine a large playing field in which people explore, discover, and innovate, but with well-defined foul boundaries that people are not to breach without penalty; these boundaries will change, based on consent, with experience, culture, and technology.

Smith saw society as seeking human socio-economic betterment through the control of actions that our common experience leads us to judge as hurtful rather than through collective actions designed to achieve future conjectured benefits. The latter is uncertain and fraught with unintended consequences; moreover, history is littered with examples of grandiose failures. The former relies on natural impulses for individuals and assemblies to pursue betterment, risking only their own resources; this framework led him to oppose slavery, colonialism, empire, mercantilism, and taxation without representation at a time when such views were unpopular.

His policy views derive from his belief that every person’s socio-economic achievements should depend as much as possible on merit and as little as possible on privilege.

Reprinted from the Independent Institute

Dr. Vernon Smith
Dr. Vernon Smith, Professor of Economics and Law at George Mason University, earned an economics Ph.D. at Harvard in 1955. In 2002. Dr. Smith was awarded the Nobel Prize in Economics for laying “the foundation for the field of experimental economics.” 
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The Core of Liberty Is Economic Liberty

September 12, 2017 ALOD Policy Blog

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. 

Republished from FEE.org

Deirdre N. McCloskey

Deirdre Nansen McCloskey taught at the University of Illinois at Chicago from 2000 to 2015 in economics, history, English, and communication. A well-known economist and historian and rhetorician, she has written 17 books and around 400 scholarly pieces on topics ranging from technical economics and statistical theory to transgender advocacy and the ethics of the bourgeois virtues. Her latest book, out in January 2016 from the University of Chicago Press—Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World—argues for an “ideational” explanation for the Great Enrichment 1800 to the present. 

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Nigeria Needs More Entrepreneurship And Government Has A Role

August 30, 2017 ALOD Policy Blog

By Gbadegesin Tosin 

Entrepreneurship is an important factor in the development of any nation. Entrepreneurs are responsible for taking calculated risks that open up doors to progressively higher levels of economic growth. If it were not for them, the world would never have known such marvels as the wheel, electricity or the Internet, to name just a few.

Entrepreneurs are the veritable backbone on which the world and modern ideas continue to develop. The magnitude and reach of their contributions, however, extend much beyond the world of business and economy, and to them goes irrefutable credit for the growth and evolution of societies at large. Developed nations across the world owe their current prosperity to the collective effort of intrepid entrepreneurs, on whose innovation also rests the future prosperity of much of the developing world.

The role of government in entrepreneurship development in Nigeria became significant after the Nigeria civil war (1967-70). Since then, there has been increased commitment of government to entrepreneurship development especially after the introduction of the Structural Adjustment (economic) Program (SAP) in 1986 and establishment of agencies such as National Directorate of Employment (NDE), National Open Apprenticeship Scheme (NOAS), Small and Medium Enterprise Development Association of Nigeria (SMEDAN) etc.

In early 2000s, entrepreneurship studies were introduced into the Nigerian educational system, especially at higher institutions as a mandatory course. The Centre for Entrepreneurship Development (CED), which has the objective of teaching and motivating students of higher institutions (especially in science, engineering and technological (SET)) to acquire entrepreneurial, innovative, and management skills, was established. This was done to make Nigerian graduates self-employed, create job opportunities for others and generates wealth in the process.

The scope of financial freedom and flexibility that entrepreneurialism allows is a means to simultaneous individual and national prosperity. If this holds true for economies around the world, it has especially. Traditional Nigerian entrepreneurship began in a climate of economic stagnation and as a purely survivalist endeavor. Dismal human development indices, unemployment and infrastructure deficits resulted in the evolution of a massive informal economy that depended almost exclusively on personal initiative and hazardous risk-taking capacity.

The return of democracy in 1999 ushered in a period of economic reforms and a renewed focus on enterprise development as viable means to sustainable growth. Nigerian leaders initiated a massive program of disinvestment and financial deregulation aimed at boosting business development across the Micro, Small and Medium Enterprise (MSME) space.

One of the principal problems is the fact that Nigeria is not perceived as a promising business destination. The high cost of doing business, corruption and systemic flaws in the country’s economic policies have cumulatively succeeded in keeping off potential investors. Massive infrastructural deficits, particularly with regards to roads and electricity, are further turn-offs. The most significant aspect of the problem, however, is Nigeria’s nascent and shaky polity, constantly under threat from civil intolerance and rising religious extremism.

Social problems, growing out of deplorable human development indicators in the absence of inclusive growth, form the second significant obstacle for Nigeria in utilizing the benefit entrepreneurship brings. The status of women and their traditionally limited involvement in entrepreneurial activities is a significant drawback from the perspective of rapid social and economic growth. The issue is further compounded by a catastrophic divide in the condition of rural and urban populations. People exposed to entrepreneurship frequently express that they have more opportunity to exercise creative freedoms, higher self-esteem, and an overall greater sense of control over their own lives.

Entrepreneurship promotes liberty and increase economic growth by:

  1. Producing and distributing goods and services to satisfy certain public needs. To fulfill this task, businesses developed flexibility and constantly researched on consumer demands.
  2. Creating job opportunities; More than that, most jobs created are productive jobs.
  3. Providing income sources: income that business provides is by no means restricted to the profit its owners get. It pays salaries and wages to its employees, and this way, makes the whole business world go round: they spend the money they earn buying all kinds of goods and favour further development of business ventures.
  4. Contributing to national well-being: by means of taxes businesses pay to government (though, grudgingly as its management is hardly ever justified), it is possible for the government to maintain all kinds of public and social institutions and services;
  5. Helping to enlighten and educate people, thereby encouraging their further personal growth.

Entrepreneurship is the foundation of any developed nation. For Nigeria to reap the full benefits of a dynamic and evolving economy however require the overcoming of entrenched social, financial and political hurdles. The government must increasingly work to improve the ease of doing business by developing and implementing more pro-market policies and making the entire business environment more attractive to investors. Also, improvements and reforms in education and international participation are crucial for Nigeria to shake off its third world heritage and achieve the full breadth of its economic potential.

 

Republished from AfricanLiberty.org

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Twelve Economic Concepts Everyone Should Know

August 28, 2017 ALOD Policy Blog

By Richard N. Lorenc


When I tell people that I work at the Foundation for Economic Education, they sometimes ask: “What economic ideas should people understand?”

We at FEE have thought about this quite a lot for our articles, courses, seminars, and videos. We have distilled “economic thinking” into 12 key concepts. The following list has guided us internally for a few years, and I figure it’s now time to share it with the world.

1. Gains from trade: In any economic exchange, freely chosen, both parties benefit–at least in their own minds.

2. Subjective value: The value of any good or service is determined by the individual human mind.

3. Opportunity cost: Nothing is free, and the cost of anything is what you give up to get it.

4. Spontaneous order: Society emerges not from top-down intention or planning but from individuals’ actions that result in unplanned outcomes for the whole.

5. Incentives: Individuals act to maximize their own reward.

6. Comparative advantage: Cooperation between individuals creates value when a seller can produce a given item or service at a lower cost than the buyer would spend to produce it himself.

7. Knowledge problem: No one person or group knows enough to plan (and force) social outcomes, because information necessary for social order is distributed among its members and revealed only in human choice.

8. Seen and Unseen: In addition to the tangible and quantifiable effects, there are quite often invisible costs and unmet opportunities to any action or policy.

9. Rules matter: Institutions influence the decisions individuals make. For example, property rights extend from the reality of scarcity which demands that ownership must be vested in individuals and not a collective.

10. Action is purposeful: Each person makes choices with the intention of improving his or her condition.

11. Civil society: Voluntary association permits people of all backgrounds to interact peaceably, create value, cultivate personal character, and build mutual trust.

12. Entrepreneurship: Acting on an opportunity to gather underused, misused, or undiscovered resources and ideas to create value for others.

You might think about all the ways and places these principles appear–as you shop, socialize, and plan your future. As we like to say, economics is everywhere!

Republished from FEE.org

Richard N. Lorenc

Richard N. Lorenc is the Chief Operating Officer of FEE and serves as managing director of FEE’s Youth Education & Audience Research (“YEAR”) project to develop and promote new content and distribution techniques for free-market ideas.

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Money Is the Real Social Contract

August 26, 2017 ALOD Policy Blog, Philosophy

By Baudoin Collard

Despite major inconsistencies, the social contract theory remains one of the most prominent founding myths of our societies. Is it possible to revisit this dogma to correct its deficiencies?

The social contract theory finds its origins during the Enlightenment era in the 18th century. In the context of challenging royal institutions, philosophers like Rousseau and Hobbes sought to answer the following questions: How are societies born? Why do humans decide to live together? Where do governments derive their legitimacy?

According to Rousseau, an implicit contract binds men together to form a society. Through this contract, men relinquish some of their freedom to the state. In return, the state provides justice and security. This way, the general welfare is protected from special interests through the legislature, elected by the people.

The social contract theory has had a major influence on Western philosophy. As attractive as it is, the theory suffers from fundamental flaws.

First, no one has ever signed such a contract. One can argue that elections represent a tacit renewal of the contract. But in this case, abstention should be considered. And what about countries like Belgium where voting is compulsory?

Second, history teaches us that human societies emerged well before the institutions that govern them. It is the society that begets the institutions and not the reverse. Moreover,  these institutions have been set up in bloody wars and revolutions.

Lastly, according to Rousseau, since the parliament represents the people, the minority must accept any decisions taken by the majority in the name of a nebulous “general interest.” In the 19th century, Alexis de Tocqueville had already mentioned the risk associated with this belief. Such a system drifts into a tyranny of the majority.

If we looked closer, we would see an institution inseparable from the human society that could perfectly fulfill this role of the social contract: money.

Is Money a Social Contract?

Money is proper to man. Historically, no society could develop without the support of some form of money. Conversely, the concept of money is meaningless when taken out of its social context. It is from its acceptance by users that money derives its legitimacy and value. Men voluntarily adopt money because they benefit from it.

By facilitating exchanges, money allows specialization — the source of new technological developments. As a store of value, it allows users to save, which is the source of investment and protection against the hazards of life. Investment and technological progress both generate growth. This is the fundamental reason why men unite: in order to draw greater benefit from each other’s labor.

Currency Manipulation

If money is the cement that binds society together, what happens when this cement disintegrates? The German hyperinflationbetween 1921 and 1924 is certainly one of the most tragic examples of monetary collapse, but it is far from an isolated case.

Given its critical role, it may be tempting for a minority to manipulate the currency to its advantage. If the phenomenon is not new, it has also become more complex over time.

An early example occurred with the use of minted coins.

Originally, coins ensured the weight and quality of the currency. But gradually, the right to mint coins has become a state monopoly. This has allowed governments to control currency and extract a rent (seigniorage and sometimes debasement).

The invention of the banknote was a major technological evolution. Originally introduced to facilitate increased trade, banknotes have gradually become a monopoly of the power in place. As a striking example, Napoleon Bonaparte gave the monopoly of printing bank notes to the Bank of France, of which he was a major shareholder.

The creation of central banks is the logical continuation of the state’s growing influence over money. Under the pretext of stabilizing money issuance and protect depositors from banking crises, the creation of central banks actually greatly facilitated state indebtedness, war funding, and ultimately inflation.

Speaking of inflation, here is precisely what Keynes said about it:

By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some.”

From Social Contract to Social Control

But inflation is not the only stab to the social contract of money. From the moment the money is imposed by the government rather than freely chosen by citizens, it loses its legitimacy. Initially acting as a social contract, money in state hands becomes a tool of social control. It allows a minority to exploit their privileged position for profit and power.

The states impose the use of their currency in more or less subtle ways. In the most authoritarian countries like China, the currency is subject to strict controls.

Exchange rates are set by the government and capital movements are tightly monitored. In the so-called democratic countries, the currency is imposed through legislation and numerous regulations. For example, the official currency is the only one allowed for the payment of fines and taxes. Banking and insurance regulations require individuals to invest a proportion of assets in state bonds, to inform the government of all transactions above a certain amount, etc.

In terms of social control by the currency, governments can be very creative. One example is the introduction of price and wage controls. Another example is the introduction (and increasingly pervasive use) of the food stamp program.

A more pernicious threat now hangs over the money with the disappearance of cash so desired by our governments. The abandonment of cash threatens to increase our dependence on the banking system. It also increases the stranglehold of states over their citizenry by facilitating the establishment of taxation on savings accounts or even an outright confiscation of bank accounts, as was the case in Cyprus.

Freeing the Money

All monies do not fulfill their social contract equally. Among fiat currencies, large differences exist, depending on the objectives of central banks and economic policies. So if we compare the consumer price index (a proxy for inflation), we observe that the US Dollar has lost about 54 percent of its purchasing power over the last 30 years.

The Swiss Franc saw a decline in purchasing power when it was limited to 31 percent and then 14 percent for the Japanese Yen. At the same time, the currency’s purchasing power fell by more than 99 percent in Mexico, Turkey, and in many countries of the former Soviet Union.

Gold and precious metals enjoy a lasting credibility because these commodities are difficult to manipulate. Precious metals have also provided an effective hedge against inflation and other monetary turpitudes throughout history. Gold is still a reserve currency of choice for central banks.

Finally, a new form of currency has recently emerged: the cryptographic currencies among which Bitcoin is undoubtedly the most famous. Bitcoin appeared in 2009, at the height of the subprime crisis and bank bailouts by the taxpayers. If they have often aroused disbelief in their infancy, these cryptocurrencies now enjoy a combined capitalization largely exceeding $100 billion.

More fundamentally, cryptocurrencies are the perfect illustration of the competitive bidding of private currencies. This is similar to what was proposed by Friedrich Hayek in his book “The Denationalization of Money.” 

Since the use of these currencies is free, their value fluctuates according to the interest they generate and the resulting demand. Their course is closely linked to the services they can provide, as a means of payment, and their credibility, as a store of value. The proliferation of these cryptographic currencies is a full-scale laboratory experiment for the future of money.

Money Guarantees a Free Society

Money, even more so than democracy, embodies the essence of the social contract. Its legitimacy comes from its acceptance, freely chosen by all users. 

The fundamental role of money in exchange explains its catalytic action in the seeding of the development of human societies, long before the emergence of democratic institutions. Finally, currency manipulation inevitably causes the decline of a society,as democratic as it may be.

Nothing better sums up money that Ayn Rand’s quote:

“Money is the barometer of a society’s virtue.”

Money is a tremendous source of emancipation for the society. It promotes cooperation and peaceful exchanges between humans, no matter their views, gender, origin or preferences. It is the conductor that imperceptibly regulates the human action.

Conversely, anyone who aims to suppress money should be prepared to substitute it by a planned economy with cohorts of bureaucrats who impose by force. Anyone who denounces the dictatorship of money should recall that the worst tyrannies are those where citizens were deprived of their currency. And if money is regularly accused of being the root of all evil, it is all too often the victim of those who control it. Rather than blaming the money, let’s blame those who corrupt it.

Perfect currencies do not exist. As the brainchild of fallible humans, monies are bound to constantly face primal temptations. Failing to find such an illusory ideal, the freedom to choose currencies is the best guarantee of having sound money in a free society.

 

Republished from FEE.org

Baudoin Collard

Baudoin Collard is an active member of the Libertarian Party of Belgium (Parti Libertarien de Belgique). He holds a PhD in cryptography and is passionate about cryptocurrencies.

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ASUU, the Government and Tertiary Education in Nigeria: The Way Forward

August 19, 2017 ALOD Policy Blog

By Ashton Dagana

Since 1999, successive governments have at least two things in common; ASUU and strikes. ASUU strikes. The ASUU strikes always follow the same pattern; initial noise about a possible ASUU strike, a warning strike, government ignores ASUU all along, the public isn’t particularly interested, ASUU goes on long strike, everyone gets interested, government and ASUU meet over and again, agreements are signed, ASUU goes back to school, tick tock tick tock, repeat cycle.

As usual with most things Nigerian; no one really cares about a sustainable solution that ensures there is no repeat of a bad situation, attention is often paid to what Nigerians would call ‘patch-patch’ solutions. Each government deals with ASUU in a way that ensures ASUU returns to the classrooms, knowing fully well that the underlying problem of why ASUU goes on strike remains perpetually unresolved. Like debts and corruption cases, they pass on the ASUU burden to future governments. It is why over 18 years into our new democratic experience; our universities continue to face exactly the same challenges they faced in 1999. Poorly funded, absenteeism of lecturers, normalization of the handouts menace, strikes, dilapidated infrastructure and the inability to compete globally. This simply means that we are not going to fix our universities and the recurrent ASUU challenge with the same Band-Aid approach we used in the past. We need a far more sustainable solution. The challenges of our universities and indeed other tertiary institutions are not that these challenges exist; it is that these challenges more or less remain the same over decades. What we must now do is solve them and work out ways of meeting new challenges and not continue to sink under the weight of the same challenges decades on.

We should not be in this position where all the lecturers in virtually all the public universities can go on strike at the same time. None of the countries where the children of the rich and powerful go to school abroad have this model. Our leaders, including even some of the privileged lecturers have their children in schools everywhere but public schools where they are exposed to some of the menace already mentioned above. Like with most of the challenges Nigeria has had to deal with over the course of almost its entire Independent existence, the problem is centralization and control by the Federal Government. The current structure does not work and we already know that. What we probably aren’t so sure of is how to move forward.

The universities should be run by Trusts. Government should simply give grants. Trustees should include private sector big wigs and people that can help raise money and endowments for the University. They will also check fraud by the VCs, which is very rampant. At the moment, at least six former or current Vice Chancellors are under investigation by the Economic and Financial Crimes Commission, EFCC. There are verifiable rumblings for the arrest of some others. Some of them have even been charged. This piece is not about the obvious so I will not be elaborating on that but I should add that University administration has since been taken by the general Nigerian malaise; corruption. The Trust sets the terms and conditions for employment. That way, each lecturer is an employee of the trust, not directly of the Federal Government. For instance, if UNILAG lecturers choose to strike against their Trust, the strike will only affect UNILAG. This is the same problem we have with Health and why doctors constantly go on strikes. These problems have become permanent simply because we choose the same Band-Aid solutions that are not sustainable and far reaching over much more sustainable and effective ones.

The FGN appoints people as Ministers of Labour or portfolios of the type and automatically assumes that they were born as skilled negotiators. No negotiation skills. No training. Two things then happen. First, each strike is an opportunity for the Labour Minister or the cronies to make money. In the past, huge sums were ferried at night to Labour leaders to persuade them to call off strikes. The Minister, of course, got a huge cut and it was in his interest to collude with the unions to hold out for more money, while publicly “appealing to them to go back to work.” Secondly, the glory for him was that he had successfully ended the strike. He would therefore sign anything, knowing fully well that government could not afford it. In his mind, ‘the next Minister can worry about that.’ This, just so he can say, “when I was Minister, I ended the strike.” This is all that matters to them in a country where the interests of personalities continually trump the collective interest. Today, they agree with ASUU. Tomorrow, Non-Academic Staff of Universities will claim that you can’t give ASUU alone and so they go on strike too. The Minister will sign another agreement with them. ASUU will get angry again and the cycle continues. The exact same thing we do with Doctors of NMA and Health Workers under JOHESU. It’s a sad expensive joke, really.

While one is sympathetic to the claim that agreements should be honoured, the quantum of ASUU’s claim is put at about N1.2 Trillion. In 2009 when this was agreed, this was about 25% of the Budget. Someone was illogical enough to sign this on behalf of government. To move forward, there may be a need to overhaul the system altogether. This reset of the system could even cost an entire academic year but if it fixes this particular problem permanently, it would be a very useful sacrifice to make for the sake of the future. Since 1999, ASUU has embarked on some 12-strike actions that lasted about over years cumulatively.

ASUU through the individual universities establish university staff schools without consultation with government. There is apparently an agreement with the government on funding the staff primary schools and secondary schools. Government had in the past agreed to fund the primary schools 100% and part-fund the secondary schools. Then the universities open the schools up to outsiders and charge handsome fees. They pocket those fees and don’t remit a kobo to the FGN. The schools want government to pay the teachers that they – the schools – recruited. They want government to maintain the schools while they pocket the fees they charge. This, according to available reports is part of their reasons for striking. I wonder, did a government official sign these agreements without making it clear these schools were to serve the children of the staff of the schools or make it clear government funding would not cover for discretion taken by the schools outside of the agreement?

ASUU has organised resistance to IPPIS, the government biometric payroll system that has already helped to weed out thousands of ghost workers in several ministries, this so that they can continue to create ghost workers. There is an estimate from a reliable source at IPPIS that some 30% of the people ASUU is striking for are ghost workers. Part of government’s negotiations should therefore be to do biometric capture so that they know who they are paying. The situation is the same with hospitals. They refuse to go on IPPIS, recruit illegally and create ghosts. That way, the salaries government sends are spread to half pay for all and government is then accused of owing salaries when it has paid everybody it gave approval to be recruited in full. Government gets to be used and treated like an entity whose failings mean nothing, when in reality the people are the government.

Government needs to cut a deal with ASUU but must think sustainability when going to the table. A recent news report has the current Education minister Adamu Adamu saying the ASUU strike will be over in a matter of days. This simply means that we are about to wash and rinse the same dirt from the previous playbook. This means that in the very near future, another government, if not this one even, will have to call ASUU back to the table again, when they embark on yet another strike. The government must go all out to overhaul this system once and for all by divesting and relinquishing control and ending this centralization that favours everyone else but the very people the universities were set up for, the students.

Ashton Dagana, a Quantity Surveyor writes from Port Harcourt. (ashtongana@gmail.com)

Republished from AfricanLiberty.org

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Why is the number of poor people in Africa increasing when Africa’s economies are growing?

August 4, 2017 ALOD Policy Blog

By Laurence Chandy

2015 marks the 20th year since sub-Saharan Africa started on a path of faster economic growth. During that period, growth has averaged 5.2 percent per year. Meanwhile, the number of people on the continent reportedly living under $1.25 a day has continued to creep upwards from 358 million in 1996 to 415 million in 2011—the most recent year for which official estimates exist.

What can explain these divergent trends? 

The most obvious explanation would be if all the benefits of growth were captured by the rich, resulting in ever-increasing inequality within each country. But the data don’t show much evidence of that, thankfully. Distribution trends within African countries are a wash: The distribution is widening in about as many countries as it is narrowing. And in most countries the distribution isn’t changing much at all. It might be that the very richest people—the top 1 percent—are enjoying more than their share of the spoils of growth but that this is missing from the data, as this rarified class tends not to participate in household surveys from which distributions are derived. Yet, in the absence of supplementary data to back this theory up, such as the tax records used to measure top incomes in rich countries, this is mere speculation. Moreover, there is certainly evidence of rising average incomes for the people who do participate in surveys. 

Instead, there are five factors that can account for sub-Saharan Africa’s disappointing poverty numbers.

The first is the region’s rapid population growth of 2.6 percent a year. While African economies are generating more income, that income has to be shared among an ever-increasing number of people. Since the region’s income is growing faster than its population, average incomes are rising and the share of Africans living in extreme poverty is falling—from 60 percent in 1996 to 47 percent in 2011. But the rate at which poverty is falling is less than the rate at which the population is rising, so the number of people living in poverty continues to grow. More generally, sub-Saharan Africa’s record on economic growth looks much less impressive in per capita terms. The World Bank has just released a revised growth forecast for the region in 2015 of 4.0 percent. When you lop off 2.6 for population growth, you’re left with per capita income growth of only 1.4 percent. Compare that with the world average where projected economic growth of 2.9 percent combined with population growth of 1.1 percent results in per capita income growth of 1.8 percent in 2015. So, in per capita terms, Africa’s growth this year is expected to be below the global average.

The second factor is the depth of Africa’s poverty compared to poverty elsewhere. In other words, poor people in Africa start further behind the poverty line. So even if their income is growing, it is rarely enough to push them over the $1.25 threshold. In 2011, the average person living in extreme poverty in Africa lived on 74 cents a day, whereas for the rest of the developing world, it was 98 cents. I’ve written before about the implications of this trend for poverty reduction in Africa here.

The third factor is that even though inequality isn’t rising in most African countries, inequality is already at unusually high levels. Where initial inequality is high, it is to be expected that economic growth delivers less poverty reduction, since the absolute increases in income associated with rising average incomes will be that much smaller for the have-nots versus the haves. Moreover, the degree of inequality that exists on the continent is worse than it looks. The fact that Africa is divided into so many countries masks big differences in income between them. If Africa were a single country, its inequality would look much worse—worse even than Latin America. Since incomes across African people vary so widely, only a fraction of people are likely to cross the poverty line at any one time. That contrasts with India where a concentration of people immediately below the $1.25 mark means that even a small increase in incomes can result in a sudden flood of people moving above the poverty line.

The above three factors explain why you would expect relatively little poverty reduction for a given amount of growth in Africa compared to elsewhere (in technical terms, a lower poverty elasticity). But they can’t explain why the number of poor people in Africa has actually increased since the start of the century. For this we need the two final factors.

The fourth factor is that there is a degree of mismatch between where growth is occurring and where the poor are on the continent. To be sure, the region’s growth acceleration has benefited some of its poorest countries, including Ethiopia, Mozambique, and Rwanda. Yet others such as the Democratic Republic of the Congo and Madagascar have recorded little or no growth over the past 20 years, and the number of poor people in these countries has risen accordingly. So long as a handful of the region’s fragile states struggle to build and sustain economic momentum, the number of poor people in Africa need not fall. 

The fifth and final factor concerns data quality. Poverty estimates are drawn from household surveys which in most African countries are conducted infrequently. Those that do take place often suffer from operational glitches that affect the credibility of the results. Take Nigeria, which accounts for a quarter of the people on the continent living in poverty. There are some well-documented flaws with its most recent national survey of living standards (not to be confused with the issues concerning the country’s national accounts, which were recently rebased). When new data become available, be prepared to discover that Nigeria’s poverty rate is considerably lower and has been falling at a faster pace than previously thought. As a general rule, aggregate poverty numbers for Africa should be handled with care, and small increases or decreases should not be taken too seriously.

The dissonance between Africa’s growth performance and its poverty numbers is a striking phenomenon that demands an explanation. While intuition may lead us to call into question the region’s growth—it only benefits the rich, the quality of growth is deficient, the growth numbers are exaggerated—the above five factors suggest that the answer can instead be found by analyzing Africa’s poverty data more closely.  

 

Laurence Chandy is a former fellow in the Global Economy and Development program and the Development Assistance and Governance Initiative. His research focused on poverty, fragile states, aid effectiveness, and globalization.

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George Ayittey in TED: Dead Aid

August 4, 2017 ALOD Policy Blog, Philosophy

Culled from TED Blog

Economist George Ayittey gave a blistering talk at TEDGlobal 2007, laying out his case that not only has Western aid not helped in most African countries — it’s actually hurting.

We asked Ayittey for his thoughts on the new book Dead Aid, which has lately been burning up the talk shows and opinion columns with a message similar to Ayittey’s. Author Dambisa Moyo says that aid is killing the very countries it’s supposed to help. She singles out for criticism the celebrity crusades to “save Africa,” and the skewing view they present of African life.

(You can also download the unedited notes for this interview, including reading list, sources and more.)

Dambisa Moyo’s new book is drawing new attention to the question of aid in Africa, and her thesis is quite like yours, but aimed at a mass-market audience (as she said on Charlie Rose). Do you think it is risky to sensationalize the issue?

I don’t think Dambisa is sensationalizing the issue strong enough. Americans were justifiably outraged when AIG, which received billions in U.S. taxpayer money in bailouts, paid out hefty bonuses to its executives. So where is the outrage when African leaders, who receive U.S. taxpayers’ money in foreign aid, build palaces for themselves while their people wallow in abject poverty?

More important, the presumption that Africans don’t know what is good for them and that Americans or other foreigners know what is best for Africans is extremely offensive. If you want to help American farmers, you ask them what sort of help they need and whether such assistance is working. Why don’t Americans ask Africans what type of aid they need and whether the aid Americans have provided is working? So what is wrong with an African, Dambisa, telling Americans that the foreign aid they are providing isn’t working and it is “Dead Aid”?

It’s clear that Moyo’s thesis draws from your work. How would you respond to those who assert that her views and yours are idealistic and ideological?

Our critics have not been paying attention to the literature on foreign aid. Our views are neither idealistic nor ideological but rather factual. There are three types of foreign aid: humanitarian relief aid, given to victims of natural disasters such as earthquakes, cyclones and floods; military aid; and economic development assistance. We have no qualms with humanitarian aid, and I am sure our critics would agree that military aid to tyrannical regimes in Africa is the least desirable. Much confusion, however, surrounds the third, also known as official development assistance or ODA. Contrary to popular misconceptions, ODA is not “free.” It is essentially a “soft loan,” or loan granted on extremely generous or “concessionary” terms.

The consensus that emerged decades ago was that foreign aid had not been effective in reversing Africa’s economic decline. Dambisa and I are simply restating a fact. And it is not just Africa. That foreign aid has failed to accelerate economic development in the Third World generally was also accepted. In 1999, the United Nations declared that 70 countries — aid recipients all — are now poorer than they were in 1980. An incredible 43 were worse off than in 1970. “Chaos, slaughter, poverty and ruin stalked Third World states, irrespective of how much foreign assistance they received,” wrote the Washington Post, on Nov. 25, 1999. Except for Haiti, all of the 13 foreign aid failures cited — Somalia, Sierra Leone, Liberia, Angola, Chad, Burundi, Rwanda, Uganda, Zaire, Mozambique, Ethiopia and Sudan — were in Sub-Saharan Africa. The African countries that received the most aid — Somalia, Liberia and Zaire — slid into virtual anarchy.

Is there a fundamental place where you diverge from Moyo?

Though we are both on point regarding the failure of aid programs in Africa, we diverge in two respects.

First, Dambisa wants all aid to Africa stopped in five years, which won’t happen. Over the decades, various African civic groups and persons, including myself, have called for a cutoff of aid to Africa. In a report drafted during a five-day forum hosted by UNESCO in Paris in 1995, more than 500 African political and civic leaders urged donor nations to cut off funds to African dictatorships and called for free elections in such nations within two years. If the West could impose sanctions against Libya and South Africa, then Africans could also call for sanctions against their own illegal regimes.

Second, I believe that the foreign aid resources Africa desperately needs to launch into self-sustaining growth and prosperity can be found in Africa itself, not in China as Dambisa believes.

Moyo’s work speaks to that deep urge among Westerners to “do something” — even something that may be deeply unproductive. What’s a more productive way to “do something”?

I think Westerners should resist that urge to “do something,” because the worst type of help one can receive is that which doesn’t solve your problem but compounds it. If Westerners want to help, they must carefully scrutinize and reform current aid policies to make them more effective. Both the Clinton and Bush administrations tried to but failed. Business as usual is no longer an option, which is what both Dambisa and I are against.

Foreign aid should be tied not on promises of African leaders but to the establishment of a few critical institutions:

+ An independent central bank: to assure monetary and economic stability, as well as stanch capital flight out of Africa. If possible, governors of central banks in a region, say West Africa, may be rotated to achieve such independence. The importance of this institution resides in the fact that the ruling bandits not only plunder the central bank but also use its facilities to transfer the loot abroad.

+ An independent judiciary — essential for the rule of law. Supreme Court judges may also be rotated within a region.

+ A free and independent media to ensure free flow of information. The first step is solving a social problem is to expose it, which is the business of news practitioners. The state-controlled or state-owned media would not expose corruption, repression, human rights violations and other crimes against humanity. In fact, it is far easier to plunder and repress people when they are kept in the dark. The media needs to be taken out of the hands of government.

+ An independent Electoral Commission to avoid situations where African despots write electoral rules, appoint a fawning coterie of sycophants as electoral commissioners, throw opposition leaders in jail and hold coconut elections to return themselves to power.

+ An efficient and professional civil service, which will deliver essential social services to the people on the basis of need and not on the basis of ethnicity or political affiliation.

+ The establishment of a neutral and professional armed and security forces.

The establishment of these institutions would empower Africans to instigate change from within. For example, the two great antidotes against corruption are an independent media and an independent judiciary. But only 8 African countries have a free media in 2003, according Freedom House. These institutions cannot be established by the leaders or the ruling elites (conflict of interest); they must be established by civil society. Each professional body has a “code of ethics,” which should be re-written by the members themselves to eschew politics and uphold professionalism. Start with the “military code,” and then the “bar code,” the “civil service code” and so on. These reforms, in turn, will help establish in Africa an environment conductive to investment and economic activity. But the leadership is not interested. Period.

Effective foreign aid programs are those that are “institution-based.” Give Africa the above 6 critical institutions and the people will do the rest of the job.

Africa is poor because it is not free.

George Ayittey responded to emailed questions from TEDAfrica Director Emeka Okafor and TED.com editor Emily McManus. Download the unedited notes from this interview, an 11-page PDF with reading lists, noted sources, and much more. TED intern Mischa Nachtigal prepared this edited blog post.

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Aristotle: Politics

August 4, 2017 ALOD Policy Blog, Philosophy

Aristotle was an ancient Greek philosopherand scientist born in the city of Stagira, Chalkidice, on the northern periphery of Classical Greece. His father, Nicomachus, died when Aristotle was a child, whereafter Proxenus of Atarneus became his guardian.[3] At seventeen or eighteen years of age, he joined Plato’sAcademy in Athens[4] and remained there until the age of thirty-seven (c. 347 BC). His writings cover many subjects – including physics, biology, zoology, metaphysics, logic, ethics, aesthetics, poetry, theater, music, rhetoric, linguistics, politics and government – and constitute the first comprehensive system of Western philosophy. Shortly after Plato died, Aristotle left Athens and, at the request of Philip II of Macedon, tutored Alexander the Great beginning in 343 BC.

Our purpose is to consider what form of political community is best of all for those who are most able to realize their ideal of life. We must therefore examine not only this but other constitutions, both such as actually exist in well-governed states, and any theoretical forms which are held in esteem; that what is good and useful may be brought to light. And let no one suppose that in seeking for something beyond them we are anxious to make a sophistical display at any cost; we only undertake this inquiry because all the constitutions with which we are acquainted are faulty.

We will begin with the natural beginning of the subject. Three alternatives are conceivable: The members of a state must either have (1) all things or (2) nothing in common, or (3) some things in common and some not. That they should have nothing in common is clearly impossible, for the constitution is a community, and must at any rate have a common place- one city will be in one place, and the citizens are those who share in that one city. But should a well ordered state have all things, as far as may be, in common, or some only and not others? For the citizens might conceivably have wives and children and property in common, as Socrates proposes in the Republic of Plato. Which is better, our present condition, or the proposed new order of society.

Part V
Next let us consider what should be our arrangements about property: should the citizens of the perfect state have their possessions in common or not? This question may be discussed separately from the enactments about women and children. Even supposing that the women and children belong to individuals, according to the custom which is at present universal, may there not be an advantage in having and using possessions in common?

Three cases are possible: (1) the soil may be appropriated, but the produce may be thrown for consumption into the common stock; and this is the practice of some nations. Or (2), the soil may be common, and may be cultivated in common, but the produce divided among individuals for their private use; this is a form of common property which is said to exist among certain barbarians. Or (3), the soil and the produce may be alike common.
When the husbandmen are not the owners, the case will be different and easier to deal with; but when they till the ground for themselves the question of ownership will give a world of trouble.

If they do not share equally enjoyments and toils, those who labor much and get little will necessarily complain of those who labor little and receive or consume much. But indeed there is always a difficulty in men living together and having all human relations in common, but especially in their having common property. The partnerships of fellow-travelers are an example to the point; for they generally fall out over everyday matters and quarrel about any trifle which turns up.

These are only some of the disadvantages which attend the community of property; the present arrangement, if improved as it might be by good customs and laws, would be far better, and would have the advantages of both systems. Property should be in a certain sense common, but, as a general rule, private; for, when everyone has a distinct interest, men will not complain of one another, and they will make more progress, because every one will be attending to his own business.”

How immeasurably greater is the pleasure, when a man feels a thing to be his own; for surely the love of self is a feeling implanted by nature and not given in vain, although selfishness is rightly censured; this, however, is not the mere love of self, but the love of self in excess, like the miser’s love of money; for all, or almost all, men love money and other such objects in a measure. And further, there is the greatest pleasure in doing a kindness or service to friends or guests or companions, which can only be rendered when a man has private property. These advantages are lost by excessive unification of the state. ………. No one, when men have all things in common, will any longer set an example of liberality, or do any liberal action; for liberality consists in the use which is made of property.

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