Title: Rich state, poor state
Author: Greg Mills
Publisher: Penguin Books
ISBN: 9781776391394
A useful way to start a review of a book like Rich state, poor state by Greg Mills is first to answer the question: what is the book’s question?
The subtitle says: “Why some countries succeed and others fail”.
Does the book give us fresh insight? Does it provide real answers to the question it poses, and really tell us why some states fail and others succeed? These are no idle questions, especially bearing in mind that the barely disguised aim of the book is to address the African problem, and more specifically, the South African.
A good metaphor to describe the book is that of a tapestry. It consists of multiple pieces of history, quotations, personal observations and anecdotes woven together in a mosaic testifying to a wealth of experience and research. It is organised in chapters each dealing with a region or country that demonstrates why some states either fail or succeed.
Rich state, poor state is part history, part travel journal and part economic policy. It is clear that the author has walked many roads, read widely and broken bread with countless people in government, business and the aid industry who have regaled him with fascinating stories about the successes or failures of different territories. Here is one of many striking examples, explaining the attitude of Vietnamese leader Ho Chi Minh toward the Americans:
“We will spread a red carpet for you to leave Vietnam. And when the war is over, you are welcome to come back because you have technology and we will need your help.” After Saigon’s fall in 1975, the Viet Cong did not put up a flag over the US embassy as they did in other locations. “We are not authorised to raise one,” said a soldier guarding the premises. “We don’t want to humiliate the Americans. They will come back.”
Stories, snippets and cameos like this make for a captivating meander through the economies of the developing world. However, interesting as the stories are, do they penetrate to the heart of the matter? The fabric of the book, of course, does include certain golden threads that make up success, which include:
- Quality of leadership
- Economic freedom
- The rule of law
- Sound infrastructure
- Education
- Technology
- Investment
The message is that most of these factors are interrelated. For example, good leaders make education a priority. Good education enables the mastering of technology. Good leaders realise that they should not centralise all power into their own hands, but allow the private sector free rein to produce and trade. The rule of law is a key ingredient of free markets. And so on.
It is no surprise then that a prominent view advanced by the writer is that there is no silver bullet, no magic formula.
That seems eminently reasonable, doesn’t it? But there is a trap in that seemingly wise and balanced approach. Explaining their love lives, people sometimes resort to the answer, “It’s complicated.” Which is all very fine, but it can be a cop-out.
Just so with economic policy. We all sometimes feel a need for the proverbial one-handed economist, one who does not preface every point with “On the one hand” or “On the other hand”. The point is, sooner or later we want to know:
- Granted that there is no silver bullet, no sword that will cut the Gordian Knot in one fell swoop, is there not at least one fundamental reason for – some basic cause of – failure? And, as a corollary, a basic step to kick-start success?
- In a related vein: if we want to fix all this, where do we start? And who must do the starting, in a manner of speaking?
The problem is that the reader is tempted to conclude that economic development is like the carpenter who was asked how to make antique furniture. “Oh, it’s easy,” he said. “All you have to do is take good quality wood, reproduce a classic table or chair design, and then polish it, use it, touch it and rub it for 300 years to a gleaming patina, and presto: you have antique furniture!”
Take the sensitive aspect of culture. This aspect is thrown into sharp relief by the section (50-66) on the most successful African country, Mauritius – an island colonised by the Dutch, the French and the British in succession from the seventeenth century until independence in 1968. The population consists of Indians (66%), African Creoles (28%) and Chinese (3%) imported as labourers and slaves at various times, with a small minority of French descendants who still control a large stake in the economy. The problem is best illustrated by this passage:
The share of Muslim and Chinese in the senior public service rose in the first three decades after independence. None of the ethnic groups is excluded from the system. As economist Jeffrey Frankel notes, “it is intriguing that the three African countries with the highest governance rankings, (Mauritius, Seychelles and Cape Verde) are all islands that had no indigenous population”. (58)
Leaving aside the non sequitur in the last sentence, surely this is a matter of grave concern? Surely a book like this should deal with the question of why the most successful country in Africa – one of the role models punted – is, well, not African?
Another example of African success that the book proffers is Morocco (284-96). But that is not ethnically African either. It is Arabic for the most part.
What, then, about that poster child of African success, Botswana (38-49)? At least that is a nation comprising Africans, not so? But here the author has no choice but to bemoan the fact that the De Beers discovery of diamonds and development of a massively successful diamond industry have created income streams for locals, but have not unleashed a culture of entrepreneurship independent of diamonds. Instead, despite its good performance when measured by per capita income, Botswana’s indigenous black population have not become stewards of a diversified economy, but have remained dependent on the diamond trade and the subsidies and grants flowing from that (44).
The South African account (67-90) provides no obvious answer either:
Turkeys … do not vote for Christmas. The ANC has been incapable of turning off the tap of rent-seeking and protectionism. Even 55 per cent of its own members no longer believe in the messages of the organisation. It cannot function without such practices. It remains a prisoner of its past, in this way dooming South Africa to a low-growth and high-unemployment future. The overall choice today is whether the answers to South Africa’s challenges emerge from the ruling alliance, or from competitive economic and political entrepreneurs that put people and not the state at the centre of development. (88-9)
South Africa, as described here, drives home the message that a key ingredient to economic salvation is politics, which dictates the choices governments make. The question is how some countries have managed to break the shackles of political paralysis leading to poverty, while the vast majority in Africa have failed. The book does not really venture an answer. It’s complicated, remember.
One idea is briefly examined, namely a benign dictatorship, as in the case of Singapore or the monarchy of Morocco. Another example (not discussed) is China. In these countries, benevolent but authoritarian governments realised that growth would be achieved by deregulating markets, opening trade and stabilising the currency. If the temptation of corruption is kept under control (a bigger temptation in totalitarian states), the economy is OK. But eventually, the author rightly discards this possibility as a durable solution (111, 113).
As for democracies, Mauritius, and to some extent Botswana, are examples of African states with some measure of economic success. The success of both is ascribed to institutions established by democracy, which in turn resulted from the length of colonial settlement. The longer the settlement, the stronger the democratic institutions (55). Which brings us back to the antique furniture maker. At least, arguably, we do not have 300 years (or however long it would take) to inculcate democracy and the rule of law as part of the politics of Africa. Because, their relative success notwithstanding, even these outlier African countries’ performance remains rather mediocre – well below that of Asian countries Singapore, Hong Kong, South Korea and Taiwan (in the post-colonial era), well below a host of former Eastern Bloc countries like Estonia and Lithuania (after the fall of the Berlin Wall), and roughly average in the world.
Why have the Asian Tigers performed so much better than Africa? A culture of saving, investment, learning and postponement of gratification was evident in certain presently successful and developed societies even when they were very poor. China, Japan and the Scandinavian countries, to name a few examples, have all had to overcome harsh conditions. But over many centuries, through a mixture of good fortune and hard work, they have acquired technological, reading and writing skills and have learned specialisation, division of labour and how to trade. All this has gone with various types of reasonably well-functioning governance systems, which has ultimately culminated in some degree of free market capitalism, democracy and the rule of law (China excluded in the last two respects).
Meanwhile, Africa remained isolated, had no navigable rivers and knew little science. The result is that Africa could start catching up only from the beginning of colonisation, a less than ideal way to do so. This is no idle complaint, especially against the backdrop of the small matters of intervening colonialism and diversity of ethnicity.
If colonialism is to blame for anything, then surely number one on the list must be how Great Britain, France, Belgium and Germany cut up the continent of Africa into massive swathes of territory with no regard for ethnic, language or religious differences. The result is that the typical African country is disproportionately heterogeneous. For example:
- The first ten most ethnically diverse nations in the world are all African.
- The first non-African country on the list is Yugoslavia, at number 14.
- In the top 10% of homogeneous countries (all very successful economically), there is not a single African country.
What is more, the typical African government is unusually highly centralised, another kind bequest of the colonial masters. Which matters very much if your country is highly diverse, as invariably is the case in Africa.
Education in Africa is poor. Just like African governments, it too is highly centralised. Perhaps it should not be.
The rule of law is, sadly, still an orphan in much of Africa. Based on data from “The rule of law index” of the World Justice Project, African countries fare quite badly, achieving on average 1,96 compared with the international average of 3,24 and the top performers like New Zealand and Denmark, which achieve more than 5.
So, accepting that good leaders with knowledge of economic principles are needed to run a good reform process, how do we find leaders who are already educated, trained and steeped in the values of freedom, rule of law, frugality, investment and education? More importantly, how do we ensure that they take power and are elected with the support of their people, who have hopefully bought into these principles sufficiently enough to support such leaders?
The bottom line is that Africa is desperately behind in the cultural and educational race. This is not because they are ethnically inferior; it is an unfortunate happenstance of history. But it is a fact of life. Denying it would be intellectually dishonest. And unless we do, we cannot begin to understand the conundrum of Africa.
How do we inculcate a functioning business culture in 1,2 billion Africans, comprising hundreds, if not thousands, of interest groups each pulling in a different direction? Is that not the fundamental problem that we have to confront?
To be fair, the problem of education does receive a mention in the book, but mostly as a genuflection towards spending money on it (55, 108-9, 126). The peculiar problems of Africa – multiple ethnicities (with which go multiple languages, religions and value systems) and highly centralised education systems – are not addressed.
One possible answer, of which the author is understandably wary, is Western intervention in African states. The conventional aid model is viewed with scepticism, as it should be. A so-called Marshall Plan, likewise, has its own pitfalls. Notably, in the European case, it was built on pre-existing skills, governance and capacity, commodities in short supply in Africa. Secondly, the Europeans were willing partners; they bought into the scheme and built productive economies. Thirdly, in Africa, business is often one-sided in favour of Western investors and not reciprocal benefit (316-9).
In the African examples cited by the author, it is nevertheless notable that the success stories (Botswana, Mauritius) – such as they are – have played out in countries where a significant presence of Western investment and control remains a major influence. Which is fine. In fact, it is essential. Africa needs developed-country investment and mentoring.
In that vein, a tantalising glimpse of a way to change culture emerges from Malawi, where the (Western-driven) organisation Ripple Africa has, in the fishing industry for example, created a bottom-up campaign of rebuilding fish stocks through conservation, being monitored, run and policed by local citizens with government support (313-5). Decentralised, action-changing values. Small as the relative impact of the project at this stage is, it overcomes the problems associated with the typical top-down aid or a Marshall Plan arrangement. But how can that be translated into a continent-wide initiative at scale?
At the end of the book Rich state, poor state, one is disappointed. The reader is entitled to say: we know that the developing states need the rule of law, free market capitalism, a culture of saving, investment and growth, good education, business-friendly institutions, sound governance and so on. But why are these in such short supply in Africa? And why can they not be supplanted from the developing world where they originated?
Those are the real questions, surely. And they are not addressed.
And, in the end, one cannot but be left with a sense of nagging frustration. In the end, the book is a tour de force through Africa and the developing world, but one is left floundering: we have had this hugely informative, picturesque and colourful journey through the history and economics of the developing world. But where are we?
- Cartoon: Open Clipart Vectors | Pixabay
The post Rich state, poor state by Greg Mills: a review first appeared on LitNet.
The post <i>Rich state, poor state</i> by Greg Mills: a review appeared first on LitNet.