Great Write up on Live8

[Lyion]

Live8: a triumph for sentiment, not for results

By : Allister Heath July 03, 2005

THERE was a time when young people who wanted to save the world would become doctors, scientists or teachers; move to Africa to devote their lives to helping the poor; or even study economics, human rights law or international relations. Now, it seems, they go to rock concerts. Its much less hassle.

Welcome to the brave new world of pop star economics, where sentiments matter more than results, emotion triumphs over reason and hedonistic Westerners can feel good about themselves in Londons Hyde Park, safe in the belief that they are doing their bit for starving African babies while listening to Madonna, U2, Pink Floyd and the rest. An estimated 200,000 people attended the main concert in Londons Hyde Park on Saturday afternoon, convened by Sir Bob Geldof, the former Boomtown Rat turned anti-poverty activist, in support of the Make Poverty History campaign which lobbies for more aid, fair trade and a foreign debt write-off. Billions more watched it on television. The organisers were hoping to set a new record for a global audience and while the concert will have zero impact on world poverty, it undeniably came close to living up to its billing as the Greatest Show on Earth, at least for those who like that kind of thing.

In Edinburgh, meanwhile, an altogether more motley crew marched in support of Prime Minister Tony Blair and Chancellor Gordon Browns crusade to double aid to Africa ahead of the G8 summit in Gleneagles starting on Wednesday, in a remarkable blurring of the distinction between protesters and establishment, entertainment and politics, and in the eyes of its critics between rule of the mob and democracy.

To his detractors, Geldof had this to say: I am withering in my scorn for the columnists who say Its not going to work. Even if it doesnt work, what do they propose? Every night forever watching people live on TV dying on our screens? Of course, the answer to his question is no, and he should know by now what his critics propose as an alternative to hand-outs and posturing.

Geldof is wrong to question the motives of those with whom he disagrees. What unites protesters, concert-goers and politicians on the one hand and their critics on the other is a passionate belief in tackling global poverty. Both camps agree that it is obscene and absurd that 30,000 children are dying daily as a result of extreme poverty and that malnutrition, Aids, conflict and illiteracy are a daily reality for millions, at a time when the world is going through an unprecedented economic boom. It is a scandalous blot on the record of mankind in the era of the iPod and space travel.

The disagreement between the two camps is about means, not ends. The real question is: why are some countries rich and others poor? To the Make Poverty History crowd, the answer to this question, by far the most important in economics and all of the social sciences, usually lies with Western exploitation, insufficient aid and the alleged ravages caused by free trade or greedy multinationals. This conveniently omits to explain how so many poor nations in Asia have got rich; and many economists in developing countries no longer agree. Even more so than most westerners, they desperately want to conquer poverty but years of bitter disappointment as billions of dollars of aid did nothing to stem Africas descent into squalor and chaos have forced many to think again. The result is a growing backlash against the new Gordon Brown-Tony Blair-Make Poverty History view that when it comes to Africa, foreign aid is the answer to all the questions.

Wearing a white wristband and calling for hand-outs or debt relief is not the answer, says a growing band of young and educated Africans. The money will merely be frittered away, diverted into the Swiss bank accounts of a corrupt ruling class and do little or nothing to bring about prosperity, they say. While still a minority view, these African pro-capitalist rebels are the voice of the future; one of the leading lights in this movement is June Arunga, a Kenyan law student currently based at the University of Buckingham in the UK. The African dissidents even held a well-attended conference in London last week, adding their voices to a growing chorus of Western analysts who argue that there is no robust statistical or economic evidence that aid boosts growth. Supporters of the Make Poverty History campaign should acquaint themselves with the work of a new generation of African activists, including Thompson Ayodele, of the Insti-

tute of Public Policy Analysis in Lagos in Nigeria; George Ayittey, a Ghanaian economist and author of a new book, Africa Unchained; Franklin Cudjoe, of the Imani think-tank, also in Ghana; Leon Louw, a South African lawyer; and many others. Ayodele is scathing: Poverty in Africa cannot be reduced through government-to-government financial transfers, which never trickle down. This kind of aid perpetuates poverty, promoting poor government policies and corruption, rather than real and lasting economic growth. Sadly, this will be the outcome of the current effort.

Geldof and all those marching in Edinburgh could start by reading a report out this weekend from the International Policy Network. Its author, Moeletsi Mbeki, happens to be the brother of South Africas president, Thabo Mbeki, as well as an entrepreneur and political analyst. Mbeki argues that since the end of colonialism, most countries in Africa have been exploited by predatory national political elites who see the state as a means to acquire personal wealth through taxation and regulation.

The history of Africa since the 1960s is the history of groups of elites seeking the political kingdom with the primary purpose of enriching themselves, Mbeki says. To rectify this situation, he believes that Africas poorest people must be empowered through the institutions of the free society: property rights and markets: It is necessary that peasants who constitute the core of the private sector in sub-Saharan Africa become the real owners of their primary asset: land. To enable such ownership, freehold must be introduced and the so-called communal land tenure system, which is really state ownership of land, ought to be abolished.

He also emphasises the importance of removing internal and external restrictions on the ability of Africans to trade: Africas peasants must gain access to world markets. The producers must be able to auction their own cash crops, including coffee, tea, cotton, sugar, cocoa and rubber, rather than be forced to sell them to state-controlled marketing boards.

Mbekis paper follows the recent estimate by Mallam Nuhu Ribadu, the chairman of Nigerias Economic and Financial Crimes Commission, that that countrys politicians had stolen or squandered 220bn (E330bn, $396bn) since independence in 1960, six times the total value of the aid handed out by the US to Europe during the Marshall plan after the second world war.

These findings confirm the work of scholars in the West, such as William Easterly of New York University, who have failed to find any link between aid and growth and want to boost trade instead. In a devastating report from the International Monetary Fund last week, Cristina Arellano, Ale Bul, Timothy Lane and Leslie Lipschitz found that greater aid actually tended to reduce a countrys export performance and the production of goods for exports. The paper also found that aid was usually used to fund consumption rather than investment.

A separate study from the Globalisation Institute this weekend finds that for every 1% increase in aid received by a developing country, there is a 3.65% drop in real GDP growth per person. Contrary to the conventional wisdom in the aid industry, the study finds that even where recipients have good governance, the effect is also negative. The report More Aid, Less Growth by Tomi Ovaska, of the University of Regina in Canada, says that instead of top-down approaches to aid, helping and encouraging developing countries to create business environments that are compatible with free markets is a promising and a potentially cost-effective way to unleash the individual effort and creativity in those countries.

Between 1980 and 2003, more than $116bn (in 2002 dollars) in US development assistance alone went to 89 poor countries. Yet these recipients often experienced poor even negative per capita economic growth, says Brett Schaeffer, of the Heritage Foundation. Of these 89 countries, 37 experienced negative real annual compound growth in per capita GDP, 20 experienced minimal growth of 1% or less, and only 32 experienced growth of more than 1%. Half of these recipients in sub-Saharan Africa saw a real decline in GDP per capita.

Over the past 45 years, nearly $1.5 trillion (in 2003 dollars) has been spent on aid with little success, Schaeffer said last week. This is not to say that the West and the Hyde Park revelers can do nothing to help developing countries. Where Brown and the free-marketeers agree is in their hatred of Western trade barriers and agricultural subsides, which have scandalously impoverished Africans; there should be demos for free trade, not for more subsidies.

The EU accounts for 90% of OECD export subsides in agriculture, dumping cheap food on the markets and bankrupting African producers. The US is also to blame: it gives its cotton farmers $3.9bn a year, driving down world prices by 10-20%, costing West African countries $250m a year. Free trade in cotton would boost sub-Saharan Africa cotton exports by 75%. Blairs Commission for Africa also said free trade in sugar would raise world prices by 40% and could generate $4.7bn for developing countries.

Ultimately, however, Africans must also help themselves. The Africa Commission acknowledges this: While African governments have been pressing for decades for the removal of OECD trade barriers, many of their own barriers to trade are relatively cheap and easy to remove, and can be, in some cases, more damaging that rich-country barriers. Regional trade is worth 26.5% of GDP in East Asia and the Pacific, 15.3% in Europe and Central Asia but just 5.3% in Sub-Saharan Africa.

There is an urgent need for Africans to boost their inter-regional trade, partly to reduce their dependency on commodity exports to the West. Ask an African business person what needs to be done and chances are that very high on their list will be facilitating internal African trade by sweeping away bureaucracy and taxes. The facts speak for themselves: it costs the same to clear a 20-foot container through the ports of Abidjan or Dakar as it does to ship it all the way to a north European port.

Sub-Saharan Africa suffers from the highest average customs delays in the world; Estonia requires one day for customs clearance versus 30 days on average for Ethiopia. An average customs transaction in a developing country is estimated to involve 20 to 30 parties, 40 documents, and 200 data elements, 30 of which have to be repeated at least 30 times, according to the United Nations Conference on Trade and Development.

The UN Economic Commission for Africa calculates that the average customs delay in Africa is 11.4 days, against 5.5 in Asia and 3.9 in Western Europe. Each day spent in customs adds 0.8% to the cost of goods. Trade could be greatly improved if such costs were reduced, as in many instances they outweigh the tariff costs, according to Standard Chartered.

In a report out this weekend, its economists Gerard Lyons and Razia Khan argue that freight costs within Africa are too high in sub-Saharan Africa they are roughly twice the world average and that barriers such as checkpoints are evident across some regional communities. There are three sizes of rail gauges in Africa and even neighbouring countries such as Botswana, Namibia and Zambia have different regulations on trucks and loads.

Hernando de Soto, a Peruvian economist who has done more to help poor countries than any of those in attendance in Edinburgh, including Gordon Brown, is another dissenter who has dedicated his lifestyle to harnessing the power of the market to help the poor. For his efforts, the Peruvian Marxist terror group Shining Path targeted him for assassination: his think-tank was bombed and his car machine-gunned; fortunately he survived and has a far more interesting tale to tell than most members of the aid industry.

According to de Soto,

who runs the Institute for Liberty and Democracy,

the reforms associated with establishing capitalism in developing countries and long endorsed by Western-dominated groups such as the World Bank and the IMF low inflation, a limited budget deficit, openness to trade and capital flows, and privatisation are necessary but not sufficient. They gloss over the crucial factor that has made capitalism such a successful system in the United States, Western Europe, Japan and the Asian tigers: respect for property rights, contracts and the rule of law. Without the latter, the former will often lead only to chaos, the rule of the mob, corruption, the rise of Mafias and Russian-style, gangster capitalism.

In particular, de Soto has focused on the fact that the poor in developing countries are usually locked out of the formal, legal economy. They have houses but not titles; crops but not deeds; businesses but not statutes of incorporation, de Soto argues. All too often, what passes for ownership is a system of informally evolved and acknowledged property rights, rather than the real thing. And because the poor lack formal legal title to their property, they are unable to use their assets as collateral. They cannot get bank loans to expand their businesses or improve their properties.

De Soto originally estimated the amount of such dead capital in untitled assets held by the worlds poor as at least $9.3 trillion a sum that is probably even greater today and that dwarfs the amount of foreign aid given to the developing world since 1945 and puts Browns taxpayers cash in the pale. Governments in developing countries must therefore devise a detailed plan to transform the current, extra-legal ownership of assets into real property rights, and to recognise the informal arrangements that function within the communities of the poor.

The situation in Uganda illustrates de Sotos point. Although women in Uganda make up 70% to 80% of the agricultural work force, only 7% own land and only 30% have access to and control over proceeds. One of the main problems I faced when starting and expanding my business was access to capital. I started my own business by selling my car. When I wanted to expand no bank would look at me, says Sarah Kitakule, who chairs a fascinating group with over 800 members called the Uganda Women Entrepreneurs Association. Its twin slogans are A Wealthy Woman A Wealthy Nation and Empower Women to Create Wealth.

The Association is exactly what Africa needs more of: a dynamic group of self-made Africans that support capitalism and property rights and reject the failed statist nostrums of the past, unlike too many of the traditional, public-sector, Western-educated African elite. The future of Africa lies in internal reforms, the establishment of the rule of law and greater economic stability, to enable a new generation of entrepreneurs and business people to rise up and conquer global markets.

The West can help by tearing up its trade barriers and scrapping its deadly export subsidies; but not by handing out cash. If only those demonstrating in Edinburgh this weekend were to accept this, they would actually be helping to make poverty history. Instead, despite their good intentions, they may inadvertently be helping to prolong Africas misery.

[Wrath Child]

Once the column stopped talking about the elitist celebrities, most here stopped reading.

The easiest, most effective way to slow down or halt poverty in Africa and elsewere is...






BIRTH CONTROL!

[Tuggan]

Education is the key to getting Africa on the right path. You cant solve anything if the majority of people dont understand simple concepts, like birth control.

[Wrath Child]

How much education does it take to slap on a condom?

[Phlegm]

Aren't Sally Struthers wandering around over there helping the Africans? I see her commercial on late night tv all the time.

[Wrath Child]

In her younger days, she would have made a great condom instructor.

Now though, she's better off just wandering around.

[Eziekial]

It's a brillant article, Lyion, thanks for posting it.

[Captain Insano]

Once the column stopped talking about the elitist celebrities, most here stopped reading.

The easiest, most effective way to slow down or halt poverty in Africa and elsewere is...






BIRTH CONTROL!

We should take all the money from LIve 8 and use it to bomb Africa. They won't need aid if they are all dying from radiation poisoning.

[labbats]

Live8: a triumph for sentiment, not for results

By : Allister Heath July 03, 2005

THERE was a time when young people who wanted to save the world would become doctors, scientists or teachers; move to Africa to devote their lives to helping the poor; or even study economics, human rights law or international relations. Now, it seems, they go to rock concerts. Its much less hassle.

Welcome to the brave new world of pop star economics, where sentiments matter more than results, emotion triumphs over reason and hedonistic Westerners can feel good about themselves in Londons Hyde Park, safe in the belief that they are doing their bit for starving African babies while listening to Madonna, U2, Pink Floyd and the rest. An estimated 200,000 people attended the main concert in Londons Hyde Park on Saturday afternoon, convened by Sir Bob Geldof, the former Boomtown Rat turned anti-poverty activist, in support of the Make Poverty History campaign which lobbies for more aid, fair trade and a foreign debt write-off. Billions more watched it on television. The organisers were hoping to set a new record for a global audience and while the concert will have zero impact on world poverty, it undeniably came close to living up to its billing as the Greatest Show on Earth, at least for those who like that kind of thing.

In Edinburgh, meanwhile, an altogether more motley crew marched in support of Prime Minister Tony Blair and Chancellor Gordon Browns crusade to double aid to Africa ahead of the G8 summit in Gleneagles starting on Wednesday, in a remarkable blurring of the distinction between protesters and establishment, entertainment and politics, and in the eyes of its critics between rule of the mob and democracy.

To his detractors, Geldof had this to say: I am withering in my scorn for the columnists who say Its not going to work. Even if it doesnt work, what do they propose? Every night forever watching people live on TV dying on our screens? Of course, the answer to his question is no, and he should know by now what his critics propose as an alternative to hand-outs and posturing.

Geldof is wrong to question the motives of those with whom he disagrees. What unites protesters, concert-goers and politicians on the one hand and their critics on the other is a passionate belief in tackling global poverty. Both camps agree that it is obscene and absurd that 30,000 children are dying daily as a result of extreme poverty and that malnutrition, Aids, conflict and illiteracy are a daily reality for millions, at a time when the world is going through an unprecedented economic boom.

Here is where I stopped reading. Unprecedented economic boom? What are you smoking?

However, I do agree with the "give a man a fish, he eats a day, teach a man to fish, he eats his whole life" idealism. Throwing bags of rice may give you a warm fuzzy, but it's not going to change anything.

[Lyion]

Labbats, look at the formerly piss poor Asian Countries. Look at China. Look at some of the new Eastern European Countries. They are booming economically.

The US is also in a growth spurt.

I admire what Geldof is trying to do, but the simple truth is we already give a lot of our tax dollars for support and we need to ffix the problem, versus helping but not being a real solution.

[Martrae]

How bout the artists set an example by donating the $12k 'goodie' bags they got for participating?

[xaoshaen]

The initial premise was absurd, but the article went on to make some important points.

THERE was a time when young people who wanted to save the world would become doctors, scientists or teachers; move to Africa to devote their lives to helping the poor; or even study economics, human rights law or international relations. Now, it seems, they go to rock concerts. Its much less hassle.

The people who dedicate their lives to actually helping others have always been an exception to the greedy, lazy masses. It's no different today.