Saturday, June 11, 2005

Perpetuating Poverty

Samizdata weighs in on African debt forgiveness with: rewarding vice and punishing virtue by stating that ”The decision to write off billions of dollars in debt for various third world nations is in effect a subsidy for bad governance.” From a June 11, 2005 Reuters article:
The deal struck by finance ministers from the Group of Eight industrialized nations is part of a British-led campaign to rid sub-Saharan Africa of poverty and diseases that kill millions every year.

Details were not immediately available on the size of a deal that was expected to cover more than $40 billion in debt.
What is conspicuous by its absence is any mention of mandatory reforms on the part of the African nations that will have their debt erased. The obvious question is: what incentive do these corrupt, or at least inept governments have to be fiscally responsible, thereby curtailing future economic stagnation and mitigating chronic poverty? Alas, it appears that the ‘good feelings’ which result from state-sponsored charity matters more than actual help where the third world is concerned. Or is it just Africa?

The American government has had no qualms about maintaining a trade embargo on Cuba for more than forty years, along with similarly cool relations with North Korea. The reason is the same in both cases: corrupt regimes, hostile to the US, ensure the poverty of their people with backward, irrational social policies. If those two despots would simply institute political reforms and begin to respect individual liberty, they would be able to join the modern world and enjoy the benefits of global trade instead of relying upon meager hand-outs from sympathetic allies. Speaking of which, ‘pop stars’ are perennial advocates of the poor, while ignoring the underlying causes, especially in Cuba and Africa. The main impediment to a ready solution for such dire straights is a modicum of reason and logic. Sadly, such common sense is rare in the celebrity set. The lead singer of Coldplay, Mr. Gwyneth Paltrow, displayed his economic acumen in a recent interview.
EMI Group, the world's third-largest music company and owner of Coldplay's label Capitol, warned in February that profits would be lower because the band took longer than expected to finish its first studio album in three years.
But lead singer and charismatic frontman Chris Martin said in an interview, "I don't really care about EMI. I'm not really concerned about that.

"I think shareholders are the great evil of this modern world," Martin told Reuters before Tuesday's concert at Manhattan's Beacon Theater.
Still, for all the corporate involvement in the band of four friends who met in college, Martin said it was all worth it since it gives them artistic freedom and the ability to talk about subjects dear to them such as fair trade, or paying fair prices for products such as coffee and cotton from developing nations.

On Monday, the band recorded an episode of VH1's "Storytellers" and told the audience there, "Deadlines mean nothing to us. We'll sink the whole company (EMI) if we have to," Billboard reported.
Substituting emotionalism for reason has become a hallmark of modern liberalism, the effects of which are scarcely felt by wealthy celebs and like-minded politicians. Rather, it’s the poor and uneducated that are more likely suffer after voting for candidates that demonize capitalism as a tool used by the rich to perpetuate poverty while padding their pockets. The fact is that demagogic rhetoric is advantageous when your constituents crave instant gratification and expect unearned entitlements. Why teach the hungry to fish when others have already labored to catch a boatload that is rife for redistribution?

Update: Catallarchy contributor, Randall McElroy, has a great post that succinctly addresses the issue of African debt cancellation.