The International Labour Organization (ILO) recently reported that over 12 million Malawians could become poor by 2030 if poverty reduction rates remain the same. This is despite Malawi’s slight improvement in GDP per capita since 2004, and the implementation of numerous measures to counter poverty, including increased government spendings on infrastructure and social welfare programs. Rather than reduce poverty and stimulate economic development, these policies have further impoverished the nation–half of its population earns below 687 Malawian Kwacha (less than one US dollar) per day.
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The World Health Organization (WHO) recently warned that Somalia is at risk of experiencing their third famine within 25 years.
In 2011 famine killed over 260,000 people, but once again the country is facing a humanitarian crisis. Half of all Somalis are in need of urgent assistance. In response, the United Nations and NGOs are seeking over $1.5 billion in donations.
This plea for aid recurs whenever the drought-prone country experiences famine.Unfortunately, donors have not helped Somalia prepare for long-term infrastructural sustainability. Rather donations have fueled corruption and further weakened Somalia’s economy.
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Early this week, the South Africa Daily Maverick published an op-ed titled, “It’s not Zuma that we need protection from, it’s the market.” While the author rightly calls out the role of cronyism in destroying ordinary South Africans’ economic mobility, she doesn’t seem to make a distinction between economic freedom and crony capitalism.
This spotlights a crucial misunderstanding in the ongoing battle against capitalism in South Africa, and across Africa.The values of freedom will continue to take a back seat as anti-market forces demand more state control of the economy against “corporate” interests.
The Benefits Seem Unattainable
How is it that perceptions of the market are so negative on a continent with such a rich tradition of economic freedom?
It can be alleged that the arguments for capitalism have become too utilitarian to appeal to a continent that has been ravaged by the effects of slavery, colonialism, kleptocracy, ethnic genocide, crony capitalism, and extreme poverty. Indeed, in his 1999 book “Development as Freedom,” Harvard Professor Amartya Sen argued,
The discipline of economics has tended to move away from focusing on the value of freedoms to that of utilities, incomes, and wealth. This narrowing of focus leads to an under appreciation of the full role of the market mechanism, even though economics as a profession can hardly be accused of not praising markets enough.”
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