African Poverty

Why is the continent of Africa so poor? Historically, the continent did not contain land as fertile as that found in more temperate regions of the globe, this meant that subsistence farming carried on, and still continues today, while other continents were able to develop farming which freed people from producing food to allow them to produce other things. Today though, there is more than enough food in the world markets, and farming technology is such that even in Africa it is possible to produce more food than one needs to satisfy only oneself. Some people have blamed the problem on colonialism, the Europeans enslaving the local population and setting them back, however, if this is the case, how does one explain that South Africa, once a colonial power is far richer than Ethiopia, which was never under colonial rule. Maybe the rich countries are exploiting the resources of the world and consuming too much, not leaving enough for the third world, this too is wrong. We do not take food from Africa, on the contrary, we produce too much food ourselves, and we also have a huge capacity to produce everything we need for a comfortable life, far beyond the amount we consume.

There is a problem which might be setting Africa back though, our food overproduction is due to an economic anomaly, the price of grain is subject to the same price system as anything else, supply and demand determine the price. The current price of farm products is too high however, this sends a price signal to farmers to produce more, as there is a profit in it, the reason the price is higher than it should be given the current demand is because of subsidies. The extra produce is then sold on the world market at below market prices, this means that other countries cannot sell at a competitive price. This of course benefits the farmers in the West, but nobody else, it does not benefit the people in the west, as we pay higher prices for our food than we should do, and those outside the subsidized areas are hurt from unfair competition. This alone though would not push the entire continent of Africa into poverty; it would simply reduce the number of farmers in these countries down relative to other workers. So while it is a grave injustice it is not the sole reason for poverty. For the true reason for poverty we need to look at what is missing from Africa that allowed most of the rest of the world to prosper.

The greatest period of economic expansion in Britain was the industrial revolution, a period when the whimsical rule of the monarchy was reduced to virtually nothing and people were largely left free to pursue their own ends, they had property rights and the rule of law. The same was true in America during its own economic expansion; Hong Kong has grown into an economic superpower despite the fact that it is a small land mass and has nothing in the way of natural resources, simply from the rule of law, property rights and freedom that its citizens enjoy. When we look at the majority of African countries we see a different picture. Dictators rule over their people with absolute authority, life is often cheap and it is certainly not uncommon to hear of government soldiers burning down villages and killing its inhabitants. Rwanda is a shocking example of this; Darfur in Sudan is another and is still happening today, Somalia, Niger etc. Without confidence in property rights, there is no incentive to obtain property, without the rule of law, a person is unable to know whether they will be prosecuted for their actions or not, regardless of what those actions are. This is not an environment where Adam Smiths invisible hand can operate, until the dictators of Africa are removed, the poverty will remain, regardless of aid and debt relief, and even if subsidies are removed, the continent needs to be free.