Saturday, 25 April 2009

Is there such a thing as "properly using natural wealth"?

In a very recent post "South Africa Fades", Rod Dreher is pointing out that South Africa is failing in exactly the same way other states of sub-Saharan Africa did. The very first commentator attributes this to the inability of black Africans to develop efficient capitalist businesses, claiming they simply rob the country of its mineral wealth. The article from which Dreher based his news points out that South African education is very poor even compared with other countries in Black Africa.

Yet, people never make similar claims about Australia, despite the fact that a couple of days ago I saw that Australia's private sector invested an exceptionally small fraction of its income in research compared with that of European nations - and this was back in 1984 before increasing criticism of Australia's lack of innovation during the John Howard era emerged.

Yet, it is tempting to ask how much the poor economic performance of Black Africa would really be improved with the recommendations of Austrians and their allies. Austrians themselves admit that scarcity drives innovation in performance but never, ever consider what happens where there is no scarcity or even a glut as is the case with the supply of usable land in Australia and many parts of Black Africa. The answer, quite simply, is that if there is no scarcity there is no incentive to innovate, especially as people's desires are likely to be less when resources are abundant. (If resources are so scarce relative to demand that conservation becomes impossible or impracticable, then the incentive is to substitute for them completely. This is why mercury was phased out for most uses, not concern over its toxicity.)

Although South Africa's white minority is quite small, if it was as innovative as European nations of comparable or slightly larger size like Sweden or Switzerland, it could still achieve a great deal. The problem is that it is in the same position as Australia's population, and thus tends to become stuck with the attitudes developed when it colonised the area. It is tempting to say that if Bantu (or, I should point out, Nilotic or Cushitic or even Austronesian) farmers had not expanded into Southern Africa before Europeans, we would see the similarity between Australia and sub-Zambezian Africa much more clearly. As it is, there is much more poverty, but it is wrong to assume that extreme pro-capitalist reforms would turn sub-Saharan Africa into an innovative industrial powerhouse. The only exceptions that I would call likely are East Africa and the Gulf of Guinea coast, and even these do not have the land scarcity of the Alps or Himalayas or California or Japan. The best it could become is an Australia-like ultraconservative primary-product dependent land, and Australia's current history shows the dangers of that.

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