LONG before Baobab became a lowly journalist he scraped a living as a lowly academic. "If you're so clever why aren't you rich?" was a favourite tease of his less bookish but better-paid peers. The Africa Progress Report, prepared by an expert panel led by Kofi Annan, a former UN secretary-general, was unveiled last week at the World Economic Forum conference in Cape Town, and deals with a more wounding provocation. If Africa is so resource-rich, it asks, why are its people not better educated, its children well nourished and its adults longer-lived? – The Economist
Dominant Social Theme: Africa suffers from too many resources and doesn't tax enough – and that's why it is poor.
Free-Market Analysis: In the pantheon of absurd Economist articles, this has to rank as one of the most ridiculous. There is a reason why Africa is poor but it has little to do with this outrageous and misguided analysis.
This article just appearing in The Economist is one of a series of articles that is apparently intended to form the basis of a much larger African promotion.
We've commented on this in a series of articles. The modern global economy is in part dependent on the US selling the dollar abroad and then creating opportunities for a given country to sell consumer trinkets back to an enriched US population.
This procedure was seemingly first implemented in Europe, then in Japan and finally, in China. Now it is Africa's turn. Such a transaction demands a strong central bank and a pliable, impoverished population. Africa doesn't have a single central bank but there are plans to develop both an African Union and a pan-African central bank. You can look it up.
This sort of strategic arrangement allows globalists to trumpet the benefits of capitalism and private enterprise. But in fact, over time the central bank stimulation necessary to actuate this sort of program actually impoverishes the country involved.
Japan cranked up its central bank to purchase US Treasuries and then in turn sell cars, TVs, etc. into an enriched US marketplace. But over time, this sort of transnational economic development caused a huge bust in Japan. It imbalanced the economy, debased the currency and created a 30-year quasi-depression. Talk about a Faustian bargain …
China is headed down the same path, in our humble view. And now it is seemingly Africa's turn. The blizzard of articles in the mainstream press extolling a potential African Miracle is approaching stupefying. It is predictably led by Reuters and The Economist, the flagship media Trojan Horses of globalist messaging.
Over time, if we are correct, there will be more and more promotions of Africa taking place within mainstream newspapers and television, as well. Wall Street and City firms will start flogging Africa. In fact, they already are. This Economist article is an additional signal; here's more, including an "explanation" about why Africa has not progressed along with the rest of the world.
The study notes a large gap in mineral-rich countries between incomes and broader gauges of living standards like the UN's human-development index. Twenty countries in sub-Saharan Africa are classified as "resource-rich" by the IMF. Of these 14 are placed higher in the world rankings based on GDP per person than they are by their score on the UN index. Angola, for instance, is the 110th richest country measured by GDP per person but is ranked 148th on the development scale.
This in part is a familiar tale of the resource curse. The battle for the spoils from oil, gold or diamond wealth is a cause of political instability and a check on other forms of enterprise. Export earnings drive up the exchange rate, making it harder for jobs-rich local farming or manufacturing to compete with cheap imports. But there is more to the story, says the panel. The continent is not benefiting as much as it should be from its minerals partly because of the poor deals it cuts with foreign mining firms.
One problem is that mining assets are sold on the cheap. The panel looked at five deals struck between 2010 and 2012 in the Democratic Republic of the Congo, and compared the sums for which the mines were sold with independent assessments of their value. It found that the valuation gap was a staggering $1.36 billion, double the state's annual budget for health and education. And these deals are just a small subset of all the bargains struck, says the report.
… African countries also fail to adequately tax the profits from mining, says Mr Annan's panel. Zambia's copper exports were worth $10 billion in 2011 but its tax receipts from mining were a meagre $240m. The widespread use by mining firms of offshore investment vehicles as conduits for mining profits creates scope for tax avoidance. Their use is not restricted to rich-world companies. Much of the oil that Angola ships to China is via the China International Fund. Its trading prices are not made public.
Despite these many problems the panel is loth to succumb to what its report calls "resource pessimism". Instead it calls on the G8 group of rich countries to work together to make tax avoidance harder. African countries should favour investors that create bigger spillovers for the local economy. They should publicise the details of asset sales so that outsiders can judge whether a good bargain was struck for their citizens.
What a treasure trove of memes this is! We learn that countries with resources can be poorer than countries without resources because of "resource competition." And then we learn that prosperous societies are high-tax one. But please recall first of all, that government produces nothing. Thus, in taxing the private sector government is only transferring wealth, and doing it inadequately.
Taxation does not enrich. It impoverishes. More taxes, more impoverishment. There is not a single "taking" that we know of that enriches, assuming one believes that the private sector can build roads, schools and other items that today's common wisdom claims only the state can accomplish.
Then there is this idea that because Africa is resource rich, it has been subject to rapine and pillaging that have given way to more sedate forms of exploitation that have still left the continent bleeding and impoverished. We tend to doubt this scenario, however.
What is going on in Africa seems, in our humble view, to be more of the same: the culmination of what could be see to be an intricate strategy of exploitation and control methodologies designed to unify this great, groaning continent under the control of globalists that are trying to pull all the pieces of the world together.
Africa seen in this light is "next on the menu." We mention this point again because if we are correct great fortunes may be made in Africa. Those seeking opportunity will consider Africa not because what is going on there is fair or right – it is not – but because the global economy may be mobilized to create the perception of an African Miracle as part of the larger mechanism of control that we have described above.
If you missed out on China and Japan, you may want to scrutinize Africa closely. But take care and come to your own conclusions. In the 21st century, globalist memes are regularly exploding. There is no such thing as a "sure thing" – especially now.
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