Solving the inequality problem in Africa?

A writer friend recently asked me to comment on the problem of inequality in subsaharan Africa — and how African governments should deal with it. I decided to respond through this blog.

As I started thinking about this, there was a live tv broadcast of Goldman Sachs Congressional hearings for their allegedly unethical practices and their supposed role in the recent financial crisis.

When will Western intellectuals realize that they don’t know how to solve Africa’s “inequality” problems if they don’t even know how to solve their own much smaller inequality issues?

Something that kept being repeated in the Goldman hearings is the fact that the crisis was rooted in the American government’s efforts to help the poor get loans for houses. Why? To reduce inequality in America. The people who were supposed to be helped are now jobless. So, here’s an idea for American experts who are obsessed with advising African nations: how about you first succeed in lifting your own internal “Africa” out of poverty?

The Goldman Sachs hearings overshadowed another big event in the news: the debt crisis in Greece. But they were both really about the same lesson: when the state tries to reduce inequality through any positive interventions to help the poor, they can only create a big disaster that will hit the same poor people hardest.

The only way the poor in any country can be helped is when government stops trying to help them and leaves that job to business forces. Every effort by the state to help the poor requires that they take something away from the business sector. In short they always make it harder for businesses to make money and thus to lift more people out of poverty.

Every single African country has tried to close the gap between the rich and the poor through state intervention and in every single case the result has been disastrous to different degrees, depending on how efficient the plan was. In Zambia, our first president, Kenneth Kaunda, even set a cap on how rich a Zambian could become (so that everyone could “rise together”). Thus it was official policy for the government to nationalize any Zambian owned business if it started making too much money for the owner. The result was to take Zambia from being one of the richest emerging states at independence to being an indigent failed state that is still struggling to recover.

The latest case is of course Zimbabwe, which tried to solve the “problem” of a few white farmers having more fertile land than the majority blacks (never mind that the produce from these farms fed the entire country; the problem of inequality was apparently more urgent). Mugabe grabbed this land and “redistributed” it. He decided to “spread the wealth around.” Again, the result was indeed reduced inequality: everyone became poorer, especially the poor, even while they owned more land.

Einstein defined insanity as doing the same thing over and over again, hoping for a different result each time. So, after seeing this idea destroy every single African state that tried it, there is now growing pressure in South Africa to try it too. They believe the result will be different this time. Somehow.