The 5 Ps of Poverty
Why Poor Countries are Poor:
A country’s history is a powerful predictor of poverty. Again, let’s use the example of many nations in Africa.
Involvement in the Slave Trade
The slave trade is a key historical flashpoint for many African countries, particularly those located along the coast, where slaving ships landed and pursued their exploits for several hundred years, up until the mid 1800s.
The slave trade, first and foremost, removed entire generations of Africa’s most able-bodied people. The young and strong, those whose labor and talents would otherwise be applied to building societies and economies on the continent, were systematically taken away. Those that remained were often sickened, and died from diseases brought by slavers, or from the violence that ensued around the trade.
The slave trade also exacerbated tribal and ethnic tensions among those who remained on the African continent. Some indigenous groups became involved in helping the slavers to find and secure their quarries; sowing significant internal discord and mistrust that would outlast the trade.
Most present African countries were, at one time, colonies of Western nations. Britain, France, Portugal, and Belgium dominated the “Scramble for Africa,” although colonies would change hands with the fortunes of European nations in subsequent world wars.
Colonialism usually meant extraction of raw materials for shipment back to Europe and subjugation of indigenous people. Economies and societies grew up around the needs of the Western imperial powers, not the needs of Africa. Some good was done, when education systems and infrastructure were built out of noblesse oblige or pragmatism. But, in short, Africans lost out on the chance to develop their own communities, for their own benefit.
More nefariously, colonialism usually also meant exacerbation of ethnic tensions. “Divide and conquer” was the guiding principle that allowed small groups of European settlers to rule large numbers of African people. The plan was simple enough – pick one ethnic group and favor them with education, jobs, and privileges, so that they will feel their fortunes are tied to those of the colonists. This keeps different ethnic groups from joining forces against the colonizers, sowing internal mistrust and discontent much like during the slave trade. The legacy of “divide and conquer” far outlasted the colonial regimes. The modern genocides of Rwanda and Burundi (and even the genocidal violence following elections in Kenya several years ago) can be traced back to this policy.
When these countries gained independence is important. Whether they were summarily cut loose by Western countries distracted and destroyed by WWII, or fought bloody battles to gain their sovereignty , independence was a mixed blessing – coming when it did and considering what shape these new nations were in when it happened. Few had any preparation or capacity – politically, economically, socially – for self-rule. Tensions that had simmered beneath colonial rule rose to the surface. Opportunism exploded. Few were given the chance to sort themselves out before the meddling of the West took new shape in the form of the Cold War.
The Cold War
The Cold War is an often-neglected historical antecedent for much of what ails Africa today. Once again, the continent was carved up – this time along the lines of loyalty and patronage to either the West (dominated by the US) or the USSR. As each superpower tried to keep the “dominoes” from falling, they cultivated client states and forged proxy wars to shore up their influence globally. In Africa, this created corrupt regimes such as those of Mobutu in Zaire (now the Democratic Republic of Congo), Idi Amin in Uganda, Robert Mugabe in Zimbabwe, Quaddafi in Libya, Samuel Doe in Liberia, and many others. It can be said that Africa’s less than stellar record on governance and leadership trace back to the “big men” and their cronies that were put in place and supported by outsiders during the Cold War.
Cold War machinations gave way to an explosion of civil wars in Africa – for all kinds of reasons, further sinking many new nations into poverty. The continent began to eat its young as the oppression and violence of colonial times continued in home-grown varieties. Much more on this in The Five Ps of Poverty: Peace.
The SAP Era
Many experts would say that another significant historical slap to African countries was the West’s ill-fated efforts to help them (and roll back Socialism in the world) through Structural Adjustment Programs (SAPs). SAPs, also known as shock therapy, placed conditions on loans given by International Finance Institutions (IFIs like the World Bank and International Monetary Fund) to poor countries. The intention was to push these countries to make fundamental economic and political reforms through fiscal discipline. The ultimate goal was the creation of conditions conducive to free market, capitalist growth. Most countries were required to deregulate industries, abolish public subsidies, reduce state spending, lower tariffs, encourage export-oriented business, and sell major public enterprises.
In order to rapidly transition an economy with faltering socialist practices into a functioning capitalist free market, the patient was often nearly killed in order to be saved. The result was short-term hardship as government jobs were eliminated, prices for basic goods rose, and private industries were opened up to crippling foreign competition. Those with capital to purchase previously state-owned assets quickly rose the top, while others found their standard of living diminished. The result was often a raw, corrupt form of capitalism, untempered by government welfare measures. Although social welfare mechanisms (like Social Security/pensions and health care) are usually provided in mature capitalist economies to cushion the blow of competition and catch those who fall through the cracks, these measures were typically discouraged in SAP agreements attached to loans to poor countries. Even if these “safety net” mechanisms were allowed in the loan conditions, these types of benefits require a highly functioning government to disburse effectively (a luxury not often found in developing countries).
In short, the fall-out of the SAP era for many poor countries, especially in Africa, was enormous debt and continued suffering, and even exploitation by foreign investors and well-connected domestic elites. But not the promised economic growth, as these countries found themselves unable to take advantage of the promised benefits of the free market. The whole effort left a bitter taste toward the West’s well-intentioned, but misguided economic reform efforts. In some cases, leaders of countries experiencing failed SAPs went on to place the blame for their continuing poverty squarely on Western institutions and experts. This resentment lingers today and continues to ignite suspicion about Western interventions.
And finally, the current era of globalization has, in many cases, worsened the plight of African countries. Without the infrastructure, human and financial capital, good governance, and international clout required to make the most of the global marketplace, many African countries have continued to fall further behind as others have surged forward in the world economy. Trade policies of larger, wealthier nations often put Africa at a disadvantage. The ascent of China and India has pretty much locked up the lower rungs of the economic ladder that countries must climb on their way to development.
A note of caution about historical antecedents…
What we are really talking about are historical forces; and assigning blame is a tricky business. While it can be said that many LDCs were exploited and harmed over time – by policies and agendas of other nations, usually Western- things are rarely that simple. There is more than enough blame to go around involving a variety of internal and external players, some of whom were, themselves, victims of historical forces. Suffice it to say that history has not been kind to the poor nations of the world, and that helping them requires addressing these historical legacies.