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Free Markets Are Rare in Starving Nations

April 24, 2008

By Steven Malanga

Last week the Daily Telegraph of London ran a photo of food protests in Haiti to accompany a story on how the West's production of bio-fuels had contributed to the world hunger crisis. Facing down the protestors in the photo was a solider in a blue helmet, identified in the caption as a U.N. peacekeeper.

Observant readers might have wondered what a U.N. soldier was doing in Haiti in the first place. In fact, the soldiers' presence there preceded the current world food crisis. Detachments of U.N. troops have been in Haiti since 2004, when the country went into what the New York Times described as "international receivership" after its president, facing a revolt, was forced to flee. Today, according to the Heritage Foundation's Index of Economic Freedom, Haiti is one of the world's most volatile, least free, and poorest countries, "plagued by corruption, gang violence, drug trafficking, and organized crime." It lacks property rights and its explosive political situation discourages foreign investment, while payoffs to customs officials raise the cost of imported goods.

Haitians are tragically starving, in other words, not because of the West's misguided bio-fuels policies.

To read media coverage and commentary of the world's growing hunger crisis, one would assume that the problem is largely the doing of Western democracies. We've been reminded any number of times, by commentators on the left and the right, that misguided efforts to convert grains into fuel have robbed the world market of precious foods. Meanwhile, that noted climatologist, Paul Krugman, has blamed the crisis in part on the West�s failure to address global warming, which he assures us has caused the drought that has curtailed food production in Australia. Even worse, the meat-eating proclivities of Westerners, critics tell us, have robbed others of food because it takes 700 calories of animal feed to produce 100 calories of beef.

It�s startling, however, the degree to which this kind of thinking is at odds with the geography of hunger around the world. If there is one thing which the countries where—according to the United Nation's World Food Programme—hunger is rampant share in common it is that they resemble Haiti. They are places where people are often enslaved, where free markets don't operate, where property rights are not respected and corruption is widespread, where foreign investment dares not tread, where thugs and revolutionaries often appropriate for themselves aid that is meant for others. But these are problems which the Western media can hardly speak of when addressing hunger, as if it's unseemly to say that people are hungry because their own leaders are failing them—often despite our efforts, not because of them.

Political turmoil and the retreat of freedom have managed to make people hungry even in places where many previously were not. Heading the U.N.'s list of countries where people are most undernourished, for instance, is Zimbabwe. When the country became independent in 1980 it had, according to the Index of Economic Freedom, "extensive natural resources, a diversified economy, a well developed infrastructure, and an advanced financial sector," as well as networks of productive farms. But the increasingly repressive regime of strongman Robert Mugabe has destroyed property rights, allowed favored government officials to seize control of farm lands, and been hostile to Western investment, in the process transforming the country "from the breadbasket of Africa into a starving, destitute tyranny," according to the Index of Economic Freedom.

In many places, hunger is prevalent even though natural resources are plentiful. In the Democratic Republic of the Congo, where two-thirds of the country's 62 million people are undernourished, citizens lived amid constant chaos after war broke out in the mid-1990s and the country became a battle ground for troops from eight nations in the so-called African World War, in which more than 5 million people died mostly from starvation and disease. Tragically but perhaps not surprisingly, despite abundant resources including copper, cobalt and diamonds, as well as "enormous agricultural potential" according to the United Nations, the DRC is one of the world's poorest countries, where production of food has declined some 40 percent since war broke out.

Conflict is at the heart of the struggles and starvation of many of the world's poorest people, especially those whom Oxford University economist Paul Collier calls "the bottom billion." Collier argues in his book of the same name that while much of the developing world marches toward a better future, about one-sixth of the Earth�s population is being left behind in large part because of political turmoil and bad government. In all, Collier estimates, more than seven in 10 people in the bottom billion have lived through civil war, while border conflicts are common among countries where this group lives. Many of the nations that engaged in the widespread conflict that devastated the Democratic Republic of the Congo are themselves places where the population is suffering from extreme hunger, including Angola, Zimbabwe and Rwanda. Elsewhere in Africa Ethiopia, where nearly half the population of 69 million are starving, has warred with its neighbor to the north, Eretria, where starvation is also widespread, and invaded Somalia, a country which has no had a national government for some 17 years and where hunger is assumed to be extensive, although data are hard to come by because of the country's instability.

Faced with such massive governmental breakdowns, Western aid agencies have focused much of their energies on places like China, Brazil and India—where economic progress is already lifting hundreds of millions out of poverty—while truly destitute places languish and their standards of living decline. "The World Bank has large offices in every major middle-income country, but not a single person resident in the Central African Republic," writes Collier, who once headed development research for the World Bank. "Every development agency has trouble getting its staff to serve in Chad or Laos."

Collier has several recommendations for the West, including tying aid to political and economic reforms, giving the poorest countries preferential treatment to Western markets until their products can compete on a level playing field with those from other developing countries like China, and finally, when all else fails, military intervention to reestablish order and save lives. Needless to say, that is his most controversial solution, though one that is finding increasing support even from unlikely sources, like New York Times columnist Nicholas Kristof, who has traveled extensively in Africa and sees little else that may make a difference to people in the direst circumstances. He argues that had the West intervened in Rwanda in 1994 and averted massacres there, the number of lives saved would have far surpassed anything accomplished by more traditional forms of aid.

Perhaps it's because military intervention seems so unlikely—after all, the U.S. is preoccupied in Iraq and most European armies today resemble glorified police forces incapable of operations around the world—that the media prefer to focus on how Western policies have contributed to the growing hunger problem. But the West's shortcomings have had a marginal impact, at best, and as free markets engage around the world, they are likely quickly to offset those failings. Even now in the United States farmers who have been paid by the government for years not to farm their land are ratcheting up production to meet growing demand.

What won't change, even as the business cycle turns and markets respond, is the plight of the most destitute, who are also almost universally the world's most enslaved people. They need democracy and free markets of their own, and until they get those, the world's hunger crisis won't disappear.

Original Source: http://www.realclearmarkets.com/articles/2008/04/free_markets_are_rare_in_starv.html

 

 
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