A Free-Market Famine?

Earlier this morning, I had a post ready to go on the food emergency in West Africa. But then I read an article in the Washington Post that led me to rethink what I wanted to write about. Honestly, I’m still thinking through some things. So while I’d ordinarily wait to write until I had a better grasp of what it was I wanted to say and how I wanted to say it, I think this time I’m just going to use this space to get some rough thoughts out there, ask a few questions, and see what y’all think.

We’ve talked before about the complexities of tackling a massive problem like extreme global poverty. If you spend any time at all reading about or discussing this, you will inevitably run into the argument that a lot of international aid is ineffective because it goes to prop up the regimes of corrupt, awful leaders. And while it’s not quite that simple, there’s some truth there. The argument often continues to point out that liberal democracies tend not to suffer famine or to suggest that market reforms might lay the groundwork for positive economic growth. In a very simplistic sense, this is part of the argument behind the recommendations and requirements that the IMF lays out for the poorest of nations.

But here’s the thing.... It makes sense to point to a country like Zimbabwe and say that the impending food emergency can be traced in large part to Mugabe’s misguided land reform and his horrific policies aimed at the urban poor and rural citizenry. But Niger’s case is much different. In many ways, Niger seems to be doing a lot of things right. It is a fairly respectable democracy in a region where dictatorship and military coups are more the norm. It has begun to implement many of the free market reforms recommended by the IMF and the EU.

And yet millions of Niger’s citizens face a dire food emergency.

When I first started reading and writing about this, the storyline seemed pretty clear:
bad harvest + locusts + lack of international response = famine. But the articles I read today suggest that the story is much more complicated than that.

Via ...My Heart’s in Accra, I found an article in the Guardian from earlier this month that puts it this way:

The starvation in Niger is not the inevitable consequence of poverty, or simply the fault of locusts or drought. It is also the result of a belief that the free market can solve the problems of one of the world’s poorest countries.

The price of grain has skyrocketed; a 100kg bag of millet, the staple grain, costs around 8,000 to 12,000 West African francs (around €13) last year but now costs more than 22,000 francs (€25). According to Washington-based analysts the Famine Early Warning System Network (Fewsnet), drought and pests have only had a “modest impact” on grain production in Niger.

The last harvest was only 11% below the five-yearly average. Prices have been rising also because traders in Niger have been exporting grain to wealthier neighbouring countries, including Nigeria and Ghana.

Niger, the second-poorest country in the world, relies heavily on donors such as the EU and France, which favour free-market solutions to African poverty. So the Niger government declined to hand out free food to the starving. Instead, it offered millet at subsidised prices. But the poorest could still not afford to buy.

[...]

The UN, whose World Food Programme distributes emergency supplies in other hunger-stricken parts of Africa, also declined to distribute free food. The reason given was that interfering with the free market could disrupt Niger’s development out of poverty.

The food emergency in Niger doesn’t seem to be a proper reflection of Niger’s ability to produce food. I’ve read a number of accounts of bustling, well-stocked food markets throughout the country.

Ultimately, it’s possible that these market reforms will be the key to getting Niger out of its current cycle of extreme poverty. But if letting the free market drive pricing results in the death of hundreds of thousands to millions of people, is it worth it? Might there be other preconditions that need to be met before freeing prices?

Look, the dark side of capitalism is that there will always be economic losers. But there’s a huge difference between inevitable income inequity and inevitable mass starvation. I don’t want to pretend that there’s anything but an ugly answer to this question, but what is the threshhold where the loss outweighs the benefits of market liberalization?

The Washington Post article I mentioned earlier tells the same story in a different way. I’m not going to quote as much of the article as I want to, so please read the whole thing. In addition to the high prices attributable to free market reforms,

the tradition of sharing in their society is giving way to sharper, more selfish attitudes as Niger, one of the world’s poorest countries, reaches for a more materialistic, Westernized future.

[...]

“There are people who are making profit out of this whole situation,” said Abdoulkader Mamane Idi, a local radio journalist. “The link of brotherhood and solidarity has been broken.”

[...]

In the mostly Muslim nation, where the wealthy have a religious duty to set aside a portion of their income for the poor, some Islamic leaders said fewer and fewer are bothering to do so.

“There is nothing like generosity now,” said Malan Hassane, the imam of a neighborhood mosque. “Selfishness is gaining ground.” He maintained that humanitarian groups would not need to intervene if people here were more willing to feed one another.

Now you can certainly argue that the traditional way of life in Niger hadn’t done much to break the country out of abysmal poverty. I don’t want to overromanticize this point. But there’s still something distressing about the way that market reform tears at the fabric of community, undermines commitment to religious duty, and squelches the spirit of generosity.

I very much hope that someday, Nigeriens and others who live in poverty might know the abundance and the opportunity that I’ve known in the United States. But at the same time, reading this article made me contemplate what we’ve given up in the U.S. in order to let the free market have so much control over our society and over our lives. At what cost have we achieved our “materialistic, Westernized” status?

Have we lost our link of brotherhood and solidarity? In a mostly Christian nation, where the wealthy have a religious duty to give to the poor, how many of us bother to do so? Is selfishness gaining ground? Hell, has selfishness flat out won?

There’s not extreme poverty in the U.S. like what we read about in Niger, but still, consider a statement like the last sentence from that excerpt: “humanitarian groups would not need to intervene if people here were more willing to feed one another.” Considering the preponderant wealth of the U.S., how scathing a criticism is that if we turn it on ourselves?

Jeanne at Body and Soul reads the same article and asks this: “Are we better off with more things and fewer connections? Do we think Africans will be?”

As I said at the outset, I’m still thinking through a lot of this. These are big questions. I know I’m not the first to ask them. But it just seems like there must be a better way. As an American, I cannot be satisfied with this. As I Christian, I really cannot be satisfied with this.

Do you feel the same way?

7 Ripples from “A Free-Market Famine?”

david says:

August 12, 2005 at 4:08 pm

re: the argument that aid is ineffective because it goes to corrupt leaders:

you may have said this elsewhere (i haven’t read your blog before this post), but this argument and any debate surrounding this argument merely touches on some of the symptoms of global poverty and miss the deeper issue, viz., the geopolitical climate that has made it possible for corrupt leaders to ascend to power in african (and other third world) countries. the fact is that the economically and militarily powerful nations of the world have exerted their power in at least two ways that have precipitated the current geopolitical situation.

first, the conomically powerful have rigged trade laws to favour their own economies without regard for the effect such laws have on underdeveloped economies. one of the implications of this is that too much resource control is put in the hands of government leaders. in an economically unstable society, where poverty abounds, that is a recipe for coups and dictatorships for two reasons. first, it provides incentive for some group to change their economic fortunes by taking over the poltical reins of the country. second, the unstable conditions prevent the formation of an active and stable population nedded to oppose and counter dictatorial policies. thus, trade laws as devised by wealthy nations make it such that their third world counterparts will remain economically unstable, and thereby unable to devise an effective solution to their poverty problem. thus, one way to address the root of global poverty is to campaign for fair trade and not simply free trade.

second, let’s not kid ourselves. the corrupt leaders at the helms of third world dictatorships are there because the united states and its miliatry allies installed them there. so, if international aid is ineffective because it falls into the hands of corrupt dictators, we need look no further then western geopolitical designs to figure out how such a situation came about in the first place.

so, while international aid may be a short term solution to address the symptoms of global poverty, it will remain ineffective in addressing its roots.

(btw, i recognize that none of this appears to apply to the situation you were addressing specifically, viz., niger, although it could be argued that one of the causes of poverty in niger is unfair trade laws--even if they have liberalized their economy.. i simply wanted to respond to what i felt to be a mistaken emphasis placed on the symptoms and not the problem.)

zalm says:

August 12, 2005 at 10:08 pm

Hi David,

I appreciate you stopping by and taking the time to leave such an extensive comment.

This post was largely me shooting from the hip.  I oversimplified a lot and tried as much as possible to acknowledge that fact.

I mentioned the “corrupt leaders” argument in passing largely to make the point that Niger seems, at least to an inexpert observer like me, to be a counterexample to that argument.  I thought it a necessary point to make in order to then explore the idea that interested me the most: in a country with a government that doesn’t seem to be corrupt, and in a country that seems to be taking the “right steps” towards market liberalization, there still seems to be something important that is being destroyed in the process.

The points you make are certainly important ones, but I didn’t really widen my scope enough to take them on in this post.  Thanks for broadening the discussion.

Here are my initial thoughts about the arguments you make:

Like you, I only find the “corrupt leaders” argument compelling to a point.  I think corruption and tyranny matter in this discussion, and both factors make aid and development efforts much less efficient.  But the argument also frustrates me.  I think it gives people a misguided excuse not to give.  And I think, as you suggest, it takes away some of the blame that belongs squarely on the shoulders of the world’s economic and military powers.

Africa in particular has been deeply shaped by European colonial and post-colonial policies.  Add to that the U.S. and Soviet influences during the Cold War and a growing Chinese presence in countries like Sudan and Zimbabwe, and you’re right � many of these corrupt leaders are in power because other countries either put them there or greatly shaped the conditions that led to their assumption of power.  (My knowledge of African history isn’t expansive enough to make the claim that this is true in every case.)

That said, I think that putting all of the blame on the U.S. and others leaves you with an agency problem.  Even if powerful countries are at fault for creating conditions where someone like Mugabe could grab and maintain power, he’s still responsible for his actions.

All of this is to say that even if I didn’t write about it in this post, I agree that a discussion about the causes is more important than a discussion of the symptoms.

An even more important discussion, albeit one that really builds on the others, is what can we do to address the causes.  Not just us as a country.  Us as individuals.  And that’s where I still don’t have a lot of answers.

If you’re inclined to take the time to read previous posts, I would suggest <a rel="nofollow" href="http://www.fromthesalmon.com/2005/04/23/fighting-poverty-bad-news-and-good-news/">this post</a> and <a rel="nofollow" href="http://www.fromthesalmon.com/2005/04/27/the-end-of-poverty/">this post</a> as a general overview of where I’m coming from in my writing about extreme poverty.  In many ways, I’m just getting started. And I’m by no means an expert.  But I’m trying to learn. And I think through issues like this best when I’m writing.  The fact that some of this can turn into a dialog is even better.  Thanks for being part of that.

Kevin says:

August 12, 2005 at 10:09 pm

Nothing to add to any of this. But, Zalm, I thought you might be interested in a sermon we had a church a few weeks ago about global poverty. It skirts between Rwanda and things locally here in the Chicago suburbs. I’m pretty pleased that, though I go to a church that is a megachurch (although it’s the sort that plants new locations instead of morphing into a small city), we’re doing a lot to fight this fight. Anyways, there’s both video and audio if you’re interested. Also, a family in my church started a non profit called Global Family Rescue, which sponsors families in extreme poverty around the world, primarily in Africa it appears.

david says:

August 13, 2005 at 8:08 am

zalm

i appreciate the point about agency. i would agree with you, which is why i don’t put all the blame squarely on the west. someone on the african end has to be willing to play the corrupt dictator part and there have not been a shortage of those types.

also, i appreciate what you were trying to do with this post. i understood that you were trying to set up your discussion of what to do in a country without a corrupt leader by contrasting it with that tired and familiar argument. but some of what i had to say about trade laws might still apply to niger. one thing we (incl. myself) need to understand better is the dire trade situation many third world countries are in, that even if they could get it together economically, international trade laws wouldn’t allow them to get out of the hole.

what to do as individuals? i’m not sure that unjust trade laws can be addressed by individuals qua individuals; i think trade laws need to be addressed by collectives of individuals. there needs to be enough pressure to force governments to pursue fair trade. i’ve just started on this journey myself, but i can offer a few links of note.

first, one of the ways individuals can pressure gov’ts and corporations is by consuming ethically. to that end, check out ethical consumer mag. also, there are a number of activist organizations that specifically target trade laws. for example, the make poverty history campaign was largely concerned with int’l trade. see the ONE campaign here in the U.S. or make poverty historyin canada or in the UK. also, check out christian aid and their companion site pressureworks.

of course, all these might be things you’ve checked out or know about.

this is a good journey you’re on. thanks for letting me be a part of it.

cheers.
dw

zalm says:

August 14, 2005 at 4:08 am

Sorry that your comment got delayed, David.  I think my spam filter throws up a flag at more than four links.  As you have a site of your own, I’m sure you understand.

Because of the people I know who do this work and the path my own studies took back in my more academic days, I find it easier to grasp the role of a relief and development agency or to explore the kinds of changes that need to happen within a country as preconditions to economic transformation.  But the trade policy side of this is admittedly a bit daunting. 

On the one hand, I’ve never really taken the time to educate myself as to how the World Bank, the IMF, or the WTO really work.  If I’m seriously interested in learning more about these issues, that’s something I really should do. 

On the other hand, I find trade policy a bit difficult to grasp largely because it involves keeping up with a somewhat byzantine set of laws and regulations in multiple countries.  I start reading about something like CAFTA, and my eyes start to glaze over. Perhaps this is where advocacy groups might be able to highlight the more egregious examples for me.  I’ll definitely poke around on some of the sites you linked to.

But you’re right, it’s one thing to tell these countries that the path to economic growth is for them to trade their way out of their poverty (and ultimately, I believe that is what needs to happen).  But it’s something totally different to tell them this while rigging the system in a way that will never allow that to happen.  That’s just unconscionable.  But, as little as I understand it, it seems that’s what happening.

I’ll try to make a point of reading up on this and then writing more about it in the future.

Russell Nelson says:

August 15, 2005 at 9:08 pm

If it’s possible to “rig[ging] the system in a way that will never allow that to happen.” then clearly that market is not free.  It seems to me that the solution is not for us to criticize the citizens of Niger for doing what we tell them, but for US to criticize US for not doing what we tell others to do.  Free trade begins at home, by eliminating any and all kinds of trade restrictions.
-russ

zalm says:

August 16, 2005 at 4:08 pm

Russ,

I agree with you that if free trade is the answer, it’s imperative that we stop protecting our farmers at the same time (if not before) we require other countries to liberalize their markets.

From poking around your site, it’s clear to me that you have a stronger background in economics than I do and that you hold a particularly high view of the free market.  I’d be curious to hear your thoughts on this passage from my post:

Ultimately, it’s possible that these market reforms will be the key to getting Niger out of its current cycle of extreme poverty. But if letting the free market drive pricing results in the death of hundreds of thousands to millions of people, is it worth it? Might there be other preconditions that need to be met before freeing prices?

Look, the dark side of capitalism is that there will always be economic losers. But there’s a huge difference between inevitable income inequity and inevitable mass starvation. I don’t want to pretend that there’s anything but an ugly answer to this question, but what is the threshhold where the loss outweighs the benefits of market liberalization?

I realize that the current domestic and international markets in Niger aren’t perfectly free by a long shot.  And the market liberalization in Niger is certainly only one among many contributing factors to this food emergency.

But, had the related markets been free from the beginning, how might that have alleviated this crisis?  Wouldn’t hundreds of thousands of Nigeriens still be unable to afford food?  Wouldn’t food aid of some sort or another still be necessary?  And wouldn’t that in turn mess with the markets?  Does the free market alone contain mechanisms that would provide for people with no means in an emergency?  Or does a commitment to laissez-faire economics mean that these people are on their own?

I’m not really looking for a vigorous debate, since I know better than to lock horns with someone who calls himself the “Angry Economist.” But I am looking to learn, and I’d be grateful if you’d spend some time with my questions.
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