Guilt and Debt at the G8 Summit


Gleneagles Hotel, Perthshire

Not another summit? You may well ask. In Gleneagles, Scotland, world leaders are gathered together today at great expense to pronounce on world problems: largely manufactured to give politicians something to do. As we know, if politicians did less there would be fewer problems. But to keep them in what they think is gainful employment they always latch on to the most emotionally-charged issues. This time the subjects will be ‘poverty in Africa’ and environmentalism, more specifically, alleged global warming. These both have a public resonance and the activists deliberately use them to make rich capitalist countries of the West feel guilty about their success and morally obliged to share it.

Let us look at these issues in turn. Why should the West be racked with guilt about poverty in that benighted continent, Africa? The poverty there is not caused by the wealth of the West. Those miserable countries in sub-Saharan Africa would do better if they adopted the ways of the West rather than turning up at international crisis meetings with a begging bowl. In fact, the hopelessness of these African countries is largely a consequence of the misguided generosity of the West which has ensured their permanent poverty. Hundreds of billions of dollars have been poured into Africa in aid since independence yet most of the countries are poorer now than twenty years ago. And it is not for lack of resources. Nigeria has massive oil reserves yet poorer people are no better off through having them. Like the aid, the wealth the resources generates goes to corrupt politicians.

The point is that African countries waste both international aid and natural resources through corruption by its political classes and pointless wars. A country does not get rich from aid or even natural resources – look at Hong Kong. It needs stable and transparent government, peace, the rule of law and protection of property rights. Only if these criteria are met will these countries be attractive to overseas investors. In their absence, poverty and war will result. It is not that African peoples are incapable of grasping the main features of capitalist enterprise. As the great free market economist and development writer, the late Peter Bauer has shown in stimulating detail, African countries had generated complex and efficient trading systems long before they were colonised.

But then the Africans discovered socialism from the London School of Economics and the decline set in. And worst of all, dependency became the norm. Perhaps the most spectacular of socialist waste was Tanzania, where billions were spent on grandiose schemes to eliminate capitalism. And the people got poorer and their rulers richer. As Bauer’s aphorism holds: ‘Aid is the method by which poor people in rich countries are compelled to finance rich people in poor countries’.

There is something the West can do about poverty in Africa. One way of establishing the popularity of capitalism and the wealth of Africa is for the West to end its ridiculous system of subsidies to its own farmers. Everybody would gain from this simple piece of economic rationality but it is unlikely that the European Union would take the lead here: French farmers are too politically influential. Politics is always the problem.

Similarly, the environment is likely to excite the emotions rather than the intellect. It is also another issue with which to bash capitalism. The idea that the market and the search for profit has destroyed the environment is now the accepted belief even though socialism did much greater harm to the environment, largely because of the absence of property rights and monopoly government that had no incentive to care for the environment. But now environmentalism has become an anti-capitalist religion immune from scientific analysis.

The clear conclusion is that far from damaging the environment industrialisation has actually improved it. As capitalist countries get richer their citizens come to value a pleasant countryside and clean air. Just compare the London of today with that of forty years ago. For poor and undeveloped countries a good environment is a luxury. In all this we should remember that property rights and a reliable legal system are crucial. The possibility of suing the polluter is essential if we are to avoid the heavy hand of the state. The move towards the issue of pollution permits, which can be bought and sold on the market, is obviously a move in the right direction.

The big issue at the moment is the question of global warming. The European press mistakenly claims that there is scientific agreement that it is a problem. But there is no unanimity here. Many perfectly respectable scientists claim that the very small increases in temperature that we have experienced are explicable in naturalistic terms not industrial ones. Also, the one writer who has done so much to discredit the environmentalist claims, the Dane Bjorn Lomborg in his important book, The Skeptical Environmentalist, argues persuasively that the fashionable measures to cope with global warming are costly and will hold up that industrialisation which is the only thing that can save the environment. As he points out, the much-heralded Kyoto agreement will cost 150 billion dollars a year and will delay global warming by six years. It just is not worth it.

At the Gleneagles summit the world leaders will be surrounded by highly educated people equipped with the latest fashionable knowledge. But that is the problem. The problems of poverty in Africa and global warming require only basic microeconomics and a little common sense. But politicians have other fish to fry – winning elections and appeasing the intellectual classes.