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Off-the-cuff comments can offer insights into underlying thinking, a truism illustrated well by President Obama’s remarks at a press conference in South Africa on Saturday. In response to a question about foreign interest in African trade, the president advised Africans “to make sure that [trade] interactions are good for Africa,” because “there’s been a long history of extracting resources from Africa” during which “the profits” and “the jobs” flow elsewhere. And: foreign builders should hire “African workers,” natural resource development should ensure that “the money is staying in Africa,” and with respect to industrial development, “the manufacturing and value added [should be] done in Africa.” And finally: corruption should not be tolerated.
Put aside the elementary point, unrecognized by the president, that increased trade means greater specialization; does Mr. Obama know the “correct” division of market values among the owners of resources, labor, foreign capital, and the like? Only a believer in industrial policy by government planners could make such comments as his. Voluntary exchange can be presumed to make all parties better off as long as we respect individual choices; whether such transactions “are good for Africa” in some aggregate sense is a license for bureaucrats and politicians — and “experts” — to stick their noses in others’ business. And about those profits that flowed elsewhere: were African resources sent abroad for free? Or for less than world market prices? If so, is that the fault of foreigners? Or are local corruption and the absence of enforced property rights to the resources under consideration the more likely sources of the problem? And why is it that Africa for so long has exported resources rather than manufactures or services? Is it because of foreign perfidy? Or, instead, because of the perverse historical nature of political and economic institutions in much of Africa?
Can it possibly be the case that the president does not see the connection between such centralized decisionmaking and the institutionalization of corrupt practices? If politicians, bureaucrats, and experts have a say in how resources will be developed, who will be allowed to buy and sell them, and how the benefits will be distributed among competing interests, then no amount of anti-corruption vigilance would be sufficient. The president’s call for someone “to make sure that [trade] interactions are good for Africa” is a call for a more powerful government and a weaker market, and the corruption and poverty engendered by that combination. And that is a reality not limited to Africa.
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