Are hand-outs and welfare rooted in what has been called “the tyranny of low expectations”? Could economic freedom be the antidote to that poison?

June 24, 2019

By: Bobby Casey, Managing Director, GWP

tyranny africa trade

I heard a very thought-provoking quote from Naval Ravikant. He was addressing the coming of further automation and artificial intelligence (AI). When asked if people can learn to adapt to these coming changes, he responded nonchalantly in the affirmative.

What about those who say people won’t be able to keep up? That a technocracy is coming for their jobs, and they won’t be able to adjust in time?

Ravikant called that: “The tyranny of low expectations.”

I can’t shake that phrase. Like when you buy a white car, and suddenly it seems everyone has a white car? I heard this, and now it seems I see it everywhere.

As an entrepreneur, I see solutions and business opportunities all the time. My problem is having too many ideas and not enough bandwidth to indulge them all… if you even want to call that a problem.

Have all my ideas panned out? Certainly not. But some people are very stuck in one paradigm with a political class hell-bent on keeping them there, regardless of where the market is heading.

This is how you get a campaign for a “living wage” to gain traction. You have someone who says some nonsense like, “A full-time minimum-wage job can’t afford a two-bedroom apartment anywhere in the United States!”

My instinctive response to that is, “Nor should it…”

Sadly, while the claim is factually correct, it neglects the fact that under 5% of Americans make minimum-wage. Moreover, the majority of that 5% are between 16 and 25 years old. It’s a transient wage largely procured by young, unskilled or under skilled workers.

The full premises for the “living wage” campaign are insufficient to impose it on the market. But by insisting that people cannot do better than this, and convincing those people that they are right, people end up surrendering.

People are convinced that they cannot be anything more than what they are, and that unto itself is mental shackles.

People are convinced that society cannot be without a government, and that too serves as shackles.

Political hacks have done this to much of the nation’s poor, but to a great extent they’ve also done this to the continent of Africa.

I wrote a piece a while ago about China’s dealings with Africa, contrasting that with that of the US. The former has offered lines of credit, while the US has offered hand-outs and pity that really never help the people. Even Bono has insisted that capitalism is a far better remedy to African poverty than foreign aid.

US National Security Advisor, John Bolton has been critical of China’s involvement in Africa:

The predatory practices pursued by China and Russia stunt economic growth in Africa; threaten the financial independence of African nations; inhibit opportunities for US investment; interfere with US military operations; and pose a significant threat to US national security interests.

The African continent is taking their place in the world and asserting their self-determination. A little less than a month ago, Africa reached the minimum 22-nation threshold to implement a free trade accord: African Continental Free Trade Agreement, or AfCFTA.

To be sure, Africa stands more to gain as a free-trade entity than as a recipient of pity and aid. According to FEE:

If all fifty-five African nations unite under the AfCFTA, then it’ll do just that. In fact, it’ll create a market with a shocking GDP of over $3 trillion—the fifth-largest economy in the world.

The member nations themselves will see quick returns as well! Tariffs were lifted off 90% of the goods traded among member nations, which is expected to boost trade among them by over 50%!

As a singular trading bloc, means a lot for economic sovereignty in Africa, but also a boon for the global economy. Streamlining trade with Africa cuts down on costs both in time and money.

Bureaucratically, making bi-lateral trade agreements with each of the African nations was to say the least, a hassle. According to a 2016 report out of the Office of US Trade Representatives:

In addition, the sub-Saharan region’s overlapping and incomplete customs unions can actually increase the costs associated with trade. In some cases, tariffs remain on trade within customs unions, and members can take deviations from the common external tariff rates, creating complexity and uncertainty for traders. Coupled with vast internal land borders and a large number of landlocked countries, complicated trade rules and tariff rates make intra-regional trade costly and inefficient.

Some countries also have non-tariff measures that further amplify the challenges that tariff rates pose for U.S. exporters and intra-African trade.

There’s no doubt that the African continent s abundant in resources. The issue has always been whether it will be Africa or other nations that control it. I’m excited to see Africa collaborating within itself to become a player in its own right.

Perhaps this arrangement will be more to Mr. Bolton’s liking. His new “Africa Strategy” calls for a reduction in foreign aid to the continent, while enhancing trade and commercial ties.

Is this an example of giving a man a fish or teaching him to fish? Or, is this an example of either working toward your own dreams or working to build someone else’s?

One thing is for sure, to keep people at subsistence levels while convincing them they will never amount to much more, is an undeniable tyranny. Perhaps Africa can be a lesson for individuals in the US: economic freedom leads to greater prosperity than monetary handouts.

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