Foreign and Defense Policy, Subsaharan Africa

President Obama on African trade and natural resources

REUTERS

REUTERS

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.

3 thoughts on “President Obama on African trade and natural resources

  1. There is extremely great irony that he would have anything at all to say about corruption, when he himself is the titular head of perhaps the most corrupt administration the country has ever seen.

    Moreover, the corruption as it exists and as concerns foreign trade is almost always because of top down, socialistically inclined government. Usually the President of African countries gives a sweetheart deal to some international corporation in trade for a sweetener for himself and his family. And of course, this is precisely the style of government that Barry encourages. As is usually the case, Barry is blind to the irony because he is blind
    to the fact that he and the style of government he promotes are the very causes of the problems of the system

    • The far from perfect pres. of Rwanda is closer to the truth than Barry is. He (Rwandan pres.) calls for western corporations to invest more in the infrastructure of Africa, both to facilitate getting resources to market, and to leave Africa better off for the trade. He points to Chinese countries doing what he asks, whereas the Western companies seem to prefer dealing with the socialists in a rape pillage and plunder fashion that strengthens the president or dictator in charge, leaves the people little if any better off. The marketplace left free would provide a more equitable distribution of wealth than the socialist style governments that Barry likes. Note that even here, it is dividing along the lines of those politically connected to a corrupt government who tend to be better off, while those not connected are more likely to have wealth stagnated or declining.

  2. Can it possibly be the case that the president does not see the connection between such centralized decision-making and the institutionalization of corrupt practices?

    Seriously? Of course he understands this. What do you think he learned in Chicago and Washington?

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