I’ve shared in the past how free trading & nearly laissez-faire Botswana has now surpassed Detroit in many measures of standards of living.  Here I want to provide you another perspective and a different comparison.

WHY CONGO

On the African continent Botswana is an exception.  Most of the continent has been denied access to capitalism.  Throughout the Cold War Africa was a proving ground for Marxism, and the Soviets even established a university in Moscow called “Patrice Lumumba University” (since renamed) where the Soviets would import African leaders and train them to implement Socialism in their home countries.

Patrice Lumumba was a Congolese revolutionary who was executed in the early 1960s.  The Soviets locked on to his popularity and “martyrdom” to use him as a symbol of their commitment to Africa.  So, given the Congo’s specific ties to socialism (I’ll stop here with the history) this story is especially approbo.  Although the country never became socialist it certainly has remained a very autistic command economy even to this day.  So even though the country has one of the most abundant stockpiles of natural resources in the world it remains, to this day, very poor due to under-developed social institutions like private property that are necessary conditions for a market economy to function.

I am going to provide an excerpt from an old article in “The Economist.”  I found it so memorable that years later I wanted to look it up again and, thanks to the internet, was able to find it in the annals of history to share with you.

THANK THE DIVISION OF LABOR

What makes one nation (or area within a nation) richer and another nation poorer?  Simply put one nation has more accumulated capital per person than the other.  This is the case in America.  Our country has become so wealthy through the capital accumulation process brought about by capitalism that poverty has been eradicated.  In this instance I refer to true poverty, or penury, not the relative poverty of “this income quintile makes XX% less than another income quintile.”

In the excerpt below the chief African correspondent for “The Economist” decided to interview the richest African he could find and compare their lifestyle against the poorest American he could find.

These were the results:

I have found it difficult over the years to make a Western audience understand the magnitude of the wealth gap between the developed world and Sub-Saharan Africa.  You can talk about people living on a dollar a day, but that doesn’t mean a lot in a country where a regular guy makes $40,000 a year.  I tried to contrast the life of a poor man in America with that of an upper-middle-class Congolese man.

I was researching an article about poverty in Appalachia in 2005. I flew to Kentucky, drove to a remote hamlet in the mountains and asked some local charity workers to introduce me to the poorest people they knew – I phrased it more tactfully than that, of course.  I said “I’d like to see how people live around here.” This fooled no one.

The people of Appalachia may not be rich, but they are not stupid, either. They knew exactly why a journalist might be nosing around their neighborhood.  My guide introduced me to her Uncle Enos with the words: “This is Robert. He’s writing an article about poor white trash.” Uncle Enos smiled and said: “That’s me.”

Enos Banks is a loud, jovial fellow in late middle age. He lives in a trailer with half a dozen cars in varying states of disrepair parked outside and a pile of crushed Pepsi cans below the porch.  He has no job — he used to work as a driver for a coal-mining firm, but left after a heart attack in his 40s. He wears a cowboy hat and talks with an accent that outsiders find nearly impenetrable.

He tells a cracking yarn about ketchup.  One day, he spilled a splotch of it on his shirt. For fun, he persuaded his brother-in-law to shout angrily and shoot a gun through the window. When their two wives came rushing in, they saw Mr. Banks lying there covered in what looked like blood… “My wife passed out,” he chuckles, and my brother-in-law’s wife shook him till his [false] teeth rattled.” Mr. Banks is clever with his hands. When the price of gasoline hit the sky, he grafted a chainsaw engine onto a bicycle to make a moped. He likes to be prepared.  He walks with a walking-stick–cum–rifle, with a plastic cap on the end of the barrel to keep out the dirt. If someone tries to mug him for his painkillers, he says, he is ready to “shoot them plumb between the eyes.” And if he runs out of bullets, he has a big knife strapped to the contraption with duct tape.

He “draws” $521 a month in Supplemental Security Income (a form of cash assistance for the elderly, poor and disabled). He laments that the authorities deduct $67 a month because he won $3,600 on the slot machines. Why, he asks, won’t they take account of all the money he has lost while gambling? It is a fair question..’

No American would dispute that Mr. Banks is poor. But by global standards, he is not. Shortly before I met him, I interviewed another man with roughly the same income: Mbwebwc Kabamba, the chief trauma surgeon at the biggest hospital in the Democratic Republic of Congo. After 28 years as a doctor, his salary is only $250 a month, but by operating on private patients after hours, he stretches it to $600 or $700.

Given the lower cost of living in Congo, one might guess that Dr. Kabamba is better off than Mr. Banks. But the doctor has to support an extended family of 12, whereas Mr. Banks’s ex-wife and three sons all claim public assistance. Indeed, the reason Mr. Banks split up from his wife, he says, is because they can draw more benefits separately. She still lives in the trailer next door.

What do Dr. Kabamba’s wages buy? He has a four-bedroom house with a kitchen and living room, which would be ample if there weren’t a dozen people under his roof. His home would be deemed unacceptably overcrowded in America. Even among the 44 million Americans officially classified as poor, only 6 percent live in homes with more occupants than rooms.’

Dr. Kabamba would quite like running water and a steady power supply. His family fetches water in jars, and the electricity comes on maybe twice a week. Air-conditioning would be nice, but “that is only for VIPs,” says Dr. Kabamba. In America, 84 percent of poor households have air-conditioning. Some 98 percent have a color television (two-thirds have two or more) and two-thirds have a car.

Dr. Kabamba earns enough to feed his children, but not as well as he would like. The family eats meat about twice a month; he calls it ‘a great luxury.” In America, poor children eat more meat than the well-to-do. In fact, they get twice as much protein as their government says is good for them, which is why the Walmart in Mr. Banks’s neighborhood sells such enormous jeans.’ A Congolese doctor, a man most of his countrymen would consider wealthy, is worse off materially than most poor people in America. That puts Americas prosperity into context. It also helps explain why so many of the world’s huddled masses yearn to live there. But it is riot only people from poor countries who seek a better standard of living in the United States. Americans are richer than people in other rich countries, too. Income per head in America is about 40 percent higher than the average among the members of the Organisation for Economic Cooperation and Development (OECD), a club for rich industrialized nations. Among OECD members, only Luxembourg (a tiny tax haven) and Norway (an orderly Scandinavian country sitting.

Source: “The Mountain Man & The Surgeon“, The Economist, Dec 20, 2005

 

Notes:

  1. Source attribution for the featured image
  2. The author of that excerpt, Robert Guest, also used that story in a book called “Borderless Economics” where you can find more of his stories