All true but largely beside the point.

Thanks to the weather (an ice storm), I woke today to find that that I had a bit of extra time. So I sat with a cup of coffee and yesterday's NYT (December 10th 2007) and saw on the front page Lydia Polgreen's "Congo Republic Awash in Oil and Poverty". I readily admit that I expect to see certain things in any article on Africa. Ms. Polgreen's article did not in any way, shape, or form surprise me. In it (1) I found a naive notion that mineral wealth, overall wealth, and income are synonymous and found no mention of environmental issues, (2) I found too much focus on corruption, and (3) I found a careless use of numbers. One walks away from a piece such as Polgreen's confident that if they were given a month or two to run the show all would be well. Implicit in this is the ugly attitude that the people actually involved are so inherently bad, stupid or both that they cannot manage their own affairs. (1) RESOURCES: After having described the deplorable conditions at Brazzaville's main teaching hospital, Polgreen poses the following question "... why is the hospital, like so much of the Congo Republic, so tattered when the country sells billions of dollars of oil each year?" The answer is actually simple. Oil and willing workers it may have but the Congo Republic lacks human capital, tools and machinery and natural resources. The skilled labor to fix plumbing, repair light fixtures and electrical connections is in short supply. Also the capital it needs, real capital, both public (roads, well developed harbors, airports) and private (tools and machinery) is scarce in the Congo Republic. Finally, as green and lush as it may appear the Congo Republic's environment is very fragile indeed. As population has increased and farmers have been forced to change from traditional slash and burn techniques to more settled agricultural techniques, nutrient mining (the depletion of minerals in the soil and hence fertility) has been very high (1). This coupled with the Congo river (an annual river which goes from a trickle to rapids and back again) means that overall the country's natural resource base is quite poor. Nobody who takes a moment to consider how important natural resources, physical capital, and skilled labor to economic development will be at all surprised that the Congo Republic is so poor. Perhaps a better question would be how well those of us from economically richer areas -used to the advantages we enjoy-would cope with the obstacles found in the Congo Republic. _________________________________________________________ Of course, the preceding raises the question as to why the stock of skilled labor, tools and machinery and infrastructure is so poorly developed. Consider investment in public capital or infrastructural investment first. The Congo like most of SubSaharan Africa is sparsely settled. Therefore the cost of building and maintaining infrastructure is spread over relatively fewer people and people who are poor. As a result, the cost per person is by definition far higher than it would be in a more densely settled area. There is therefore in turn a lower chance that individual benefits will outweigh the costs. Because of this, as Ester Boserup argued a long time ago, poor and sparsely settled areas are caught in a trap that is difficult to escape. The publicly provided capital, the infrastructure, that the country needs to carry out economic activity such a producing and then transporting new light fixtures, paint, and plumbing fixtures to fix hospitals is far from developed to the degree that it should be. Without a great deal of extra effort this is unlikely to change. And low levels of investment in education, training, or in business is a chicken and egg problem. Take for example education. The benefits from the investment in education are contingent on what we expect others to do. If somehow a poor family could afford to give up the income that their children help to provide them*(see * below), it would all be worth it if that child in turn could find work that would make use of this education. However, this will only be true if the structure of the economy changes and this the family has no direct control over. Stuck at the bottom of a very deep hole individuals trying to climb up to the top on their own are unlikely to make it. Only if they were to cooperate, standing on one another's shoulders, might it be possible to escape. And this is not possible without a great deal of trust. While life at the bottom of the deep hole may not be too pleasant you know what you must face and know you can cope. What if a family helps others climb out only to find that when they have reached the top they have forgotten their obligation to help the rest escape? What of the risks of injury if this human ladder collapses means? It perhaps is better to leave well enough alone. Poor laborers, farmers, and business people are -because of their poverty-risk averse. (2) CORRUPTION: Even if one had the most dedicated and well-financed government in the world it is difficult to overcome these obstacles, especially when the environment is such that it lacks skilled labor and capital and the country's coastline has few natural harbors, its rivers are not navigable, rainfall is highly variable, and soil is poor. In short, when the hole is especially deep and the edges particularly slippery it will require far more effort and far more help than the help those in shallower holes required. Corruption does not help make it any easier for a poor country to climb out of the hole it is in. However, for every twenty pieces written on the political and economic obstacles African countries face that focus on corruption there may be one that mentions the problems of poor natural resources, low private investment and poorly developed infrastructure. A change in political culture will not make the Congo River more navigable. It will not change the speed with which the costs of increased population and density emerge (urban overcrowding, nutrient mining, and so on) versus the speed at which the benefits appear (a wider base to spread infrastructural investment over only works if the level of real per capita income remains constant or increases.) It can of course alter the payoffs from private investment in such a way that it lessens the risks to any one family or business taking the first steps to educate, train, or invest in their own business or farm. However, a less corrupt government does not alter the contingent nature of these investments. What I referred to as the chicken and egg problem remains. Blessed with natural harbors, timber, coal, iron ore, fertile land, labor (first brought in chains and the driven here by poverty) the U.S. has prospered despite Tammany Hall, McCarthyism, Watergate, or Enron. Although India's shining is more an example of how all that glitters is not gold (see Mira Nair's Planet India for example) its growth is high despite widespread corruption. To blame poor performance on corruption is cruel when no matter how well run things might be or how selfless public servants could be, the hole is so deep and so hard as to be almost impossible to climb out of. (3) PROPORTION: My last criticism of Polgreen's piece involves simply taking the numbers she had reported and asking a few relatively straightforward questions. For example, Polgreen states that the Congo Republic churns out 250,000 barrels of oil a day. At $90 a barrel this means that that the Congo would earn $22,500,000 a day or $8,212,500,000 a year. This sounds like an awful lot of money. However even with a population of only 3.8 million people this then represents only $2,161.18 a year available per person. Say that actually only half of this (about $1100 per person) could be turned back over to development because the rest is needed to cover costs of production and that none of this money was wasted. It is without a doubt true that a great deal could be done with this in such a poor country as the Congo. It is equally true that the average American would need to pay only about $14 a year and that the burden would be even less (far far less than what the average American family spends eating out or on entertainment each year, about $5,000 per family) if all the economically more developed parts of the world were to ask its citizens to put money into what might be called something like a Help Africa Compensate for Corruption Fund. In sum, we could help those most in need if we were to actually go out and buy a ladder rather than standing at the edge of this deep hole criticizing the behavior of the leaders on the bottom. The money wasted by government officials on travel, lobbying, and such is not confined to just countries like the Congo Republic. *(See above) Stephan Thernstrom in _Poverty and Progress_ wrote eloquently of the problem that the families of unskilled workers in Newburyport, Massachusetts faced. "The relentless pressure of poverty -stemming from the depressed wage level for common labor and from sharp seasonal fluctuations in employment opportunities -forced the children of Newburyport's laborers into the job market at an early age. Sometimes a laborer went several weeks without earning a cent; then the four dollars a week that his twelve year-old son earned as a bobbin boy was the family's sole source of support. Opportunities for formal education past the age of eleven or twelve were effectively nil for working class children" (Thernstrom, 1971, pp. 22-23) For more on geography as a barrier to trade see Hummels "Time to Trade"