Nelson Mandela speaks at Make Poverty History rally
This morning Nelson Mandela gave a speech on ending world poverty. Here’s what he had to say,
I have said before that trade justice is a truly meaningful way for the developed countries to show commitment to bringing about an end to global poverty.
The second is an end to the debt crisis for the poorest countries. The third is to deliver much more aid and make sure it is of the highest quality.
I agree 100% that trade is a priority. I’m a staunch believer in free trade, without any farm subsidies within nations, and without tarrifs and trade barriers. I also realize this is but a dream of mine; “It ain’t gonna happen”, like Paul Newman said in The Simpsons once. The EU, which started as a common market, has now become a huge bureaucracy loaded with regulations on everything from the pasteurization of goat’s cheese to the size of beer bottles.
As to ending the debt crisis, that’s another story. Why should the developed countries subsidize countries like Argentina, which as Steve Forbes mentions this week, has simply defaulted on $80 billion of dollar-denominated debt?
Argentina recently reminded the world why its economic prospects are bleak; why as a country it continues to fall behind the rest of the world; and why half the population lives in poverty, with little possibility of improving its lot in life. The government has declared that it’s going to shaft private bondholders. Argentina defaulted on some $80 billion of dollar-denominated debt three years ago. Add in the unpaid interest and these obligations come to more than $100 billion.
After stiffing bondholders for over three years, the government is now making them an offer that they should indignantly refuse: It will pay bondholders about 30 cents on the dollar. Argentina is, in effect, giving the rest of the world its middle finger. The country is quite capable of restructuring this debt in such a way that bondholders eventually could be made whole–or almost whole–in the years ahead.
This is lawlessness, pure and simple. The government figures it can stiff these creditors and get away with it. What government officials don’t understand is that the rule of law is essential for future prosperity. Investors will be loath to make the kind of commitments they would normally make in Argentina because of fears that the government will arbitrarily change the rules some day and stick them with losses
Mr. Mandela proposes “much more aid and make sure it is of the highest quality”. Yes, aid for clean water; lifting the ban on DDT; aid for teaching and implementing the science of agriculture instead of encouraging pie-in-the-sky land redistribution schemes to people who don’t know how to cultivate. Aid that is taken directly to the people who need it, without ending up in the pockets of the few, as is so often now the case.
And I suggest one more thing to end world poverty (call it a two-prong measure, if you might): making the rule of law apply to all, mighty and low, alien and native, and instituting permanent, enforceable property rights.
Democracy would help, too. Singapore has achieved huge prosperity without total democratic freedom. However, the rule of law and property rights are respected in Singapore.
Free trade, clean water and effective sanitation, property rights and the rule of law, foreign aid not diverted to the corrupt. Then we’ll begin to see an end to poverty.