Mar
28
2014

Skyscraper Effect in China?

Chinese Skyscrapers Mania

Skyscrapers are some of the most long-term building projects on the planet, and China seems to build a new one every day. Shanghai currently has three of the 16 tallest buildings in the world: the Jin Mao Tower (1999), the Shanghai World Financial Center (2008) and the Shanghai Tower (2014). And China is planning to finish the tallest skyscraper in the world with a project in Changsha, the capital city of central China’s Hunan province.

 

 Do Skyscrapers Cause Economic Depression?

The economist Andrew Lawrence created the “skyscraper index” in 1999 to point out the correlation between the building of the latest “world’s tallest skyscraper” with impending global financial disaster. Lawrence called his index an “unhealthy 100 years of correlation.” Bottom line: if you hear that some builder is constructing the “tallest skyscraper in the world,” watch out! It is not that the building of the skyscraper causes the economic depression, but is rather a prominent symptom of powerful economic forces. Specifically, these skyscrapers tend to get built when there is the largest disconnect between the actual interest rate and the natural interest rate. That is, when government intervention forces the actual interest rate lower than the natural rate of interest for a long period of time and to a great extent.

Boom-Bust Business Cycle

The builders announce and begin constructing the world’s tallest skyscraper in the late phase of the boom in the Austrian business cycle, while unemployment is still low. Next is a sharp economic downturn and increase in unemployment. The skyscraper is finally completed during the early phase of the inevitable economic correction. Had the builders known the future, they would not have continued their incredible building project in these cases, but, the relevant price information typically comes too late for them to make an informed decision on construction.

Capital-Intensive Boom

The most famous economic disaster in U.S. history, the Great Depression, took place at a time of what Austrian economist Mark Thornton called a “capital-intensive boom in the construction of ever-taller buildings.” What was he talking about? Everybody has heard about the massive gains and bubble in the stock market at the end of the 1920s, but fewer are aware of the massive construction bubble that occurred at the same time. At the time of the great stock market crash, U.S. builders were in the midst of constructing not just one of the “world’s tallest skyscrapers,” but three: 40 Wall Street (71 stories in 1929), the Chrysler Building (77 stories in 1930), and, of course, the Empire State building (102 stories in 1931).

What is the Austrian Explanation of the Skyscraper Effect?

skyscraper

Planned “world’s tallest skyscraper” in Changsha, China.

The skyscraper has become the symbol of the capitalist system in the modern era, much like railroads and factories were its symbols in earlier eras. Skyscrapers are very long-term investment projects – just the kind of projects that artificial booms encourage. Remember, during the Great Depression, the famous “cluster of errors” occurred first in capital-goods industries rather than consumer-goods industries.

Mark Thornton explained, “In the Austrian view, changes in the interest rate change the relative price between longer-term capital projects and shorter-term capital projects. A lowering of the interest rate raises the prices of longer-term capital goods relative to shorter-term capital goods.” The market responds to this change in relative prices by diverting resources to long-term capital goods, such as skyscrapers. There are only so many resources in the economy at any given time, and they do not always get diverted to the best long-term projects for the actual market. “These resources become formulated in a highly specific capital good that may not be well suited to the alternative production processes of the postadjustment economy,” said Thornton.

And then there is the earthy question of what happens when land prices go up and construction prices go down? Skyscrapers go up.

Thornton explained what happened in four major financial crises throughout the 20th century:

“First, a period of “easy money” leads to a rapid expansion of the economy and a boom in the stock market. In particular, the relatively easy availability of credit fuels a substantial increase in capital expenditures. Capital expenditures flow in the direction of new technologies that in turn creates new industries and transforms some existing industries in terms of their structure and technology. This is when the world’s tallest buildings are begun. At some point thereafter, negative information ignites panicky behavior in financial markets and there is a decline in the relative price of fixed capital goods. Finally, unemployment increases, particularly in capital- and technology-intensive industries. While this analysis concentrates on the US economy, the impact of these crises was often felt outside the domestic economy.”

Perhaps the Chinese government knows about the skyscraper effect and that is why they have recently called it off “until the project passes relevant safety examinations and gains building permits.”

 

Read Mark Thornton’s Skyscrapers and Business Cycles

Mar
15
2014

1776: Libertarian Revolution Against Conservatives of Power

In his magnificent Libertarian Manifesto For a New Liberty, Murray Rothbard made the case that the American Revolution of 1776 was a principled libertarian revolution – not a conservative revolution. The conservatives were those who wanted to continue their illegitimate, market-insane privileges; the revolutionaries actually cared about the principles of liberty.

Classical Liberals

Rothbard credited the “classical liberal” movements of the 17th and 18th centuries for bringing to the Western world the Industrial Revolution. These were revolts against the conservative Old Order which had a supposedly divinely-inspired king in charge of an absolute State mixed up with a monopolistic, anti-market order with urban guild controls and rural feudal land monopolies. This structure of mercantilism had business monopolies working closely with powerful States who could declare wars to enrich the businesses.am rev 2

The purpose of the classical liberal revolutions was to free individuals in all areas of life. Entrepreneurs were to be freed from regulatory controls that, of course, favored the big businesses who worked closely with political leaders; tax burdens were to be reduced; civil liberties such as religious freedom were to come. This was the ambitious program of the classical liberal revolutionaries.

Every facet of life was to be finally separated from the aegis of the State. “Separation of Church and State,” was just one aspect of this separation. Rothbard also named separation of the economy, of speech, of military affairs. “Indeed, the separation of the State from virtually everything,” he said (3). The revolutionaries were not middle-of-the-road “small government” types who believed in government-forced insurance programs; rather, they were dead set on stopping any new form of taxation or expansion of the State – because they knew such expansion always came at the expense of individual rights.

American Libertarian Revolution of 1776

The ideas of classical liberalism pored over into the American colonies in the 18th century. The debates that had been happening in England for years moved seamlessly into the New World. Bernard Bailyn wrote of the American Revolution:

Where the English opposition had vainly agitated for partial
reforms . . . American leaders moved swiftly and with little
social disruption to implement systematically the outermost
possibilities of the whole range of radically liberation
ideas.

The American colonies were in a unique position to actually implement the great liberal thought which began in England because they did not have the same constraints as British libertarians, namely, the feudal landlords and wealthy aristocrats who had been lording over the people for centuries.american revolution

Rothbard called the American Revolution an “explicitly libertarian revolution, a revolution against empire; against taxation, trade monopoly and regulation; and against militarism and executive power (7).” And yet, there were some entrenched elites who clamored for State controls, wanting in the colonies a copy of the British mercantilist system. These not-so-revolutionary forces organized themselves into a political party, called the Federalists. Unfortunately, these were indeed the people who were in charge during the first two presidential administrations in America.

Jeffersonianism and the Democratic Party

The Democratic Party has roots in libertarianism, not in socialism as you might expect based on the modern-day party. Despite President Jefferson’s strong libertarian leanings, his years in office witnessed a relentless march towards uncompromising statism as the American political elites headed towards another war with Britain. The Federalists were able to get a central bank, tariffs and taxes to fund their war march, and they spent horrifying amounts of cash on the military and public works programs.

Rothbard painted the scene in Moticello, where an old Thomas Jefferson complained about the Federalists’ hatred of freedom and motivated his visitors, Martin Van Buren and Thomas Benton, to found the Democratic Party. The new party had great success in the 1830s – defeating the central bank – but it never recovered in its libertarian form after being split up and destroyed over the issue of slavery and then the Civil War.

Power Elites: Conservatives Who Hate Liberty

It was not the libertarians who wanted to go back to the Old Order of landed elites who dominate everybody else’s life because they enjoy special privileges; it was the conservatives of the time: the Federalists in the 1790s; the Republicans in the 1800s; the Democrats and Republicans in the 1900s; Bush and Obama so far in the 2000s. These are all conservatives of power – they care deeply about conserving their own power.

Although libertarians are among the most likely to be traditionalists who uphold strong family values in their personal lives and communities, they are political radicals who oppose the State because it conserves immoral traditions of unjustified power. The State is an excuse power elites can use to maintain their power position without doing any real work. Libertarians oppose this evil program and that is what the American Revolution was about.

Feb
14
2014

Sundown in America?

David Stockman, the former Director of the Office of Management and Budget (1981-85) during the Reagan Presidency and author of “The Great Deformation: The Corruption of Capitalism in America”, spoke at Harvard University in a speech he called “Sundown in America: The Keynesian State-Wreck Ahead.” Stockman spoke about the ill-effects of his party’s Republican Keynesianism and its responsibility for destroying the growth of wealth in American families over the past 25 years.

Golden Nuggets from the speech:

  • Stagnant Living Standards: The median U.S. household income in 2012 was $51,000- a figure reached in 1989. Living standards have not grown in 24 years.
  • Poorest Struggling More: Bottom quintile of households making $11,500, a 20 percent decrease from the $14,000 in constant dollar income in 1989.
  • Food Stamp Nation: The number of Americans on food stamps has risen from 18 million to 48 million since 1989.
  • Rich Getting Richer, Including Under Obama: The top 5 million U.S. households (top 5%) have enjoyed an income rise from an inflation-adjusted $240,000 in 1989 to $320,000 last year. The $40 trillion gain in the net worth of the top 5% is almost double the entire net worth of the other 95% of households.
    Writes Stockman, “So, no, Sean Hannity need not have fretted about the alleged left-wing disciple of Saul Alinsky and Bill Ayers who ascended to the oval office in early 2009. During Obama’s initial four years, in fact, 95 percent of the entire gain in household income in America was captured by the top 1 percent.
  • Pentagon Budget Grew $200 billion: From $450 billion per year in 89′ to $650 billion per year, a 40% increase despite the election of the Harvard peace candidate Barack Obama.
  • Income in DC Metro Has Climbed 40%: From $48,000 to $62,000 during the same time that wages have been stagnant for 25 years in America as a whole.
  • Debt as Percentage of GDP: The $3 trillion of national debt in 1989 was just 35% of GDP; today’s $17 trillion debt is 105% of GDP.
  • U.S. Credit Market is on Drugs: Has risen from $13 trillion (2.3X national income) in 1989 to $58 trillion (3.6X national income) today. This credit market debt figure includes the debt of households, financial institutions and businesses.
  • Fed Prints $4 Billion of Make-Believe Money Every Business Day: This is a solution?

Stockman’s picture of America over the last 25 years:

  1. The rich have done exceedingly well, doubling their fortunes. He blames this on the Central Bank’s policies which transfer wealth to the top 1%.
  2. The government has done very well, expanding its powers over people.
  3. Regular folk are paying more for the government and getting less in benefits.

The modern American State is failing to deliver on its promises: it is a “Savior State which can no longer save the economy and society because it has fallen victim to its own inherent short-comings and inefficacies.”stockmanreagan.banner.AP

Stockman got on a roll, calling out the State for totally failing to distinguish between public interest and private looting, “One week Washington proposes to bomb a nation that can’t possibly harm us and the next week its floods Wall Street speculators, who can’t possibly help us, with continued flows of maniacal monetary stimulus.”

Stockman predicted this depressing “Sundown in America” scenario because he believes the federal budget has become a “doomsday machine,” without any effective process of fiscal governance in sight. He concluded that the American State will destroy itself through its own economic debauchery.

Feb
1
2014

Why the West Developed – Less Militarism?

Why did the West develop economically much more quickly than other civilizations?

Because the West demonstrated a lower time preference compared to these other people groups. This allowed the process of civilization to occur, a process marked by savings and capital accumulation. The higher a group’s time preference level, the more likely it was to stop being smart and developing its human capital, and instead just beat other groups over the head with a club and steal their stuff. A great short-term strategy, but you can see how it makes people very stupid after hundreds or even thousands of years.

Ludwig von Mises writes: “The eminence of the Western nations consisted in the fact that they succeeded better in checking the spirit of predatory militarism than the rest of mankind and that they thus brought forth the social institutions required for saving and investment on a broader scale.”

At some point, property rights need to be respected so that the division of labor can work its magic in peace. “What the East Indies, China, Japan, and the Mohammedan countries lacked were institutions of safeguarding the individual’s rights.”

And yet the success of the West has helped other people groups. The West’s foreign investment into areas with higher time preferences have supported the process of civilization the world over. Mises writes, “Thanks to foreign capital, the countries of Latin America and Asia are today equipped with facilities for production and transportation that they would have had to forego for a very long time if they had not received this aid. Real wage rates and farm yields are higher today in those areas than they would have been in the absence of foreign capital.”

Nov
7
2013

Lincoln Cheated

Dishonest Abe Lincoln cheated to win his bid for reelection in 1864: 11 out of the 25 states of the Union did not allow their fighting soldiers to vote because they were not at home (the other 14 allowed them to vote, chew gum and fight all at the same time.) One of these 11 states was a critical one for Lincoln’s reelection campaign: Indiana.Abraham_Lincoln_by_Alexander_Helser,_1860-crop

So what did Lincoln do? He generously gave the fifteen thousand soldiers from Indiana “sick leave” so they could go home, dance, pull some weeds and vote Lincoln back into office. Unheard of in American history, the President sent soldiers home to vote.

General William Tecumseh Sherman wrote to his wife: “Our armies van­ish before our eyes and it is useless to complain because the election is more important than the war.” The only thing Lincoln and Sherman preferred to a good war was maintaining their political control.

Lincoln probably figured that winning 39.8% of the popular vote would not be enough his second time around (each party had two regional candidates in the 1860 election).

Source: “American History Revised: 200 Startling Facts That Never Made It into the Textbooks”;Seymour Morris Jr.  (Pages 417-420)

Oct
3
2013

100 Year Birthday of Income Tax Slavery

1913: The Income Tax is Born Again

On October 3, 1913, President Woodrow Wilson signed into law the Revenue Act of 1913, re-imposing the federal income tax in the United States of America. The tax started out in relatively benign fashion: it was very small and applied to less than 1% of Americans (singles making $3,000+ and couples making $4000+). It was a progressive tax from the start: Most of the income tax victims were paying only 1% while the richest were paying the top marginal rate of 7%.

Worst Day in American History?

Dan Mitchell, a senior fellow at the Cato Institute, wondered if today is the anniversary of “The Worst Day in American History.” “Once the income tax was adopted,” Mitchell observed, “it became a lot easier to finance subsidies, handouts, and redistribution.” The government could use its new peacetime income tax to fund a much larger State.

The income tax, with its redistribution of wealth from the people to the State, certainly did not “build the middle class” as some overly-optimistic progressives believe. But was October 3, 1913 the worst day in American history? Mitchell is not the first person to ask the question.

Frank Chodorov put it succinctly in his book “The Income Tax: Root of all Evil”: “The freedoms won by Americans in 1776 were lost in the revolution of 1913.” (p 35) Chodorov moved beyond the bogus class-warfare argument, pointing out that the State has used the income tax to “soak the poor” as well as the rich. “While the haves and the have-nots struggle over the division of existing wealth, it is the business of the State to improve itself at the expense of both; it picks up the marbles while the boys are fighting.” (p 36)

Andrew Carnegie, the great industrialist and richest man in the world at the time, said the income tax would make the United States into “a nation of liars.” “It penetrates business to the core,” he said. “The nation will never regret anything so much as attempting to collect a tax upon men engaged in business – bees making money for the national hive.”

The Income Tax That NEVER ENDS

The 1913 income tax was not the first income tax in American history – that would be the Revenue Act of 1861, passed by the tax-and-spend president Abraham Lincoln during the Civil War. It put a 3% tax on incomes over $800 and a 5% tax on those unfortunates living outside the country. The 1913 tax was also not the first peacetime income tax in U.S. history – that would be the Wilson-Gorman tariff of 1894, which charged 2% to households making over $4,000/year (of course, it exempted local and state officials).Historical_Mariginal_Tax_Rate_for_Highest_and_Lowest_Income_Earners

But the 1913 income tax is the one that has now lasted for an entire century.

It was sold as a small and insignificant tax that would only apply to the rich who could really afford it anyways. But then the federal government found an excuse to raise taxes. Wilson brought the U.S. into World War I in 1917, causing an enormous debt of over $20 billion to be passed on to the U.S. taxpayers. The income tax rose to 25% in the 1920s and went on to reach 94% in 1944-1945. Top rates stayed over 90% under Truman (who vetoed a bill to reduce income taxes in 1947), finally being lowered to 77% in 1964. Reagan brought the top rates down substantially – to 28% – by the end of his second term in 1988. Rates have since fluctuated between 30-40%.

We are still waiting for the top marginal rate to return to 7%.

 

Sep
13
2013

The Man-Boy Mook Myth

Money, sex and freedom – but without any of the corresponding responsibility. This is the childlike fantasy of manhood so heavily promoted in modern American society. But how many modern people have actually fallen for the fantasy?

small_beavis-and-but-head-2

Is this the picture of the modern American male?

In her 2006 article Men Growing Up to be Boys, Lakshmi Chaudry looked at the evolution in America from the benevolent patriarch of the 50s, dubbed “The Family Man,” to the adult teenager who spends his time “sneaking off to hang out with the boys, eying the hot chick over his wife’s shoulder, or buying cool new toys.” Chaudry argued that this new mythical image of masculinity is a corporate executives dream customer: “a man-boy who is more likely to remain faithful to their product than to his wife.”

There is a modern myth about the hopeless boy-man that will never grow up and thus has no capacity for pair-bonding and parenting – what Chaudry calls the “the basic processes that form the foundation of all societies.” And, of course, this new self-obsessed metrosexual man cannot be trusted with even the simplest of domestic tasks.

And yet, how much of this is just pure feminist fantasy? If this is the truth about the modern American man – and it certainly is the image pushed by popular culture in movies and such – then our civilization is screwed.

But perhaps this nothing more than a faux argument designed by apologists for the State to showcase men as unnecessary creatures in a Welfare-State that hires non-men to transport its fatherless children around to its schools, medical clinics and grocery stores – the Almighty Daddy who makes men look like losers because they don’t have the ability to provide for “the children” (he has no power of taxation).

While it is true that these male mooks are rampant among the young in American society – these man-boys who will never take responsibility for their actions and especially won’t provide for their offspring – the average American male of today seems to value traditional responsibilities: to hell with pop culture, rank consumerism and feminism. The Families and Work Institute, for instance, found that the percentage of college-educated men who were obsessed with their careers and wanted to move into jobs with more responsibility fell from 68% to 52% from 1992 to 2002. Combine that with the Radcliffe Public Policy Center Report from 2000 which said 70% of men in their 20s and 30s were willing to sacrifice career promotions and more money to get a more family-oriented work schedule. The culture-creators can try all they want to make all men into man-boy mooks, but they might never be able to penetrate the pair-bonding propensities that are  innate in the human male.

 

Jul
20
2013

Monsters in America

Americans have always created monsters for their own consumption as a way to deal with changes in American society. Scott Poole’s book “Monsters in America: Our Historical Obsession with the Hideous and the Haunting” recounts the history of American horror culture. Poole shows how the monsters represented in American fiction reveal the psychology of the American mind as it responds to historical events and big social changes. Essentially any being outside of the American norm could become a monster.

Colonial Era

New World colonists have been creating monsters ever since Columbus discovered the wonderful world of cannibalism. Europeans then believed that all Native Americans must be cannibals. Cotton Mather saw the natives as children of the devil who were created to challenge the Puritan colonists in the New World. The witch was “the devil in the shape of a woman.” Poole sees the image of the witch in the 17th and 18th centuries as a depiction of woman commanding economic and sexual power in society. Other early monsters included the mysterious sea monster and the wholly mammoth.

Slavery

Distrust in slavery went both directions. First of all, the slaves wondered what the slave-owners did with the slaves that left the plantation. They must be eating them, of course. And then the slave-owners obsessed over the potential for slave rebellion. Poole writes, “The story of an inhuman creature that turns on its master provided slaveholders with a ready metaphor for the possibility of a slave rebellion.” They also had to dehumanize their black slaves to justify their enslavement; many American slave-owners did not have a history of slave-ownership back in Europe and so were not naturally comfortable with the institution. But owning monsters was more palatable.

Human Agency Horror

In “Human Agency Horror,” we see common people committing horrendous crimes, especially in the household. These horror comics, written in the 1940s and 1950s, dealt with domestic horrors such as the murder of spouses. These comics often had a socially and politically “subversive intent,” according to Poole. This might be a mental patient uprising against their unfair caretakers or a wife cruelly murdering her husband.

World War and Cold War

The post WWII era is characterized by radioactive lizards and alien invasions. The radioactive lizards served as a way to define the nuclear threat and attempt to deal with it. Americans were understandably paranoid about what nuclear power might do — rather than write some lame script about some anti-nuclear weapon activists attending conferences, Americans created a nuclear monster.

The alien invasions were based on fears of a Soviet invasion during the Cold War, and probably some residual fears of Nazi Germany that was so firmly planted in the American mind. There was also the fear of invasion from within: communists at home; perhaps even your neighbor. Invasion of the Body Snatchers would be an example of this inability to trust your neighbors’ intentions. Poole mentions the paranoia brought on by J. Edgar Hoover, who told Americans to be very suspicious of young people who play the guitar or women who are way too interested in education.

Serial Killers

The 1970s and 1980s and even 1990s witnessed a response to the cultural revolution of the 1960s. Americans began consuming what he calls “horror news” wherein  The “sexual counter-revolution” of the 1980s created the myth of the serial killer, who was represented as the inevitable result of the sexual revolution. The serial killer was often given deep sexual motives for his violent crimes. “We created this” was the idea. “True Crimes” authors noted things like Ted Bundy was born out of wedlock and raised by a single Mom, or Jeffrey Dahmer was a homosexual.

What does the Monster Look Like Today?

Where is the insatiable debt monster? Oh wait, the monster is the evil businessman in the movie who tries to make a profit at any cost.

Jun
20
2013

“National Interest” and Noninterventionism in 40s-50s

The concept of America’s “national interest” is one of the main arguments warfare-state politicians use to justify sending American troops all over the world at such an enormous cost. But what is America’s true national interest? Perhaps America is spending a lot of money on a plan that does not actually pursue national interest. George Lundberg, a prominent sociologist who served as the 33rd president of the American Sociological Society, wondered if the American foreign policy he was seeing in the 1940s and early 1950s was in the country’s true national interest. Lundberg wrote an essay in 1953 called “American Foreign Policy in the Light of National Interest at the Mid-Century” to voice his concerns. He found that America had gone from a foreign policy of strategic non-interventionism to one dominated by a powerful executive who disregards the pubic and uses propaganda to increase his own powers.

The United States has a long history of non-intervention. Lundberg describes this long-standing policy as “continentalism.” The idea was that America would develop its own civilization on its own terms, independent of foreign opinions and influences. Lundberg explains: “Concretely, the policy meant non-intervention in the controversies and wars of Europe and Asia and resistance to the intrusion of European and Asiatic power systems and imperial ambitions into the Western Hemisphere (Perpetual War for Perpetual Peace, Barnes, p 576).” This did not necessarily mean the U.S. would never intervene in any conflict, but it would never do so without regard to national interest. President Washington advocated for the strength of the U.S. military to ensure it could “choose peace or war, as our interest, guided by justice, shall council (ibid.).” The potency of this strategic non-interventionism was that it enabled delayed response, what Lundberg calls “the capacity to take into consideration aspects of the environment relatively remote in time and space (p 580).”

By the middle of the 20th century, American foreign policy was dominated by a stupendously powerful executive, supported by a bipartisan foreign policy consensus resembling one-party rule. Lundberg argues that the U.S. government multiplied its powers by disregarding public opinion and using propaganda to gain fraudulent support for those powers. He cites the examples of the World Wars, both of which had very little support from the American public. Wilson won his re-election campaign in 1916 on the slogan of “He kept us out of war.” Roosevelt publicly proclaimed to be against American intervention in World War II to keep up with public sentiment (p 612). But it was also a fraud; he was secretly planning intervention at the same time as his public statements against it.

The result of this power-grab by the U.S. government during the World Wars was an unprecedented tax burden to fund intervention and what Lundberg calls “the Fuhrer knows best” principle of foreign policy. The U.S. executive was asking Americans to embrace the Fuhrer principle with regard to itself at the very time that it was supposedly fighting this principle abroad. Lundberg described the unprecedented tax burden of the Truman Administration: “The administrations of all Presidents from George Washington through Franklin D. Roosevelt, including two World Wars, the Civil War, the War of 1812, collected $248,000,000,000 of taxes. President Truman’s administration in a few years has levied $12,000,000,000 more, the fantastic total of $260,000,000,000 (p 598-599).” Perhaps this is what the politicians mean by “national interest.”

Reference: American Foreign Policy in the Light of National Interest at the Mid-Century by George A. Lundberg, pp. 555-626 in “Perpetual War for Perpetual Peace” (1953) by Harry Elmer Barnes

May
8
2013

Foreign Aid to Africa: “Please Stop!”

Well-meaning Westerners have long supported their governments in sending foreign aid to poor countries, particularly those in Africa. What does Kenyan economist James Shikwati think about foreign aid to Africa? “For God’s sake, please just stop.” He told SPIEGEL that the good intentions of Western governments to eradicate poverty has been “damaging” his continent for the last 40 years. “Believe me,” he said, “Africa existed before you Europeans came along. And we didn’t do all that poorly either.”

Unfortunately, poor Africans are not the real recipients of Western aid. Shikwati said, “If the West were to cancel these payments, normal Africans wouldn’t even notice. Only the functionaries would be hard hit. Which is why they maintain that the world would stop turning without this development aid.” He explains how the process of sending goods to Africa works: the UN World Food police take their cut of the action and then a large portion of the goods dump into the market at very low prices, causing local farmers hardship. “Local farmers may as well put down their hoes right away; no one can compete with the UN’s World Food Program.”

Africa has remained poor despite massive aid because it has incentivized African functionaries to avoid real market solutions – like initiating trade relations with neighbors. If Kenya were to trade with Uganda or Tanzania, “It would force us to improve our own infrastructure, while making national borders – drawn by the Europeans by the way – more permeable.” The most merciful policy the Western countries could have toward struggling Africans is to stop funding the UN World Food Program and stop the propaganda about the need to help a continent with plenty of oil, gold and diamonds.