Tuesday, December 1, 2009

Can Votes Save The Third World?

I just finished one of the most thought-provoking books I've ever read. It's Wars, Guns, and Votes: Democracy in Dangerous Places

Paul Collier, professor of economics at Oxford and Director for the Center for the Study of African Economies, contends that our obsession with democracy as the be-all and end-all of governance for every nation in the world is a big mistake. He points out that voting is good but far from a panacea for developing countries who lack the social structure, legal systems, stability, and economic prospects to make the results of their elections work. Collier's contentions aren't based on guesswork, either, but rather on statistical studies that examine not our beliefs about developing countries but the reality of them.

I was particularly intrigued by his comments about the Democratic Republic of Congo, which provides numerous examples of the situations he explores. Here's one passage that neatly sums up the current status of the legitimate Congolese mining industry:

"Is democracy the key to peace in these societies?....The recent record is not entirely encouraging....

"Take the transitional government of the Democratic Republic of Congo. Knowing that they had only three years in power before facing elections and the possible loss of office, ministers set about plundering the public purse. But the public purse was pretty small because tax revenue had withered away: as you will see, low taxation is part of the strategy of misgovernance. But plunder can extend beyond tax revenue. One strategy would be to borrow: saddle future citizens with liabilities and run off with the proceeds. Unfortunately for the new leaders of the DRC, this strategy was not feasible: President Mobutu had already used it to the hilt so that the country was beyond its neck in debt. No bank was going to lend.

"But there was an alternative. The Congo is mineral-rich. Much of these resources are unexploited because under President Mobutu it would have been folly for a company to incur investment necessary to sink a mine. The president was stuck in what economists call the time-consistency problem: because he could not bind himself from confiscating investments, no sane company would make them. But by the time of the transitional government the global boom in commodity prices had changed the calculus of risk: it was worth paying a little something for the exploitation rights that the transitional government could legally confer. And so the ministers of the transitional government of the DRC mortgaged the future of its citizens as surely as if they had issued debt, by selling off national assets at bargain prices. A few months ago I had lunch with one of the shrewd purchasers of these rights: a good lunch it was too. He became a little upset when I told him that the rights ought to be renegotiated."

While I found most of Collier's observations highly believable, I can't say the same for his proposed solutions, which I found mostly impractical or even totally impossible except in theory. Still, the solutions he proposes are like the rest of the work--very tasty food for thought.

Dave Donelson, author of Heart of Diamonds a about in the

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