“[E]conomic growth can’t just be for the lucky few at the top, it’s got to be broad-based, for everybody.”
President Obama’s remarks Friday at the Symposium on Global Agriculture and Food Security prove once again that he is ignorant as to how a capitalistic society flourishes.
The President attempted to acknowledge the needs of the poor African countries, basically implying that capitalism was the demise of their success. This is simply not the case.
Economic growth stems from risk-taking, profit-driven entrepreneurs that successfully cater to the wants and needs of consumers. This, in turn, benefits all and raises the standard of living.
Struggling African countries often lack a capitalistic structure and are usually governed by a tyrannical top-down political system. Businesses in these countries are heavily regulated by their government, lack property rights, and face an overwhelming tax burden that prevents any economic growth.
Sounds a bit like where we’re heading.
Take Kenya for example. According to the Heritage Foundation’s Index of Economic Freedom, Kenya is ranked 103rd. The reason is such:
“The foundations of economic freedom are fragile and uneven across the country. Poor protection of property rights and widespread corruption discourage entrepreneurial activity. The rule of law is weak, and local courts are subject to substantial political interference.
“After several years of strong economic growth, Kenya’s economic performance has deteriorated, partly because of the global economic slowdown and also because of the generally slow pace of efforts to improve regulatory efficiency and open markets to international trade and investment. Reforms in public finance management have continued, but progress has been sluggish.”
Due to a lack of property rights, heavy taxation, unstable monetary conditions, and top-down economic policies, Kenya has left its population with an unemployment rate of 40 percent and a poor standard of living.
So, does capitalism only benefit the wealthy at the top? No.
Capitalism is a consumer-based, not a producer-based, system. It improves society by allowing entrepreneurs to provide consumers with their wants and needs—the rich only win if consumers win.
On Friday, President Obama administered a plan that would help African nation’s become more “self-sufficient.” However, history shows that top-down planning from external organizations have left these nations in economic stagnation.
Take Oxfam International, a “fair trade” group intended to promote self-sufficiency in African Nations. In its 2002 report, “Mugged: Poverty in your coffee cup,” there are many suggestions as to how “fair trade” certified coffee would improve economic conditions in low-income countries. In its recommendations section, out of 48 recommendations only 5 are directed towards consumers.
In fact, many of the “recommendations” are actually wealth-destroying tactics in the name of poverty alleviation. These include destroying at least 5 million bags of coffee and preventing certain commodities from entering the market for sale, to name just a few.
What do these regulations have to show for economic improvement? Not much. The International Coffee Organization has been around for over 20 years and there is no evidence of poverty being alleviated. Such regulations destroy wealth and prohibit the accumulation of it.
The best thing that leaders around the world could do to improve a global standard of living is to promote sound free-market policies. President Obama’s solutions are just another top-down approach doomed to fail.
Editor’s Note: Celia Bigelow is a graduating economics major at Hillsdale College and a chapter chairman for Young Americans for Freedom.
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