Saturday, November 6, 2010


I am currently engrossed in the book “World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability” by Amy Chua.

The idea that by spreading capitalism and democracy, the world will be a better place to live in does not hold up to scrutiny when viewed against the background of the last 20 years since the fall of communism as symbolised by the fall of the Berlin Wall.

In fact the opposite seems to be true with increased incidents of poverty, ethnic divisions sharpening and in many places there are determined efforts to roll back the free economy and fledgling attempts at democratic practice.

In reading the book I see interesting parallels with the developments of the last 24 years in Uganda – the rise of economically dominant ethnic minorities, widening income disparities and rising tribal tensions

Capitalism by harnessing individual initiative is undoubtedly the most efficient way of growing wealth, how in a true free market inevitably the rich get richer and the poor get poorer.

I think even Jesus Christ recognized this truth more than 2000 years ago counseling his disciples that those who have will have more added onto them and those who don’t will have even the little they have taken away from them.

But why is it so? Author Eric Beinhocker in his book “The Origin of Wealth” reports on a computer simulation that showed that starting off on a relatively wealthy note, in terms of access to resources, almost always means you will end up wealthier than your contemporaries who started off less wealthy. Basically that wealth begets wealth.

So are the poor doomed to remain poor?

Not the way Beinhocker sees it. After a long and arduous deconstruction he comes to the conclusion that knowledge is the origin of wealth. The greater the knowledge in a society the more it informs the physical and social technologies, how we work and organise ourselves respectively to achieve the society’s goals.

So western economies are richer because they have a long history for recorded research & development and are organized – politically, commercially, socially in such a way as
To take advantage of this accumulated knowledge.

Even on an individual basis we are not as rich as we want to be because there is something we do not know. I am always amused when in denigrating rich people, the average person point to their huge debts as the illusion on which their wealth is built. One can get rich by saving every coin they earn (something the rich man’s critic does not do anyway) but it will take a life time of subhuman subsistence, and isn’t the point to get wealthy to enjoy a better lifestyle? However the judicious use of debt can quicken the process. Now you know.

So the question for every government is how do you get everyone in a position to accumulate knowledge, raise incomes and get richer?

The simple answer is widespread education.

Learning about the Rhinelands, Canadian prairies and the Benelux region is largely useless information – even for those who travel regularly, but the greater role of education is to open our minds to receive more and more knowledge.

It is not by mistake that the richest countries have near universal education up to undergraduate level.

But in those same countries you have people like Bill Gates, Larry Ellison, Alan Sugar and Philip Green who have no degrees but are the richest men in the world. Would they have achieved so much in a poorer, low income country like our own? No chance. The organization of society can not yet allow the accumulation of such wealth here.

The adherence to rule of law especially as it relates to business, mean that wealth can easily generated there than here.

For instance this week the World Bank released a report measuring the ease of doing business globally in which Uganda slipped to 122 from 112 out of 183 countries surveyed. Singapore was at the top of the heap with the UK and US at fourth and fifth respectively.

The point is that in a free market economy the rich will get richer, as is their right, but the poor need not get any poorer. There is more than enough to go around for everyone.

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