Ås30.04.2013

by John Y. Jones, Networkers SouthNorth and the Dag Hammarskjöld Programme,

Voksenaasen, Norway(See separate text that accompanied the pp)

Special thanks for data to professors Erik Reinert (Tallin) and Lawrence King (Cambridge) and the UN DESA office (Jomo K.S.) For pictures, see the Norwegian digitalmuseum.no

Colonialism

Colonialism:Why is Africa still poor?

As we start I would like you to thing aboutthese three issues:

1. developing countries vs industrial countries

2. Who defines what is development aid?

3. Rank these countries in income pr capita in 1960

• Ghana• Somalia• South-Korea

- and rank them for the year 2013

Good development is about sharing resources to meet everybody’s basic needs

• We have all agreed to put the colonial world’s history of unbalanced development of poor South versus richNorth behind us.

But first• How did we in our country bridge the gap between rich and

poor?

Norwegian countryside 120 years ago

Norway’s comparative advantage:snow, ice and woodAmsterdam and London is floating on our timber. Our sailing shipsexported blocks of ice to Europe.But also:

Extractive industries…Mining

High-tech industry 1900

Using local resources, importing and copying state of the art skills and toolsUsing e.g. import tariffs to protect vulnerable local infant industries

Waterways and woodlands’ important local resourcesOur large woods gave raw material for-local industry (paper, pulp, house-building)-export of timber and paper-skills and competence in manufacturing and business

Our many rivers facilitated transport but also gave us -hydroelectric power, (tilbakefallsretten ved fossefallsutnytting)-cheap energy to industry -clean and cheap heating and energy for households

Well insulated traditional wooden houses are both a welfare as well as an environmentally friendly issue and vital to sustain local building industry and skills

Fisheries spur local trade and export and local manufacturingand food security

Today: fish farms have become a huge export industry

Technological innovation1940-60 lead to jobs and know-howin local industry meeting local needs and export opportunities

Industrial mass production 1950-60s

Good cycles of wealth creation: increasing returns’ jobs secured value-additionand increased efficiency, higher wages, enlarging the tax-base, and increasedresources for building the nation, welfare sharing and public services

Building infrastructure that stitches the country together

Railway for all – heavily state subsidisedPrivate railroads were nationalised and are today almost exclusively run by state owned companies

696 tunnels2760 bridges

Welfare state and social inclusion

To enable women to take part required universal education, parent’s leave facilities, child care and health care

NationalDevelopmentPolicies (NDP)

Prioritiesset by nationalpoliticians inparliamentand carriedout or assig-ned bygovernmentand state

This is the maingovernment offices in Oslo.

When the terrorist 22.7.2011wanted to attackthe all-inclusive Norwegian society,

his bombwas naturallydirected towardsthis building

Setting national priorities

is about - using resources for the common good- controlling resource-use

…. you couldn’t buy a car for private consumption prior to 1960

• Tariffs for infant industries that would otherwise be wiped out by foreign import competition

• Subsidies to farmers not for export subsidy, but to enhance national equality and local food security

• Restriction on land-purchase to restrict commercialising arable land (two-tire price system and farmers licences)

• High tax on luxury goodscars, cosmetics

• Setting national standards in education, healthcare, pensions, labour etc

… Human Capacity

• University of Oslo in 1811, when we were still a colony under Denmark

• Obligatory basic education introduced in 1889• Today 4 of 5 citizens are educated beyond

basic education

Our forefathers were wise:

Hydro-electric power belongs to all

Waterfalls:60 yearsleasing-period-then handed back to the community for free

Oil, found in 1969

•A nationalised resource•Peaceful negotiations with neighbouring states clarifying borders•Tension: Oil versus fisheries, the environment and tourism•Conditionalities set for participating foreign investors

Instead of oligarchs we got a close to 4000 billion NOK pension fund

Parliaments’ main responsibility

• Accountable to its own citizens

Labour unions are important for welfare development

National agreement:

• Strongly organised labour and employer’s organisation together with the government have sustained a national agreement:

Increased productivity will justify increase in wages.

Dag Hammarskjöld1905-1961

The second UN Secratary General

Africa is a vast continent54 countries, 20 of earth-land/15% of earth population, the size of Europe; India, China,

USA and Japan together

Dag Hammarskjöld was critical when he heard that the OECD countries wanted to ”take responsibility” for decolonising Africa, saying:

”The are going to make Africa a happy hunting ground”

OECDs development committee DAC23 industrial member countries

Structural adjustment= WB and IMF’ssystematic shaping of the third world since 1980 in accordance with neo-liberalism by

• privatisation of resources and wealth• liberalisation of capital• deregulation of social and financial

interaction

Politics is about balancing personal and public interests, so let’s look at

Private vs public?

• ”Public is good” : There is little scientific evidence to support the claim that public services and ownership are less efficient than private ones

• But: All large scale operations like water and sanitation and transport delivery are difficult, regardless of private or public provisions

• Privatisation strongly pushed through international consultancy firms threatens to derail constructive publicly owned services (like water, education, electricity and transport) and PPP should not be allowed to be perverted into PPPPP, Private Profit Public Pay Partnerships.

Privatisation- a lesson from Russia in the 1990s

(see Lancet, 2009)

Margaret Thatcher privatised 23 state companies in the UK over 16 years. Mr. Jeffrey Sachs spear-headed a Washington Consensus drive that mass-privatised over 3 years

112.625 companies as part of shock therapy for economic transformation in Russia in the 1990s (”a success”, Sachs calls it) that lead to

suffering and deaths• An unprecedented fall of 5 years in life expectancy (’91-’94)• 4-7 million deaths, mainly among working men 15-55• Dramatic fall in GDP, production, health and welfare-services

Mass privatisation and adult male mortality in Belarus and Russia

Lawrence King et al, online:The LancetJan 15, 2009.

Russian

Belarus

Structural adjustment reforms despite dubious theoretical justification and weak empirical support including:

• global economic governance• loan policy conditionalities• reduced ‘policy space’ • trade liberalization• financial liberalization• deflationary macroeconomics• pro-cyclical macroeconomics• privatization• strengthened intellectual property rights (IPRs)• ‘good governance’, esp. property rights

80-90s saw slower growth because of structural adjustment reforms

• Stabilization, austerity + structural adjustment programs more market-orientation

• Reduced growth, development + redistribution roles

• Less taxes + less progressive taxation, weakens state and public space

• Reduced role of government in most countries, especially social spending

• Privatization, contracting out: benefits transnational companies and threatens locals

80-90s Changed to smaller role of state

Source: Grilli and Yang (1988); Ocampo and Parra (2003).

Figure 1AGGREGATE REAL COMMODITY PRICE INDEX, EXCLUDING OIL (GYCPI)

30

50

70

90

110

130

150

1900 1920 1940 1960 1980 2000

19

00

=1

00

Commodity Price Trends, 20th Century

Net transfer of financial resources goes from South to North,

and not the other way round

•1997 •2007

AfricaE&S AsiaW Asia

Latin-America

Developing countries

•2000

Bretton Woods, 1944: United Nations conference on monetary + financial affairs

44 countries • 16 industrial • 28 developing • of which 19 from Latin America

The talks had an emphasis on

• sustaining growth • employment creation • post-war reconstruction• post-colonial development

and not just monetary + financial stability

Original Bretton Woods momentum is lost

Donor domination is an issue todayUN Secretary General ’53-’61, Dag Hammarskjöld, warned against the OECD’s particular interest in post colonial reconstruction through establishing DAC (Development Assistance Committee). It is a bad idea, according to Hammarskjöld, to put colonial powers in charge of decolonisation. This should be the job of the entire United Nations and no other institution. Warned Hammarskjöld:

”They are going to turn Africa into a happy hunting ground”

We need to see the current situation in the light of history, and see the below events together, and for each of them ask ”Whose reality counts”?

• Berlin Conference 1884-85 (Wealthy countries formalising colonialism)

• DAC establishment 1961 (Consists of 23 industrialised countries)

• Creating the MDGs (Origin traced back to OECD/DAC 1996)

• Obamas food safety initiative May 2012 (Basically securing multilateral export industies in the North, and not food-security in the South)

Two 1000-dollar-questions

No country has ever moved from poor to rich without industrialisation!

Why then does the OECD’s African Economic Outlook, e.g. never address industrial policy or manufacturing?

Could it have to do with the logic that it is not in the interst of industrial countries to help former colonies to industrialise, become competitors, raising prices of raw materials?

• National Development Strategies, not PRSPs • Genuine country ownership, not donor priorities• Policy space, not loan conditionalities• Pragmatism in local wealth creation, not dogmatism

Parliamentarians must take the lead to control and harness markets and national resources for the benefit of all.

African parliamentarians must stop the export of Africa’s wealth to the rich countries and, to establish structures for sustained African wealth creation:

Africa need:

• Away from palliative (superficial) into real development approaches (wealth creation, increased returns activities)

• Eschew mainstream orthodoxy in favour of pragmatism, overcoming growth constraints

• Growth is necessary, but not sufficient• Wealth distribution and accountability important• National ownership and ‘policy space’ crucial• African Researchers inmust replaceForeign Consultants,

in other words learn to pose the right questions rather than just give away the “right” answers (See Mahmud Mamdani)

Learning from experience

Summing up experiences of 12 years with MDGsat the steps of the next development period

• MDGs were very modest targets, not development strategies (Thomas Pogge, Erik Reinert)• MDGs suffer from being constructed by OECD and not a result of a broad UN process• MDGs should become more than goals, but not be used to divert attention away from

necessary development strategies for sustainable, structural wealth creation policies:

In stead of attacking the sources of poverty from inside through the production system - which is what development economics used to be about – the symptoms are addressed by throwing money at them from the outside.

On MDGs, by Erik Reinert, How Rich Countries got Rich and Why Poor Countries Stay Poor, p. 240. 2007.

Future strengthening of Africa’s voice in its own affairs

Strengthening and sustaining of rights and access to commons for all and put private initiatives and profits in the services for all Africans

•Secure local resources for local needs through disclosure of illicit capital flights and unfair pricing and trade arrangements so that foreign aid will be less prominent and decisive for development•Harness health IPR to the larger benefit of people’s health and not short sighted improved profits for e.g. big pharma•Sustainable and comprehensive health services and not divert attention through Davos initiated malaria bed-nets and costly microfinance initiatives•Strengthen African lead in its own intellectual discourse and research•Establish wealth creation structures of cutting edge industries, research manufacturing and to replace decreasing returns activities

Mr Owosu and Mr Adejumobi (at the AU inter-parliamentary meeting i 2012:

It is high time Africa takes the driver’s seat and attain control of the international market

forces and donor impositions

Suggested sources for more information

DESA working papers, UN-DESA website:

www.un.org/esa/desa/

www.g24.org

www.ideaswebsite.org

www.theothercanon.org

www.saprin.org

Books and articles:

Chang, Ha-Joon: “Bad Samaritans” and “Kicking Away the Ladder.” Cambridge.

Reinert, Erik: “How Rich Countries Got Rich and Why Poor Countries Stay Poor.” London, New York.Stuckler, King and McGee: ”Mass privatisation and the post-communist mortality crisis: a cross-national analysis”, The Lancet, online January 15, 2009.Hammarskjöld, Dag. See UN collection of Secretary General’s written production. Unfortunately not digitalised yet. Voksenåsen has the hardcover copies.