Thursday, October 01, 2009

Africa and Macro

I saw some posts related to William Easterly's article on the recycling of development strategies in Africa, noting that many of today's suggestions are almost identical to those made in 1938: mosquito nets, cleaner water, better fertilizers. This lead me to an article by the British doctor Theodore Dalrymple published back in 2003. He highlights an interesting aspect of the 'big man' phenomenon, in that any successful man is expected to provide for a large circle of relations:
The young black doctors who earned the same salary as we whites could not achieve the same standard of living for a very simple reason: they had an immense number of social obligations to fulfill. They were expected to provide for an ever expanding circle of family members (some of whom may have invested in their education) and people from their village, tribe, and province. An income that allowed a white to live like a lord because of a lack of such obligations scarcely raised a black above the level of his family. Mere equality of salary, therefore, was quite insufficient to procure for them the standard of living that they saw the whites had and that it was only human nature for them to desire—and believe themselves entitled to, on account of the superior talent that had allowed them to raise themselves above their fellows. In fact, a salary a thousand times as great would hardly have been sufficient to procure it: for their social obligations increased pari passu with their incomes...

The thick network of social obligations explains why, while it would have been out of the question to bribe most Rhodesian bureaucrats, yet in only a few years it would have been out of the question not to try to bribe most Zimbabwean ones, whose relatives would have condemned them for failing to obtain on their behalf all the advantages their official opportunities might provide. Thus do the very same tasks in the very same offices carried out by people of different cultural and social backgrounds result in very different outcomes.

Now, I'm no Africa expert, but clearly Africa is a basket case (The term 'basket case' came from WWI, indicating a soldier missing both his arms and legs who needed to be literally carried around in a basket). To the extent this social dynamic, where individuals cannot become wealthy because they have so many contemporaneous obligations they can never accumulate savings, has serious implications for a growing economy. After all, most small business is funded via retained earnings, and if that is all going out to one's extended family, that won't happen.

Now consider if this is true and important. Macroeconomic variables will not capture it. This factor may not be operative, but it's plausible, and perhaps there's another such theory at work that is not captured by national income accounting or unemployment statistics. Macro thus appears like measuring someone's health using a thermometer, noting dead people are cold, sick people are hot, and healthy people are 98F (36C). But that metric is not very helpful in predicting, or even explaining, people's health.

9 comments:

J said...

Do Africans take their family obligations more seriously than the Chinese? or Europeans? Do they maintain their children and pay for their education? African poor relatives are more demanding than say Jewish ones? I dont think the "Big Man" theory explains corruption.

Pete S said...

Wouldn't they wheel the soldier around in a cart? Maybe we should say that Africa is a "Wheelbarrow Case".

David said...

Eric, and J,
Dalrymple's argument is bang on. I've worked as a Pacific analyst for the past decade or so, and I can tell you the big man problem is as pervasive there as it is in Africa. I also grew up in PNG, and it always struck us how difficult it was for anyone to start a business or get ahead when the wantoks (relatives) came looking for handouts. The big man culture may not explain 100% of the corruption problem - certainly tribal rivalries and the abuse of aid dollars can also be partly to blame. But it is, in my view, the dominant issue.

bjk said...

Kristof gave a Cambodian prostitute some money to start a store in her village. Her family ate the inventory.

Adam Smith talks about this phenomena quite a bit. He contracts the landed lord who spends his income on ostentatious charity - supporting the local villagers by hiring maids and gardeners and cooks and other
"unproductive" labor. The bourgeois alternative is to buy what Smith calls trinkets of frivolous utility, like pocketwatches. There's a big difference between blowing $5000 on a watch and blowing it on a vacation. The watch can always be resold on Craigslist.

J said...

I think Jewish poor relatives and beggars are the most aggressive of the lot, they dont beg but they demand what they feel is theirs. Here is the story of a schnorrer (professional fundraiser aka beggar) who used to visit the house of the Baron de Rothschild to receive his weekly alms. On one particular visit, he is told that he cannot be supported that week. Visibly upset, he wants to know the reason. He is told that the Baron's daughter had been mar­ried that week and that the wedding had been particularly costly and there were no funds left for charitable purposes. The shnorrer, react­ing with a combination of understanding and protest, says: "I certainly don't mind the Baron marrying his daughter, but not with my money!"

Yet we Jews somehow manage to amass some capital.

Plamen said...

J, correct me if I am wrong, but it seems to me in a Jewish community one becomes a target of "beggars" at a significantly higher level of wealth? This would allow for accumulation of capital. Also, in a Jewish community, you have a level of privacy - you can be wealthy with few people knowing it. In Africa, you have few options for concealing your status.

Valeri said...
This comment has been removed by the author.
Valeri said...

I definately think that the issue is about realtive wealth; Africans are a couple of hundred years behind the Jews. I'm sure it was not very easy for one jew to get out the Prague ghetto back in 1800s even if he was especially talented with the burden of aunt Sara and Uncle Samuel hanging over him. The relationship is definately not linear. Often all they need is some sort of capital investmetn like a purchase of a donkey, however in order to invest in one they often have to say NO to more urgent needs like nutrition and medical care for their ever expanding families. It is a wheel-barrow case indeed.

Anonymous said...

This article is all wrong - you're looking through the wrong window.

If you haven't read it already, you should read "The Poisonwood Bible" by Barbara Kingsolver.