aid from Africa

This morning's main headline on the BBC is the first Live8 concert. And a couple of days ago, G.W.Bush announced that aid to Africa would "double." He promised to ringfence 1.2 billion dollars for African aid. So let's talk about aid, or more specifically, movements of wealth.

African nations, in general, do not do well financially. When any other business does badly, it shrinks, its customers go elsewhere one by one, and so the business is forced to either change or be bought by a competitor. Nobody dies. But our current system will not allow that. Failing nations just get worse and worse, the people are trapped inside their borders, and millions starve.

When a country is failing, it has less money to pay its people. Let us imagine that country A pays its people an average of five dollars an hour, and country B pays fifty cents per hour. For citizen B to earn a day of country A's production, he needs needs 50 dollars, so he needs to work for 100 hours. For citizen A to earn a day of country B's production, she only needs 5 dollars, so she needs to work one hour. So the pay difference of 10 to 1 produces a trade difference of 100 to one.

For poor countries to survive, they must trade with the rich countries. But the 100 to 1 disparity means that whenever they trade, the rich countries act like giant vacuum cleaners, sucking out anything of value from the poor country.

Let us look at President Bush's 1.2 billion pledge. Currently, a a typical African country (like Botswana) spends 50 million dollars a year in America . Nigeria spends around 10 billion. The whole of third world Africa probably spends maybe 30 billion. America spends much less in the other direction. These figures are measured in American dollars and American sweat. Measured in terms of African work and pay, multiply that by one hundred. This is like 3 THOUSAND billion dollars of blood and sweat being squeezed out of an already hungry continent every year.

So Bush's 1.2 billion is largely irrelevant. Measured in terms of blood and sweat, the wealth all flows in one direction. Even if we stick to global market prices, our financial power and their helplessness means we benefit in a hundred different ways - a topic for another time. The bottom line is, whichever way you measure it, they aid us. We don't aid them.