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March 2013

Free Markets Series E13: Free-market Solutions to Poverty

How can you tell if a poor nation is going to become more prosperous in the future? In this fascinating interview, author, philanthropist and strategy consultant Michael Fairbanks says it has everything to do with prevailing values and attitudes. If the people believe that competition is good, are confident about the future, and appreciate the importance of complexity, then they are bound to improve their lot.

In contrast, countries that see things in purely material terms are doomed to remain poor. “A poor country thinks that wealth is subsoil assets [like] bauxite, copper; they think it’s sunshine; they think it’s abundance of cheap labour; and they think it’s location.” But Venezuela has all of these things, Fairbanks points out, and it is not growing wealthier because these kinds of advantages are easily imitated.

The author goes into some detail discussing his role as advisor to President Paul Kagame of Rwanda, who fought against the genocide in that country. Kagame not only had the moral authority to get things done, he also understood the entrepreneurial ideas Michael Fairbanks was promoting. Among the successes this war-torn country has achieved is the high-end tourism that has been encouraged with regard to Rwanda’s precious gorillas. Sold as a unique experience on planet Earth, it has produced profits for surrounding villagers and has put an end to poaching.

As for foreign aid, Fairbanks boldly states, “The Chinese have done more to eradicate poverty in Africa than all of the foreign aid in history.” While not denying that there are instances of corruption and exploitation, he blames a receptive Western media for exaggerating these incidents and downplaying the substantial benefits of the Chinese presence on the continent. Simply by being willing to do business with Africans, the Chinese have done a lot of good, building roads and providing jobs, and all without the sanctimony and condescension that too often accompanies foreign aid.