No Economic Freedom: No Democracy!

Published on 12th September 2006

Democracy, a system of government by the majority (especially through representatives whom they choose) goes hand in hand with free enterprise which involves ownership of the production and marketing, with minimal state interference.  The two have choice as their baseline.  Both are people centered, and have raised living standards more than any other systems.  If democracy is the right foot, free enterprise is certainly the left foot and vice versa.

In Africa, one cannot talk about choice and governance without sinking into economics.  Why? Economic conditions greatly influence choice. Ludwig Von Mises in Human Action states that all present day political issues concern problems commonly called economic. All arguments advanced in contemporary discussion of social and public affairs deal with fundamental matters of economics. Everybody therefore thinks of economics whether he is aware of it or not.  In joining a political party and casting a ballot, the citizen simpliciy takes a stand upon essential economic theories.

For a long time, political campaigns in Kenya’s Eastern and North Eastern provinces have been done after combing other parts of the country. Why? Due to the region’s setting in the arid/semi arid zone and frequent spells of drought and famine, delivering of bags of maize and cooking fat has been all that has been required to influence choice.  During the constitutional review referendum, the country was pitted against the government (YES) and the opposition (NO). Eastern Province received massive tonnes of food aid from the government, near areas where the “NO” proponents were holding their rallies. This was an effort to dissuade civilians from voting against the government.

In one area in central Kenya that has lived in darkness, electric poles and wires were lined along major highways during the campaign period, to influence the vote in favor of the politically “correct” candidate. When he flopped, they were all ferried away.  Harping on the poor transport system in his region, one candidate in Western Kenya distributed truckloads of bicycles to his supporters. He was careful to write their names and addresses as a fall back strategy. When he flopped, he dispatched a truck to retrieve the bicycles.

It is not in Kenya alone. This is common in Nigeria. A highly placed person in a recent meeting to discuss democracy in Bamako, Mali, confided that Britain also gives goodies during election periods.

If democracy has to survive, it must address peoples’ economic concerns.  Economic stability will stop such manipulation and lead to informed choices.  Economic stability will greatly increase choice. When people are economically empowered, they will be able to choose between having their children learning in public schools or pay for private school education.  They will choose between remitting money to the government health insurance fund or save it in an institution of their choice.  They will decide whether to subscribe to the government social security fund or save it for themselves. They will choose in which hospital to receive treatment.

What should governments do to empower people economically? They should allow citizens to keep more of what they earn.  If an entrepreneur satisfies the wants of consumers in the best and cheapest way, he will succeed by means of “excessive” profits.  He ploughs back the greater part of the profit into his business, making it grow rapidly. It is this activity that provides the market economy with its “dynamism.” It forces the old firms and big corporations either to adjust their conduct to the best possible service of the public or close shop. But alas! Taxes absorb the greater part of the profit. Entrepreneurs cannot accumulate capital. They cannot expand their business. They cannot become a match for the vested interests.  In fighting profit, governments deliberately sabotage the proliferation of choice.

Throughout the third world, neighborhoods throb with hard work and innovation. Street cottage industries have sprung up everywhere, meeting daily needs like footwear. There are factories that build and rebuild machinery. Vendors from shanties supply most of the food available in the market. The emerging economic powers of the developing world are the garbage collectors, the appliance manufacturers, the ‘illegal’ construction companies, the bicycle transport system, and the women I saw baking bread on the streets of Mali. Yet their possessions are not represented in such a way as to produce additional value. Their assets should be transformed to live capital. According to the Peruvian Economist Hernando De Soto, the total value of the real estate held but not legally owned by the poor of the third world is at least $9.3 trillion-an amount nearly as much as the total value of companies listed in the main stock exchanges of the world’s twenty most developed countries. This “dead” capital should be freed by legalizing the assets and transactions. 

When people are sure of the fruits of their labour devoid of fear of aggression; when a legal infrastructure is in place that protects property rights of owners and enforces contracts; when peaceful activity is not demonized as crime; in the midst of our own poorest neighborhoods are trillions of shillings- ready to facilitate choice.


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