My Beauty Best Teacher

Via The Daily Caller:

Former Minnesota governor Tim Pawlenty turned out a blockbuster economic growth plan this past week, including deep cuts in taxes, spending, and regulations. It’s really the first Reaganesque supply-side growth plan from any of the GOP presidential contenders. And he caps it all off with a defense of optimism as he charges ahead with a national economic growth goal of 5 percent.

That’s right: 5 percent.

Pawlenty calls this target aspirational. Okay, fine. But deeper down, he’s basically saying no to the declinists and pessimists who seem to populate the economic landscape these days. Big government doesn’t work. Let’s try something different.

Ronald Reagan always believed that America is exceptional. By removing obstacles to growth, the Gipper held that economic policies could unleash a massive outpouring of risk-taking, creativity, and entrepreneurship. He was right, and his policies launched a two-decade-long boom.

Actually, the first couple years of the Reagan recovery came in at over 7 percent. And as Pawlenty noted in his speech at the University of Chicago this week, between 1983 and 1987, the economy grew at 4.9 percent annually. I note that President John F. Kennedy also had a 5 percent growth target, a response to Ike’s three recessions.

...those on the left criticize Pawlenty...

Whether Pawlenty's goal is realistic or not is not the point- rather it is the Democratic liberal establishment's response to it. Rather than hope and change and pushing back the tide and restoring America's prosperity and believing in and pushing for and working for jobs and a great economy, liberals and Democrats, whether they are in Congress or in the White House or in the media, now simply laugh at and scoff and ridicule anyone who believes such things.

IS THIS WHAT YOU VOTED FOR? A party that's first and biggest and lasting impression of someone saying that our economy can grow again is to laugh, scoff, deny, and offer reason after reason why you won't get a job, why you won't get a raise, why your children will owe more in debts, why America will get weaker, etc- the new normal of Obama and the Democrats will be a lesser nation, one that you better get used to and expect won't improve.

The very possibility that America could rise again after the destruction that the Democrats and Obama has driven into the very foundations of America inspired the White House to reply:

With regards to 5 percent growth, we couldn’t agree more; that would be very beneficial to the economy. We think providing expansive tax cuts to the wealthy — which we did in the last term and added tremendously to our debt and resulted in this President inheriting a massive deficit and debt in 2009 — probably not the best approach.

This comment filled with snark and sarcasm and divisiveness and bitterness is what we all can now expect from Obama and an Executive Branch controlled by the Democrats. He didn't say 'That's great, how can we work together and find common ground to achieve not only 5% growth but 6% growth', but rather the reply was mocking, empty rhetoric on class warfare, and transferring blame.

Firedoglake, which Obama reads and quotes from and believes in, called Pawlenty's plan a "Unicorn and Pony Economic Plan", and suggested that it is now a 'fantasy' for America to grow again at 5% and that merely suggesting that America can be a prosperous, free, and strong nation is ridiculous.

Michael Ettlinger of the liberal Center for American Progress said, "It's patently ridiculous... it's not worth serious discussion. ... No one serious thinks that's possible."

This quote illustrates the difference between the right (conservatives, tea partiers, libertarians, moderates) and the left (liberals, communists, socialists, fascists)- the right still thinks that unleashing human liberty and freedom through private property protection, limited government, rule of law, and a love of human life will lead our nation to high GDP growth rates, and the left does not. The left believes that it is no longer even possible for America to grow, and that the ruling classes need to lock in social and economic classes through regulation, government control, and excessive taxes so that the rich can grow richer and the poor can grow poorer.

It is shocking that Obama and the Democrats believe that it isn't even possible for the United States to have a 5% GDP growth rate. According to the CIA, many nations grew faster than 5% last year- Qatar grew at 16.272%, Paraguay at 15.270, Singapore at 14.471, India at 10.365, Turkmenistan at 9.222, Argentina at 9.161, Peru at 8.795, Botswana at 8.562, Nigeria at 8.394, Sweden at 5.536, or Mexico at 5.518.

In fact, out of 184 nations listed, 68 of them grew at a rate of 5% or faster last year- and yet Obama and the Democrats think that this is impossible for the United States to do, and they believe that we've turned it around and that Americans should be happy with a growth rate of 2.834% for 2009, which makes our nation the 117th fastest growing economy in the age of Obama.

Our economy that Obama and his liberal Democrat allies thinks it is impossible and silly and just wrong for our economy to grow faster than 5%, and their policies are doing just this- high taxes, high fees, increased regulation, increased government control over society, more bureaucrats, breaking the rule of law, excessive environmental regulations, rhetorical attacks on business and investment and success and industry, policies that attack our energy industry, policies that break the law white hindering our nuclear industry, and massive stimulus and spending bills that mis-allocate resources.

Republicans offer an alternative- they still believe in America, they still believe in the dream of a growing economy, and they still think that 5% growth rate is possible. Vote for them next election.

Paul Collier writes in ANSA:

...as the radically different trajectories of Botswana and Sierra Leone illustrate, growth based on resource exports is critically dependent upon the quality of public choices. A long chain of decisions has to be got right, not just once but repeatedly for a generation. The upstream part of the decision chain involves reconciling strong incentives for prospecting with capturing as much as possible of the resource rents for society. This requires overcoming acute problems of agency, of time-inconsistency, and of asymmetric information. As the Niger Delta and the Gulf of Mexico demonstrate, it also requires the effective restraint of environmental damage.
The downstream part of the decision chain is about harnessing revenues for sustainable growth. Resource revenues need to be treated distinctively: they come from the depletion of a natural asset and should be substantially offset by the accumulation of other assets. The only European model of prudent use of resource revenues is Norway, but the Norwegian model is inapplicable for Africa. Norway has more invested capital per member of the labour force than anywhere else on earth, whereas Africa has less. Hence, whereas it is appropriate for Norway to accumulate foreign financial assets, Africa needs to invest domestically

More here

M G Zimeta writes in Prospect that Ethiopia:

...gets a disproportionately large slice of Africa's aid, but the Ethiopian regime does not act in the best interests of its citizens or its neighbours. So why has the G20 made the country a spokesman for the entire continent?

He contends that the G20's

...refusal to think long term, or to recognise the diversity of Africa, they are doing the continent great disservice. Instead of indulging in tokenism, they could be drawing more on success stories like Ghana, Botswana, Senegal, Namibia and Tanzania—and we could all be learning more from what actually works.
As for Ethiopia’s citizens, whose iconic suffering seems to be what has earned their prime minister the right to be the “voice of Africa”—their suffering continues.

More here

Image via Wikipedia

Despite its status as the best governed SSA economy Botswana's reliance on a singular source of income-Diamonds-is proving to be an achilles heel.The FT reports:

Even for Botswana, for long the model of how a poor country can use its minerals to build a path from poverty, there is no escape from the the financial crisis.
“There is no doubt we are facing a huge challenge,” said Ian Khama, Botswana’s president in his first wide-ranging interview with a foreign newspaper since taking office in April. “The main reason is because we have been very dependent on revenues from minerals, especially diamonds, ever since they were found in the seventies.”
Diamonds bring in four of every five of Botswana’s foreign exchange dollars and generate about a third of annual gross domestic product. But the US, which accounts for up to half of diamond demand, is in recession. Debswana, the joint venture between De Beers and Botswana that normally supplies almost a quarter of the world’s rough diamonds , sold no stones in November and few in the months since...[continue reading]

In other words the importance of an industrial value-added economy cannot be under emphasized enough.Botswana wannabees take note.

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• De Beers to suspend work at Botswana diamond mines as sales slide (telegraph.co.uk)
• Botswana diamond firm shuts mines (news.bbc.co.uk)

Richard Uku writes about a low-cost solution to the power problem in the Guardian:

...resources like fuel oil, diesel, light crude, solar, and gas are available as means of electricity generation, but their costs are all quite prohibitive.
These factors make a good argument for coal as a cheap alternative source of Africa's power. Coal has historically played a crucial role as a source of energy worldwide, and has several important advantages over other fossil fuels. First is its relative abundance. The current level of proven coal reserves worldwide stands at roughly 850 billion tons. Africa has about 50 billion tons. Coal is also much more widely distributed geographically than any other fossil fuel...[continue reading]

Read related coverage here on Botswana's coal abundance

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• Report: Energy, fossil fuel use to grow

photo courtesy of palagems

Image via WikipediaDuncan Green writes in the New Statesman:

The secret of Botswana's success lies in politics. The country's elite come from a single dominant ethnic group (the Batswana) whose governance systems, emphasising broad consultation and consensus-building, emerged largely unscathed from colonialism. Botswana's leading human rights activist calls it "gentle authoritarianism". The government broke every rule in the so-called Washington consensus, setting up state-owned companies, nationalising mineral rights and steering the economy via six-year national development plans. "We are a free-market economy that does everything by planning," one local academic told me, laughing.

In the second half of the 20th century, dozens of developing countries emulated Botswana's success and achieved similar growth rates. "Getting the politics right" was key for them all. These countries have built effective states that guarantee the rule of law, ensure a healthy and educated population, control their national territories and create a positive environment for investment, growth and trade. For many, the growth spurt began with the redistribution of land and other assets...[continue reading]

Rejoice Ngwenya writes in African Liberty:

By the time you finish reading this piece, one hundred illegal immigrants will have crossed the border into South Africa and Botswana, two of their colleagues will have been murdered in xenophobic Alexandra, ten men will have been infected with HIV, one Movement for Democratic Change [MDC] activist will have been beaten up, maimed or killed in Uzumba Marambapfungwe, one child will have died of malnutrition in Matebeleland, ten people will have lost their jobs in Harare and ultimately, the Reserve Bank of Zimbabwe [RBZ] will have pumped one billion worth of valueless bearer cheques into the system.

Brill's overview of George Ayittey's Indigenous African Institutions-2nd edition:

Since the publication of the first edition of Indigenous African Institutions in 1992, Africa has undergone a substantial change. Still, much mythology and misconception enshroud Africa and its people. An enduring myth claims that pre-colonial Africa had no viable institutions. This book is an attempt to provide a better, modern understanding of Africa and its people – not for cultural rehabilitation or romanticism but for practical reasons.
Traditional or indigenous Africa has not vanished; it is still the home of the real people of Africa – the peasant majority, who produce Africa’s real wealth using ancient institutions and practices. Kings, chiefs, and village markets still exist in Africa.
The object of development is to improve the lot of the peasants – not the pockets of Africa’s ruling elites – and it starts from the “bottom up” – not from the “top-down.” What is there at the bottom are the peasants, their institutions, practices, and economic ways of life. Africa cannot be developed by ignoring its traditional sector, nor can this sector be developed without understanding how it works. Africa’s salvation, then, lies in returning to its roots and building upon its own indigenous institutions. This ethos is captured by such phrases as “sankofa” by the Asante, “majimbo” in Swahili, and the mantra, “African Renaissance,” touted by President Thabo Mbeki of South Africa.
Botswana is the only African country that built upon its own indigenous institutions and prospered. Moreover, it was the same indigenous institutions African peasants utilized to engineer what historians call, “The Golden Age of Peasant Prosperity, 1880-1950.” In recent times, pro-democracy activists revived and modernized an indigenous African institution (the village meeting) into a “sovereign national conference” and used it as a vehicle to craft a new political dispensation for Benin, Cape Verde Islands, South Africa and Zambia – in the same way as the United Nations used a loya jirga, an ancient tribal democratic institution, to chart a new political order for Afghanistan in 2002. Similarly, the same indigenous African institutions can also be used to craft uniquely “African solutions to African problems.” Thus, the blueprint for Africa’s economic rejuvenation can be found in its on backyard; that is, its own indigenous institutions. Tragically, African leaders, elites and their Western development partners have seldom looked there.

The Economist reports:

Until recently Botswana, a country of 1.8m people that produces 27% of the world's diamonds by value, exported only rough stones. The government, which is struggling to diversify its economy and create jobs, wants to get more out of its main commodity. Cutting adds about 40% to the value of rough stones. But the idea, explains Akolang Tombale, the permanent secretary of the ministry of minerals and energy, is to create an international diamond centre that not only cuts and polishes, but also trades diamonds and provides security, technology and financial services. The government hopes this will spill over into other sectors and help diversify the economy. For now, the diamond industry should create over 3,000 jobs by the end of next year.

Update: Botswana launches Diamond Trading Company

photo courtesy of Economist

Finance Asia reports:

The overall African economy is expected to grow at 6.2% in 2007, compared with 5.5% in 2006. Countries such as Ghana, Botswana, Uganda, Zambia, Mozambique, Namibia and Nigeria are showing gross domestic product growth rates that are three- to four-times faster than those of the developed economies in the Euro zone. The Ghana Stock Exchange is one of the world’s best performing stock markets, while Botswana boasts one of the highest per capita government savings rates in the world

The Economist writes about emerging markets being the flavor to the moment,are they?:

Back in 2002, emerging-market bonds offered a yield a full ten percentage points higher than American Treasury bonds. This year, although spreads have widened from the historic lows seen in May, they have settled at a modest two percentage points or so.
The performance of the equity markets has also been impressive. The MSCI emerging markets index has risen by nearly 40% so far this year, a remarkable achievement given the credit crunch and geopolitical worries. Although China's stockmarket has more than doubled, this is not all about the People's Republic; the Polish, Indian, Brazilian and Pakistani markets are all up by more than 40%.
Indeed, investor focus is now shifting towards what Michael Hartnett of Merrill Lynch dubs “the emerging emerging markets”, such as Botswana and Kazakhstan. MSCI is in the process of launching a benchmark for such exotica called the “frontier market” index.

Rob Griffin of The Independent reports.

An economic revolution driven by the booming global demand for commodities over the past few years means the corporate world can no longer afford to ignore fast developing nations such as Nigeria, Botswana and Ghana...

Quoting Bryan Collings of Hexam Capital Partners.

A lot of politically stable countries endowed with resources such as oil and commodities have succeeded in strengthening their reserves, stabilising interest rates and providing a much better environment in which to operate," he says. "They have also benefited from the development of capital markets in the region.

continuing...

Sub-Saharan Africa - excluding South Africa - rose by an impressive 38.2 per cent and were not affected by either the March correction, which hit a number of rival emerging markets, or the Nigerian presidential elections a month later. This compares with a relatively modest 10.2 per cent rise for the MSCI Far East index and a fall of 5.5 per cent in the MSCI Eastern Europe.

The power supply challenge is being reframed as an opportunity

Another serious concern is the continent's power supply problems. It is estimated that more than half of sub-Saharan nations are now facing crippling electricity shortages with blackouts becoming increasingly common."In many ways Africa is a victim of its own success as the higher-than-expected GDP growth has put a huge strain on the electricity supply, which is causing problems as there hasn't been any major investment in the industry for 15-20 years," Mr Thomson adds. "On the positive side, however, you can make money by investing in companies that are building power-producing capacity in the region."

The [African] blog wars writes about the 'Resource Curse':

It is widely suspected that the ‘curse’ is largely caused by the effects of over-dependence on resources. Governments, perhaps believing resources will never run dry (in their time), fail to wean economies off these commodities. One of the consequences of this is that in times of high prices, the real exchange rate rises making local industries less competitive, while encouraging borrowing as it becomes relatively cheaper to do so.
The danger though is when prices fall, exchange rates fall and debt repayments soar, and this is after industries have contracted, which dramatically decreases tax revenues. Sure, taxes could be pushed up to compensate, but this wouldn't do much for competitiveness.
Over-dependence is the big issue though. Botswana still gets 70 percent of its export revenues from diamonds, while Burundi, Rwanda and Uganda all earn more than 50 of their export earnings from coffee. Looking west to cotton producing nations, the picture isn’t really any better. And, then, of course, there’s oil, which earns Nigeria 95 percent of its export income. Perhaps part of Chad’s defection to China was because the Asian giant is more likely to be able to buy all of Chad’s oil than Taiwan is.

The [African] blog wars