For Want of A Dog

Private and state donations are the big feel-goods when it comes to dealing with the prospect of third world poverty. Is this really the solution however? Perhaps free markets and open borders are the answer.

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http://www.mises.org/story/2455
All for the want of a dog. "What's a dog?" I inquired.

The middle-aged Jamaican smiled, "The dog is that little part down there." He knelt, pointing to the rear wheel of his broken bicycle leaning against the stuccoed cement block wall that outlined his neatly kept yard. He rose, looked me in the eye, and inquired, "Can you bring me a new one back when you return from the States?"

You see, my friend really needed a dog — the local term for the broken small part of the wheel assembly — in order to fix the bike he used for work. The local bike shops — more like bike shacks — didn't have the part in stock. And, even if they did, the price of a dog sold on the island would have been too high for a day laborer to afford.

Sure, I would have loved to have brought one back for him, but I wasn't coming back as my service in the US Peace Corps was about to end. The bike — a gift from my friend's generous, well-meaning US relative — would slowly rust against the wall in the rain and lightly salted winds, all for the want of a dog.

This incident was one of many lessons in Third World economics that I received as a Peace Corps volunteer serving in Jamaica in the early 1990s. Another such incident was the abrupt end to the computer class I initiated at a local secondary school. The dog bit once again, this time in the form of the failed keyboard, which doomed the program. For the want of a simple US$10 keyboard, a US$1,500 PC would sit idle.

These lessons come to mind as I hear more and more about the idea of providing laptops to millions of students in Third World countries. The idea sounds wonderful, utopian even. But the dog will bite again, and this idea will assuredly fail.

What causes the dog to react so? Well, the political and economic structures of Third World countries — such as Jamaica — of course. During my service, the Jamaican political economy was based on a centralized, interventionist government; a supposed democracy where garrison districts recorded landslide victories of 99%; an island where the ruling party had close ties to Castro in the '70s; a nation whose political parties ran drug posses to generate funds and enforce political power; a country where the confiscation and nationalization of private property was one stroke of the pen from reality.

Jamaica is a nation where my students believed the solution to the country's ills was to "ask for more money from President Bush."[1] I knew better. US aid rarely makes it to a small school in the countryside. There were too many dollar-hungry bureaucrats driving late-model Fords circling the government agencies and NGOs of the capital, Kingston, to allow much money to escape their grasps. And, it would not have mattered even if some money filtered through; the money always went for the PC when it was the dog that was needed. Mises long ago explained this inability for central planners to lead an economy in any direction other than down Chaos Avenue.

In addition, Jamaicans suffered due to an official exchange rate that was about 30% below the active black market for dollars. This, in addition to outrageous protective tariffs and inflationary policies, drove the cost of the dog my friend needed above the price he could afford.

All of this resulted in the typical contradictory Third World activities existing side by side: water and electric rates set at an unaffordable price forcing residents to illegally tap into the pipes and wires — and no one really caring since the government owned the utilities; tourist hotels — mostly exempt from tariffs and quotas - and government agencies flowing with food while the local shops were barren of most essentials.

Such is life in the Third World.

The laptop idea is doomed to fail. What's worse, since the failure is the result of politics, the cost, as usual, will be borne by taxpayers. There will be winners, those who live as pilot fish, eating scraps left over from the victims of a gorged government shark. In fact, the laptop idea appears to have resulted in a manner akin to a pilot fish whispering in the ear of its sycophant shark, encouraging the shark to strike so that more scraps can be scavenged without effort by the beguiling fish.

The general public in the United States will be sold on the supposed benefits of providing laptops to the impoverished students of the world, and will wait like Pollyanna for the sun to rise on a worldwide education utopia. A dawn that will never appear.

There are so many holes in this vision. First, while the solution is sold as the doings of altruistic donors, the truth is that governments and pseudo governmental organizations — such as the Inter-America Development Bank — are waiting in the wings. With the sharks on attack, and the pilot fish alongside, failure is impossible. Oh, the program will not be worth a darn, but that is not failure in the eyes of government. It is simply the signal that more money must be invested, more laptops delivered, more, more, more. Failure? Out of the question.

Additionally, another problem is the little dog that lies inside every electronic device. And once that dog goes bad, the laptop will be tossed into the dusty corner of a closet somewhere in the backcountry. Even if students take great care of their new machines, many will simply malfunction. And, without a capital structure to support repairs, and an economy based on borders free of tariffs and quotas, the replacement dogs will never find their way into the malfunctioning laptops.

If you want to help the Jamaican lamenting his dog and impoverished students struggling overseas, while also assisting US taxpayers and consumers, encourage the development of international and local free markets. It's a simple solution to what has become, through continued government interventions, a very complex issue. Once the steps are taken to open borders, allow goods to be traded without barriers, tariffs, and quotas, the ingenuity of acting humans will correctly resolve the situation.

Of course, it will take some time before the capital structures of poor countries can change from that which supports despotic governments into structures that respond to consumer wants worldwide. In addition, capitalists and entrepreneurs will have to be convinced that a new social system will keep their investments safe from government appropriation — no small task.

This process will not happen over night, nor will it be painless. But the short-term pain will quickly result in the appearance of cheap dogs for the laborer who needs simple transportation.

Jam it back in, in the dark.

Subsidized agriculture is a practical form of theft. There's no reason people should be paying double the amount for less.

There's nowhere I can't reach.

The benefits for first world nations are greater than the negative to begin with. It's the simplest way to provide cheaper goods for an economy in natural stages of transitioning to a service economy. (which we practically are)

It's like with the Canadian lumber issue. If Canadian loggers could provide cheaper, superior lumber, there's no reason that American consumers shouldn't have the option of buying it, and if they were subsidizing its price then doubly so. Subsidizing prices for foreign markets is a net loss for the seller, because they've essentially stolen money from all of their citizens to benefit a special interest just so that they can sell it cheaper than the equilibrium price.

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If they had the capital to buy a bike, surely they'd have the capital to buy a dog. Products aren't available on markets where there's no demand for them. Incomes have to rise in order to create the demand necessary.

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So in theory, while freeing up the market would be beneficial, in practice, the agricultural lobby wields a lot of political clout and the chances of this ever happening are next to none.

This viewpoint is disgusting to me. We have freedom of speech for a reason, and it's not at all unrealistic that people could be galvanized enough to the point where they have more influence than the agricultural lobbies. I think what you're really saying is that people are too lazy to do anything about it.

I am a dolphin, do you want me on your body?