Africa: Not Jobs, Prosperity Now

Here are two documents on African-American and Africa attitudes towards work and prosperity. The first is a summary of an article from The Guardian of Britain, a very far left newspaper, and the second from a far left, US-based online news service covering Africa. (The Guardian’s grasp of economics may be indicated by the fact they have been reduced to begging for donations at the end of each article.) The first deals with why Blacks are poor in the United States (basically Whites are welfare cheats and all wealth was created by slaves), and the second deals with the problem of industrialization in Africa: Africans will not work for competitive wages.

I am reminded of an Obama era quote for which I cannot find a source: “There will not be true economic justice until the poorest Black man on Earth, is richer than the richest White man.”


Inequality: Median Wealth Of Black Americans ‘Will Fall To Zero By 2053’, Warns New Report: Study Predicts Huge And Growing Gulf Between White Us Households And Everyone Else Could Be Disastrous For Future Of America’s Middle Class. The Guardian, September 13, 2017.

[summary] A new report calculates that median wealth for black Americans will fall to $0 by 2053, if current trends continue. Latino-Americans, who are also experiencing a sustained downward wealth slide, will hit $0 about two decades later, according to the study by Prosperity Now and the Institute for Policy Studies. “By 2020, median black and Latino households stand to lose nearly 18% and 12% of the wealth they held in 2013 respectively, while median white household wealth increases by 3%,” the report states. “At that point – just three years from now – white households are projected to own 86 times more wealth than black households, and 68 times more wealth than Latino households.” With the US set to become “majority minority” by 2044, researchers say this spells major economic peril for the nation. “If the racial wealth divide continues to accelerate, the economic conditions of black and Latino households will have an increasingly adverse impact on the economy writ large, because the majority of US households will no longer have enough wealth to stake their claim in the middle class.”

Researcher Dedrick Ashante-Muhammad at Prosperity Now, one of the report’s authors, states that the majority of Whites were not Middle Class until the 1930s and 1940s, and that prosperity was only possible because of unearned Affirmative Action for White People, like veteran’s benefits and mortgages. In addition, all White middle class families have the advantage of inherited wealth, unlike any Blacks: This inherited wealth comes from “the wealth generated by centuries of slave labor — the same labor that, directly or indirectly, helped to build most of the wealth enjoyed by white Americans”. White people never worked for anything and are just a class of welfare-cheat parasites, Ashante-Muhammad argues.

After the [Obama years], one of the most catastrophic period for Black and Hispanic wealth formation in modern history, Ashante-Muhammad calls for “investment” in creating the Middle Class for the 21st-century: He is calling for Blacks to be moved into the Middle Class by government subsidies. After all, White people never worked for anything they got, why should Black people be denied anything.


Editorial: Made In Africa. Quartz Africa Weekly Brief, October 15, 2017.

Even though the global economy has evolved significantly in the last few decades away from the industrial revolution which transformed the world’s advanced countries, there’s still much hope tied to the idea manufacturing will play a key transformative role in Africa today.

Yet, it may be foolish to place too big a bet on manufacturing in Africa, according to a new research paper from US think tank, Center for Global Development.

The researchers who used World Bank data looked at 5,500 firms in 29 countries compared labor and capital costs, productivity and efficiency of manufacturing in sub Saharan Africa with similar countries outside Africa, in particular Bangladesh. They did not have good news for most of the region.

In a bid to find out if African countries can “break into global manufacturing in a substantial way”, the researchers found factories in Africa were almost always more expensive to start and run. Looking at overall costs, small African firms had a 39% premium over comparative firms elsewhere while medium and large firms were around 50% more expensive. >Take a middle income African country like South Africa, labor costs were described as “very high” despite unemployment levels as high as 30%. A mix of structural factors, restrictive labor laws and high minimum wages mean the continent’s most advanced economy, is “not likely to emerge as a strong competitor in labor-intensive industry in the foreseeable future.”

Stable, coastal countries like Senegal, Kenya and Tanzania seem like strong candidates for a leading role in global manufacturing, yet they’re still too expensive. For example, the labor cost per Kenyan worker is $2118 compared with Bangladesh where it’s $835. The capital cost per Kenyan worker is nearly $10000, but it’s less than $1100 in Bangladesh. As a middle income country, Kenya has a higher GDP per capita ($1116) versus Bangladesh ($853). But even low income Senegal (GDP per capital $775) is twice as expensive as Bangladesh in terms of labor and capital costs.

There is good news, and it’s mostly all in Ethiopia. The researchers believe Ethiopia, already leading the way as Africa’s 21st century center for manufacturing, has the best likelihood of being the “New China” as labor costs rise in the “world’s factory” and social issues such as child labor arise in some other Asian countries. Fashion brands like H&M, Guess and J. Crew are already finding potential in Ethiopia, one of the few African countries whose labor costs ($909) are close to Bangladesh in the research.

The researchers are reluctant to speculate why African manufacturing costs are so high, but it isn’t difficult to imagine what some of the challenges would be. A lack of infrastructure such as transport networks and stable electricity in many poor African countries plus low levels of education will mean factory running costs and the African worker are going to be more expensive than they need to be. This can get exacerbated by unhelpful regulation and poor policy. That’s why the authors suggest “carefully designed industrial policy” to “possibly unleash the potential for manufacturing and rapid industrialization.”