Official corruption, there and here

On holiday in the (remarkably for mid-July) sunny South Island, I was reading Dictatorland: The Men Who Stole Africa, by British journalist Paul Kenyon.  It is well-worth reading for anyone with an interest in Africa, or indeed in economic (under)development. Over 400 or so pages, it is a series of accounts of leaders of post-colonial African countries who enriched themselves –  typically almost obscenely so –  from the vast natural wealth of the continent.    There are exceptions of course; notably well-governed Botswana.   And there were countries where idealistic disastrous policies impaired the material wellbeing of the citizenry without any great personal enrichment of the leaders (Tanzania and Zambia under Nyerere and Kaunda are two examples).  But Kenyon’s focus is on a series of countries with abundant natural resources (oil or very fertile land in his particular examples), one or more brutal leaders, and, at very best, mediocre material living standards for their people –  think Congo, Zimbabwe, Nigeria, Equatorial Guinea, Libya, Ivory Coast (with the rather different, but equally bleak, Eritrea thrown in for good measure).  Eritrea may – the author reports – have abundant oil and gas, but the regime simply refuses to allow any exploration.   Looting by leaders and their cronies was too often a big part of the story –  billions in foreign banks, fancy houses in Paris, London and the like.  The way various Western companies –  oil companies notably –  acted as enablers of this evil is pretty unedifying too.

Many many books and learned articles have been written on failures of post-colonial Africa.  I’m not sure that any of the stories really persuade me, except perhaps in the most reduced-form sense: there were weak institutions for sure, but they needn’t have stayed weak; the boundaries of many countries were artificial at best, but a strongman (arguably necessary to hold some countries together) could have lived modestly, governed wisely, and so on.   And if one were to blame the colonial predecessors –  in some cases dreadful (think Leopold of the Belgians), in others not much better than indifferent – much of east Asia also emerged from (relatively shortlived) colonial rule at around the same time, and the small Pacific countries emerged even later.  Much of the Middle East emerged from Ottoman rule only a little earlier.   And if, indeed, there is a “natural resource curse” of sorts –  at least in the presence of weak institutions – there are places like Brunei or Norway (independent since 1905).

I spent a couple of years in Zambia, working as the economic adviser to the central bank.  Kenneth Kaunda hadn’t been overly brutal, and hadn’t much enriched himself.  But under his watch, his country’s economy and material living standards had been severely impaired nonetheless.  In the midst of the liberalisation/disinflation shakeout in the early-mid 1990s, per capita GDP is estimated to have been more than a third lower than it had been at independence in 1964.  In the “what might have been” file, the story was often told of how at independence Zambia –  rich in copper, and with abundant agricultural land and a small population – had had per capita GDP similar to (or a bit higher than) those in Taiwan or South Korea.   Zimbabwe had also been about as well-off as those two east Asian states, which themselves had only emerged from fairly brutal decades of Japanese occupation in 1945.   These days, Zambia and Zimbabwe “enjoy” per capita GDP between 5 and 10 per cent of those of Taiwan and South Korea.

Another way to look at Africa’s economic failure is to compare the growth performance with New Zealand. In 1960, New Zealand was still among the richer of the advanced countries of the world. Nowhere in Africa had estimated per capita incomes more than about half of New Zealand’s (South Africa and Algeria), and most had incomes not much more than a tenth of New Zealand’s.  As readers know, over the subsequent decades we have been among the worst performing of the advanced countries.  So beating New Zealand’s growth record over the decades since 1960, should have been easy.  But of the 25 African countries for which the Conference Board database had data (in PPP terms), only 7 did.   Taken as a whole, the continent couldn’t even manage to make gains relative to the advanced country laggard New Zealand.  Of the 18 east Asian countries in  the Conference Board database, every single one grew faster than New Zealand over the period since 1960.   Looting by Africa’s leaders is far from the only story, but at very least it was symptomatic of the wider failure –  as well as being morally inexcusable.

Official looting isn’t, of course, confined to post-colonial Africa. It is mercifully rare in New Zealand, but in the course of my holiday I stumbled on an extraordinary example from the early days of settlement,  In Nelson, we stayed in Blackmore Cottage, (the warmer version of) a house first built in the early 1850s for Edward Blackmore, who had been appointed by Governor Grey as Collector of Customs and sub-treasurer in Nelson.  The owner was keen to tell us the story.  Blackmore had started by lying about his qualifications –  claiming an Oxford degree when he’d done no more than qualified to matriculate (never even attending) – but that was just the start.  He appears to have collected customs duties (at the time, the bulk of regular government revenue other than land sales) and simply never passed the revenue to the government.  At the time, it appears, people appointed customs collector had to provide sureties or guarantors, but Blackmore never provided these either.  Questions were soon asked, repeatedly, but the mails were slow, and it appears that Governor Grey himself took Blackmore under his wing (when senior public servants started pursuing him).  By the time the incident came to a head a year or two later, Blackmore owed the Crown around 2000 pounds.   That mightn’t seem like much, but total customs revenue for the entire country in 1855 was 105000 pounds.

No one seems quite clear what Blackmore did with the money, but it was probably failed business ventures.  He’d even bought a couple of islands.  But whatever he did with it, there wasn’t much left by the time things came to a head.  You might suppose that he’d have been arrested and served a considerable prison sentence –  defalcation is no trivial crime. But, astonishingly, there were no legal consequences at all.   Instead, someone in the Nelson community apparently gave Blackmore ten shillings, and took over whatever assets were left, apparently with the intention of liquidating them and paying any proceeds to the Crown.  Ten shillings (or perhaps it was in addition to the fare) seems to have been enough for the Blackmore family to leave for Sydney, whence the law did not pursue them.  Blackmore was, reportedly, no more successful in Australia, running for a time (before it failed) a private school, at which two of Australia’s earliest Prime Ministers were educated.

The Blackmore affair seemed to create quite a stir.  There was a near-unanimous resolution in Parliament that Blackmore should be arrested, wherever he was.  There was a parliamentary inquiry into the failures of senior civil servants in dealing with Blackmore (the question was whether those civil servants should have their pensions docked.  But Blackmore was never arrested, never prosecuted. never punished.  Perhaps it was simply too embarrassing for some senior people?  Whatever the latter day failings of our leaders –  and they are many –  looting in office is almost unknown.

And with that post-holiday whimsy, I’ll start to get back to the regular round of posts.

3 thoughts on “Official corruption, there and here

  1. Maybe the significance of institutions is in my mind because I’m reading “Homo Deus: A Brief History of Tomorrow” by Yuval Noah Harari; now in the middle of a chapter that explains how large numbers of people can only be organised via accepted institutions. For example the over throw of Nicolae Ceaușescu not resulting in universal freedom but merely the take over of the leavers of power by a subset of the communist party.

    We really need to face up to the fact that overwhelmingly Africa since independence has been a failure and Asia has been a success. If we cannot find compelling answers then we may experience similar troubles. The reasons I can think of would be weak institutions, unsuitable borders, unsuitable economic policies that were popular with the previous colonial govts at the time of independence, ethnic divisions, external countries causing strife, literacy, religion, tradition of large scale organisation. There is one other argument that I can barely bring myself to mention: that is race but it makes me too angry to discuss – anyone wanting to compare Obama’s recent speech with any of Trump’s will have trouble saying that having no African blood is an advantage.

    I find the ‘weak institutions’ the strongest argument but it is hard to explain how an institution becomes strong – can it just be engrained conservatism? And if so how did the Bank of Scotland remain boringly stable for 300 years and then go bananas once I opened an account.
    How about the natural evolution of human societies from hunter gatherer, to village, to town, to city, to nation/empire with each step resulting in new structures of organisation and belief. Unlike most of Asia before independence Africa was mainly villages (ref Jared Diamond’s ‘Guns, Germs, and Steel’) with its few towns and cities and those that did exist were mainly administered by foreign elites who then left. So the skills learned at one level of organisation were not there for the next. If you have not tradition of organising a town library or a regional mothers union or a general hospital then moving to the skills required for an independent police force and courts of law would be absent.
    Another force for strong institutions is trade; the geography of Africa with its absence of natural harbours made trade physically difficult and then the tariff barriers erected by the EU and others for agricultural goods would have further hampered their economies.

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    • I think your last two paras are largely right (altho perhaps not trade barriers, as the EU restrictions were typically on things their own farmers produced – eg dairy and lamb – not cocoa, flowers, tropical fruit etc. the more I’ve thought about the Zambia/Zimbabwe = Taiwan/ S Korea comparison in the subsequent 25 years the more unenlightening it has come to seem. Zambia in 1960 was mostly a white settler mining operation, generating v good living stds for a few, while the other 98% of the population were really not much more than subsistence farmers, in a pre-literate quite decentralised culture that hadn’t known anything different in the previous 1000 years.

      I’m not sure why there couldn’t have emerged a few more modest and wise democratic leaders. Then again, the 20th century highlights what can happen even in advanced (technical, literate etc etc) societies rather too easily – the Nazis, the Soviet Union, Franco, and other slightly less dreadful baddies.

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      • Hitler, Stalin, Franco, Mao: probably all believed they were acting for the best for their country with their evil being in their choice of who had to be eliminated – Jews, Socialists, Land-owners (eventually almost anyone in their paranoid visions). However many of the African dictators cannot have deluded themselves that they were acting for the benefit of their fellow countrymen as they transferred large sums to foreign banks in their family name.

        At present the tide of history is a move from dictatorship to democracy but the tide has eddies and Greece and Argentina and Egypt have moved to military rule in my lifetime. So even Kiwis should be concerned (although I am far more scared of Auckland Transport than I am of the combined might of NZ army, navy and airforce).

        A web of strong honest transparent institutions with a diverse media seems to be the best defence against abuse of power. Who would sleep well at night if the USA didn’t have powerful institutions exerting some control over its current unpredictable president. I begin to understand your comments about the ‘probably illegal governor’ of the RB and also your concern about delayed and obstructed OIA requests.

        Today’s example of Govt delay: https://www.radionz.co.nz/news/national/359321/nz-still-using-seriously-flawed-building-product-assessment which ends with “RNZ has asked the Ministry of Business, Innovation and Employment for an update on its review of CodeMark in New Zealand; and to release the second opinion it sought of the aluminium panels review, but so far it hasn’t.”

        And in light of todays’ reported immigration figures I decided to check the actual stats for permanent residency. The website has been displaying this message for about a year: “”For privacy reasons the CSV files have been temporarily removed from the website. The decision follows concerns raised that some information previously published has breached individuals’ privacy. INZ has removed the files for the time being while we review how we provide this information in a way that ensures INZ meets its legal obligation to protect personal information.”” Any computer professional with modest experience of databases could resolve any reported privacy issue in minutes not months.

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