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Monday
Nov192012

It’s not what you know, or who you know…

By Neil Crofts

It is where you were born.

Those of us born into stable countries that allow personal freedom with pluralistic and inclusive systems are the lucky ones.

I had my first opportunity to work in Sub Saharan Africa last week.  I was in a country which as soon as it gained independence from exploitative European imperialism went directly into a civil war lasting over two decades.

Eventually one group emerged to take control of the country and even though the government is autocratic and extractive it is better than civil war.

There is a great deal of poverty, with huge shanty towns and many, many lives being lived at a very basic level.  There is a high level of street crime and many weapons left over after the civil war.  The infrastructure is creaking, tap water is dangerous, electricity flickers and after a heavy rain storm the roads were deep with mud washed down the hillside.  The already bad traffic stopped with lorries and busses up to their axels in the mud.

Through mineral resources the country has substantial income.  Some of which goes to the ruling elite (the President has an enormous palace less than 500m from a large shanty town area) and some of which is being spent on fairly lavish public works.

Over time it has proven very hard and relatively rare for countries to smoothly transition from autocratic and extractive systems of government to inclusive and pluralistic.  Inclusive and pluralistic societies have also proven to be the only way to lift the mass of any population out of poverty.

What keeps autocratic systems autocratic is the gap between the elite and everyone else.  Where there is one group who have everything to loose and another group with nothing to loose (or use), it is very difficult for meaningful social change to take place.

What can change things is the emergence of a sufficiently significant proportion of the population with something to loose, a middle class, if you will.  What is important is that their wealth and success are not directly dependent on the government.  They may indirectly rely on government for licences, but not for patronage.

If this population grows both in numbers, wealth and status they also have something to loose and therefore something to protect.  They start to become influential and the governing elite may start to have to consider them.

Where I was there were Porsche and BMW dealerships among the unmaintained buildings still showing signs of civil war damage.  There were fancy restaurants, chic boutiques and expensive hotels cheek by jowl with squats, slums and shanties.

You may think – “what place is there for Porsches in poverty?”  But, counter intuitively perhaps, they are a very positive sign. They prove that there is a successful middle class who can afford these things, as a ruling elite would be more likely to be served directly by Porsche than create enough demand for a dealership.

A growing middle class means that there is the potential for stability, there is the potential for an evolution towards pluralism and inclusiveness and therefore a more general shift away from poverty.

Of course it is vulgar to see a Porsche dealership in a place where far too many houses consist of scrap wood and corrugated iron, on the other hand, maybe it is also a positive sign?

Predictions are always risky and political ones doubly so, but here goes.  Based on the analysis above I would predict that there is a middle class tipping point which shifts countries from autocratic to pluralistic.  This is what happened in England in 1688 and it could also be happening in Egypt and China.  On the other hand, countries without a middle class will find it much harder to make the shift, so I suspect Syria and Afghanistan have many more years of turmoil and poverty.

The lucky ones amongst us must respect that we are not relatively safe and wealthy because of what we know or who we know, but because of where we were born.  We also need to recognise that in our globally connected world, we are all interconnected.  Poverty, strife and conflict in Africa or the Middle East is not isolated stuff that happens on TV, it affects our future too.

Paradoxically aid is unlikely to help as it will simply allow an autocratic regime to be even less socially responsible.  What will help is to buy stuff which enables the people to create businesses and jobs and also, where possible to teach business skills, entrepreneurialism and leadership – see http://www.afriversity.org for an example.

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With love

nx

Neil Crofts
authentic business
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