Daniel Hannan is an MEP for South-East England, and a journalist, author and broadcaster. His most recent book is What Next: How to Get the Best from Brexit.
The best arguments for the free market are practical rather than theoretical. As an abstract concept, the idea that economies flourish when left to themselves does not appear especially persuasive. Why have a hundred competing car factories rather when the government could simply pick the best one and reallocate the others to something else? Why leave things to pile up in a random, higgledy-piggledy fashion when you could marshall the best minds to impose some sort of order?
There are, in fact, logical answers to these questions. But by far the most convincing answer is empirical. Other things being equal, free-trading countries always outperform over-regulated countries.
History has provided us with some laboratory-condition demonstrations: West Germany versus East Germany, for example, or South Korea versus North Korea. The developing world, too, is full of comparable pairings where the country readier to embrace global markets beats the one that clings to protectionism. Compare growth rates in Vietnam and Burma, or Colombia and Venezuela, or Bangladesh and Pakistan.
My new favourite example, though, is Uganda (partly because I’ve just been there) versus the Democratic Republic of the Congo (partly because it’s the only other sub-Saharan African state I’ve spent any time in).
I could try to convey the difference with economic data – Uganda’s GDP per capita is nearly three times that of the DRC, it is growing at twice the speed, and one in five Ugandans lives in poverty as against three in five Congolese – but statistics can’t begin to describe the gulf between the two states.
Kinshasa, the capital of the DRC, is by far the worst place I have ever visited: dangerous, destitute and dirty. No visitor dares walk or even use a taxi. Foreign diplomats count the days to the next postings. Ambitious people emigrate, leaving behind a swaggering caste of ruling officials and a sullen and fearful populace.
Kampala, the capital of Uganda, might as well belong to a different solar system. Sure, there is poverty there by Western standards. But there is also an irrepressible sense of energy and optimism. Private schools are springing up everywhere, catering for one of the youngest populations on the planet. Everyone seems busily engaged in making things or selling them. The signs of rapid growth and construction are everywhere. Locals agree that the best is yet to come.
The two capital cities are not on different planets; they are in neighbouring countries. How are we to account for such a colossal difference?
Part of the answer lies in history. British administration in Uganda, as in most of the Empire, was chequered. We removed wealth from the country and, until very late, denied full political rights to its people. At the same time, we built roads, schools and clinics, and tried to give Ugandans some basic civil protections. We came up with a few disastrous policies: one of our last governors, fashionably following the interventionist policies in vogue in the 1950s created a Coffee Marketing Board, a centrally-run body that, by fixing prices, wrecked what had been a successful industry. But we also created a legal system that was run impartially and through which an aggrieved individual might reasonably seek redress. There were, in short, entries on both sides of the ledger, and Uganda was eventually brought to independence without a shot being fired in anger.
The same cannot be said, alas, of the resource-rich Belgian Congo, which was treated as the personal property of the King of the Belgians. Under the guise of eradicating slavery, King Leopold in fact extended it, forcing local people to work in hellish conditions on his rubber plantations. When the Belgians pulled out in 1960, they left almost no infrastructure, and chaos ensued. My late mother was working at that time in the British embassy in Brazzaville, capital of what had been the French Congo, immediately across the estuary from Kinshasa. She remembered people trying to escape the Belgian Congo by swimming across the River Congo, their screams a nightly noise as they drowned in the current.
The wealth of a nation is not determined by its location, its geology or its soil. It is determined by the rules under which its citizens relate one to another. If a government provides physical security, a fair legal system, and enforceable property rights, people will prosper. As Adam Smith sagely put it in 1755, “’Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice.”
Uganda meets those conditions far more closely than does the wretched, long-suffering DRC. It has embraced something approximating free trade with other East African states. Indeed, the reason I was in Kampala was to promote closer commercial links between the region and a post-EU Britain. Brussels imposes tariffs on a number of African countries, including Kenya; but it’s the non-tariff barriers that really hurt. A Ugandan farmer explained that EU regulations on vanilla had been drawn up by French lobbyists who owned plantations in Madagascar, and had been framed in such a way as to disadvantage produce from elsewhere. He hoped that a trade deal between the UK and the region would clear such obstacles away.
It will. East Africa is moving toward a market system, with palpable results. One delegate at our trade conference in Kampala, a Nigerian politician visiting the region for the first time, told me earnestly: “You see the advantages these guys have? They’re all common-law, English-speaking countries. They understand each other. They get the concept of private property. Us? Look at our neighbours! We have to go through two French-speaking countries before we get to Ghana!”
Britain can do only so much to facilitate local trade. The Government is, to its credit, sponsoring an NGO called Trademark East Africa, which ensures that commerce happens on the ground after the accords have been signed – by, for example, streamlining customs procedures. That DFID is actively promoting trade, after years of funding NGOs that opposed it, is a welcome sign of how official thinking has progressed.
Ultimately, though, the best thing we can do is to open our own market. Doing so will incidentally benefit Africans, but the chief beneficiaries will be us. The reduction of trade barriers is always of greatest advantage to the country doing it.
We can reasonably expect that, in its own interest, East Africa will reciprocate. And we can hope, too, that the EU will eventually loosen some of its own agrarian protectionism vis-à-vis that great continent. That, though, is no longer our business. Our business is to ensure that, as we design our own trade policy, we do so on the most open and liberal of principles; that we seek mutual product recognition rather than on the imposition of industry-driven standards.
Every country that has dismantled its trade barriers, from Singapore to Australia, has prospered. As prices fall, people have more money and more time to spend other things, and the economy grows. There will also be, as it were, a collateral gain for our African allies, finally free to buy and sell their way to growth.
Before I left Uganda, I stopped at a beautifully-tended little CWGC graveyard in Jinja, at the source of the Nile. In it lay men from all over East Africa, black, brown and white, Christian, Muslim and Hindu, united in having given their lives for Britain’s freedom. I’d say free trade with Africa is the least we owe them.