Expropriation and Its Discontents
How not to eradicate global poverty, one bloated plutocrat at a time
When Elon Musk committed some $40 billion to his Twitter takeover bid, a cry went up from the progressive fever swamps: Why doesn’t this rapacious plutocrat spend the money for the benefit of the wretched of the earth instead of using it to amass even more wealth and power for himself? If only Musk and the rest of those wicked and greedy one-percenters—most of them white men, of course—could be made to cough up their ill-gotten wealth, global poverty could be eradicated!
Now if the wealth of the one-percenters consisted of gold doubloons and pieces of eight stuffed into mattresses or stashed away in safe deposit boxes, expropriation would be no problem. With enough bureaucrats, SWAT teams and snitches, the greedy rich could be stripped to the bone. But in fact their wealth is a complex construct, consisting of assets not easily transferable to the wretched of the earth. Much of it is in the form of corporate equity, e.g. the Microsoft stock held by Bill Gates. If that stock were taken away from Gates, how, exactly, could the wealth that it represents be redistributed?
Might it be possible to create some kind of global agency responsible for the supervision of all corporations, everywhere, to ensure that they operate in accordance with the goal of global poverty eradication? That seems unlikely. Surely no developed nation would be willing to yield control of its economy to some transnational bureaucratic cabal. And as the sorry record of the United Nations shows, such a scheme would be an open invitation to graft and corruption on, well, a global scale.
But the final, damning objection to the expropriation of the First World one-percenters in favor of the global poor is simply this: Taking their wealth away from them and redistributing it would do little if anything to ameliorate global poverty, the causes of which are deep-rooted in culture, society and politics.
There are many third-world countries, rich in natural resources, with hardworking people, that remain mired in poverty. Why is that? Let’s consider the case of Africa. Since decolonization in the late Fifties and early Sixties vast quantities of international development aid have been poured into the continent. Undoubtedly, this aid has done some good in basic material terms. The hungry have been fed, the naked have been clothed, the sick have been healed, etc. But the sad fact of the matter is that development aid has done little to eradicate the grinding poverty that afflicts so many African countries. Why not? What happened to all the money?
When the African colonies achieved independence beginning in the late 1950s, most of them were endowed by the departing colonial powers with liberal parliamentary constitutions. In many colonies, such as the Gold Coast (Ghana), preparations for the day of independence had been going on for many years. But there as elsewhere in Africa, democratic government lasted only a short time before sectional, tribal and religious tensions ushered in an authoritarian government. The now-familiar pattern was soon established: the rule of a small privileged elite over a more or less impoverished population. Not infrequently, as in Nigeria, Liberia, Zaire (now the Democratic Republic of the Congo) and, most tragically, Rwanda, ethnic and tribal fissures led to bloody sectarian strife, foreclosing all possibility of economic development for years or decades. In such circumstances it was inevitable that international development aid mainly benefited the governing elites. Much of it went for grandiose construction projects to which some president for life could put his name, while the poverty-stricken masses got such crumbs as were left over.
The example of a Middle Eastern country, Iraq, illustrates why wealth and resources cannot, in and of themselves, be relied upon to eliminate poverty. When Iraq became an independent kingdom in the 1930s, its governing elite was largely drawn from the Sunni-dominated administration of Ottoman times. These men, many of them military officers, suddenly found themselves in possession of extensive powers of patronage. Thus control of the central government enabled them to cement their position, building support and buying off opponents with such favors as economic concessions, grants of land and political office. Such largess naturally tended to favor their tribal Sunni compatriots, slighting the majority Shi’a Arabs and the Kurds. This led to discontent, unrest and periodic rebellion, which the central government put down by police repression and outright violence.
Nothing really changed after the 1958 military coup that bloodily deposed the Hashemite monarchy and its supporters, and transformed Iraq into a republic. The Free Officers, as the coup plotters styled themselves, inherited the patronage powers of the old regime and used them in much the same way. The subsequent twists and turns of Iraqi politics did nothing to alter this status quo and the process reached its culminating point with the rise of Saddam Hussein. He proved exceptionally adept at combining patronage with terror, an amalgam that served him well until 2003, when US military action finally toppled him and his regime.
Nor was the situation altered by the growing state revenues derived from oil production. The government nationalized the foreign-owned Iraq Petroleum Company in 1972, thus gaining complete control of oil revenues, and after the 1973 oil crisis these were not just substantial but vast. Though a fraction of this windfall was spent on economic development projects and welfare programs, the bulk of it was used in the time-honored manner: to solidify the position of the ruling group. Much of the money went for arms purchases, substantial sums were tucked away abroad, and countless billions were squandered in the Iran-Iraq War (1980-88). In the long run, given the political culture of the state and the disastrous results of Saddam Hussein’s long rule, Iraq’s oil wealth did the Iraqi people more harm than good.
The lessons of Africa and Iraq, though many would prefer to overlook them, are clear: Pouring aid money into countries lacking responsible governments, democratic political institutions and the basic infrastructure of civil society is an exercise in futility. I am not arguing against aid intended to combat AIDS, to provide people with clean water, educational opportunities, etc. Such programs, public and private, are good in themselves. But they do nothing to solve the underlying problem: the patterns of power and control in countries plagued by clan, tribal, ethnic and religious divisions. To put the question bluntly, what’s the point of despoiling the First World’s one-percenters for the benefit of Third World one-percenters?
Not that the situation is hopeless. We see in Rwanda—of all places—that real reform can indeed make a difference. In a country ravaged by a genocidal civil war, political reconciliation and decent government have fostered a miraculous recovery. Though it has problems including persistant poverty and excessive reliance on donor aid, Rwanda today is by African standards a stable and prosperous country, a magnet for tourism and foreign investment.
Instead of fantasizing about the expropriation of Elon Musk & Co., progressives might pause to ponder how Rwanda did it.