NationStates Jolt Archive

I was watching TV just now and Bob Geldof was saying that one reason African people are poor is that if they made finished goods they would have such high taxes, people in the 'west' wouldn't be able to buy them.

I was watching TV just now and Bob Geldof was saying that one reason African people are poor is that if they made finished goods they would have such high taxes, people in the 'west' wouldn't be able to buy them.

That makes absolutely no sense.

That makes absolutely no sense.

What bit? I probably typed it wrong.

And what created these high taxes? The people in Africa have resourses, tourist attractions ect, so why the high taxes?

I've heard of three reasons for these high taxes

1) The governent is a greedy little (insert word I cannot type because of fear of getting kicked out of forum) and wants as much money as they can. Money makes the world go round, and no matter what happens, the government always becomes corrupt.

2) I heard once that the reason the African nations went in debt after they broke away from Britian, France ect is because they spent so much money on social programs, and it didn't occur to them that they actually had to pay for these programs, causing a massive debt in those countries.

3) After the African nations because indebted, the countries they were indebted to were overjoyed that they could continue to collect interest to help their own economies, and being the greedy little (insert word here) they won't let go of the debt and risk having to cut their own social programs.

Just my thoughts

What bit? I probably typed it wrong.

The bit about taxes being to high. And well, lets be honest the bit about africa* producing finished goods in the first place.

*I assume this about about sub-saharan africa, because the northern bit does produce some finished good that are sold in the west.

Sorry, I should have said, these taxes are imposed by the west. Presumably to encourage people to buy home-made stuff.

I was watching TV just now and Bob Geldof was saying that one reason African people are poor is that if they made finished goods they would have such high taxes, people in the 'west' wouldn't be able to buy them.

I think he's referring to the fact that Africa as a continent is a net primary good exporter and food/manufactured goods importer. The taxes referred to here are tariffs on imported goods...thus the ABSENCE of free trade. The taxes on primary goods are lower than on manufactured goods, but still high enough to make sure that they aren't really as competitive as domestic goods (in the US, for example, where subsidies are rampant). Thus, rich nations dump their supplies on the world market, lowering the overall price, and causing producers in poorer nations to lower THEIR prices to remain competitive.

However, recent decisions in the WTO have given hope to producers in the majority world. The US was recently slapped (in March this year I believe) for cotton subsidies that make imported cotton uncompetitive. More lawsuits are pending.

Sorry, I should have said, these taxes are imposed by the west. Presumably to encourage people to buy home-made stuff.

Okay, I see, geldof was talking about tariffs.

Yeah, well he's still wrong in any case. Africa consumes finished goods, notably second hand cars and cheap radios and TVs. The very fact that it cannot even supply it's own domestic markets with domestic finished goods in the first place doesn't speak to well of its future as an exporting powerhouse.

I think he's referring to the fact that Africa as a continent is a net primary good exporter and food/manufactured goods importer. The taxes referred to here are tariffs on imported goods...thus the ABSENCE of free trade. The taxes on primary goods are lower than on manufactured goods, but still high enough to make sure that they aren't really as competitive as domestic goods (in the US, for example, where subsidies are rampant). Thus, rich nations dump their supplies on the world market, lowering the overall price, and causing producers in poorer nations to lower THEIR prices to remain competitive.

However, recent decisions in the WTO have given hope to producers in the majority world. The US was recently slapped (in March this year I believe) for cotton subsidies that make imported cotton uncompetitive. More lawsuits are pending.


Gotta love the Western countries.

Okay, I see, geldof was talking about tariffs.

Yeah, well he's still wrong in any case. Africa consumes finished goods, notably second hand cars and cheap radios and TVs. The very fact that it cannot even supply it's own domestic markets with domestic finished goods in the first place doesn't speak to well of its future as an exporting powerhouse.

What I mean is, for example, they can sell cocoa beans (which dont fetch much money) but they cant mash them up into cocoa powder (which gets much more money) and sell it, because no-one in the west could afford it. That's why even people running a successful farm are still poor.

I suppose little ole Canada is clean as a whistle? What about Japan, China, France, Germany, England and so on?
Ah, sorry about that. It's because this board is so US-centric, I start thinking it's the only country that exists...

THE WEST is culpable for these kinds of trading practices.

I think that the problem is that there is no manufacturing infastructure in sub-Saharan Africa. There is no private manufacturing coorporation or western government willing to bare the risk of creating a manufacturing infastructure in a continent with so much war.

What I mean is, for example, they can sell cocoa beans (which dont fetch much money) but they cant mash them up into cocoa powder (which gets much more money) and sell it, because no-one in the west could afford it. That's why even people running a successful farm are still poor.
Exactly. As it is, many producers are barely breaking even. It becomes more of a problem with GM crops, because many are designed to work only with expensive chemical starter or pesticides, and produce no seeds to save for the next season.

Worse is the fact that foodstuffs once produced domestically in much of Africa, have been replaced by 'cash crops' like cotton and tobacco...and now these countries are IMPORTING food they once produced themselves!!??

THE WEST is culpable for these kinds of trading practices.


Yes it does seem that way doesn't it. Every single country in the world has "tariffs" on goods to try and protect their native industries. I mean look at what China did earlier this year with textiles alone. Flooded both Europe and the US with cheap goods. It is all a mess.

In general it just seems that the richest nations just love to keep the little guys down and out.

What I mean is, for example, they can sell cocoa beans (which dont fetch much money) but they cant mash them up into cocoa powder (which gets much more money) and sell it, because no-one in the west could afford it. That's why even people running a successful farm are still poor.


Correct me if I am wrong here but are not cocoa beans from the South American countries?

Correct me if I am wrong here but are not cocoa beans from the South American countries?

well its some kind of beans, i thought he said cocoa

I mean look at what China did earlier this year with textiles alone. Flooded both Europe and the US with cheap goods.
Oh no, cheap stuff! What will we ever do? Not cheap stuff! Please, anything but that!!!!

Sorry, I should have said, these taxes are imposed by the west. Presumably to encourage people to buy home-made stuff.
You mean protectionist tariffs?
Those tariffs are so lovely :rolleyes:

they are sure handy:)

is this because no african nation has most favored nation status?

the goods of every country are taxed and they seem to get plenty of business in the west. is he suggesting that african countries should be exempt from tarriff when selling to the US/EU?

Hmmm...perhaps you have forgotten that the US is one of the countries that is pushing free trade the most, yet continues to be a major violator of those free trade ideals? Canada isn't roaming the world saying, "Do what we say, not as we do" to QUITE the extent the US is.


Every country does it and then when they get caught at it, they try and bring another violater into the fray.

Edited because it was warranted.

is this because no african nation has most favored nation status?

the goods of every country are taxed and they seem to get plenty of business in the west. is he suggesting that african countries should be exempt from tarriff when selling to the US/EU?

he wasnt suggesting anything, he was just talking about africa on a documentary, and that's what he said

Oh no, cheap stuff! What will we ever do? Not cheap stuff! Please, anything but that!!!!


Yes it is a bad thing. The textile industries in the West cannot compete with China because of all the cheap labor.

Some interesting facts about subsidies and agriculture:



Subsidies
*The subsidy to each cow in the EU, at $2.50, exceeds the daily income of many Africans. The richest 20% of EU farmers get 80% of the subsidies. The total amount of support to agriculture in rich countries stands at some $300 billion per annum.

*Bangladesh reduced import tariffs from 102% to 27% between 1988 and 1996. Ghana, Kenya and Tanzania cut tariff rates by a half or more during the 1990s5

Farmers
*Farming the land provides the livelihood of a large proportion of the world’s people.5
*Agriculture provides the main source of income for some 2.5 billion people
*96% of the world’s farmers live in developing countries
*Despite growing urbanization, 2/3 of the world’s poor live in rural areas
*In the rural areas of the developing world, close to 900 million people live on less than $1 a day. The agricultural sector is crucial for their survival

CONTROL OF SEEDS
*Just four companies – based in the US and linked in two alliances (Cargill/Monsanto and Novartis/ADM) – control over 80% of the world seed market and 75% of the world agrochemical market

Biodiversity
*Genetic resources are the building blocks of food security. Yet we now rely on less than 30 crop varieties for 80% of the world’s food supply.
*About 75% of the genetic diversity of agricultural crops has been lost since 1900
* About 30% of livestock breeds are close to extinction, and at least one breed of traditional livestock dies out every week
*Mexico has lost 80% of its varieties of corn since the 1930s
*China lost over 90% of wheat and rice varieties between the 1950s
and the 1970s

What the?
*In 1998 Britain imported 61,000 tonnes of poultry meat from the Netherlands. It also exported 33,100 tonnes of poultry meat to the Netherlands

*snip*You'll notice I deleted that quote, just to keep the thread on topic...and I've already apologised once.

Some interesting facts about subsidies and agriculture:


I really like the Britain/ Netherlands information at the end.

What I mean is, for example, they can sell cocoa beans (which dont fetch much money) but they cant mash them up into cocoa powder (which gets much more money) and sell it, because no-one in the west could afford it. That's why even people running a successful farm are still poor.

Well, Bobert is wrong. Cocoa powder is classed as an agricultual product for the purposes of GATT/WTO. It's the same thing, and the tariffs and treatment don't change whether you "mash them up" or sell them whole.

The problem is of course that making cocoa powder requires a little bit more than just mashing the beans up, and this (and I assume he is talking about sierra leone) is pretty much beyond the local industrial base in any meaningful sense.

You can't blame africa's problems on the west, especially not in respect of production of agricultural products. If you don't believe it, compare and contrast Malaysia with Ghana. Ghana was once the home of palm oil production, now Malaysia produces most of the worlds supply, with the Ghananian palm oil industry having fallen into disarray. Both countries gained independence in the same year, started with the same national incomes, yet one developed the industry and literally came from behind, despite having no trade advantages. The Ghananians never showed any industry and they lost their monoply.

You'll notice I deleted that quote, just to keep the thread on topic...and I've already apologised once.


I noticed. I was just about to go and edit mine a little bit. Apology wasn't needed either :)

I really like the Britain/ Netherlands information at the end.
Just to show you I'm an equal opportunity rich-country hater:).

Don't worry...I live in Alberta but I eat New Zealand beef for some obscure trade reason. We're all morons.

You can't blame africa's problems COMPLETELY on the west,
Added bold word, mine.

But you can't completely absolve them of blame either. Not in a global economy.

However, recent decisions in the WTO have given hope to producers in the majority world. The US was recently slapped (in March this year I believe) for cotton subsidies that make imported cotton uncompetitive. More lawsuits are pending.

It lost a first round decision. It was hardly slapped. Anyway, it's bound to prevail on appeal because of the broad exemptions drawn for domestic agriculture. (Plus these very subsidies had been questioned before, and were okay back then, so I fail to see why the US should need a "slapping" for something that the GATT said was okay in the first place).

Anyway, this is the first time that there has ever been a ruling against agricultural subsidies. Given the scope of the subsidies throughout the west, I would imagine that there will be immense pressure to reverse the decision.

Failing that, the US can always claim "food security" or cite environmental concerns. (Like with the dophin safe tuna).

It lost a first round decision. It was hardly slapped. Anyway, it's bound to prevail on appeal because of the broad exemptions drawn for domestic agriculture. (Plus these very subsidies had been questioned before, and were okay back then, so I fail to see why the US should need a "slapping" for something that the GATT said was okay in the first place).

Anyway, this is the first time that there has ever been a ruling against agricultural subsidies. Given the scope of the subsidies throughout the west, I would imagine that there will be immense pressure to reverse the decision.

Failing that, the US can always claim "food security" or cite environmental concerns. (Like with the dophin safe tuna).
I have no doubt the US (along with any Western nation ruled against for agricultural subsidies) will manage to get a reversal, while the majority world continues to be forced to strip subsidies. Hypocrisy is inevitable.

That being said...subsidies aren't always the best solution, so it's not necessarily bad that subsidies are gotten rid of in countries...but it becomes a problem when some do, some don't.

Just to show you I'm an equal opportunity rich-country hater:).

Don't worry...I live in Alberta but I eat New Zealand beef for some obscure trade reason. We're all morons.

I love to bash rich countries as well. It can be a whole lot of fun. I have a few friends in Britain that are deeply involved with fair trade. It is just sad that so many nations are morons when it comes to trade.

www.makepovertyhistory.org Sorry I just had to get that plug in.


I live in Michigan and I have no clue where my beef comes from lol.

*edited because for some reason I cannot spell today.*

Added bold word, mine.

But you can't completely absolve them of blame either. Not in a global economy.

Actually, in the case of sub-saharan africa it is completely self-inflicted. There is no point in even looking to the west's - and especially the US's - utter disinterest in the region and saying they are in the least to blame when the systematic policy of African governments over the past fifty years has been to wreck domestic agriculture, buy expensive foreign cars and generally persecute each other in pointless wars.

Many of these nations that are now supposedly suffering because of western agricultural subsidies and tariffs used to function as food exporting nations under much stricter trade regimes. Further, many of them actually have excellent access to western markets under GATT annexes, for example the commonwealth countries. The plain fact of the matter is that they have degraded their own domestic agricultural industries to the point that they no-longer can provide for their own needs, never mind export surplusses.

The utter lack of interest in developing and maintaining infrastructure hasn't helped either.

As I mentioned before, one only needs to compare Malaysia and Ghana to understand that the solution to this problem lies only within africa, and there is no point even considering the west's part.

Actually, in the case of sub-saharan africa it is completely self-inflicted. There is no point in even looking to the west's - and especially the US's - utter disinterest in the region and saying they are in the least to blame when the systematic policy of African governments over the past fifty years has been to wreck domestic agriculture, buy expensive foreign cars and generally persecute each other in pointless wars.I agree with many of the problems you've mentioned, but I have to point out the eagerness of these governments to adopt western sactioned/encouraged liberalisation shock-treatments (SAPs and so forth...though they have a new name). I agree that they are foolish to think that such reforms would actually do them good taken at full face value.

Yes I saw the latest installment of Bob Geldof's Africa documentary.

Okay, I see, geldof was talking about tariffs.

Yeah, well he's still wrong in any case. Africa consumes finished goods, notably second hand cars and cheap radios and TVs. The very fact that it cannot even supply it's own domestic markets with domestic finished goods in the first place doesn't speak to well of its future as an exporting powerhouse.
Few people in these countries could afford products. Entrepeneurs would depend on foreign trade for their business, at least at first.

Protectionism on the part of the West does no favours for these people. Some places the third world, but not Africa, do make finished products. That's the jar of hot chocolate powder that is availible for €7 competing with the Cadbury's stuff at €2.50. Once again, see tariffs.

I have no doubt the US (along with any Western nation ruled against for agricultural subsidies) will manage to get a reversal, while the majority world continues to be forced to strip subsidies. Hypocrisy is inevitable.

That being said...subsidies aren't always the best solution, so it's not necessarily bad that subsidies are gotten rid of in countries...but it becomes a problem when some do, some don't.

At the moment, the cotton ruling agianst the US is the only one of its type. I am sure however, no-one wants to set a precedent. And techinically, under the food security exemptions you can subsidize the hell out of domestic agriculture, and you will always get away with it.

Plus, if people really were concerned about the distortions caused by agricultural subsidies, they would oppose funds for famine relief, because really that is the same thing (if not worse, because any local producer has to compete with zero prices).

At the moment, the cotton ruling agianst the US is the only one of its type. I am sure however, no-one wants to set a precedent. And techinically, under the food security exemptions you can subsidize the hell out of domestic agriculture, and you will always get away with it. But only if you've got the political clout to get away with it. Which most developing nations, desperate for trade, do not.

Plus, if people really were concerned about the distortions caused by agricultural subsidies, they would oppose funds for famine relief, because really that is the same thing (if not worse, because any local producer has to compete with zero prices).
Don't confuse ignorance with lack of concern. Most people don't really look at these things, or try to understand them. And famine relief...ack...what a frickin' farce. You're right...I wish people would take a good look at it...it doesn't take a lot of thought to realise:

...rice crops were not enough to feed the people in an area so....
...tonnes of rice are given to these people to stop them from starving and...
...local producers go bust, move to the city and...
...next year there is NO domestic rice and people starve...

Some real investment in infrastructure (storage and transport) would go much farther. The sad thing is, in many cases of famine, the food is already IN the country that needs it...but it is too centralised and doesn't get to them, or it is too expensive for them to buy, or the government is too corrupt and insists on exporting it.

But only if you've got the political clout to get away with it. Which most developing nations, desperate for trade, do not.


Don't confuse ignorance with lack of concern. Most people don't really look at these things, or try to understand them. And famine relief...ack...what a frickin' farce. You're right...I wish people would take a good look at it...it doesn't take a lot of thought to realise:

...rice crops were not enough to feed the people in an area so....
...tonnes of rice are given to these people to stop them from starving and...
...local producers go bust, move to the city and...
...next year there is NO domestic rice and people starve...

Some real investment in infrastructure (storage and transport) would go much farther. The sad thing is, in many cases of famine, the food is already IN the country that needs it...but it is too centralised and doesn't get to them, or it is too expensive for them to buy, or the government is too corrupt and insists on exporting it.

Somalia comes to the forefront of my mind.

I agree with many of the problems you've mentioned, but I have to point out the eagerness of these governments to adopt western sactioned/encouraged liberalisation shock-treatments (SAPs and so forth...though they have a new name). I agree that they are foolish to think that such reforms would actually do them good taken at full face value.

I also am against "shock therapy" if it is the World bank you are talking about. Frankly it just makes the problem worse. It introduces half hearted structural reforms in respect of trade barriers without addressing the structural problems that prevent domestic markets and industries from developing in the first place.

As far as I can see the only thing it accomplishes is an excuse to keep dribbling money to tyrants and provide slave labor for Nike, Abacrombie and Fitch, Ikea et al.

African foreign debts should be treated no differently from any other case, if they default, they default. People would then stop lending them money and they would have to develop domestic capital and markets.

I also am against "shock therapy" if it is the World bank you are talking about. Frankly it just makes the problem worse. It introduces half hearted structural reforms in respect of trade barriers without addressing the structural problems that prevent domestic markets and industries from developing in the first place.

As far as I can see the only thing it accomplishes is an excuse to keep dribbling money to tyrants and provide slave labor for Nike, Abacrombie and Fitch, Ikea et al.
Yup. Weird...when you first started posting, I was sure I was going to hate everything you said :p

African foreign debts should be treated no differently from any other case, if they default, they default. People would then stop lending them money and they would have to develop domestic capital and markets. I'm not sure about the whole move to 'forgive the debt'. Sometimes I'm for it because of the manipulative way the debt is administered by those who give the loans in the first place, making it almost impossible to pay off...but then again, even if the debt were forgiven, this would not suddenly reform poorly managed economies. I think I would settle with a "Pay off the principle of the debt, with REASONABLE interest, but you don't have to dismantle all your social programs and internal protections to do so".

Few people in these countries could afford products. Entrepeneurs would depend on foreign trade for their business, at least at first.

Protectionism on the part of the West does no favours for these people. Some places the third world, but not Africa, do make finished products. That's the jar of hot chocolate powder that is availible for €7 competing with the Cadbury's stuff at €2.50. Once again, see tariffs.

You cannot predicate the growth of an economy solely on access to export markets. Even in the unlikely event that all western subsidies were zero'd out and trade concessions were granted, I don't believe for a second that african agriculture would grow. They very nature of the government in that part of the world is destructive to industry.

I am willing to bet that if the US agreed to import a set quota of any given product from and african country at a premium price, they would be unable to fill the order.

As to having no money for domestic demand initally, that's everywhere. If african governments didn't have the penchant for seizing anything and everything (or just burning it down), domestic markets would start to develope of their own accord. It is as simple as someone buying a few chickens to produce eggs and sell them in the market place. Unfortunately, at the moment, anyone who does this is on their own initiative is likely to have his or her money seized by a local government official. So why bother?

Unless and until african governments stop acting like mafia overlords, and introduce the rule of law and established property rights, there is not much that can be done.

Yup. Weird...when you first started posting, I was sure I was going to hate everything you said :p

Well, obviously if you look at they way shock therapy is administed, it only addresses one side of the equation. Take jamaica for instance: Part of the deal there was establishing free trade zones for international industry, which was not a bad idea in and of itself, the problem is that anyone who works there has the dollars they earn confiscated and replaced with government scrip by the jamaican governemnt. (Basically it is stealing/slavery). Now if they were allowed to keep there earnings and spend them, there might actually be some benefit to the jamaican people from that deal and economic growth might result. (More money to spend out of work, others will set up businesses to service the workers, which would employ people &c. thus economic growth begins).

Yet, the world bank doesn't care about that sort of thing. As long as there are "free trade zones" and people can dump chicken backs and powedered milk, they are happy. It's not even that jamaicans want to eat chicken backs and powdered milk. They literally at the moment, cannot afford anything more.

The situation in africa is a thousand times worse.

I'm not sure about the whole move to 'forgive the debt'. Sometimes I'm for it because of the manipulative way the debt is administered by those who give the loans in the first place, making it almost impossible to pay off...but then again, even if the debt were forgiven, this would not suddenly reform poorly managed economies. I think I would settle with a "Pay off the principle of the debt, with REASONABLE interest, but you don't have to dismantle all your social programs and internal protections to do so".

Well, they might as well forgive it, it's not like it is ever going to be paid back anyway. They are just being realistic I suppose. Personally, I would let them default, and cut the money off to their governments. It's not like these loans benefit the people anyway.