Lack of Property Rights Suppresses Africa's Greatness

Right now I am reading Capitalism & Freedom by Milton Friedman and just the other day I came across a statement in a chapter about monetary policy in it he said something to the effect that we need rules not authorities to govern. Although Friedman was talking about monetary policy I think it has relevance in our class. I like to think of property rights as the “rules” favored by Friedman and government/bureaucratic officials as authorities. Under a property rights scheme individuals are able to exercise those rights which they own and seek objectives which are beneficial to them monetarily or non-monetarily. Complementary, under a property rights system other individuals are aware of your rights and that an intrusion on your rights will result in some form of punishment.

However, under an authoritarian system there are no individual property rights. This is the case in many Sub-Saharan African countries. In a Cato Policy Brief, Moeletsi Mbeki reviews the current plight in these countries and lays the blame at the feet of the political elites. In most of these countries the political authorities dictate the allocation of agricultural goods and use this allocation by government as a chance to gain wealth via taxation and other means. Under a system of no property rights the citizens have no incentive to increase crop yields or other beneficial measures. In Ethiopia “land is owned by the state… farmers are loath to invest in improving productivity when they have no title to the land they till. Nor can they use land as collateral to raise credit. And they are taxed so heavily that they rarely have any surplus cash to invest.” Under this authoritarian system individuals are stuck in poverty b/c they have no property rights.

After all we have read and heard this year in class I don’t see how any one could refute the overwhelming benefits of property rights. With property rights as a foundation, society can solve economic and environmental issues b/c transaction will assure that individuals and society as a whole benefit. How anyone can justify a central planner or authority as the means for allocating scarce resources is beyond me. This Sunday there was nothing on TV and I stumbled upon an interview with Thomas Sowell on CSPAN. In the interview Sowell refers to the fact that under the USSR the government had to determine 24 MILLION different prices for its products! Under a property rights regime the market determines prices, how could any group of individuals determine so many prices. A market will determine these prices and will do so indefinitely and will thus allocate those goods to their most highly valued places. I think Friedman got it right when he said that we need rules instead of authorities, especially when it comes to allocation.