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Archive for December 2013

At journey’s end

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81At the beginning of August, Helanya and I embarked on a trip that would allow us to cross many destinations off our bucket list. This morning, while enjoying breakfast in sunny South Africa with old friends and reminiscing about our experiences, I realised that much of the success of our trip depended on the generous support, hospitality and goodwill of many friends, most of whom we’d never met before.

Like the lady at the Grand Canyon gate who, during the US shutdown, warned us that she cannot allow us through, but nevertheless did. We never had the chance to thank her. Or the car rental agent, who suggested we upgrade (for a minimal fee) to a 2014-model Ford Mustang V6. (Worth every cent, see picture.) Or the Swedish train conductor who personally came to explain to us – the only English-speaking people on a Swedish train – what had happened when the train had suddenly stopped in the middle of nowhere. Or the waitress at the Cheesecake Factory in Tucson who suggested the most scrumptious upside-down pineapple cheesecake.

Then there were those friends who were willing to show us around (and offered to pay for many meals): Erik and Jeannette Green, who invited us to join them in Bornholm (a magical Danish island off the coast of Sweden) for a few days during their summer holiday. And later, another invite to a traditional Swedish crayfish festival. And to Ellen Hillbom and her family, for a lovely Swedish lunch. (Read more about our stay in Lund.) In Colorado, we met up with Scott and Cara Leonard, for a wonderful dinner at the Blue Moose in Beaver Creek. (And for showing us how to fill up on gas.) In Santa Monica, Christine Ernst Bode not only invited us into her home, but took us to Los Angeles’ most famous sites, including Malibu, Hollywood, Santa Monica Pier and even the house Helanya’s grandparents had lived in many moons ago. In Tucson, Price and Pam Fishback invited us to the Desert Museum, ensured that we see the Arizona Wildcats play football and basketball, organised an outing to a haunted cowboy town, and several wonderful dinners. Many of his colleagues and students, notably Tiemen Woutersen and Taylor Jaworski (and his wife, Lila), continued the hospitality, inviting us to dinners around town and hikes in the Santa Catalina mountains. Our Airbnb host in Tucson, Ross Raderstorf, took us to baseball batting cages with his friend Toby (try the 90mph net!) and on a ride through the desert at sunset in his 1960-something Chevvie Caprice. Back in California, family-friend Lydia-Marie Joubert showed us Stanford’s impressive campus, while Liehann Loots gave us a tour around Google’s head office. Jan de Vries and his wife welcomed us into their home at Berkeley, and not only treated us to a lovely dinner, but also to an extensive campus tour and sage advice. (More of my thoughts on America here.) In Montevideo, Luis Bertola showed me how Uruguayans braai (not bad) and play football (not bad either). (I also wrote about my trip to Latin America here.)

In the last four months, I’ve travelled more than 5000 miles by car, boarded 20 flights, and visited four continents. Wherever I went, I found people willing to give much of their time and resources, and expecting nothing in return. This warmth, generosity and hospitality I encountered everywhere is profoundly reassuring: it suggests that we often underestimate the selflessness of our colleagues, friends and strangers. That we find more pleasure in giving than in receiving. That we want to share, rather than compete. That, perhaps, we have this innate desire to make life better for our fellow travellers.

So, as the final post of 2013, we toast a glass of Stellenbosch’s finest to these fellow journeymen, old and new, who have influenced our lives along the way. Maybe there is some truth in the old saying: ‘A journey is best measured in friends, not in miles’.

Written by Johan Fourie

December 23, 2013 at 18:46

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Lessons from Latin America

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MontevideoI’ve spent the last week in Montevideo, Uruguay, attending a Summer School* on the economic history of the region. I’ve listened to presentations on demographic change in Chile, war in Bolivia, and regional inequality in Brazil and met students from Colombia, Ecuador, Argentina, Mexico and, of course, Uruguay. I’ve been exposed to my own ignorance: Latin America to me was a continent of football, Spanish and partying. And while these are central to Latino life, I’ve been exposed to its past variations – the diverse impacts of colonialism, independence, and post-independence growth and stagnation – and present peculiarities – the work ethic of São Pauloan Brazilians, the Italianness (and therefore fierce hand-gestures) of the Argentines, the placid nature of Uruguayans (in contrast to the outlier, Luis Suarez).

I’m embarrassed to say that I had thought of Latin America much like most of the world thinks of Africa.

This is tragic because we, as Africans, have much to learn from the Latin American experience. Argentina, and specifically the area around its capital Buenos Aires, was the richest region in the world at the end of the nineteenth century, spurred on by migration and agriculture expansion. A century later, much of Buenos Aires is dour and downtrodden as the country experiences yet another economic crisis and bout of political turmoil. (On Friday, amidst riots which left 22 Argentinians killed, President Fernando de la Rue resigned and fled the government palace in a helicopter; I’d walked around the palace just a week earlier.) In contrast, many countries in Latin America are booming (Colombia, Peru, Uruguay, Brazil), mostly due to resources and an insatiable demand from China, but also stronger domestic consumption, improvements in education and good macroeconomic policies.

Nineteenth-century Latin America presents an especially useful comparison to twentieth-century Africa. Melisa Luc of the University of Barcelona showed how resources and weak institutions caused border wars (sound familiar?) between several Latin American countries in the nineteenth century, while Gerardo Sanchez of the University of Buenos Aires found large increases in regional inequality during Argentina’s Belle Epoque, suggesting a positive relationship between rapid economic growth and inequality. It’s perhaps this severe inequality, together with the devastating impact of the Great Depression, that would a few decades later ferment the rise of military rule and Peronism. Africa is experiencing its own Belle Epoque, also labelled ‘Africa Rising’. But, learning from the other country experiences, is this a sustainable growth strategy?

Dani Rodrik doesn’t seem to think so. In his latest Project Syndicate contribution, he argues that African countries lack the ‘productive dynamism’ that allowed Asian countries to achieve persistently high growth rates. “As in all developing countries, farmers in Africa are flocking to the cities. And yet, rural migrants do not end up in modern manufacturing industries, as they did in East Asia, but in services such as retail trade and distribution. Though such services have higher productivity than much of agriculture, they are not technologically dynamic in Africa and have been falling behind the world frontier.” In short, what African countries lack are “the modern, tradable industries that can turn the potential into reality by acting as the domestic engine of productivity growth.”

Why did this ‘productive dynamism’ occur in Asia and not in Latin America? And what can be done in Africa to promote such dynamism – and avoid the failures of Argentina?

Answers to these questions, I believe, lie in better comparative economic history.

*I’d like to thank my host, Luis Bertola, for the invitation to visit and for his kind hospitality. And a special thanks for last night’s perceto steak, which was braaied to perfection.

Written by Johan Fourie

December 14, 2013 at 13:07

The last laugh

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Mandela in 2007 at his 89th birthday (Denis Farrell/Associated Press/File/http://www.boston.com/bigpicture/2013/12/the_world_mourns_mandela.html)

Mandela in 2007 at his 89th birthday (Denis Farrell/Associated Press/File/ http://www.boston.com/bigpicture/2013/12/the_world_mourns_mandela.html)

Don’t let the facts get in the way of a good story. This is, in any case, my feeling after reading Slavoj Zizek’s Opinion Piece in the New York Times, Mandela’s Socialist Failure. Zizek argues that Mandela abandoned the socialist perspective after his election as president, which is why, instead of celebrating his life, we should consider it a failure.

In contrast to many of my friends, I’ve never been a fan of Zizek’s work, mostly because his remarks are often unspecific crowdpleasers – ‘Communism will win‘ – and when he talks about economic issues, he equates capitalism with Ayn Rand. This is like looking at a rainbow and just seeing red. But his piece on Mandela warrants a response, for two reasons: he lies, and does so repeatedly.

Zizek starts off with two ‘key facts’: “In South Africa, the miserable life of the poor majority broadly remains the same as under apartheid, and the rise of political and civil rights is counterbalanced by the growing insecurity, violence, and crime.” He doesn’t cite a source for either, probably because there are none. The first is the easiest to dispel. As I’ve said repeatedly on this blog, South Africans today are better-off than they had been under apartheid. This is confirmed by countless surveys and poverty analyses; the most recent one, a study by the National Planning Commission and UCT found that since 2008 (the beginning of the recession, remember), poverty levels have fallen significantly. Since 1994, the poorest of the poor have gained access to services: water, sanitation, housing, and electricity.

His second fact is equally dubious, although it is slightly more difficult to disprove. Crime statistics are notoriously suspect and there are few reliable estimates for crime and violence in South Africa’s black townships during apartheid. But there is absolutely no evidence that violence in South Africa is on the increase or, as Zizek puts it, ‘growing’; in fact, official South African Police Service statistics show that the absolute number of contact crimes (murder, attempted murder, sexual offences, assault and robbery) have declined by 30% between 2003 and 2013. And this has happened while the South African population has increased by more than 5 million individuals.

Zizek uses these two ‘facts’ to argue that Mandela’s ANC should have pushed for a total transformation of the South African economy; his suggestion of exactly what should have happened is vague as always. He notes that, in general, as soon as a political revolution is successful, the new political leaders succumbs to the ‘ruling ideology’ (i.e. capitalism) and therefore fails to pursue the revolution to the extreme. This is because “the ruling ideology mobilizes here its entire arsenal to prevent us from reaching this radical conclusion. They start to tell us that democratic freedom brings its own responsibility, that it comes at a price, that we are not yet mature if we expect too much from democracy. In this way, they blame us for our failure: in a free society, so we are told, we are all capitalist investing in our lives, deciding to put more into our education than into having fun if we want to succeed.”

Okay, so let me get this straight. Nelson Mandela was a failure because he valued education above having fun?

“We can safely surmise that, on account of his doubtless moral and political greatness, he was at the end of his life also a bitter, old man, well aware how his very political triumph and his elevation into a universal hero was the mask of a bitter defeat.”

Mandela had much to be happy about (see picture). There is no doubt that things could have been even better; much of South Africa’s recent ‘success’ has been achieved despite and not because of our leaders. But South Africa today is a vastly different country than the one of two decades ago. It is safer, wealthier, and more optimistic about the future, mostly because South Africa integrated into the global economy, improved its productivity, trade, and foreign investment, which resulted in higher economic growth. Growth created tax income, which the government used to fund large service improvements in many rural areas, increase education and health spending, and other social transfers. Capitalism – not the Ayn Rand type but the social democratic type – won.

Mandela was not a ‘bitter, old man’ wearing ‘the mask of a bitter defeat’. Instead, I suspect Zizek may be referring to himself.

Written by Johan Fourie

December 8, 2013 at 13:33

South Africa: A country of migrants

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The arrival of Indian indentured labourers in South Africa (www.ulwazi.org)

The arrival of Indian indentured labourers in South Africa (www.ulwazi.org)

Continuous waves of people have flocked to this land. Inhabited for thousands of years by hunter-gatherer peoples, the first group of technologically advanced migrants arrived from across the Limpopo in what we today call the Bantu migration. Starting around 3000 BC around the modern-day border of Nigeria and Cameroon, a sedentary people with advanced technology – agriculture and bronze-working – began to move east and south, amalgamating with or simply displacing the hunter-gatherer peoples they found on their way south, eventually crossing the Limpopo somewhere around 300 AD. (We know this from using ethno-linguistic evidence: tracing the origins of the Bantu languages we find one common ancestor in in south east Nigeria.) The Bantu used two major routes to the south: starting in Nigeria, one traveled directly south, through the tropical rainforests of central Africa. The other traveled east first, around the forests, through the plains of modern-day Kenya and Tanzania and then south into South Africa. Arthur Blouin, a PhD candidate in Economics at Warwick University, use these two routes to test Jared Diamond’s hypothesis that climate influences technological adoption. He finds that these travel routes still matter today; the descendants of Bantu migrants that traveled through the rainforest (and thus lost their superior agricultural technologies) are less able to adopt new technologies today (yes, more than two millennia later) than those that traveled around the forests (and thus maintained their better technologies).

The Bantu migrants settled most of southern Africa, except for most of the desert-like region on South Africa’s north-western shore (which is why a few Kalahari San people still remain, pushed to survive in these extreme environments) and the plush south-western Cape, where the Mediterranean climate was unsuitable to the summer-rainfall crops of the Bantu. This meant that when Dutch settlers arrived in the mid-seventeenth century, the only peoples they encountered were the Khoe (descendants of Botswana San who had long before adopted cattle farming and migrated south) and the San (the original hunter-gatherer’s at the Cape). They became collectively known as the Khoesan (or Khoisan).

Slavetrades_COL3

The Dutch arrived not to colonise but to control the route to the East Indies, where precious spices could secure huge profits for the shareholders of the East India Company. A small fort was constructed in Table Bay, but it was soon realised that the Khoesan could (or would) not provide enough cattle to supply the passing ships, and so a few company workers were released to become free farmers, the start of the process of colonial expansion. Not all of them were equally good farmers, though, and as Dieter von Fintel and I show, the Huguenots were more productive wine farmers than the rest. It was the Khoesan that suffered the most from the colonial expansion; by the end of the eighteenth century, descendants of European immigrants had settled most of their territory; those that did not perish from disease or skirmish could either flee (to the north, as many did) or accept their fate as labourers on the settler farms. They weren’t the only labourers on these farms, though. From early, Cape officials had begun importing slave labour, most of whom arrived from the Indian Ocean regions of Indonesia, India, Malaysia, Madagascar, Sri Lanka and the East African coast. The image above, from my paper with Joerg Baten, shows the regions where the slaves came from (at least in our data set).

Not only were settlers moving east (augmented by about 5000 British settlers in 1820), but the Mfecane forced many groups to move west, away from the powerful and violent Zulu kingdom of Shaka on the coast and, in the interior, Mzilikazi’s Matabeles. Some estimates have it that up to 2 million people died in these tribal conflicts. This depopulation of large parts of South Africa made the journey of a few thousand settlers across the Orange River possible, a migration now known as the Great Trek. By 1840, very few South Africans (black and white) had been born in the same district (or country) they were then living.

The settlement of Afrikaners and subsequently British settlers in fertile Zululand meant that tropical crops like sugar could be produced. Yet sugar required large-scale labour, and even though Zulu labour could be found, the sudden discovery of diamonds in and around Kimberley meant that wages were at a premium. Instead, Indian indentured labourers were imported, and in vast numbers. More than 150 000 Indian labourers arrived by ship between 1867 and 1902 to work on the plantations. After the discovery of gold in the 1880s in the Witwatersrand, and the Second South African war which disrupted the labour flows of black workers to the mines, close to a 100 000 Chinese labourers also arrived at the start of the twentieth century, although most returned to China a few years later.

European and African migrants continued to move to South Africa throughout the nineteenth and twentieth centuries in search of employment (on the mines) and a higher quality of life. And they still do: close to 5% of South Africa’s population today, according to official statistics, are immigrants. (This Nando’s ad sums it up pretty well.) Yet the benefits and costs of migration are fuzzy: Paul Collier writes in a contentious new book – Exodus – that migration is good (as most economists would agree), but that too much of it will be bad (both for the host country and country-of-origin). This is the best review I’ve read. His most important contribution, I think, is in rephrasing the question: instead of asking whether immigration is good or bad, we should rather be interested in how much more migration would be beneficial, and to whom?

Over the next two days, economic historians in South Africa will discuss these question at the 10th ERSA Economic History workshop (hosted by North West University, Potchefstroom campus). Immigration is likely to become an even more perplexing political topic in South Africa over the next decade. It’s best we understand its impact on our past.

Written by Johan Fourie

December 3, 2013 at 10:18