Posted on 13-5-2002
The Poverty Free Market

During the 60s Zambia embarked upon a successful programme of keynesian
welfarism and centralised import subsidizing industrialisation. This
involved the state's heavy development of copper and textile industries.
Literacy rates, life expectancy and employment had reached levels far above
those achieved in most African nations by the mid seventies.

At the end of the seventies copper prices crashed. IMF economists proposed
a loan to Zambia with which it could adapt its industries to changing
global needs. The sceptical government was assured that copper prices
would, in the long term, increase, allowing the easy repayment of debt. The
increase in copper prices never came, leaving Zambia more reliant than ever
on its heavily protected textile industry and struggling under a burden of
debt. The IMF used the high level of debt to institute a structural
adjustment programme, forcing the Zambian government to slash welfare
spending and remove trade barriers. The same trade barriers that had been
protecting the textile industry.

First World poor are reativelty picky with the clothes that they accept
from charities. Charities always have far more clothes than they can
distribute. So when you or I put a sack of retired clothing out for the
Salvation Army or a similar organisation, only a small proportion of what
is given can be used by the group. Want to guess what happens to the rest?
Its bought up at extrememly cheap prices by private traders who sell it on
the lucrative third world market. These traders can expect mark ups on the
clothes of up to 500%. Even then, the price at which the clothes are sold
at is far cheaper than local produce.

Since the IMF forced the removal of protectionist trade barriers in Zambia,
the textile industry has collapsed as the market is flooded with cheap
clothes originating from first world charities. An estimated 30,000 jobs
have been lost and a vital industry worth $US60 million (about 4%of the
GNP) has literally disappeared. This is in a country where the external
debt is now more than twice the GNP.

Go the free market.

Sources:

'Zambia reduced to a flea-market economy' the The Guardian Weekly May 9-15

'Zambia' in New Internationist World Guide, New Internationalist
Publications, London 2001