Why is it that the African continent holds an abundance of natural resources yet remains the poorest of the continents? Could its failures hold secrets of success for America? African leaders say that it is a lack of money that keeps their nations from succeeding, yet money is a commodity that can be printed from thin air by any nation that holds a printing press.
While both China and countries on the continent of Africa have the ability to print money, China’s star has risen while Africa remains peering up from the earth below. Perhaps it is the quality of money that creates success.
Before the modern age of banking, value was created and then exchanged for money. In today’s world, money is created and exchanged for the promise of value returned. It is the quality of this promise of future value that sets the exchange rate of money. In the global money market, China’s promise has been deemed a higher quality.
Countries of high quality value creation can create money velocity that expands chains of money to create more money. Strong rule of law, limited corruption, protection of citizens’ health and education of their young, giving voice to the people and purity of government’s purpose to regulate businesses for the good of all, these national qualities tend to make good on promises to create value. Fulfillment of promises creates value, grows money, and sustains a nation.
Combining high quality with high savings rates accelerates a country’s growth. Early civilizations forced excessive savings through wars and conquest. Then came mercantilism and colonization. America’s Captains of Industry concentrated savings by reinvesting industrial output through two great wars. Japan instilled a sense of state over self that inspired sacrifice and high personal savings during its rise. China, by her mixture of authoritarian rule and shoreline capitalism, has forced saving through foreign exchange manipulation and managed labor rates.
With her high savings and a well executed strategy of four modernizations, China has climbed toward hegemony. China has added education, infrastructure, and modern law to support business growth. She has opened up her shores to investment, requiring all who enter to bring gifts of innovation and trade secrets. With a credible belief in China’s future by both her people and the rest of the world, China has created a high quality of value creation and her wealth has grown.
Unlike China, many countries in Africa have suffered from a lack of credibility that translates into a lack of faith in future value and a corresponding lack of money creation. However, unlike the days of old when money was a physical commodity commandeered through battle, money is no longer outside of Africa’s grasp. Countries within Africa need only to commit to a path of higher value by building national qualities that will create money from thin air. And if this is a good prescription for Africa, it most certainly is for America as well.
Clif Carothers
Job Voucher Plan 