US - Africa Trade and Investment

WM Trade: Strengthening the U.S.-Africa Trade and Investment Relationship, Nov 17, 2021

Our concern remains the unbalanced nature of trade with third world nations. Our food aid has a history of showing up when people are hungry - just before the harvest. Instead of sending food, we should send infrastructural expertise. American road building is second to none because we learned how to do it from Germany. It is better for us to transfer knowledge, some equipment. The goal should be building factories - possibly as a subsidiary of American firms.

We are experts in storing grain. Passing this knowledge (and facilities to build grain bins in more tropical climates) is better than sending food. There are plenty of hungry people, so a better diet will not hurt our own agriculture. 

Most importantly, the system of land registration we inherited from England would be useful in Africa, where individual land holding is not practiced. Registering land, with set asides for public schools and land grant universities is the best technology transfer we have. Instead of attracting students, we should export professors to train local academics rather than draining African talent and providing a path to citizenship.

Another issue is dumping used American clothing on African countries. This damages the emergence of a textile industry in such nations. A system that ships African cotton to China where it is processed into garments, what we cannot sell is then packaged and sent overseas. What we do as charity turns into asymmetric trade. Rwanda refuses such aid and they are better for it.

These approaches can be applied in other industries as well. Bilateral and multilateral trade should advantage both parties rather than providing yet another avenue to placate American consumers at the cost of American jobs. Consumerism has been used to break unions and to radicalize workers. 

No modern political system will ever let workers impose socialism. Social democracy is too successful, as are the employment of wedge issues. Any workers revolution will be accomplished by simply beating capital at its own game, which is outside the scope of these remarks.

On the other side of the ledger, our oil supply includes crude pumped from African soil. While this revenue is technically provided to the people of the nations, its elites are adept at diverting such proceeds toward overseas bank accounts. Corruption is always a feature of colonialism, even if colonization is economic rather than political and military.

Aside from Alaska, our system is not immune to abusive economic systems and corruption through campaign donation. The oil industry is masterful at breaking up its operations into smaller units, while aggregating profit in the company with the brand. 

Extraction costs paid to the public and  Tribal Governments are lower than they could be. The Department of the Interior is too friendly to the extraction industry and big oil.  Tribes could make better deals. Conglomerates could deliver more of their profits to the nation as a whole (although exported oil could not be taxed without a constitutional amendment).

In short, our system is as corrupt as anything found in Africa. As is detailed in the attachment, our best way to encourage an end to corruption in Africa is to reduce it in this country. Start with campaign finance reform and the creation of an Asset Value Tax.

We will omit our usual attachment on tax reform, although to refresh your memories, we will repeat the portion about the AVAT. Our proposal removes the collection of taxes on capital gains, dividends, interest and rent (the last being solely collected by state and local governments) from income taxes. The inheritance tax would also be repealed. 

AVAT would be marked to market at Initial Public Offer, option exercise and first sale after inheritance, gift or donation. Families would retain assets as long as they use them and operate the business, but those who buy them would pay the tax to the SEC. As is the case currently, the tax would be zero rated for sales to qualified employee stock ownership plans. Sales to cooperatives would also carry this benefit. The revolution will occur as a tax benefit, rather than through confiscation.

Africa could learn this lesson too, even forming links to American cooperatives all along the supply chain. This is a much better option than continuing with our current system of trade agreements and tariffs. 

Attachment: The Challenge of Forced Labor