The Third World – The World without Business

The Third World is impoverished. This poverty is not because of one country taking from another, taking too much of the “fixed pie,” as Left “Progressive” thinking asserts, but is a result of a hostile environment for the planting, germination and nurturing of new businesses and for the expansion and healthy maintenance of existing businesses. With lack of businesses, comes a lack of employment as the business sector offers a nearly unlimited flexibility and potential for more opportunities for employment and self-employment by the hour, by the day, by the week, by the month, by the year, providing individuals far more access to earning income starting with little or no experience and working one’s way up to higher levels of responsibility and productivity than any rigid governmental employment structure can ever provide.

Businesses are the manifestation of productivity in a society. Business is one outlet through which people express natural human creativity in creating and producing goods and services for the community. Businesses are the fruit of human imagination and problem-solving, and are borne of an awareness of the needs of the local society and how these needs can be met.

Businesses can be as small as a carpenter fashioning one table at a time, a gardener employing two people to care for fifty clients’ yards, a babysitter who provides services to two families. Many businesses are as simple as a chauffeur saving up his money to buy a two room lodging, one half to live in, the other half to rent out. He raises his family’s standard of living modestly, but measurably and enhances his children’s chances to higher achievement in the future. Instead of a renter himself, he is now an owner of a small, income-producing asset which he can sell later if he chooses. Another fellow makes his start by hawking drinks on the street. He saves enough money to pay for a kiosk so he doesn’t have to stand in the sun, wind and rain anymore, and sell more drinks, and he’s noticed people like a certain type of biscuit so he adds that to his inventory. In year of this, he has saved up enough money to build a small room, where he can stock fifty items, matches, tea, tomato paste, the staples he’s discovered the local community will buy. To make a sale, he’ll break sets, sell half-packages, whatever he perceives his clients can and will buy.

This natural identification of a need and a solution to addressing that need happens every day. It’s impossible to suppress and shouldn’t be suppressed. In the midst of a refugee camp of displaced people, 10,000 of them, chased and beaten out of their homes with hardly more than the clothes on their backs, within two days, while government and humanitarian aid agencies sat in meetings to discuss the emergency, hawkers had already figured out how to get small goods into the guarded camp and were wandering through selling items which people needed. People require goods and services to live and to function, and other people are willing to do the hustle to make those necessities or luxuries available. The two, consumer and provider, are brought together, they exchange payment for goods and they both depart satisfied.

In America, this free market tradition has brought the nation and the individual great comfort and wealth, yet many people in America do not perceive themselves as wealthy. But a comparison of the standard of living of an American carpenter versus an African, or South-Asian (Indian) carpenter dramatically displays the difference between an American carpenter’s comfort and a Third World carpenter’s comfort. An American carpenter, one of the trades, owns a car, owns a truck, owns a house. There is nothing noteworthy in America to see a Middle Class carpenter in a three bedroom house, with two full baths, a half bath and a garage, in fact it is expected and the norm, usually with much more. In the Third World, a carpenter is of the Middle Class, with a trade by which he can produce a regular income. His transportation is a bicycle. His family lives in a nine by twelve foot rented room, and shares a toilet with up to ten other families also renting rooms alongside his. A single room is his home – kitchen, salon, bedroom for the whole family in one. The major feature is a sturdy locked door to keep the thieves out at night. He’s admired. He has a nice little sofa, his wife has a decent set of cooking pots, a nice tea server for guests, and underneath the embroidered dust cloth is a second-hand TV, which can be used when the electricity is on. His wife fills their family jerry cans with water from the communal tap at the end of the building. She knows when to fill as the water is rationed through the city, on in her neighborhood for certain hours of the day only.

Both men have the same trade. They both are solidly representative of their respective nations’ Middle Classes, but the American carpenter has benefited from a business environment that his Third World counterpart does not have.

The Third World has several critical flaws that make it Third World, a World without Business.

The chauffeur mentioned earlier is real. He lives in the country of Guinea in West Africa. He is a professional driver who works for one of the international organizations, so he’s had a steady, decent-paying job, so with part of his earnings he built a small building. His family lived in one 9 by 12 foot rooms and he rented out the other 9 by 12 to a tenant. It took him years to be able to save up enough to shift out of renter to min-home-owner and mini-landlord. He began to enjoy a bit more income to send his kids to a better school. His home/rental was situated in a busy, growing neighborhood about three miles out of downtown Conakry and he was poised to expand to rent out a second room to add a little more again to his monthly income. But today, his income is only his salary and he must rent a place for his family. Why?

The chauffeur pointed out to us what happened, indicating a restricted construction area we were passing by one day. The government decided that the square mile community was in the exact location they absolutely needed to put up new governmental and international agency buildings. The entire neighborhood was razed to the ground, not a person of the thousands in it had any say in the matter and not a soul was compensated. After years of saving, plus the hard work of construction, the chauffeur was wrecked, his home and rental, destroyed. He’s older, and has fewer years of income ahead before mandatory retirement; his investment for his family and his old age is gone. Instead of having some buffer and cushion, he is back to the scramble of his early days, but with more mouths to feed. Every business and residence in that area, including scores and scores of small kiosks and shops and services, was literally wiped off the map. The investment of the wealthy, government-connected were enhanced by the government taking that land and handing it to contractors and politically-connected landowners who then had the guarantee of years of lucrative leasing to international organizations, but the investments of thousands of little guys was destroyed. A fraction of those micro-investors had the resources and drive left to start over, wary to invest in anything that could be taken away again.It wasn’t Big Corporation that hurt the little guy, it was Big Government, and what was destroyed was Business. The people moved on to more squalid living, and just make do, because they had no choice. But many of them have lost heart to start another business, to invest again because of the disappointment and discouragement of their loss of years of sacrifice. They are unable to raise their standard of living. They remain at hardly more than a subsistence level of economic activity. Every time they try to improve, their efforts are knocked down. First World “experts” tsk and shake their heads, decrying the local people’s woeful lack of initiative as the barrier to development, without a glimmer of understanding as to why a universal, natural in-born human trait was missing. Yet, immigrant Africans are amongst the fastest-rising immigrant achievers in America. If these people had no initiative because of their culture, how come they flourish in America? Initiative hadn’t been missing, it had been punished. Likewise, international corporations learn the same brutal lessons about the wisdom or futility of investment efforts when their companies are overrun, their employees threatened, and their assets are seized by national governments made up of political officials scheming to enrich themselves on other people’s work.

A survey of Third World businesses will reveal a pattern of cynical adaptability. With confiscation a real threat, businesses large and small are stripped to the bare bones. Warehouses and factories appear dilapidated, lest – by being neat and well-kept, and noticeably prosperous -they catch the eye of a covetous government official. Not a penny of investment which can be gone without goes into maintaining the infrastructure – just enough to keep it from falling on everyone’s heads, no more. No paint, no improvements, just mildewing plaster. Private businesspeople in the Third World have an emergency plan, which includes their passports in one hand at all times, so they can abandon the country within hours if they have to, to literally walk away from everything they own there, and everything they own was deliberately chosen to be expendable. One Third World writer complained a few years ago, “At least with the old days, the “corruptocrats” would invest their money locally. But with the Socialists, Communists and Dictators seizing property and banks, the rich folks don’t dare keep their money in country. They move it out immediately to foreign shelters, so local investment is practically dead.”

At the micro-level, it is the same. Third World streets are lined with rough, scrap-board tables so unattractive, they appear ready for the junk pile, but they are in service during the day holding the stock for sale of the small vender. When the police are sent out by the government-connected shop owners to remove the low-overhead competition, there’s not much to smash, and if it does get smashed, a few nails and another cross-support usually does the trick , and the goods are on display again after a discreet waiting period.

Business as a natural human endeavor needs certain basic conditions to survive and flourish. The lack of these five conditions produces the reality of the decrepit Third World economy:

1) Security. No one can run a business of any sort when rebels or armies or bandits rule the streets. Bullets, bombs and robberies are the results of two different failures of security: First, national security against all manifestations of foreign or domestic aggression which undermines and endangers normal societal functions; second, local security of a professional and competent police force. Effective local policing for a time in Lagos, Nigeria, abruptly and effectively brought a halt to massive robberies, where bandit gangs would start at one end of a street and rob every single house to the other end of it – dozens and dozens of frantic calls to the police unanswered, plus the alarming highway bridge robberies where in broad daylight, thieves would set up a roadblock at the two-mile long stretch of lagoon bridge, trapping hundreds of vehicles over the ocean waters so the thieves could rob each car, and everyone in them, one after the other. No police.

2) Property Rights. People of high and low classes will invest generously if they are guaranteed to be able to keep their investment. If their investment is not protected by law, subject to confiscation by government or by covetous competitors, people become discouraged and defeated in hopes of moving up the economic ladder. If ownership cannot be proven or protected, people are unable to buy or sell any asset with confidence.

3) Infrastructure. Expansion of business and increasing sophistication of business activity requires good roads and other transportation modes, plus reliable utilities like electricity and water, and communications. Commerce, and all business suffer greatly in Kenya due to the horrible state of the nation’s roads. Potholes, the infamous “Kenyan Massage” known here in Arizona as “washboard,” crumbling tarmac, and narrow routes cause accidents, loss of life, loss of property, vehicle damage, and delay, delay delay, with high transportation losses that hamper trade and reduce profits. Nigeria, an OPEC country, has fuel shortages as endemic as malaria thanks to government artificially setting low prices. Government officials commandeer cheap gasoline and diesel from the refineries and sell them in the neighboring countries for many times the Nigerian official price. Not much is left over for Nigerians. Cars queue for a week at the filling stations. The employee or boss cannot sit a week in a line at the gas station, so a driver must hold the place, sleeping in the vehicle, ready to move ahead the moment the tanker rumbles in to refill the station’s empty tanks. Nigerians, in order to maintain some semblance of continuity of working must horde gasoline and diesel. Explosions are common, thanks to poorly stored fuel. As the days without gas increase, so the number of cars on the roads decreases. People with enough money buy generators to provide electricity when the city power goes out, hours of a day, or two-three-four days in a row. This is a constant drain on productivity, and increases all costs on everything in the country.

4) Reasonable Taxation. Overtaxed people have no money to invest. Overtaxed businesses are a double tax ; first on the individual, then on the business. Businesses have to pass expenses on to the consumers in the calculations of the pricing for goods and services. There is point where more and more consumers cannot pay the increases, and the buy and sell activity slows or halts. Businesses cannot employ people if they can’t sell anything, and bribes to government officials to stay in business without harassment are simply another form of taxation.

5) Human Resource Development: Business can only expand as far as the ability to recruit competent people. Effective schooling to improve the productivity of people is key to an upwardly mobile population. Uneducated or poorly educated people are not effective in their ability to take on work or take on higher responsibility once employed.

Government doesn’t have to be the enemy of Business, but through human history the trend is that governments set themselves at every opportunity to shackle or destroy natural human business interaction and activity, through heavy taxation, confiscation, dereliction of security and disrespect for Rule of Law. America’s innovation was to clear the playing field, to recognize the importance of the merchant and the producer, to allow Human Business to flourish.

The Third World is right across the horizon. It can be reached in a day from any place on the planet. What excuse then is there to ignore or dismiss the reality of how these nations remain in poverty and human stagnation? What excuse is there is to claim that American Business has not served Americans well when the standard of living for the American Middle Class has exceeded the Middle Class of every other nation in every measure since American Independence, and the evidence is openly verifiable? Government is best when it provides a few key neutral functions which enable human beings to express their aspirations through their own hard work and initiative. It is at its worse when it covets all human productivity while being crushingly jealous of the human natural cooperative, social drive for business. Actions have consequences. America, indeed no country, is immune from becoming part of the “Third World,” a moribund and aspiration-crushing nation-state of being – The World without Business.