In order to establish this claim, lets have a look at an African country. I have no idea which one is typical for the whole continent (if indeed there is one, with East Africa being hugely different to, say, Morroco), but for now lets just go with Malawi, seeing as some friend from school are doing a charity project there over the summer:
According to the World Bank, starting a business in Malawi involves ten procedures which on average takes 37 days, compared to the OECD averages of 6.2 and 16 respectively. Starting a business costs 134.7% of income per capita, unlike in Singapore where its only 0.8%.
Once youve started a business there, you need to deal with licences. In order, for example, to build a warehouse, including obtaining necessary licenses and permits, completing required notifications and inspections, and obtaining utility connections youll have to go through 22 procedures, costing 236.2% of income per capita; compare this to Singapire, where it takes 11 procedures and 22% of income p.c.
Can you see how difficult it is to engage in enterprise in these poor, bureaucratic countries already? Unfortunately, Malawi isnt the exception and theres at least sixty countries in the world which are even worse, apparently. What makes it even more difficult is that those in Africa are less educated than we are, and dont have access to all the lawyers the World Bank does, making it even more harder for them.
In Malawi, if youd like to fire someone something which is very important, because if its harder to fire someone, youre less likely to hire in the first place (look at France, for example, and specifically youth unemployment). Now, in order to fire someone in Malawi, it costs 84.3 weeks of wages, compared to 26.0 in your beloved Sweden.
Registering property takes 118 days (which is why most of it isnt), but that actually isnt so bad for the third world (OECD average: 31.8) in Haiti it takes 683 days, for example.
Evidently, Malawi isnt very good on the mortgage front, because it seems nobody has credit, whether its underwritted privately or by the government. But, if its quite hard to register property and businesses, you cant get credit rolling out property rights would be the most effective way of reducing world poverty and if you cant get credit, you can only build your house on the money you have in your pockets which is why houses there tend to be made of corrugated iron, at best. If you cant register property, neither can you have access to the electricity, water or telephone networks either, which makes living and running a business very hard.
Now, youll probably love this bit: what Malawi is good at is ripping off companies (of course, when you find out theyre poor Africans, youll probably drop the Marxist nonsense, at least in this case). It takes 29 payments to pay ones taxes in Malawi and 878 hours (no wonder they cant feed themselves, if theyre too busy paying the government!); compare this to the OECD average of 15.3 and 202.9 respectively (these figures are for a medium-sized business in a given year). Profit tax is 31.5% comapred to 20.7% in the OECD (Laffer Curve, anyone!?). On the total tax rate, however, Malawi is quite good, it being less than the OECDs (as they dont pay labour taxes for pensions, but theyre deducted from incomes anyway): 32.6% compared to the regions average of 71.2%.
Wow, the average African tax rate for businesses is 71.2%. No wonder theyre so poor, because if el presidente is going to take away that much money from you, why bother setting up in the first place? Im never going to invest a penny in Africa, be it by aid or otherwise, not of 71.2% of money given to businesses gets stolen by the government anyway! Its obscene and just shows its Africas own fault that its poor. If there ever was a proof for the Laffer Curve, this is it!
Oxfam estimates that if Africas trade share increased by 1%, 128 million people would be lifted out of poverty. Heres an idea: they could make it slightly easier bureaucratically, for in Malawi it costs $1,565 in regulatory fees to export a container of goods (compared to the OECD average of $811) taking 44 days requiring eight documents, compared to 10.5 and 4.8 respectively.
One thing Malawis government can do more of, however, is enforce contracts. Obviously, the harder it is to do such a thing, the less likely people are to invest. If you ever go to Africa, youll notice, for example, that nobody will accept a credit card (except foreign hotels), because, well, nobody ever honours their payments (not that youd need one anyway). In order to enforce a contract in Malawi, it takes 40 procedures and costs 136.5% of the debt (so its not worth it anyway ****** country!); in the OECD, these figures are 22.2 and 11.5%.
Okay, have you been with me so far? One more thing closing a business. Banks will only lend to businesses if they know they can get collateral; without loans from banks, businesses cant have any money. Now, in the OECD, when a bank closes a business it costs 7.1% of the estate and they typically have a recovery rate on average of 74 cents on every dollar because of this, most banks are willing to invest in businesses here. Not in Malawi, where it costs 29.5% of the estate, which is futile anyway with a recovery rate of 13.2 cents on the dollar.
Can you see now how Malawi is screwing itself over and that its its own fault that its poor? Take any African country you like the economic status quo will be quite similar indeed, this situation seems common to the whole of the third world. Should we abolish the CAP, introduce fair trade and give Africa billions of pounds of our hard-earned money? Before we do such a thing, Africa should sort out its own house indeed, these things seem trivial compared to how Africa is screwing over itself
, and to balance it take -50% to build troops, to show how hard it would be for the central order to raise an army in these circumstances.
I, too, think State Property is quite overpowered, and I never understood the significances of the bonuses. Did they change the Upkeep to low?? I'm still playing vanilla and it has no upkeep...
), but someone else said it was.
