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-- Of States and Taxes...

Of States and Taxes...

I've been reading an interesting book by Jeffrey Herbst entitled "States and Power in Africa", and it's given me a couple of interesting revelations about the nature of state consolidation of power. The premise of his book is that Africa's underdevelopment and instability can in part be explained by the manner in which states were forged, and the relationships they maintain with their people. He concludes that the ability of a state to project enough power to tax a population fairly and efficiently is both a mark of stability and development. Obviously this is something that doesn't exist in any real sense in Africa, so it makes for a provocative argument. But it's one that I'm beginning to sense has real merit.

Herbst begins by analogously examining Europe's political development in order to show that taxes form the fundamental social contract between Western populations and their states. The people agree to give up a portion of their capital in exchange for specific services provided by the state - namely, security, various civil liberties, infrastructure, sanitation, electricity, etc. Now, this would make sense to replicate in Africa, except that the historical structure of African society is not conducive to instituting such a system.

Europe's political consolidation took a very long time - centuries of conflict and political division have sliced and diced the continent into political entities of varying duration. Herbst argues that it was this seemingly endless process of conflict and political jockeying that created the modern state. Leaders in a city sought to secure their position against external threats. The easiest way to do this was to acquire geographic space between their metropole and the metropole of the enemy. To do this, power had to be extended into the periphery. Armies were sent into the hinterland of states, determined to deter invasion. In exchange for this protection from pillaging and conflict, the population of these territories were expected to pay tribute. This early form of taxation marked the first time that elites in the metropole were able to exact any real control over remote rural areas. And it also marked the beginning of democracy (rural populations denounced taxation without compensation, and in some cases demanded representation to secure desired compensation).

As time passed and the threat of conflict subsided, the relationship (taxation) between the state and the people remained. However, the people demanded that the state provide other services now that security was no longer paramount. Thus, the beginning of public funding for infrastructure development, education, etc. The social contract between state and society has endured.

Now, African states were born into the same borders created by the 1885 Conference of Berlin. These artificial colonial boundaries were adopted by African leaders as a necessity in order to ward off the sort of violent shifting of political allegiances implicit in actual self-determination. On this both the international community and African nationalists were united - to open the discussion to a re-drawing of borders would only invite chaos and instability. And to date, Africa has remained stable in that sense. There has only been one real intrastate conflict (well, depending how you count - Libya's incursions into Darfur in the 1980's pissed off Sudan but didn't amount to much; Ethiopia technically owned Eritrea for the duration of that conflict; Ethiopia invaded Somalia in the last year or so, but did so at the behest of the internationally-recognized government there; and South African troops did fight against the Angolan government in the early nineties, but not under the South African flag) in the whole of Africa's independence period, a pretty remarkable record given the bloodshed in the formative years of Europe's political development.

That said, internal conflicts are common. Herbst argues this is because African states don't have the capacity to tax. Or rather, the security of their borders has never compelled states to develop the same relationship with their populations that has been cultivated in Europe and America.

For the literary gurus, think of the African state in the same way that Dante considered Hell (not a far stretch of the imagination for most whose familiarity with Africa is one of conflict and death). Concentric circles emanate outward from the metropole, only in Africa, chaos increases further away from the center. The state is able to exert control over the capital out of necessity, and as such, taxation there is common. However, out in the bush the state is non-existent. Why devote state resources to protecting a border that is in no danger of violation?

Well, perhaps because failure to control one's own hinterland is the greatest threat to political stability in Africa that we can identify. In the absence of the state providing public services and security, it is common for rural populations in Africa to turn elsewhere. In some cases the international community can step in and prop up local economies through aid. And in others, warlordism rises to challenge the state. Regionally-based entrepreneurs, eager to sever linkages between the state and resource accumulation or capital extraction, make bargains with local populations, providing basic services in exchange for allegiance to movements that rise in opposition to the state. By capitalizing on the human insecurity of population centers outside the sphere of influence of the metropole, these warlords are able to challenge state authority and legitimacy. You can imagine how states take this - they seek to crush any and all threats to supremacy, and war is created. And then if the warlords emerge victorious power shifts and there is a new hinterland and a new metropole, and soon new opposition.

Furthermore, underdevelopment is perpetuated by this cycle in two distinct ways. First, inequality is created through the unequal distribution of aid and capital accumulation by the state. Clientelism and rent-seeking in the metropole is unfortunately exceedingly common, creating distortions in income distribution and aid disbursal. Economic growth (however slow) serves the elite few and not the poor - in fact, when inflation rises faster than wages, it can actually hurt the poor. Healthy social service institutions can alleviate this cleavage in society. Second, conflict only serves to destroy all sorts of indicators, from economic (inflation, etc.) to human development (life expectancy drops, education rates plummet as children become soldiers instead of students, local economies are destroyed by pillaging, and infant mortality increases as sanitary medical facilities become rare). In fact, the World Bank has acknowledged that conflict is the biggest "trap" keeping underdeveloped states poor.

So maybe it's time to re-evaluate the exercise in liberalist state building going on in Africa. Politically, the continent is still in its infancy, and despite criticism there are signs that its development may still be more rapid than its European forefathers. But in lieu of the fundamental force that drove state consolidation in Europe, some creative engineering may be in order. In other words, the key to development in Africa just may be a good tax policy. All this time we've been sending members of the World Health Organization and the International Monetary Fund to Africa when we should have been sending representatives from the IRS.

dude...

glad im not a political science major..

I may have gotten a bit carried away.

But seriously, it's an interesting concept. Is the secret to global stability and overall development simply a substantive tax code?

yeah Africa is a real shithole.. Just look what happened there last week..

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Originally posted by Krypton glad im not a political science major..

I was as an undergrad, but that's not my field anymore. However, too much of the international development field is simply policy evaluation, that when I come across something more theoretical I get the equivalent of academic nostalgia or something.

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Originally posted by Capitalizt yeah Africa is a real shithole.. Just look what happened there last week..

I don't understand. Is that a video game?

lol..yes. I'm not smart enough to respond to the other stuff you wrote.

Resident Evil 5

A valiant effort Lebez nonetheless.

Whilst I certainly agree that a sound tax policy is conducive to the economic and political integrity of a nation, the issue of enforcement bothers me. I'm not sure about everyone else here, but if my government didn't threaten me with incarceration or other penalties should I not pay my taxes, I simply would not pay them. No matter how 'fair' a tax is, nor how beneficial it may be to some 'greater good', I'm not forking over my earnings unless you put a gun to my head. It seems to me that in order to impart a stable tax in favour of development, you would need a large organization to overhead the project - you know, send tax attorneys and commandos into the bush in order to rustle up some cash from the natives. So how do you make people give enough of a shit about Africa to actually oversee a project like that?

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Originally posted by Aortik Whilst I certainly agree that a sound tax policy is conducive to the economic and political integrity of a nation, the issue of enforcement bothers me. I'm not sure about everyone else here, but if my government didn't threaten me with incarceration or other penalties should I not pay my taxes, I simply would not pay them. No matter how 'fair' a tax is, nor how beneficial it may be to some 'greater good', I'm not forking over my earnings unless you put a gun to my head. It seems to me that in order to impart a stable tax in favour of development, you would need a large organization to overhead the project - you know, send tax attorneys and commandos into the bush in order to rustle up some cash from the natives. So how do you make people give enough of a shit about Africa to actually oversee a project like that?

Yes, enforcement is a huge issue, and probably the main reason why effective taxation doesn't already exist. Most African countries were borne into independence with no history of institutional governance, and cronyism and rentierism (soliciting favors from the government through illicit payments or vote engineering) is too rampant in many places to put into effect any sort of uniform policy. Right now taxation is a system of informal roadblocks and random coercion. The small step of replacing police roadblocks with toll booths has already increased government revenue and decreased both traffic congestion and claims of injustice in some countries - perhaps this is a model that should be followed continent-wide. The difficulty again, though, is finding bureaucrats who are willing to give up a lifestyle of kickbacks for the common good.

But the notion remains an interesting one - perhaps the army of aid workers developing education projects and the like would be better tasked with cultivating an ethos of public service in bureaucratic institutions? That way corruption could be limited, tax collection could be uniformly implemented in some fair way, and the state could take ownership of public services that previously were completely dependent on aid from the World Bank or USAID.

We already send tons of people to Africa - maybe we're just sending the wrong ones.

Do you think it's possible that charity does more harm than good?

It seems to me that even a small reliance upon hand-outs breeds resentment and unnecessary avarice amongst people, which might only fan the flames of malcontent in developing nations, leading to further conflict and regression. I've read of several instances where women in third-world countries would readily trade rations for makeup and jewelry - status, as with all people, is pertinent to the political and social health of a populace. Competition must exist. And this is not to say that it doesn't there, but when the rest of the world feels sorry for you, you're at the bottom of the pecking order. And one universal truth of mankind is that whomever is made to eat last shall always seek to cut in line.

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Originally posted by Capitalizt lol..yes. I'm not smart enough to respond to the other stuff you wrote.

Haha, honestly this thread was half-created with you in mind. I thought surely it would get your hackles up to see an argument in print that good state development policy is synonymous with taxation.

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Originally posted by Aortik Do you think it's possible that charity does more harm than good?

I do, but not for the reasons you list. I'm not of the opinion that the problem is lack of competition. In fact, I'm a pretty close follower of development critiques that show that greater competition actually breeds inequality (if you think about it, the capitalist economy is inherently based on inequality as a basis of compensation, and all too often we like to think that competition is free and fair when it is anything but).

There's a growing group of Africans who are opposed to aid as a form of neo-colonial dependency, arguing that instead of freeing Africans from the constraints of poverty, aid has simply distorted income distribution and made the poor reliant upon the largesse of the West. In fact, this recent interview with Dambisa Moyo, a Zambian economist educated in the States, is quite interesting:

quote:

Your verdict about development aid is pretty harsh. Moyo: "I'm really not saying anything new. In fact, I'm plagiarising. I quote other people's research. As early as the sixties, Peter Bauer, the development economist, was describing development aid as 'a tax on poor people in rich countries that benefits rich people in poor countries'. He was ignored. In the world of development aid it is not a secret that it just doesn't work. But aid organisations and celebrities like Bob Geldof are keeping the myth alive. My own family suffers the consequences of development aid every day." What are those consequences then? Moyo: "First and foremost the widespread corruption. The people in power plunder the treasury and the treasury is filled with development aid money. The corruption has contaminated the whole of society. Aid leads to bureaucracy and inflation, to laziness and inertia. Aid hurts exports. Thanks to foreign aid the people in power can afford not to care about their people. But the worst part of it is: aid undermines growth. The economies of those countries that are the most dependent on foreign aid have shrunk by an average of 0.2 percent per year ever since the seventies." But surely donor countries have checks and balances. They demand good governance. Moyo: "But at the end of the day they let the African countries get away with it. World Bank research has shown that 85 percent of development aid was used for other than the intended purpose. Donor countries are propping up the most corrupt regimes. From 1980 until 1996, 72 percent of World Bank aid went to countries that did not abide by the rules. The need for donor countries to just keep on giving appears to be insatiable."

http://www.nrc.nl/international/art...ust_not_working

Pretty damning. I think she goes to far and is way too optimistic about the ability of Africa to stand on its own, but she actually advocates for the unconditional end of aid in all forms - education, health care, food assistance, everything.

All that said, I don't think technical assistance in the form of tax advice really constitutes "charity" in the same form that monetized aid does - re-orienting the development industry to focus on good governance through taxation would actually decrease the aid burden over the long haul and help African states regain independence in service provision and development projects.

I don't know WTF Africa needs exactly but I'm sure more taxation isn't the answer. They need the same thing all countries need to prosper..stability...a stable government and a stable currency (no more zimbabwe-style devaluations) Get a widely recognized currency in place that isn't being devalued at a ridiculous level and you can worry about taxation later. Sound money is the key to a stable society.

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Originally posted by Lebezniatnikov I do, but not for the reasons you list. I'm not of the opinion that the problem is lack of competition. In fact, I'm a pretty close follower of development critiques that show that greater competition actually breeds inequality (if you think about it, the capitalist economy is inherently based on inequality as a basis of compensation, and all too often we like to think that competition is free and fair when it is anything but).

I do not disagree with you one bit. And just to be clear, I didn't mean to imply that capitalism is the answer, even though I came off as such.

When I speak of competition, I do not necessarily mean it within a contained, economic sense. I mean it in a global, socioeconomic sense. With the need to update Africa to a stable, modern, economic level comes the flux of cultural identity - exactly what you were speaking of before. Africa appears caught in its inexorable history with western domination and culture as well as the geographical and even cultural influence of more eastern nations. This doesn't leave a great deal of room for any given country to forge its own identity. As sticky as that sounds, it is a significant factor in the economy of a nation, as every individual in the work force must be expected to not only support their selves and families, but also uphold the stability and will of their given society and economy for their own benefit; with the satisfaction of success comes the conceit of pride - an identity is formed.

Of course this is a gross simplification of a process that is not always reproducible, but my point was that competition - state-endorsed or not - is indeed a factor of shifting inequality, but is conducive to a country's prosperity and identity, if not only for its ability to wrest sovereignty from the back of the welfare queue.

The danger of this being that, as discussed before, it may require a massive overhead to actually implement any lasting infrastructure, and as such, you risk blowback or failure - both of which could possibly lead to even further conflict or even severe religious fanaticism. See Iran.

In Salammbo is a great example of what desperation brings about in a nation... but you haven't read that yet!

quote:

There's a growing group of Africans who are opposed to aid as a form of neo-colonial dependency, arguing that instead of freeing Africans from the constraints of poverty, aid has simply distorted income distribution and made the poor reliant upon the largesse of the West. In fact, this recent interview with Dambisa Moyo, a Zambian economist educated in the States, is quite interesting: http://www.nrc.nl/international/art...ust_not_working Pretty damning. I think she goes to far and is way too optimistic about the ability of Africa to stand on its own, but she actually advocates for the unconditional end of aid in all forms - education, health care, food assistance, everything.

Very interesting. I think you're right, it is a bit extreme, as it seems to me that a lot of people may die merely to serve some economic idealism. Despite our species' propensity towards bringing that about anyways, I couldn't possibly bring myself to approve of that in any idealistic sense.

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All that said, I don't think technical assistance in the form of tax advice really constitutes "charity" in the same form that monetized aid does - re-orienting the development industry to focus on good governance through taxation would actually decrease the aid burden over the long haul and help African states regain independence in service provision and development projects.

You've definitely got a point there. But even the best intentions of sincere aid in the form of assistance in institutionalizing autonomy could be interpreted as pity or parenting, and unfortunately, interpretation is almost all that counts.

Though I am operating under the presumption that the strength of a nation's identity lies merely in its viciousness - it's ability to influence and assimilate for its own means just another form of violence, economic or territorial.

Sorry it took so long to reply in this thread - somehow I missed this post.

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Originally posted by Aortik When I speak of competition, I do not necessarily mean it within a contained, economic sense. I mean it in a global, socioeconomic sense. With the need to update Africa to a stable, modern, economic level comes the flux of cultural identity - exactly what you were speaking of before. Africa appears caught in its inexorable history with western domination and culture as well as the geographical and even cultural influence of more eastern nations. This doesn't leave a great deal of room for any given country to forge its own identity.

This is a really good point - even "African nationalists" at independence assumed the modern nation-state as created by European colonialism - self-determination has never existed in Africa, and therefore not a single state is built upon a common identity.

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As sticky as that sounds, it is a significant factor in the economy of a nation, as every individual in the work force must be expected to not only support their selves and families, but also uphold the stability and will of their given society and economy for their own benefit; with the satisfaction of success comes the conceit of pride - an identity is formed.

I would argue that this is not how identity is primarily formed - if you remember our earlier discussion of Kundera, I would put forth the suggestion that identity is not formed by success but rather through collective failure. Sure, some identity hinges upon the celebration of significant collective achievement (i.e. academic research that suggests national soccer teams are "creating" a common identity for many African states), an even stronger identity is more often rooted in the collective failure or tragedy of a group (i.e. the defeat at Kosovo Fields for Serbs, the Battle of Britain for England, 9/11 for Americans).

Part of Africa's problem is perhaps that other than colonialism, which was less a symbolic event than a systemic method of oppression, there is no unifying tragedy for any one African state - the most tragic moments in African history have wrent states apart, rather than unified them in common grief (i.e. Rwanda, Sierra Leone).

This gets back to my original point that the lack of security threats to the cohesive existence of African states has led not only to the failure of any real national identity formation, but also the failure of state institutions to evolve to incorporate the notion of public service.

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Of course this is a gross simplification of a process that is not always reproducible, but my point was that competition - state-endorsed or not - is indeed a factor of shifting inequality, but is conducive to a country's prosperity and identity, if not only for its ability to wrest sovereignty from the back of the welfare queue. The danger of this being that, as discussed before, it may require a massive overhead to actually implement any lasting infrastructure, and as such, you risk blowback or failure - both of which could possibly lead to even further conflict or even severe religious fanaticism. See Iran.

I'm not entirely sure I understand the point being made here - it seems to me that growing inequality leads directly to more widespread instability, no?

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In Salammbois a great example of what desperation brings about in a nation... but you haven't read that yet!

I really do need to get on that.

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You've definitely got a point there. But even the best intentions of sincere aid in the form of assistance in institutionalizing autonomy could be interpreted as pity or parenting, and unfortunately, interpretation is almost all that counts.

This is far too true. Many dependenistas view Western benevolence with such skepticism that even the best of intentions could be mistaken by many as exploitation.

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