Tuesday, June 05, 2007

Joachim Buwembo Understands the Cause of Poverty: stone throwers in Germany Do Not

The headline in the East African was not encouraging: “Ten great rules that will help you remain poor all your life”, especially as the it was billed to be about Adam Smith (‘Oh, no, please not another load of rubbish about ‘globalisation’ and ‘wealthy countries making Africans poor’).

But I started reading, and yes, it opened with: “In 1776, Adam Smith published his classic scholarly work, An Enquiry into the Nature and Causes of the Wealth of Nations. Two centuries and three decades later, we hereby publish the 21st Century sequel. It is entitled An Enquiry into the Nature and Causes of the Poverty of Persons".

And continued with: “Unlike Adam Smith’s tome, ours is a very easy-to-read guide, consisting of only 10 points, which are very easy to memorise. It is a result of four decades of observation and participation in activities that create poverty in abundance in independent African states. It must, therefore, be respected as a product of painstaking study.”

In for a penny, I continued reading, and it was well worth a pound. I can only sample the rest because IPRs should be respected. It offers ten rules to “defeat wealth for the rest of your life”. I give you his rules three, four and five:

“Three: Don’t think of saving until you have real big money. How can you save when you earn so little? Those telling you to save are not sympathetic to your burning needs.

Four: Don’t engage in activities usually reserved for the “uneducated.” How can you, a graduate, engage in petty trade or home-based production? That is for people who never went to school.

Five: Don’t think of starting a business until an angel comes from heaven and gives you capital. How do they expect you to invest before you get millions of shillings? Even though more than half the businesses in your town were started with a few hundred shillings, you, as a smart person, can only start with millions.”

The author, Joachim Buwembo, is the editor of the Daily Monitor of Kampala, and in anybody’s economics, heterodox or orthodox, he is absolutely right. It’s exactly what Adam Smith took a long time to write in Wealth Of Nations.

Capital comes from patient saving and investing in a business activity, your own or somebody else’s, preferably one you can see operating or can operate yourself close by, initially. The drive comes from the desire to ‘better your current circumstances’ and this leads to you augmenting your fortune by participating in gainful employment from your labour and your knowledge.

To save, you need an income from employment, no matter what the paid job is (within, the law), work has dignity; declining work because its ‘below’ you is a ticket to remaining ‘below’ yourself. From gradual accumulation, a few shillings a week, you get your first ‘grub stake’, the little bit of capital you need to work for yourself, or to invest in another business while working for income from somebody else.

Forget the instant ‘success’ of a token Mercedes car; that’s for fools, criminals and dreamers. It’s the slow and gradual growth, bit by bit, that will raise your wealth – your share of the annual revenue from producing goods and services for sale to others – that will lead you from poverty.

Poverty is the absence of wealth; those who have wealth do not cause its absence; you not getting started causes your poverty.

That was Smith’s message. Congratulations to Joachim Buwembo for understanding the Smithian imperative of working, saving and investing. Now if only the rich western charities and the those throwing bricks in Germany could only see it too.


Blogger Billy-Joe said...

Hi Jojo, please digit news when U can

6:08 pm  

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