Growth accelerated with tentative reforms in 1980, and shot up to 9% after reforms deepened in the current decade. How much lower would infant mortality, illiteracy and poverty have been had India commenced reform a decade earlier, and enjoyed correspondingly faster growth and human development? I have published estimates in a paper for the Cato Institute (see http://www.cato.org/pubs/dbp/dbp4.pdf). This shows that the delay in reforms led to an additional 14.5 million infant deaths, an additional 261 million illiterates, and an additional 109 million poor people. Indian socialism delivered a monumental tragedy, lacking both growth and social justice.

Economists frequently estimate what would have happened had policies been different. The assumptions on which such estimates are based can always be questioned.

For instance, Nobel Laureate Amartya Sen has popularized the notion of 100 million missing women on account of gender discrimination in China, South Asia, West Asia and North Africa. These regions have 94 females per 100 males, against 105 females per 100 males in other countries with equal gender treatment. Sen assumed that without gender discrimination, the female:male ratio in the four developing regions would also have been 105:100. On this basis, he estimated that gender discrimination had caused a shortfall of over 100 million females — what he called "missing women".

Sen's model was so simplistic that he did not send his paper to an economic journal: he published these estimates in the New York Review of Books. Various economists complained that he had neglected other causes of gender differences, and some came out with alternative estimates.

Despite these objections, Sen's estimate of 100 million became world famous, and his phrase, "missing women", became standard lexicon in gender debates. What mattered was not the precision of his estimates, but the magnitude of the social disaster he was able to highlight.

In the same spirit (but without implicating Sen), i have sought to estimate the number of missing children, missing literates, and missing non-poor arising from the delay in economic reforms. Had reforms started in 1970 rather than 1980, India would have grown faster. In this fast-growth scenario, i assume that per capita income growth in the 1970s would have been what was actually achieved in the 1980s: growth in the 1980s would have been what was actually achieved in the 1990s: and growth in the 1990s would have been what was achieved in 2001-08.

I calculate the rate of change of infant mortality, literacy and poverty with GDP since 1971. I then apply this rate of change to the fast-growth scenario. This reveals what infant mortality, literacy and poverty would have been with faster growth.

In a fast-growth scenario, infant mortality would have been less every year, and in 2008 would have been 27 deaths per thousand births, against the actual 54 per thousand. The cumulative number of "missing children" turns out to be a massive 14.5 million. This is two-and-a-half times the number of Jews killed by Hitler.

I use trends from the latest surveys to calculate actual literacy and poverty levels in 2008, and compare these with literacy and poverty levels in a fast-growth scenario. With faster growth, literacy would have been virtually 100% by 2008, and 261 million more people would have been literate. Again, faster growth would have reduced the number of poor people in 2008 from 282 million to 174 million. This means we have 109 million "missing non-poor" on account of delayed reform.

Doubtless critics will object, as they did after Sen's exercise, that i have used a simple model that neglects other factors affecting infant mortality, literacy and poverty. Demographer Ansley Coale reworked Sen's calculations to show that the number of missing women was probably 60 million, not 100 million. That did not dent public horror at the social tragedy that Sen unveiled.

I invite critics to produce more sophisticated models on the impact of delayed reform, as Coale did in the case of missing women. If these more sophisticated models conclude that Indian socialism killed only 10 million children and not 14.5 million, i will shrug. My point about the magnitude of the social tragedy will stand.

Congress believes it won the election by focusing on the rural poor — raising support prices for crops, waiving repayment of bank loans by small farmers, guaranteeing 100 days work for rural laborers on government projects, improving rural infrastructure and providing massive subsidies for food and agricultural inputs.

This produced rural prosperity in a country where 70% of the population is still rural, and where trade controls insulate rural India from the gyrations of global markets. This explains why Congress won handsomely: The rural masses were not touched by the global recession. Congress will now aim to strengthen this populist approach.

This will mean a heavy fiscal burden in a country where the combined fiscal deficit of the central and state governments exceeds 10%. But that will easily be defended as a Keynesian stimulus in these recessionary days. The new government will soon come out with a new stimulus package, possibly in its budget in June. This is likely to emphasize expanded credit and low interest rates more than tax giveaways: Manmohan Singh knows he must return to fiscal restraint once the recession ends.

Congress is by instinct a left-of-center party, and wishes to been seen as the savior of rural India, not the business community. Foreign investors think of Congress as the party that initiated the pro-market economic reforms in 1991, but that was sparked by a major balance of payments crisis.

The collapse of the Soviet Union, along with the success of Deng in China, helped gradually change the old socialist mind-set. But most of the heavy lifting on economic reform has already been done in the last two decades. So, when after the inconclusive election of 2004 the Left Front said its support would be conditional on a policy thrust on agriculture and the rural poor, Congress agreed as much out of conviction as compulsion.

However, the Left Front stymied the passage of several Congress-proposed bills as too market-friendly, and these may now go through. They cover areas such as pension reform to provide greater individual choice and facilitate more investment in equities; ending the public sector monopoly in coal mining; and increasing foreign investment limits in insurance, telecom and civil aviation.

The Left Front was opposed to foreign investment in retail, which may now be liberalized. While these reforms will be useful, they will not be game-changing like the reforms of the 1990s. Bills have to be passed by both houses of Parliament, and the Congress-led coalition is well short of a majority in the Upper House, and so will move cautiously on legislation, making sure it can get the support of small parties.

Since Congress sees itself as having won a mandate for continuity rather than change, why has the Indian stock market surged 20%? One reason is sheer relief. Investors had expected a hung parliament and a very unstable ruling coalition, and are greatly relieved at the prospect of a stable government for five years, free of dependence on the Left Front. Yet the economic fundamentals of India have not changed. It remains a country that has long performed below its potential, where poverty and rural neglect have for decades co-existed with world-class skills.

India's export to GDP ratio has risen sharply in the last two decades, yet it remains less dependent than almost any Asian country on exports, and rural India is largely insulated from global winds. So, it can hope to keep growing at 5% to 6% in the coming year despite the global meltdown. It wants to accelerate spending on infrastructure, but is held back by cumbersome procedures and corruption. Foreign analysts legitimately worry that anti-recession measures — tax cuts, higher subsidies and higher infrastructure spending — will send India's public debt soaring, and that politicians will refuse to reverse the current tax cuts.

Will India go back to 9% growth when the global recession ends? Probably not. In 2003-08, India rode the global boom sparked by huge U.S. trade deficits and easy money. That global tide lifted all boats: Even Africa's annual GDP growth soared from 2.4% to 6%. The tide is now falling and is unlikely to return to its earlier highs. When the recession ends, global growth will be more muted, and so will India's. But it can surely aim at 7%-8% GDP growth, enough to qualify as a miracle economy.

Land Reform Ignored the Property Rights of Commercial Farmers

The government justified the land reform to the rest of the world by arguing that it redressed historical injustices and racial imbalances in the ownership of the land. The land reform ignored the prevailing legal situation with respect to farm ownership. It also ignored the issue of fair and reasonable compensation for assets taken over by the government.

The legal position was straightforward—commercial farmers held full freehold title. In addition, over 80 percent of the farmers also held a "certificate of no interest" issued by the Zimbabwe government. Under the Zimbabwean law, farmers who wished to sell their farms had to first offer them to the government at a market price. When the government declined to purchase such farms, it issued the farmers with the "certificate of no interest" and the farmers could proceed to sell their farms on the open market. In fact, the government purchased some 3.8 million hectares of farmland in that way between 1980, the year of Zimbabwe's formal independence from Great Britain, and the commencement of the land reform.

Farmers who held both the title and the certificates possessed an apparently unassailable legal right to the land and all the improvements they have made on that land. As such, they also had the right to be fully compensated when their assets were taken over by the state.

Unfortunately, over the last nine years, the government "acquired" thousands of farms without paying market price or, in many cases, any price to the farmers. To accomplish that, the government changed the law every time a farmer or a group of farmers secured legal judgments in their favor. Eventually a group of Zimbabwean farmers took their case to the Southern African Development Community's Legal Tribunal in Windhoek, Namibia. In 2008, those farmers obtained a decision instructing the government of Zimbabwe to protect the farmers' legal rights. The government, in spite of being a signatory to the treaty creating the SADC Legal Tribunal, ignored the ruling.

One small group of affected farmers also enjoyed the protection of a "Bilateral Investment Protection Agreement" signed between the government of Zimbabwe and foreign farmers. A group of farmers of Dutch origin, who had invested after 1980 and who were protected by the BIPA, took their case to the International Court of Justice in The Hague. In April 2009, the Hague tribunal ruled in favor of the Dutch investors and granted them nearly $22 million in compensation.

The attitude of the members of the Zimbabwean regime toward the farm acquisitions was straightforward—they were "taking the farms" from their owners. No police protection was afforded to the farmers or their staff, and no interference with expropriation was permitted. In the majority of cases, force was used—mainly by groups of young, politically motivated thugs. Those thugs acted on behalf of the future "beneficiaries" of farm expropriations—mostly members of President Robert Mugabe's ZANU-PF party. Once the owners and their senior staff had been evicted, the new "owners" occupied the land and took advantage of the assets, including crops and livestock.

Many elderly and outstanding farmers were evicted in that way—leaving some of them so traumatized that they never recovered. One such farmer, Keith Harvey (aged 86), was evicted from his cattle ranch in the Midlands and subsequently went into a coma for two years. He eventually died. He was a former chairman of the Natural Resources Board and a life-long conservationist. He was a fine cattleman, a person of great integrity and totally committed to the country of his birth. Many other farmers lost their lives—either directly or indirectly—as a result of expropriations.

The Staggering Costs of the Land Reform

To date, no proper estimate has been made of the financial cost of the land reform. Therefore, I asked economists in the farming industry to come up with the numbers. According to the Commercial Farmers' Union, the total output of the agricultural industry in Zimbabwe in 2000 was 4.3 million tons of agricultural products, worth, at today's prices, some US$3.347 billion. This output has declined to just over 1.348 million tons of products in 2009, worth some US$1 billion—a decline of 69 percent in volume and a decline of 70 percent in value.¹

It is not often appreciated that smallholder farmers have been just as badly affected as the large-scale commercial farmers. Their production in 2008 was 73 percent lower than their production in 2000. According to the government-appointed Utete Commission, during the first three years of land reform, some 250,000 people and their 1.3 million dependents were forcibly displaced from commercial farms alone.²

In spite of those stunning figures, the farm invasions have continued with 480 new incidents of violence against farmers recorded since the power-sharing agreement between Mugabe's ZANU-PF and the Movement for Democratic Change was signed in September 2008. According to the CFU, even those farms that were granted legal protection by the SADC Tribunal were targeted—presumably as a punitive measure.

The international decisions in Windhoek and The Hague create very significant challenges for the new transitional government. Justice for Agriculture, an organization of commercial farmers, estimates the total value of potential legal claims at US$5 billion dollars—some 30 percent more than current Zimbabwean gross domestic product.³

It is clear that the land reform had been a costly failure. In 2008, CFU estimates, over 90 percent of all production from commercial farms came from the remaining largescale farmers—the same farmers who are now being targeted. JAG claims that more than half of all the farms taken over by the state are now derelict and abandoned. Many of the individuals who are now "taking" farms are doing so for the third or fourth time.

The combined costs of the land reform are staggering— they include US$2.8 billion in international food aid on an emergency basis, nearly US$12 billion in lost agricultural production over 10 years, and a potential US$5 billion in compensation—a total of some US$20 billion.

It is time to give all farmers secure tenure that will enable them to finance their operations properly. Such policies cannot be implemented until the issue of the rights of the farm owners is resolved and the issue of compensation addressed.

Notes

1. Personal communication with representatives of the Commercial Farmers' Union.
2. Unpublished report by the Utete Commission.
3. Unpublished report by Justice for Agriculture.

Oddly, my "discovery" of private schools serving the poor was no discovery at all, or at least not to some people.

Leaving Hyderabad, I returned to Delhi to meet again with World Bank staff before moving on to continue my "field trip" in other countries.

I was eager and excited to tell them what I'd discovered in the back streets of the Old City of Hyderabad and to gain their insights on the way forward.

They weren't at all impressed. I met with a group of staff members in their pleasant offices, replete with potted ferns and pretty posters of cute children. Most, it was true, had never heard of private schools serving the poor, and they were frankly puzzled about how schools charging only $10 a year could exist, except through charity.

And they told me that I had found some nongovernmental organizations working in the slums, opening a few schools, that was all. They told me this, assuming I was simply misguided, even though I had told them it was something else altogether.

However, one of the group, Sajitha Bashir, had herself seen a few private schools in Tamil Nadu — although she insisted there were none in Karnataka, where she was now doing a study, so they weren't a universal phenomenon.

In front of the group, she launched into a tirade against such schools. They were ripping off the poor, she said, run by unscrupulous businesspeople who didn't care a fig for anything other than profits.

This didn't gel at all with what I'd seen in Hyderabad — how could such people devote their weekends to science competitions and cyber-olympics if money was their sole motivation? I was not at all convinced and hesitantly related some details of what I'd found. No one considered my information very significant. Those who hadn't heard of these schools simply shrugged, and the meeting soon dissolved.

Afterward, Sajitha took me downstairs for coffee, clearly trying to be helpful in letting me see the errors of my ways.

So the private schools might be there, some might even be better than the public schools, but that's only because they are selective "They take the cream of the cream," she said (and I had to force myself to remember that we were talking about parents earning a dollar or two a day), leaving the public schools much worse off.

Anyway, continuing the theme that only a few were any good, she continued, "Most of the schools are shocking, there is a shocking turnover of teachers, they're not trained, they're not committed, and the proprietors know that they can simply get others because there is a long list of people waiting to come in."

But her main problem, clearly based on well-intentioned personal convictions, was the question of equality. Because some children, the poorest of the poor, are left behind in the "sink" public schools, the private schools were exacerbating inequality, not improving the situation at all, she said.

For that reason, we must devote all our efforts toward improving the public schools, not get carried away by what was happening in a few private schools.

For Sajitha it was clear: If many — or even a few — parents had higher aspirations for their children and wanted to send them to private schools, then "they should not be allowed to do so, because this is unfair."

It's unfair because it makes it even worse for those left behind. This puzzled me. Why should we treat the poor in this homogenous way? Would we — Sajitha and I — be happy if we were poor, living in those slums, and unable to do the best for our children, whatever our meager funds allowed? But I said nothing.

As we parted, amicably enough, she told me that there was quite a bit of development literature about private schools for the poor in any case, and so I shouldn't go on too much about my "discovery" as I had done today, as people would only laugh. She gave me a couple of references to look up.

And she was right. I wondered at my own poor detective work in not having located these references before. Perhaps my own lack of recognition for what was taking place was excusable. In the writings she pointed me to, and subsequent ones that I found, discussion of private schools for the poor was somehow veiled, or referred to tangentially, and ignored in subsequent writings.

It was certainly not headlined in any conclusions or policy implications — to which many of us lazily turn when we digest development writings. It was almost as if the writers concerned were embarrassed or bewildered by private schools for the poor.

They could write about these schools in passing, but instead of their leaping out at them as some thing of great significance — as they had to me when I first "discovered" them in Hyderabad — they didn't seem to impinge in any significant way on the writers' policy proposals or future discussions.

Even for those who didn't deny the existence of private schools for the poor, everyone, it seemed, altogether denied their significance.

The more I explored those references, the more baffled I became. It was one thing to argue that "education for all" could be secured only through public education supported by international aid if you were unaware of private schools for the poor.

But as soon as you knew that many poor parents were exiting the state system to send their children to private schools, then surely this must register on your radar as being worthy of comment in the "education for all" debate? Apparently not.

I read the Public Report on Basic Education (the PROBE Report), a detailed survey of educational provision in four northern Indian states, with growing amazement. It too was clear that "even among poor families and disadvantaged communities, one finds parents who make great sacrifices to send some or all of their children to private schools, so disillusioned are they with government schools."

Here was another source pointing to the phenomenon of private schools for the poor — why weren't they better known then? The PROBE team's findings on the quality of public schools were even more startling. When their researchers had called unannounced on a large random sample of government schools, in only half was there any "teaching activity" at all!

In fully one-third, the principal was absent. The report gave touching examples of parents who were struggling against the odds to keep children in school, but whose children were clearly learning next to nothing. Children's work was "at best casually checked."

The team reported "several cases of irresponsible teachers keeping a school closed or non-functional for several months at a time", one school "where the teacher was drunk", another where the principal got the children to do his domestic chores, "including looking after the baby."

The team observed that in the government schools, "generally, teaching activity has been reduced to a minimum, in terms of both time and effort."Importantly, "this pattern is not confined to a minority of irresponsible teachers — it has become a way of life in the profession." But they did not observe such problems in the private schools serving the poor.

When their researchers called unannounced on their random sample of private unaided (that is, receiving no government funding) schools in the villages, "feverish classroom activity" was always taking place.

So what was the secret of success in these private schools for the poor? The report was very clear: "In a private school, the teachers are accountable to the manager (who can fire them), and, through him or her, to the parents (who can withdraw their children)."

"In a government school, the chain of accountability is much weaker, as teachers have a permanent job with salaries and promotions unrelated to performance. This contrast is perceived with crystal clarity by the vast majority of parents."

I read the summaries at the beginning and end of The Oxfam Education Report, a standard textbook for development educationalists, and again I found only the accepted wisdom that governments and international agencies must meet the educational needs of the poor.

The introduction states that there is an educational crisis because governments and international agencies have broken their promises "to provide free and compulsory basic education." Then in the conclusion, I read that there is hope, but only if countries, rich and poor alike, renew their commitment to "free and compulsory education."

As long as national governments spend more, and richer countries contribute billions more in aid per year, then we can achieve universal primary education by 2015. There is nothing exceptional about that, I thought as I read.

But then again, hidden away in a chapter titled "National Barriers to Basic Education," was the extraordinary (but downplayed) observation: "The notion that private schools are servicing the needs of a small minority of wealthy parents is misplaced�It is interesting to note that a lower-cost private sector has emerged to meet the demands of poor households."

Indeed, there is "a growing market for private education among poor households." The author of the report, Kevin Watkins, pointed to research indicating large proportions of poor children enrolled in private schools and commented, "Such findings indicate that private education is a far more pervasive fact of life than is often recognized."

I put the book down and thought, that's unexpected, isn't it? Something as surprising as large numbers of the poor using private schools is surely worthy of comment in the conclusions, isn't it? Not a bit. The fact that the poor are helping themselves in this way was deemed unworthy of further mention in the introduction or conclusions. It was all a non-issue as far as the Oxfam Education Report was concerned.

The consensus on this surprising phenomenon, coupled with the consensus that it lacked any real significance, struck me as incredible after my first visit to Hyderabad. That poor parents in some of the most destitute places on this planet are flocking to private schools because public schools are inadequate and unaccountable seemed to me to be hugely significant territory for development experts to concede.

The PROBE Report showed that private schools existed and were doing a much better job than government schools, but it nevertheless concluded that we must not be misled into thinking that there is a "soft option" of entrusting elementary education to private schools.

It conceded that, although it had painted a "relatively rosy" picture of the private sector (where there was a "high level of classroom activity�better utilization of facilities, greater attention to young children, responsiveness of teachers to parental complaints") this definitely did not mean that private education was an answer to the problem of providing education for all.

The more I read the more it appeared that development experts were missing an obvious conclusion: If we wish to reach the "education for all" target of universal quality primary education by 2015, as agreed to by governments and non-governmental organizations in 2000, surely we should be looking to the private sector to play a significant role, given the clear importance of its role already?

Couldn't we be the trumpeting parents' choices, rather than simply ignoring what they were doing?

This is the final part of a three-part series from James Tooley's book, The Beautiful Tree.

Mr. Fazalur Rahman Khurrum was the president of an association specifically set up to cater to private schools serving the poor — the Federation of Private Schools' Management, which boasted a membership of over 500 schools all serving low-income families.

Once word got around that a foreign visitor was interested in seeing private schools, Khurrum was inundated with requests for me to visit.

I spent as much time as I could over the next 10 days or so with Khurrum traveling the length and breadth of the Old City, in between doing my work for the International Finance Corporation in the new city. We visited nearly 50 private schools in some of the poorest parts of town, driving endlessly down narrow streets to schools whose owners were apparently anxious to meet me.

(Our rented car was a large white Ambassador — the Indian vehicle modeled on the old British Morris Minor, proudly used by government officials when an Indian flag on the hood signified the importance of its user — horn blaring constantly, as much to signify our own importance as to get children and animals out of the way.)

There seemed to be a private school on almost every street corner, just as in the richer parts of the city.

I visited so many, being greeted at narrow entrances by so many students, who marched me into tiny playgrounds, beating their drums, to a seat in front of the school, where I was welcomed in ceremonies officiated by senior students, while school managers garlanded me with flowers, heavy, prickly and sticky around my neck in the hot sun, which I bore stoically as I did the rounds of the classrooms.

So many private schools, some had beautiful names. Like Little Nightingale's High School, named after Sarojini Naidu, a famous "freedom fighter" in the 1940s, known by Nehru as the "Little Nightingale" for her tender English songs. Or Firdaus Flowers Convent School, that is, "flowers of heaven." The "convent" part of the name puzzled me at first, as did the many names such as St. Maria's or St. John's.

It seemed odd, since these schools were clearly run by Muslims — indeed, for a while I fostered the illusion that these saints and nuns must be in the Islamic tradition too.

But no, the names were chosen because of the connotations to parents — the old Catholic and Anglican schools were still viewed as great schools in the city, so their religious names were borrowed to signify quality to the parents. But did they really deliver a quality education? I needed to find out.

One of the first schools Khurrum took me to was Peace High School, run by 27-year-old Mohammed Wajid. Like many I was to visit, the school was in a converted family home, fronting on Edi Bazaar, the main but narrow, bustling thoroughfare that stretched out behind the Charminar. A bold sign proclaimed the school's name.

Through a narrow metal gate, I entered a small courtyard, where Wajid had provided some simple slides and swings for the children to play on. By the far wall were hutches of pet rabbits for the children to look after. Wajid's office was to one side, the family's rooms on the other. We climbed a narrow, dark, dirty staircase to enter the classrooms.

They too were dark, with no doors, and noise from the streets easily penetrated the barred but unglazed windows. The children all seemed incredibly pleased to see their foreign visitor and stood to greet me warmly.

The walls were painted white but were discolored by pollution, heat, and the general wear-and-tear of children. From the open top floor of his building, Wajid pointed out the locations of five other private schools, all anxious to serve the same students in his neighborhood.

Wajid was quietly unassuming, but clearly caring and devoted to his children. He told me that his mother founded Peace High School in 1973 to provide "a peaceful oasis in the slums" for the children. Wajid, her youngest son, began teaching in the school in 1988, when he was himself a 10th-grade student in another private school nearby.

Having then received his bachelor's in commerce at a local university college and begun training as an accountant, his mother asked him to take over the school in 1998, when she felt she must retire from active service. She asked him to consider the "less blessed" people in the slums, and that his highest ambition should be to help them, as befitting his Muslim faith.

This seemed to have come as a blow to his ambitions. His elder brothers had all pursued careers, and several were now living overseas in Dubai, London and Paris, working in the jewelry business. But Wajid felt obliged to follow his mother's wishes and so began running the school. He was still a bachelor, he told me, because he wanted to build up his school. Only when his financial prospects were certain could he marry.

The school was called a high school, but like others bearing this name, it included kindergarten to 10th grade. Wajid had 285 children and 13 teachers when I first met him, and he also taught mathematics to the older children.

His fees ranged from 60 rupees to 100 rupees per month ($1.33 to $2.22 at the exchange rates then), depending on the children's grade, the lowest for kindergarten and rising as the children progressed through school.

These fees were affordable to parents, he told me, who were largely day laborers and rickshaw pullers, market traders and mechanics — earning perhaps a dollar a day. Parents, I was told, valued education highly and would scrimp and save to ensure that their children got the best education they could afford.

This is the second part in a three-part series from James Tooley's book, The Beautiful Tree.

After a stint teaching philosophy of education at the University of the Western Cape in South Africa, I returned to England to complete my doctorate and later became a professor of education.

Thanks to my experiences in sub-Saharan Africa and my modest but respect able academic reputation, I was offered a commission by the World Bank's International Finance Corporation to study private schools in a dozen developing countries.

The lure of faraway places was too enticing to resist, but I was troubled by the project itself. Although I was to study private schools in developing countries, those schools were serving the middle classes and the elite. Despite my lifelong desire to help the poor, I'd somehow wound up researching bastions of privilege.

The first leg of the trip began in New York in January 2000. As if to reinforce my misgivings that the project would do little for the poor, I was flown first class to London in the inordinate luxury of the Concorde.

Forty minutes into the flight, as we cruised at twice the speed of sound and two miles above conventional air traffic, caviar and champagne were served. The boxer Mike Tyson (sitting at the front with a towel over his head for much of the journey) and singer George Michael were on the same flight. I felt lost.

From London it was on to Delhi, Chennai and Mumbai. By day, I evaluated five-star private schools and colleges that were very definitely for the privileged. By night, I was put up in unbelievably salubrious and attentive five-star hotels.

But in the evenings, sifting and chaffing with street children outside these very same hotels, I wondered what effect any of my work could have on the poor, whose desperate needs I saw all around me. I didn't just want my work to be a defense of privilege. The middle-class Indians, I felt, were wealthy already.

To me it all seemed a bit of a con: Just because they were in a "poor" country, they were able to latch onto this international assistance even though they as individuals had no pressing need for it at all. I didn't like it, but as I returned to my room and lay on the 500-thread-count Egyptian-cotton sheets, my discomfort with the program was forced to compete with a mounting sense of self-criticism.

Then one day, everything changed. Arriving in Hyderabad to evaluate brand-new private colleges at the forefront of India's hi-tech revolution, I learned that January 26th was Republic Day, a national holiday.

Left with some free time, I decided to take an autorickshaw — the three-wheeled taxis ubiquitous in India — from my posh hotel in Banjara Hills to the Charminar, the triumphal arch built at the center of Muhammad Quli Shah's city in 1591.

My Rough Guide to India described it as Hyderabad's "must see" attraction, and also warned that it was situated in the teeming heart of the Old City slums. That appealed to me. I wanted to see the slums for myself.

As we traveled through the middle-class suburbs, I was struck by the ubiquity of private schools. Their signboards were on every street corner, some on fine specially constructed school buildings, but others grandly posted above shops and offices.

Of course, it was nothing more than I'd been led to expect from my meetings in India already — senior government officials had impressed me with their candor when they told me it was common knowledge that even the middle classes were all sending their children to private schools. They all did themselves. But it was still surprising to see how many there were.

We crossed the bridge over the stinking ditch that is the once-proud River Musi. Here were autorickshaws in abundance, cattle drawn carts meandering slowly with huge loads of hay, rickshaws agonizingly peddled by painfully thin men.

My driver let me out, and told me he'd wait for an hour, but then called me back in a bewildered tone as I headed not to the Charminar but into the back streets behind. No, no, I assured him, this is where I was going, into the slums of the Old City. For the stunning thing about the drive was that private schools had not thinned out as we went from one of the poshest parts of town to the poorest.

Every where among the little stores and workshops were little private schools! I could see handwritten signs pointing to them even here on the edge of the slums. I was amazed, but also confused: Why had no one I worked with in India told me about them?

The young men at the bean-and-vegetable counter hailed me and said there was definitely someone at the Royal Grammar School just nearby, and that it was a very good private school and I should visit.

They gave me directions, and I bade farewell. But I became muddled by the multiplicity of possible right turns down alleyways followed by sharp lefts, and so asked the way of a couple of fat old men sitting alongside a butcher shop.

Their shop was the dirtiest thing I had ever seen, with entrails and various bits and pieces of meat spread out on a mucky table over which literally thousands of flies swarmed. The stench was terrible. No one else seemed the least bit bothered by it. They immediately understood where I wanted to go and summoned a young boy who was headed in the opposite direction to take me there.

He agreed without demur, and we walked quickly, not talking at all as he spoke no English. In the next street, young boys played cricket with stones as wickets and a plastic ball. One of them called me over, to shake my hand.

Then we turned down another alleyway (with more boys playing cricket between makeshift houses outside of which men bathed and women did their laundry) and arrived at the Royal Grammar School, which proudly advertised, "English Medium, Recognized by the Gov't of AP." The owner, or "correspondent" as I soon came to realize he was called in Hyderabad, was in his tiny office. He enthusiastically welcomed me.

Through that chance meeting, I was introduced to the warm, kind and quietly charismatic Mr. Fazalur Rahman Khurrum and to a huge network of private schools in the slums and low-income areas of the Old City. The more time I spent with him, the more I realized that my expertise in private education might after all have something to say about my concern for the poor.

This is the first part in a three-part series from James Tooley's book, The Beautiful Tree.

But is it really so grim? After all, my research had shown that significant numbers of parents had tried free primary education in the public schools but had decided to move their children back to the private schools. Surely, they weren't doing something so counterintuitive if they thought that the private schools really were hopeless? My research assistant from Newcastle, James Stanfield, and I decided to interview groups of parents in four schools that had reported parents' returning their children, having moved them first to the government schools. These parents at least were clear that they had behaved rationally moving back to private school.

In each discussion, parents eagerly told us how the education being offered in the slum private schools was higher quality than in the neighboring government schools — however much the buildings' appearances might suggest the contrary. Not one parent expressed the opposite view.

One mother told us: "I have two children who joined this school since their nursery level and they are still in this school today. I see them doing good in subjects. Their time and subjects are well planned; they spend time well and are taught all subjects. . . . For those reasons this private school has impressed me a lot. I have saved money and cut many costs of my maintenance in order to bring children in this private school. Even though people might question why I send children in private school while there are free [government] schools, I am concerned with high-quality subject teaching offered in this private school."

We asked parents to elaborate on what particular features made the private schools preferable. One mother told us: "People thought education is free; it may be free but children do not learn. This makes the quality of education poor and that is why many parents have brought their children back here. People got their children out of the private schools to the public schools because of free education.... However, the children do not learn; all they do is play." Other parents agreed. A father told us: "While most of the teachers in government school are just resting and doing their own things, in private school our teachers are very much busy doing their best, because they know we pay them by ourselves. If they don't do well they can get the message from the headmistress, of which we cannot allow because we produce ourselves the money, we get it through our own sweat, we cannot allow to throw it away, because you can't even take the money from the trees, you have to work harder to find it so the teacher must also work harder on our children so that he earns his own living." A mother agreed: "You will never see [in a private school] a teacher working on something else like sewing a sweater while she is supposed to be in class."

But how did parents know the quality in the private schools was better than in government schools? We asked them for details. Parents, it turned out, actively compared children in the government schools with children in the private schools in their neighborhoods. One mother commented: "If you make a comparison between a child attending private school and one who is in government school by asking them some questions from their subjects you will find the one in private school is doing very good, while the one from government school is poor. Even when you compare their examinations scores you will be able to see private school pupil is performing well while that from government is poor."

Another gave a similar story: "I am living next to parents who send their children to a government school, and I always compare their children with mine who are attending private school. I always find private schools teach better than government schools from these comparisons. Government school children are always smart dressed in good uniforms but when you ask them some questions, you will realize that they know nothing. Those attending a private school are usually not smartly dressed, but they are good in school subjects."

Finally, parents were learning from the experience of those who had moved between the two systems. One mother told us that she had a sister who used to be a pupil in Olympic, the government school bordering Kibera: "She told me that there is a difference in the teaching. In Olympic, teachers do not concentrate on the pupils and so her performance started going down. She told me when she moved to the private school, the teacher teaches well; let's say it was an English class; the teacher teaches well and spends enough time with the children but when he was in the government school, the teacher does not spend much time with them; as long as she has seen she has taught something, she walks out of class."

But it wasn't just the perceived higher standards in the private schools that attracted parents. Parents also told us of the ways in which private school managers were sensitive to the plight of parents who could not afford to pay their fees on time, a point in favor of sending children to private schools. One mother remarked: "I am thankful to the head teacher [of the private school] very much for being very considerate to parents. You will never see a child not in school because of delay paying school fees. In those cases, the head teacher will write to the parent to ask them to meet with her to discuss when the fees can be paid." A father concurred, "Here, with the little money we earn we can pay bit by bit." And then there was the concern about the "hidden" costs of the supposedly free education in government schools. One of the main requirements was school uniforms — and it was argued by parents that, in their view, government schools were using the inability of poor parents to meet uniform requirements in full to turn them away. One mother pointed out, "In a private school, a child is allowed to attend school with only one uniform while in the government school he must have two uniforms before he is allowed to attend school." Another agreed: "Even if learning there [in the government schools] is free, school uniform is expensive and you have to buy full school uniform at once. I prefer to pay fees and buy the school uniform bit by bit."

One mother enumerated what she saw as the costs that she would incur if she sent her child to a government school: "I went there [to a government school] to see [and] they told me I had to have 11,000 Kenyan shillings [$143.23] cash in hand." Partly, she reported, this charge was for the building maintenance fund. She continued that once you'd "bought a school uniform," you still had to buy ''the school sweater, which costs 600 Kenyan shillings [$7.81], and you have to make sure you have two sweaters, which is 1,200 Kenyan shillings [$15.62]. Good leather shoes and socks two pairs. You have to have two of everything." In short, the mother argued about government schooling, "I don't think it's free." One father summed it all rather neatly as to why he still preferred private schooling for his daughter rather than what was provided free in the public school: "If you go to a market and are offered free fruit and vegetables, they will be rotten. If you want fresh fruit and vegetables, you have to pay for them."

The G-20 will be no better at reducing African poverty than the G-8. Aid disbursements and debt reductions over the past few decades saw incomes in African countries stagnate or even decline. Domestic reforms, including unilateral trade liberalization, are more likely to reduce African poverty in the long run.

Sub-Saharan Africa lags behind the rest of the world in most indicators of human well-being. It scored a mere 0.472 on the United Nations' 2006 Human Development Index, which is measured on a scale from 0 to 1, with higher values denoting higher standards of living. The United States, in contrast, scored 0.948.

For decades, many development experts have advocated more aid and debt relief as solutions to African poverty. In 2005, for example, Columbia University professor Jeffrey D. Sachs unveiled his plan to end extreme poverty around the world by 2025. Rich countries, he argued, should commit themselves to increasing annual aid to the world's poorest nations from $73 billion in 2006 to $135 billion in 2015.

But aid has failed to stimulate growth in Africa. Between 1975 and 2005, for example, per capita aid to Africa averaged $24.60 per year. By contrast, in China, it averaged $1.50 and in India $2. Over the same period, Chinese and Indian incomes, adjusted for inflation and purchasing-power parity, rose by 888 percent and 174 percent respectively. In Africa, incomes fell by 5 percent.

Moreover, aid has encouraged waste and corruption. Inadvertently, it also has financed "around 40 percent of Africa's military spending," according to Paul Collier of Oxford University.

Similarly, the effects of debt relief remain ambiguous. For example, Oxfam and Jubilee 2000, two British nongovernmental organizations, have drawn a link between debt relief and poverty reduction. A recently released study from the U.S. Government Accountability Office, however, found, "The impact of debt relief on countries' poverty-reducing spending is unknown."

In fact, far from putting African countries on a firmer financial footing, debt relief often has led to yet more wasteful borrowing, necessitating more debt relief. Thus, the World Bank and International Monetary Fund's Debt Relief Initiative for Heavily Indebted Poor Countries (HIPC) in 1996 was followed by the enhanced HIPC initiative in 1999 and then by creation of the Multilateral Debt Relief Initiative in 2005.

Trade liberalization has the greatest potential to help Africa emerge from poverty. According to a 2005 World Bank study, "moving to free global merchandise trade would boost real incomes in sub-Saharan Africa proportionately more than in other developing countries or in high-income countries. ... Farm employment and output, the real value of agricultural and food exports, the real returns to farm land and unskilled labor, and real net farm incomes would all rise in the region, thereby alleviating poverty." The primary reason Africa stands to benefit "proportionately more" is because Africa remains one of the world's most protectionist regions. For example, average applied tariff rates in Africa remain comparatively high.

Whereas such tariffs in high-income countries within the Organization for Economic Cooperation and Development fell from 9.5 percent to 2.9 percent between 1988 and 2007, in Africa they only fell from 26.6 percent to 13.1 percent between 1987 and 2007.

Unfortunately, the Doha, Qatar, round of negotiations on trade liberalization have ground to a halt, and the threat of protectionism looms large as the current global economic slowdown worsens. All major players deserve blame for the Doha fiasco. Global negotiations on trade liberalization happen along long-established mercantilist lines, where countries trade concessions on market access with one another.

Mercantilists see imports as a threat. In reality, imports increase competition and specialization, and increased specialization leads to increased productivity. In a competitive market, reduction of the cost of production then leads to cheaper goods and services, which in turn increases the real standard of living. That is a major reason why people living in more open economies tend to be richer. African states should liberalize irrespective of what the rest of the world does.

For all their good intentions, summits of rich nations, be they G-8 or G-20, give rise to unrealistic expectations. The heavy emphasis on aid and debt relief make foreign actions appear to be chiefly responsible for poverty alleviation in Africa. In fact, the main obstacles to economic growth in Africa rest with Africa's policies and institutions, such as onerous business regulations and weak protection of property rights.

Africa remains the poorest and least economically free region on Earth. The G-20 should do all it can to help Africa integrate with the rest of the world. It should eliminate remaining restrictions on African exports and end its farm subsidies. Africans, however, will have to make most of the changes needed to tackle African poverty.

Trade liberalization has the greatest potential to help Africa emerge from poverty. Yet that is where the least amount of progress has been made. Negotiations on trade liberalization have ground to a halt, and the threat of protectionism looms large as the current global economic slowdown worsens.

The Gleneagles Summit, for all its good intentions, gave rise to unrealistic expectations. The heavy emphasis on aid and debt relief made Western actions appear to be chiefly responsible for poverty alleviation in Africa. In reality, the main obstacles to economic growth in Africa rest with Africa's policies and institutions, such as onerous business regulations and weak protection of property rights.

Africa remains the poorest and least economically free region on earth. The West should do all it can to help Africa integrate with the rest of the world. It should eliminate remaining restrictions on African exports and end Western farm subsidies. Africans, however, will have to make most of the changes needed to tackle African poverty.

China had always been a UN Security Council member, and since 1990 was acknowledged as an economic powerhouse. But at the time the world bracketed India with Pakistan, because of their long history of aid and antagonism. In the 1990s, India and Pakistan required massive assistance from the IMF and World Bank.

That finally changed after the information technology revolution. In 2003-08 the Indian economy averaged almost 9% growth, second only to China's. India's economic feats catalysed former US president Bush's decision to break existing nuclear rules and forge a nuclear deal with India. Indians hailed this as the definitive de-hyphenation of India from Pakistan, which was denied a similar deal. Instead, Chindia denoted a new hyphenation with China.

This was always a stretch. The Indian economy grew fast in the last five years, but remained far behind China's. India's big population makes its GDP look big, but also means it has the largest number of poor people, infant deaths, maternal deaths in childbirth, and highest child malnutrition in the world. India cannot end Maoist violence in 160 of its 600 districts or insurrections in Kashmir and the North-East. The Indian state looks weak and incompetent even as the Chinese state looks strong and competent.

The gap between China and India has become glaring in the current global financial crisis. China has become a major global player, second only to the US, while India is barely on the radar screen. Many blame the US for financial excesses that triggered the meltdown. But the US says the problem originated in the massive trade surpluses of China, which accumulated foreign exchange reserves of $2 trillion, eight times as big as India's.

The US became dependent on China for selling its treasury bonds. China's surplus dollar holdings were dumped back on the US market. This, says the US, was massive enough to depress US interest rates, encouraging an overborrowing and overconsumption spree.

Maybe this analysis is exaggerated. But unquestionably the macroeconomic imbalances causing the global meltdown arose in the US and China. Although the G-20 group of countries met to work out solutions, many commentators (including Martin Wolf of the Financial Times) spoke of the emergence of the US and China as the G-2, the only group that really mattered. Historian Niall Ferguson coined the term Chimerica to represent the great new geopolitical reality — that the 21st century will be dominated by China and America.

India scarcely matters. It is still a country that instinctively seeks aid and foreign concessions. On the international scene, it is a taker, not a giver. China, however is now a giver. In the proposed expansion of the IMF's lending, China has offered to supply $40 billion, against $100 billion from Japan and possibly the US. India does not figure in this giver's list — it would rather be a receiver.

Even as China gets hyphenated with the US, India is getting re-hyphenated with Pakistan via Islamic militancy. India looked clueless in dealing with a series of bomb explosions in 2008. Then 26/11 exposed its vulnerability to a suicide attack. The Indian media and political class sought to blame everything on Pakistan. Yet, India could not find and arrest all the local conspirators.

Pakistan is being eaten alive by the Islamic militants it once incubated. Islamists have ousted the state in the Federally Administered Tribal Areas and parts of the North West Frontier Province. The chief minister of NWFP has fled to London. Terrorists struck at the Sri Lanka cricket team in Lahore, leading other cricketing countries to cancel future engagements in Pakistan.

Indians smiled at Pakistan's discomfiture. But then came the IPL cricket league fiasco. The Indian government declared it could not guarantee the safety of foreign cricketers if the league matches were held at election time. So, the IPL shifted to South Africa. That country is reputed to be the crime capital of the world. It is also having an election, but, unlike India, can handle that and the IPL simultaneously.

So, India is getting re-hyphenated with Pakistan as a place where international cricket faces grave security risks. South Africa, whom nobody has ever hyphenated with China, is streets ahead of India in this respect. So, let's say farewell to the illusion of Chindia. The reality is Chimerica.

The results of the market reforms are notable: between 1991 and 2007, the percentage of households below the poverty line fell from 60 percent to 34.6 percent. However, official figures point to mediocre average annual per capita growth during the period 1992–2007—only 1.9 percent— which is very similar to Latin America's average of 1.6 percent in the same period. But official figures grossly underestimate the performance of the economy because of flawed measurement. In fact, the economy is probably more than 30 percent larger than indicated by the official data. Accordingly, the average per capita growth rate since 1992 has been approximately 5.2 percent per year.

El Salvador still has much to do on its policy agenda. In particular, high crime rates constitute a major hindrance to further growth. This lack of security represents the greatest threat to sustained growth and liberal policies.

Nonetheless, the country is showing the rest of the region how economic freedom can pave the way for development and how globalization offers great opportunities for developing countries that are willing to implement a coherent set of mutually supportive market reforms.

That's an objective, market-based forecast, but I think it's wrong. Yes, the deleveraging of the economy has set loose deflationary forces. However, the Fed has put the money pump into overdrive, and it is hard to see any way in which deflation could be a headline-grabber for many more months, let alone five years. U.S. Treasury-indexed securities remain a buy.

Deflation isn't on everyone's mind, however. Zimbabwe's suffering citizens are caught up in the 21st century's first hyperinflation. In March 2007 Zimbabwe's inflation rate passed 50% a month, a good threshold for defining "hyperinflation" and equal to 12,875% a year. Since then, it's gotten much worse.

The cause of the hyperinflation is a government that forces the Reserve Bank of Zimbabwe to print money. The government finances its spending by issuing debt that the RBZ must purchase with new Zimbabwe dollars. The bank also produces jobs, at the expense of every Zimbabwean who uses money. Between 2001 and 2007 its staff grew by 120%, from 618 to 1,360 employees, the largest increase in any central bank in the world. Still, the bank doesn't produce accurate, timely data.

The last official inflation statistics, for July, are hopelessly outdated. Money-supply data are even worse; the most recent figures are for January 2008—ancient history.

In the absence of good official numbers, I've developed my own hyperinflation index for Zimbabwe. I derive it from market based price data starting in January 2007. The index tells us that Zimbabwe's inflation rate recently peaked at 80 billion percent a month. That means around 6.5 quindecillion novemdecillion percent a year—or 65 followed by 107 zeros. To get a handle on it, realize that it's equivalent to inflation of 98% a day. Prices double every 24.7 hours. Shops have simply stopped accepting Zimbabwean dollars.

Where does this place Zimbabwe in the hyperinflation record books? Episodes of true hyperinflation are rare. They occur only when the money supply has been fed by an unconstrained printing press. No hyperinflation has ever been recorded when money was based on or convertible into a commodity. The first hyperinflation happened during the French Revolution. There were 28 other hyperinflations before Zimbabwe's, all in the 20th century.

The U.S. has had none of them. It came closest during the Revolutionary War, when it churned out Continental currency to pay the bills. The peak monthly inflation rate then was 47.4%, in November 1779. During the Civil War greenbacks were printed to finance the fighting, and inflation peaked in March 1864 at a monthly rate of 40%.

The accompanying table shows the six all time worst hyperinflations. The famous German episode was only the fourth most virulent. It wasn't even close to the Yugoslav experience under Slobodan Milosevic. Mugabe's mess now tops Yugoslavia's, and if it continues to grow at its current rate, it will overtake Hungary's world record in little more than a month.

Many think this will be the blow that finally topples Mugabe's 28-year dictatorship. Don't count on it. Yugoslavia's hyperinflation peaked in January 1994, but Yugoslavs suffered for nearly seven more years of high inflation until Milosevic reluctantly conceded defeat after the September 2000 elections. Bet on seeing Mugabe stick around for a while yet, unless old age (he's 84) or assassination gets him. Also bet on a return to at least mild inflation for the U.S.

Thirty years ago, the average person in China lived on less than $2 a day. Not so much wow. What happened? How can they afford this kind of extravaganza? By opening their economy and trading with us, is largely how.

Unlike in the 100-meter backstroke, in trade everybody can win. Thanks to China's greater global integration, hundreds of millions have been lifted out of grinding poverty. But due to trade with China, America's poor are doing better, too.

A recent working paper by University of Chicago economists Christian Broda and John Romalis shows that trade with China -- as brought to you by beloved institutions such as Wal-Mart -- has done more for poor families than rich families. Trade even helps to hold real income inequality in check.

How rich you are in real terms depends both on how much money you have and the prices of the things you tend to buy. Poorer families spend a bigger share of their budget on goods whose prices are affected by international trade -- like cotton shirts and canned fish. Wealthier families spend a bigger share on services that don't face the same kind of global price competition -- like yard work and psychoanalysis.

This means the rich have faced a higher effective rate of inflation than the poor have -- so much so that the gap in real incomes has stayed put, even as the nominal gap has gone through the roof. According to Broda and Romalis, prices of consumer goods heavily used by poorer Americans have fallen most rapidly in sectors where the Chinese have become most involved.

Sure, zero-sum nationalistic athletic spectacles are great. But a positive-sum system that helps most everyone is even better. So go ahead and root for America. But don't forget that when it comes to improving the welfare of the American poor and reducing inequality, Chinese trade gets the gold.

Will Wilkinson explains why trade with China has helped poor Americans on Marketplace (August 13, 2008) [MP3]

African development is high on the list of topics for the leaders of the Group of 8 countries meeting in Hokkaido, Japan. The host country has already pledged to double its aid to Africa from the current $6.9 billion over the next five years. President Bush, arriving in Japan on Sunday, made it clear he planned to push other G-8 nations to meet their 2005 promises to increase African aid.

Representatives of rich countries seem united in their belief that Africa would benefit from more international assistance and oblivious to the harm that aid has already inadvertently caused to African populations by propping up Africa's most dysfunctional states.

Instead of serving their people, most African states function as vehicles for the self-enrichment of political elites that have inherited none of the public-spiritedness of their colonial predecessors but all of the latter's contempt for the African masses. The remedy, therefore, might be to let Africa's failing neocolonial states disintegrate totally -- so that organic African political structures can emerge.

One of the key innovations that made the birth of the modern state possible was the emergence of a fundamental distinction between the government and the state. Over time, "states" came to mean the permanent territorial institutions that belong to all citizens, while "governments" denoted groups of people with temporary control of the machinery of the state. That crucial distinction nourished the ethos of public service that makes the embezzlement of public funds and all other abuses of state resources not only illegal but shameful.

The historical process whereby individual loyalties to families and clans lost ground to loyalties to states spanned many centuries in the West. Up to colonialism and after, original family and broader in-group loyalties remained largely intact in Africa.

When the colonial powers imposed the machinery of the modern state on Africa, complete with tax collectors, customs officers, police officers and soldiers, they did not instill an ethos of public service in local populations. After all, they meant to govern with their own officials. When Congo gained independence from Belgium in 1960, for example, it had only three Africans in the entire civil service and only 30 university graduates.

Is it surprising that when the colonial administrators abruptly left, almost all of their African successors proceeded to use their official positions to benefit themselves, their families and tribes? In fact, many Africans believe that it is immoral not to help family and clan if one can do so.

Corruption in Africa is almost a matter of common sense: As long as everyone else is abusing public office to benefit their clans and families, it remains self-defeating not to do so as well. A teacher in, say, Kenya may draw his government salary but seldom visit the classroom. Instead, he'll hold a second job -- driving a taxicab, maybe. In doing so, he may have learned from city government, in which public servants are nominally responsible for the delivery of public services but seldom do anything at all.

Most African states are therefore predators on the people they are supposed to serve and protect. Police officers extort bribes instead of protecting life and property; soldiers rape and rob the people they are supposed to protect from foreign attack; teachers collect salaries but do not teach; customs officers extract bribes instead of collecting duties; and for many African diplomats, foreign tours amount to prolonged shopping vacations.

From a historical perspective, then, the greatest harm inflicted by colonialism was to interrupt the organic evolution of indigenous African governments and states. That harm is being perpetuated by Western governments and nongovernmental organizations that want to help African populations.

On a micro level, Africa is littered with failed projects financed by foreign aid, including a steel plant in Ajaokuta, Nigeria, that does not produce steel and agricultural projects in Mali that decreased rather than increased the production of grain. Millions of Africans have been uprooted, with their livelihoods destroyed, by the pursuit of harebrained agricultural and irrigation schemes dreamed up by ignorant and arrogant, if well-meaning, foreigners.

On a macro level, aid has kept predatory African states alive by enriching corrupt political leaders and paying the salaries of their bureaucrats, soldiers and police. Uganda, by no means an outlier when it comes to "budget support," receives 50% of its annual government revenue from foreign aid. Economist Paul Collier of Oxford University showed that aid pays for up to 40% of African weapons purchases. On a continent where interstate conflicts are mercifully rare, those weapons are often used to crush domestic opposition -- as has been happening in Zimbabwe.

Pulling aid away from dysfunctional African states seems like a shocking move. Allowing failing states to collapse, it will be said, could lead to anarchy and turn Africa into a haven for terrorists. In the aftermath of the U.S. invasion of Iraq, however, many now believe that terrorists are best confronted by security measures, including intelligence gathering and surgical strikes against individual terrorist groups, rather than by social engineering on the scale of entire countries.

Aid is social engineering par excellence. But after 50 years and hundreds of billions of dollars, it should be clear that aid has failed to make the modern state viable in most of Africa. Instead, it has prevented the emergence and growth of authentic African polities rooted in African traditions. Aid should be ended along with most of the well-meaning but mostly harmful Western involvement in African affairs.

The well-meaning G-8 leaders can find an outlet for good works at home -- African countries are too poor to afford their charity.

Zimbabwe's hyperinflation is destroying the economy, pushing more of its inhabitants into poverty, and forcing millions of Zimbabweans to emigrate. Between 1997 and 2007, cumulative inflation was nearly 3.8 billion percent, while living standards fell by 38 percent.

The source of Zimbabwe's hyperinflation is the Reserve Bank of Zimbabwe's money machine. The government spends, and the RBZ finances the spending by printing money. The RBZ has no ability in practice to resist the government's demands for cash. Accordingly, the RBZ cannot hope to regain credibility anytime soon. To stop hyperinflation, Zimbabwe needs to immediately adopt a different monetary system.

Any one of three options can rapidly slash the inflation rate and restore stability and growth to the Zimbabwean economy. First is "dollarization." This option would replace the discredited Zimbabwe dollar with a foreign currency, such as the U.S. dollar or the South African rand. Second is a currency board. Under that system, the Zimbabwe dollar would be credible because it would be fully backed by a foreign reserve currency and would be freely convertible into the reserve currency at a fixed rate on demand. Third is free banking. This option would allow commercial banks to issue their own private notes and other liabilities with minimum government regulation.

Central banking is the only monetary system that has ever created hyperinflation and instability in Zimbabwe. Prior to central banking, Zimbabwe had a rich monetary experience in which a free banking system and a currency board system performed well. It is time for Zimbabwe to adopt one of these proven monetary systems and discard its failed experiment with central banking.

The bleak news out of Zimbabwe is getting worse every day. The government has unleashed the army and police against the opposition Movement for Democratic Change. Scores of MDC activists have been killed, tortured, or assaulted. The government's control of the press and ban on public gatherings made it impossible for the MDC's candidate, Morgan Tsvangirai, to win the second round of the presidential election. As a consequence, he withdrew from the contest yesterday.

On the economic front, the situation is dire. The economic crisis that was precipitated by Mr. Mugabe's seizure of commercial farms in 2000 has put four out of five Zimbabweans out of work. The government's tax revenue collapsed as did most of the public services. The Reserve Bank of Zimbabwe was ordered to print money to make up for the budget shortfall, leading to the first hyperinflation of the 21st century.

By the end of June, the annualized inflation rate will reach 3,140,335%. That will bring the overall inflation for the entire duration of the Zimbabwean hyperinflation to a staggering 366,386,083,683%. That is roughly 36 times the overall inflation experienced by the Weimar Republic in the early 1920s. One American dollar, which bought 50 Zimbabwean cents when Mr. Mugabe assumed power in 1980, sold for 25 billion Zimbabwean dollars on June 9.

Most Zimbabweans, especially those living in rural areas, survive on remittances from their relatives abroad and food aid distributed by NGOs and Western government agencies. But aid agencies worry that with the coming of winter hunger will spread. The ruling regime, however, uses food shortages as a political weapon against the supporters of the opposition — it hands out food to people with the ZANU-PF membership card only.

In the early 2000s, Western nations imposed targeted sanctions against Zimbabwe's top government officials. The time is ripe to ban the army and police from acquiring the weapons they need to put down internal dissent. An arms embargo has not been contemplated seriously before, because of doubts over its successful implementation.

A successful arms embargo must have the support of Southern African states in general and South Africa in particular. The cooperation of Southern African states now looks more likely. Regional leaders, like those of Angola and Zambia, who have been largely silent about the crisis in Zimbabwe previously, have been increasingly vocal in their criticism of Mr. Mugabe.

They and other African leaders may be open to arms embargo — especially if South Africa changes its policy of supporting Mr. Mugabe. As was the case in the 1970s, South Africa holds the key to the resolution of the Zimbabwean crisis. Back then, the apartheid government judged that the costs of helping the white government in Rhodesia were too great. When Pretoria discontinued its active support of the regime in Salisbury, Ian Smith's government collapsed and was replaced by Bishop Muzorewa.

Similarly, the goal today should be to make Mr. Pretoria's support for Mr. Mugabe too costly for South Africa. Thabo Mbeki's government, currently on the U.N. Security Council, should be backed into a corner and forced to vote on the issue of an arms embargo forthwith.

Moreover, South Africans should be informed that their country's ambition of becoming a member of the U.N. Security Council will remain a pipe dream so long as they go on backing dictators from Burma, Cuba, and Zimbabwe. Lastly, South Africans should be told that a continued controversy over Zimbabwe threatens the success of the FIFA World Cup that South Africa is to host in 2010.

The presidential election was never likely to produce a resolution to the crisis in Zimbabwe. Mr. Mugabe, after all, made it clear that he will not leave power so long as he lives. As such, an increased international pressure on the Zimbabwean government has never been as needed or as likely to succeed as it is today.

Much of the global media attributed the South African clashes to the deplorable situation in Zimbabwe. The economic collapse of that country resulted in a flight of some 3 million of its most enterprising people to South Africa. Zimbabwe's implosion is in part a result of the massive failure of Mbeki's "quiet diplomacy." Mbeki claims there is "no crisis" in Zimbabwe, a statement for which he has been roundly criticized, and unfortunately, his notion of racial solidarity prevents him from speaking out against the rule of Robert Mugabe.

The situation in Zimbabwe is deteriorating even further thanks to its ZANU-PF government, which is brutalizing known supporters of the MDC opposition. Mugabe hopes that by intimidating the population, he may yet "win" the second round of the presidential election and cling to power.

Some instigators of violence against African immigrants claim that the latter steal jobs that should go to native South Africans. That is a debatable proposition. Over the last decade and half, the ANC government has focused primarily on the redistribution of the existing economic pie, rather than increasing it in size. As the country's population grew to some 50 million, the unemployment rate grew to maybe as much as 40 percent.

Absolute poverty rose as well. According to the South African Institute of Race Relations, "The number of people living on less than $1 per day (the measure of extreme poverty used by the World Bank) in South Africa, increased from 1.89 million in 1996 to 4.2 million in 2005. As a proportion of the population, this represents an increase from 4.5 percent to 8.8 percent of the population."

Lamentably, much of the labor force is unemployable due to deteriorating educational standards, an inappropriately strict labor code, and a misguidedly high minimum wage. The recent electricity shortages that cut the GDP growth rate to its lowest in six years have not helped. All in all, many foreigners have found employment because of their superior skills and readiness to work for lower wages, not because they "stole" jobs from qualified and willing locals.

South Africa's high unemployment rate and the concomitant desperation of millions of fellow citizens is a self-inflicted wound. Similarly, the tensions between native South Africans and illegal immigrants in the townships must be blamed partly on the failure of Mbeki's policy toward Zimbabwe.

But Mbeki's failures could yet result in consequences reaching far beyond the despicable attacks on South Africa's hapless immigrants. Newspaper reports suggest that some of the mob violence was directed against certain black South Africans, especially Shangaans and Venda. Both ethnic groups have traditionally been associated with higher levels of economic success than the rest of South Africa's black population.

History is full of examples of ethnic violence against economically successful groups. The Chinese in Malaysia and the Indians in East Africa are just two of many minorities that suffered repression or worse at the hands of their less wealthy but numerically superior neighbors.

It is, of course, naive to expect that unscrupulous businessmen in the townships will heed calls for decency and refrain from channeling the xenophobia of some of their countrymen into accomplishing their objective of driving out their economic competitors. The sad reality is that as long as South African economic growth remains relatively low, tensions in the country will persist and may even grow.

President Mbeki, who presided over South Africa's slide into a moral and economic morass, is a lame duck. He was replaced by Jacob Zuma as the ANC leader during the ANC's conference at Polokwane a few months ago. Having reduced South Africa's Parliament to a rubber stamp institution, Mbeki now has to watch as Zuma and his followers run the country from the ANC headquarters in the Lithuli House. Mbeki should heed the growing calls for his resignation and bow out. He has no future in politics.

The United Nations Food and Agriculture Organization estimates that world production of cereals was a record 2,108 million tons in 2007, and will hit a new record of 2,164 million tons in 2008. Rice production will rise by 7.3 million tons and wheat by 41 million tons. World cereal consumption has been growing slightly faster (3%) than production (2%) for a decade, so global stocks have fallen to 405 million tons. But this is not a disaster scenario, and it hardly explains skyrocketing prices.

In the U.S., one-fifth of the corn crop has been diverted to ethanol, and in Europe, some vegetable oil has been diverted to biodiesel. These ill-conceived policies have induced farmers to switch significant acreage from wheat to corn, soybeans and rapeseed, but world wheat output has nevertheless risen from 596.5 million tons in 2006 to an estimated 647.3 million tons in 2008. Corn-based ethanol cannot explain the runaway increase in the price of rice, which grows in very different conditions.

Biofuels caused an initial spike in prices, which then led to panic, export protectionism and speculation in commodities futures -- and these latter factors have increased prices much further. To protect domestic consumers from rising world prices, dozens of governments have curbed the export of rice and wheat -- principally Argentina, Brazil, Russia, China, India, Ukraine, Vietnam, Cambodia, Pakistan, Egypt, and Indonesia.

Export controls have reduced the amount of rice and wheat available for world trade. The FAO estimates that world trade in rice will fall from 34.7 million tons in 2007 to 28.7 million tons in 2008, and trade in wheat from 113 million tons to 106 million tons. Actual trade may fall even more, as more and more countries impose export controls. Absent these limitations, it would be inconceivable for trade in grain to contract so sharply after record world harvests.

Countries limiting exports hope to reduce hoarding, which could send prices even higher. India has set limits on the stocks that each trader can hold.

But countries imposing export controls, have, in effect, become hoarders themselves, creating an artificial scarcity in the world market, and an artificially high world price. Farmers know what their crops could fetch on the world market, so they demand higher prices at home. And around and around we go.

This has eerie similarities to the Great Depression, when many countries resorted to import protection to protect jobs at home, and simultaneously devalued their currencies to try and push up exports. Yet the Great Depression got worse, thanks to what John Maynard Keynes called the fallacy of composition.

If one country alone resorts to import protection and devaluation, it can temporarily increase jobs. But at a global level, one country's exports are another's imports. If all countries reduce their imports, they unwittingly end up reducing their exports, too. And job losses get worse.

Today, each country wants to curb agricultural exports and stimulate imports to reduce prices. But if every country limits exports, the result is a decline in world imports, so prices rise instead of falling.

Solving the problem may require coordinated international action. After the Great Depression, the world community created the Global Agreement on Tariffs and Trade -- which later morphed into the World Trade Organization -- to negotiate simultaneous cuts in import barriers by major trading powers. This coordinated approach thwarted free riders, and gradually gained acceptance by all.

WTO rules permit food export limitations. In the Doha Round of trade negotiations, WTO has sought to reduce agricultural subsidies causing excess production. It never anticipated that export controls might create scarcities.

The new developments may improve the prospects of the Doha Round. But quick action is needed to tackle rising hunger. The WTO should convene an emergency meeting for countries to jointly reduce export controls. Even modest concessions can be in exporters' self-interest, as they would cause world prices to fall sharply, and thus ease domestic price pressures.

The terrible irony is that world grain production will be at a record high in 2008. People are hungry, and it's not because there isn't enough food to go around.

Back in the early 1950's, Burma was the wealthiest nation in Southeast Asia. But today, after a half-century of socialism and authoritarian rule, it's one of the poorest countries in the world.

When a regime mows down a gathering of political protestors, we sit up and take notice. But when it actively impoverishes its people with economic policies long ago proven harmful, we're too willing to see this not as a choice to which men may be held accountable, but as a natural fact, under no one's control.

So it wasn't fated that tens of thousands of Burmese would have so little shelter from the storm. They could have been richer, safer.

In 1995, an earthquake rocked wealthy Kobe, Japan, ranking as the most expensive natural disaster in history. Yet only 6,400 lives were lost.

Compare the Sizchuan earthquake. Catastrophe modeling firm AIR estimates total damages will exceed $20 billion, only about one-tenth the economic loss of the Kobe earthquake. But the human toll is over five times greater.

China, thankfully, is on its way up the growth path to higher ground. Burma? Well, it's a tragic illustration that natural disasters are all disaster, and only part natural.

Economic growth creates roofs that don't blow away, walls that don't crumble, hospitals to tend the sick, and generators to keep to the ventilators on. The self-dealing thugs that botch the institutions of growth don't just keep their people poor. They keep them vulnerable, exposed.

Will Wilkinson discusses man-made poverty's role in exacerbating natural disasters (May 21, 2008) [MP3]

The cost of a meal is 40 per cent higher than one year ago in many poor countries. When food purchases can represent 75 per cent of a household's budget, those price increases become a nightmare.

This could mean the return of millions under the poverty threshold, wiping out several years' development efforts.

What are the reasons for this situation? Given that the economy is made of complex interconnections, we shall seek the real reasons for the crisis in more depth than is usually done.

The crisis can be interpreted as the unintended consequence — the perverse effect — of several policies which prevent many decision-makers from acting responsibly.

First though, let us recall that each year millions can pull themselves out of poverty — thanks to the integration of their economies into globalisation. This is clearly good news but has induced an increasing demand for food, and especially for meat (and cattle needs cereal).

Now we need to understand why food supply does not follow demand. While we do need to take into account climate hazards (like drought in Australia), we mainly need to focus on the direct or indirect political elements that prevent markets from adjusting quantities and maintaining relatively stable prices where possible.

Subsidies in rich countries are sometimes rightly pointed at. They generate two types of effects. First, subsidies divert producers toward subsidised crops.

And when governments subsidise crops for biofuel production, it means less food crops and higher cereal prices.

The second effect is that subsidies combined with tariffs in rich countries close the door to poor countries, preventing them from competing on the markets of rich countries and developing their competitive advantage.

However, it should also be remembered that protectionism amongst African countries especially, is stifling their economies by reducing the possibilities of having productivity-enhancing regional markets. Protectionist policies are thus partly responsible here.

Institutional arrangements for agricultural land property are fundamental to the understanding of food problems today. In Africa, the main problem of agriculture is that poorly-defined property rights over the land are disincentives for investment.

The major challenge of development policy is to foster agricultural expansion in some countries by allowing institutional arrangements — integrated to local traditions — enabling the responsibility of "farming entrepreneurs." Only with such incentives will the supply of agricultural production really emerge in some countries.

Interventionist policies from the World Bank and the IMF brought nearly no positive results compared to the massive amounts swallowed up in the aid process. However, they made several poor economies "sustainably dependent."

Huge debts were created from counterproductive "Big push" utopian programmes, logically followed by structural adjustment programmes. Hence the obligation in aided countries to sometimes develop non-food export crops such as cotton in order to reimburse loans. These aid policies thus disturbed the food security of some poor countries.

But they also enriched and maintained irresponsible or corrupted government cliques. International agencies are still lending them money whilst they are oppressing their peoples and preventing them from enjoying economic freedom.

The recent financial crisis was somewhat deflected on the food market, as rice and corn are now investment shelters for speculators. We therefore must seek an indirect explanation of the food crisis behind the financial crisis. What we find are American banks granting too many risky loans. But few people realise that this is strongly linked to the Federal Reserve policy.

First, the Fed kept interest rates low for far too long in the early 2000's, artificially feeding the housing boom. Second, what is often called the "Greenspan doctrine" produced at least one major perverse effect: that the Fed in a way "insures" losers (banks) who deliberately take risks.

This policy of wrong incentives led to banks acting irresponsibly and eventually degenerated into a global crisis. There is a striking parallel here with the behaviour of the IMF and World Bank: top organisations render other organisations under their control simply irresponsible. However, States and markets work efficiently only if the responsibility of decision-makers is sanctioned.

Finally, the oil price surge has an impact on transportation costs, and thus on the final price of food. The increase in oil prices is explained by an increase in demand at the world level with a supply which is essentially a rigid cartel that has not invested to adapt its production.

Besides, oil also represents an investment shelter for speculators in this period of crisis: the price increase can thus partially and indirectly be attributed to the people responsible for the financial crisis.

Emergency aid is necessary to relieve people from disaster. However, after treating the symptom, we will have to deal with the deep structural causes of these disequilibria.

Yet, "responsible" representatives of various organisations and States do not seem to hold a responsible discourse.

We heard references to the New Deal, to lasting supplementary aid by the president of the World Bank, to new market distortions, and even to lasting European protectionism by the French Agriculture Minister.

These are bad omens. This crisis should be an opportunity to promote the idea of responsibility in the system and to rethink development policies in the widest sense. This means changing attitudes within international aid agencies, governments in poor countries, and, of course, in wealthy countries as well.

Samson was a member of an opposition student movement — a crime in Ethiopia under the rule of a Marxist military dictator named Mengistu Haile Mariam. Samson was only one of many thousands of his countrymen who lost their lives during the Red Terror, which lasted from 1974 to 1991. Yet most people have forgotten that Mengistu is still living in exile in Zimbabwe. As the situation in Zimbabwe deteriorates, we should remember that Robert Mugabe is not the only dictator whose future hangs in the balance. If Mugabe falls, Mengistu should also face justice.

Mengistu Haile Mariam was born in 1937. He joined the army at an early age and by 1974, when the military overthrew Emperor Haile Selassie, was a major. He thus became a member of the military junta known as the Derg. Mengistu soon distinguished himself by both his radicalism and ruthlessness. Having executed Gen. Teferi Benti, the Derg's chairman, Mengistu succeeded him in 1977.

The next 14 years in Ethiopia were marked by the typical Marxist trifecta: murder, economic collapse and famine. First, Mengistu turned on his opponents from the Ethiopian People's Revolutionary Party and All-Ethiopia Socialist Movement. In the violence that followed, tens of thousands of people lost their lives. Some of them were mere children. According to a report issued by the Swedish Save the Children Fund in May 1977, for example, "1,000 children have been killed, and their bodies are left in the streets and are being eaten by wild hyenas...You can see the heaped-up bodies of murdered children, most of them aged 11 to 13, lying in the gutter, as you drive out of Addis Ababa."

Second, Mengistu embraced the disastrous economics of central planning. All private businesses, such as banks and factories, were nationalized and put under the control of Soviet-style bureaucracies. The Derg shut down Ethiopia's schools and universities for two years, forcing the students to move to the countryside to implement land nationalization. Land nationalization exacerbated the effects of the drought, severely reducing the output of Ethiopian farmers. By 1984, Ethiopia was suffering a full-blown famine.

Mengistu initially denied that the famine existed. Instead, he devoted much of the state's resources to celebrating the 10th anniversary of the Derg's rise to power. Soon, however, Mengistu realized that he could use the world's sympathy to his advantage. As images of Ethiopian babies with kwashiorkor bellies beamed into Western living rooms, foreign aid and food poured into the country. Private charities raised money, too, as did the first Live Aid concert organized by Bob Geldof.

Unbeknownst to many people, the Derg channeled some of the aid to feed the military machine in its war against two rebel movements: the Ethiopian Peoples' Revolutionary Democratic Front and Eritrean People's Liberation Front. By 1991, however, the rebels were able to drive Mengistu into exile.

The trial of Mengistu and other Derg members that took place in Ethiopia ended in 2006. After 12 years, Mengistu was found guilty of genocide. In early 2007, he was sentenced, in absentia, to life in prison. The trial provided an opportunity for some of the victims of the Derg to tell their story. Ms. Teklu was one of them. "These people are luckier than our sons and daughters," she noted about the convicted members of the Derg. "They are getting a fair trial."

Should much-needed political change come to Zimbabwe, Mengistu will be, once again, stateless. Already the Ethiopian diaspora is filled with rumors of his possible future flight to North Korea. The victims of the Derg deserve that Mengistu Haile Mariam never makes it there.

The United Nations Food and Agriculture Organization estimates that world production of cereals was a record 2,108 million tons in 2007, and will hit a new record of 2,164 million tons in 2008. Rice production will rise by 7.3 million tons and wheat by 41 million tons. World cereal consumption has been growing slightly faster (3%) than production (2%) for a decade, so global stocks have fallen to 405 million tons. But this is not a disaster scenario, and it hardly explains skyrocketing prices.

In the U.S., one-fifth of the corn crop has been diverted to ethanol, and in Europe, some vegetable oil has been diverted to biodiesel. These ill-conceived policies have induced farmers to switch significant acreage from wheat to corn, soybeans and rapeseed, but world wheat output has nevertheless risen from 596.5 million tons in 2006 to an estimated 647.3 million tons in 2008. Corn-based ethanol cannot explain the runaway increase in the price of rice, which grows in very different conditions.

Biofuels caused an initial spike in prices, which then led to panic, export protectionism and speculation in commodities futures -- and these latter factors have increased prices much further. To protect domestic consumers from rising world prices, dozens of governments have curbed the export of rice and wheat -- principally Argentina, Brazil, Russia, China, India, Ukraine, Vietnam, Cambodia, Pakistan, Egypt, and Indonesia.

Export controls have reduced the amount of rice and wheat available for world trade. The FAO estimates that world trade in rice will fall from 34.7 million tons in 2007 to 28.7 million tons in 2008, and trade in wheat from 113 million tons to 106 million tons. Actual trade may fall even more, as more and more countries impose export controls. Absent these limitations, it would be inconceivable for trade in grain to contract so sharply after record world harvests.

Countries limiting exports hope to reduce hoarding, which could send prices even higher. India has set limits on the stocks that each trader can hold.

But countries imposing export controls, have, in effect, become hoarders themselves, creating an artificial scarcity in the world market, and an artificially high world price. Farmers know what their crops could fetch on the world market, so they demand higher prices at home. And around and around we go.

This has eerie similarities to the Great Depression, when many countries resorted to import protection to protect jobs at home, and simultaneously devalued their currencies to try and push up exports. Yet the Great Depression got worse, thanks to what John Maynard Keynes called the fallacy of composition.

If one country alone resorts to import protection and devaluation, it can temporarily increase jobs. But at a global level, one country's exports are another's imports. If all countries reduce their imports, they unwittingly end up reducing their exports, too. And job losses get worse.

Today, each country wants to curb agricultural exports and stimulate imports to reduce prices. But if every country limits exports, the result is a decline in world imports, so prices rise instead of falling.

Solving the problem may require coordinated international action. After the Great Depression, the world community created the Global Agreement on Tariffs and Trade -- which later morphed into the World Trade Organization -- to negotiate simultaneous cuts in import barriers by major trading powers. This coordinated approach thwarted free riders, and gradually gained acceptance by all.

WTO rules permit food export limitations. In the Doha Round of trade negotiations, WTO has sought to reduce agricultural subsidies causing excess production. It never anticipated that export controls might create scarcities.

The new developments may improve the prospects of the Doha Round. But quick action is needed to tackle rising hunger. The WTO should convene an emergency meeting for countries to jointly reduce export controls. Even modest concessions can be in exporters' self-interest, as they would cause world prices to fall sharply, and thus ease domestic price pressures.

The terrible irony is that world grain production will be at a record high in 2008. People are hungry, and it's not because there isn't enough food to go around.

Zimbabwe suffers from an 80 percent unemployment rate and, according to the International Monetary Fund, an inflation rate exceeding 150,000 percent. Since 1994, the average life expectancy for women in Zimbabwe has fallen from 57 years to 34 years; among men it has dropped from 54 years to 37 years. Some 3,500 Zimbabweans die every week from the combined effects of HIV/AIDS, poverty, and malnutrition. Half a million Zimbabweans may have died since 2000, while some 3 million fled to South Africa alone.

A country that used to be called the "jewel" and the "breadbasket" of Africa is now an Orwellian nightmare. With the economy in ruins and political freedom eviscerated, Zimbabwe's state-run media rail against a phantom international conspiracy consisting of Western powers and led by "liar" George Bush, "gay" Tony Blair, "uncle Tom" Colin Powell, and "a slave to white masters" Condoleezza Rice.

I visited Zimbabwe twice during the 1990s. Back then, the country was in the midst of an earlier economic crisis caused by sluggish growth and excessive government spending. The IMF stepped in with an "economic structural adjustment program" worth hundreds of millions of dollars that, alas, bore little fruit. Still, I was shocked to see the extent of Zimbabwe's economic decline when I returned there last November.

I crossed the border between Zimbabwe and Botswana at the Kazangula junction, just a few miles from the spectacular Victoria Falls. While the other tourists drove up to the beautiful, though now almost completely empty, Elephant Hills Hotel that overlooks the falls, I remained in the town below to see for myself the outcome of Robert Mugabe's 27-year rule.

The once charming town of Victoria Falls that used to teem with tourists from around the world looked run-down and empty. About half of the shops were either empty or closed altogether. The main shopping center looked more like a warehouse. It offered few products thinly spread out on half-empty shelves — an obvious attempt to mask the widespread shortages of consumer goods. A handful of tourists, mostly young backpackers from Canada and Australia, wandered around the town center in futile search of edible food. Like them, I could not find meat or bread anywhere.

Few ordinary Zimbabweans would agree to talk to me about their problems. Those who did, looked over their shoulders, worried that someone from Mugabe's omnipresent Central Intelligence Organization might be listening. They are right to be afraid, for Zimbabwe today is a police state where armed gangs of government supporters harass, beat and kill members of the opposition with utter impunity.

How different, I thought, was Zimbabwe from Botswana, the latter of which is safe and increasingly prosperous. But what accounts for such striking differences between the two neighbors? It turns out that much of the difference stems from the degree of freedom that each populace enjoys.

It's the Economies, Stupid

Botswana, previously the Protectorate of Bechuanaland, gained independence from Great Britain in 1966. Her new president, Seretse Khama, a descendant of the local Bamangwato chiefs, received his education at South Africa's Fort Hare University and Oxford's Balliol College. In 1948, he married a white woman, Ruth Williams, who clerked at Lloyds in London. Their marriage was political dynamite that was, at first, opposed by both the traditional chiefs in the Bechuanaland and by the government in South Africa, Botswana's immensely more powerful southern neighbor whose white population had just elected a regime that wanted to increase racial segregation between whites and blacks. Fearing South Africa's negative reaction, the British government banned the Khamas from the Protectorate for almost a decade.

The racial prejudice that the pair encountered from both sides of the racial spectrum proved to be formative. While most regimes in post-independence Africa sent their white populations packing, Khama and his successors strove for racial harmony. As a result, Botswana benefited greatly from the human and financial capital of her large white community, which totals 7 percent of the overall population. It is surely a sign of Botswana's relative comfort with racial diversity that on April 1, 2008, Ian Khama, the first-born son of the country's founder, took over the reigns of power in Botswana, thus becoming the first half-white leader of an African democracy.

The elder Khama's other big contribution to the long-term stability and prosperity of Botswana was to maintain the tradition of public meetings (or kgotlas). This was the way in which the Africans made local decisions; it served to keep their chiefs honest and accountable. The exceptional humility of Botswana's politicians is just one positive consequence of such "grassroots democracy."

As Robert Guest of The Economist noted in his 2004 book, The Shackled Continent, "In the last 35 years, Botswana's economy has grown faster than any other in the world. Yet, cabinet ministers have not awarded themselves mansions and helicopters — and even the president has been seen doing his own shopping." Similarly, a game warden I spoke to in the Chobe National Park reminisced about standing behind the minister of education in the line for groceries. A shop manager recognized the minister and motioned her to the front of the line. She flatly refused.

In most African countries, even those that are nominally democratic, the leaders are so far removed from day-to-day public scrutiny that they behave with impunity and in an embarrassingly rapacious manner. Of course, Botswana's free media plays a vital role in keeping her politicians honest. My visit to Botswana, to give one example, coincided with President Festus Mogae's last "state of the nation" address. One of the country's weekly newspapers, Mbegi, carried a page-long response to the president written by the leader of the opposition, who railed against the government's "laissez-faire" policies. Though I disagreed with the substance of his arguments, I was happy to see his freedom of expression honored, especially considering that Botswana has been ruled by the same political party, the Botswana Democratic Party, since 1965.

That brings me to probably the most important legacy of Khama's presidency: a limited government and one of the freest economies in Africa. (In its 2007 Economic Freedom of the World report, Canada's Fraser Institute ranked Botswana's economic freedom on par with that of Belgium and Portugal.) According to Scott Beaulier, an economist at Beloit College, "Khama adopted pro-market policies on a wide front. His new government promised low and stable taxes to mining companies, liberalized trade, increased personal freedoms, and kept marginal income tax rates low to deter tax evasion and corruption."

But why did Khama chose to embrace the free market and limited government at a time when Marxism seemed to be on an unstoppable march in other African countries? I can only hypothesize that a prescient leader like Khama would have been aware of the failure of African socialism as early as 1966, the year of Botswana's independence. After all, in February 1966, Kwame Nkrumah, the Marxist prime minister and later president of Ghana, was ousted in a coup amid economic decline and political repression. Moreover, Khama, who came to power peacefully, was not beholden to the Soviet Union or Maoist China for military, financial, and intellectual support, while many African liberation movements were. In fact, Khama seems to have had a healthy regard for the British parliamentary system and common law.

Economic openness served Botswana well. Between 1966 and 2006, its average annual compound growth rate of GDP per capita was 7.22 percent — higher than China's 6.99 percent. Its GDP per capita (adjusted for inflation and purchasing power parity) rose from $671 in 1966 to $10,813 in 2005. Unfortunately, the high GDP growth rate has not resulted in increased life expectancy, which, in a country ravaged by the HIV/AIDS pandemic, declined from 62 years in 1980 to 35 years in 2005.

The Tragedy of Robert Mugabe

It was with some apprehension that Ian Smith — the last white prime minister of Rhodesia, who once promised to maintain the white rule in that country for 1,000 years — answered the summons to meet with Robert Mugabe, the newly-elected prime minister of Zimbabwe. After all, the Marxist former guerilla leader had declared that he would have Smith publicly hanged in the capital's main square. Instead, Smith was greeted with "a warm handshake and a broad smile." In his own words, Smith was "completely disarmed." He rushed home to admit to his wife that maybe he had been wrong about Mugabe. "Here's this chap, and he was speaking like a sophisticated, balanced, sensible man. I thought: if he practices what he preaches, then it will be fine."

It was 1980, and Zimbabwe had just gained independence from Britain. White minority rule had ended and so had a conflict between blacks and whites that cost some 30,000 lives. The election gave Mugabe's Zimbabwe African National Union (ZANU) a parliamentary majority, but Zimbabwe had an independent judicial system and a constitution that protected minority rights. It also had one of the continent's largest economies. Zimbabwe seemed destined to become an African success story.

Things turned out very differently. As early as 1982, Mugabe turned on his onetime ally Joshua Nkomo of the Zimbabwe Africa Peoples Union (ZAPU). Mugabe unleashed his special forces — trained by the North Koreans — on Nkomo's supporters in the Matabeleland, killing some 20,000 in the process. Nkomo was forced to agree to a merger of ZAPU with Mugabe's ZANU. In return, Nkomo received the largely ceremonial title of Zimbabwe's vice president.

Shamefully, the Western world not only ignored the massacre of the Matabeles but proceeded to send Mugabe hundreds of millions of dollars in foreign aid. Similarly, the Western media ignored Mugabe's attack on Zimbabwe's democratic institutions. Apparently Mugabe's relentless monopolization of power was incompatible with the simplistic portrayal of the Zimbabwean leader as an African freedom fighter.

Mugabe's megalomania grew as time went by. Omnipresent at international conferences, where foreign dignitaries continued to treat him like a celebrity, he came to see himself as a leader of global importance. When Nelson Mandela, the moral voice of the African continent, won election as South Africa's president in 1994, it irked Mugabe greatly. He saw Mandela as an upstart and flatly refused to treat him with deference.

To show his independence and strength, Mugabe ordered the Zimbabwean military to intervene in the Congolese civil war. Following Mobutu Sese Seko's flight from the Democratic Republic of Congo in 1997, the country descended into chaos. Congo's new strongman, Laurent Kabila, was faced with an internal rebellion that drew military responses from Namibia, Zimbabwe, Angola, and Chad on Kabila's side; and from Uganda, Rwanda, and Burundi on rebels' side. (It also attracted an assortment of mercenary forces from around the world.) The conflict, which turned out to be Africa's largest ever, cost Zimbabwe $15 million per month and tied up one third of Mugabe's armed forces.

In return for Mugabe's help, Kabila rewarded the Zimbabwean president and his generals with mining concessions in the southern part of the Congo (chiefly the Katanga and Kasai provinces). The top brass of the Zimbabwean military, including General Vitalis Zvinavashe, commander of the armed forces, made small fortunes and developed a taste for riches that Mugabe would later find so difficult to satisfy.

Back home, however, the war was very unpopular, and the Zimbabwean population, which paid the military's bills, threw its support behind the newly-founded Movement for Democratic Change (MDC), led by a former trade union boss named Morgan Tsvangirai. It was Tsvangirai's MDC that, in a 1999 referendum, defeated Mugabe's plans to change the constitution and extend his rule. Furious at his defeat, Mugabe turned on Zimbabwe's white commercial farmers, whom he suspected of giving financial backing to the MDC.

Over the next few years, almost all of the country's 4,000 white-owned farms were invaded by state-organized gangs. Some of the farmers who resisted the land seizures were murdered, while others fled abroad. Mugabe claimed that the land would be given to the landless masses. In fact, much of the best land was given to his cronies, who proceeded to enrich themselves with such gusto that Mugabe had to plead with them "to choose one [farm] and give up the rest to the government."

The new owners showed little aptitude for farming, however. The agricultural sector soon collapsed, and with it most of Zimbabwe's tax revenue and foreign currency reserves. Those parts of the economy that processed the agricultural produce soon followed, as did the banking sector, which relied on farms as collateral for future lending. To meet its obligations to domestic and foreign creditors, the government ordered the Reserve Bank of Zimbabwe (RBZ) to print more money, sparking the first hyperinflation of the 21st century.

During my visit to Zimbabwe in November 2007, the black market exchange rate between the U.S. dollar and the Zimbabwean dollar was one to 1.3 million. By April 2008, that rate rose to one U.S. dollar to 200 million Zimbabwean dollars. In November 2007,the largest banknote was worth 200,000 Zimbabwean dollars. In April 2008, the RBZ started printing notes worth 250 million Zimbabwean dollars. However, until this month, the official exchange rate remained one U.S. dollar to 30,000 Zimbabwean dollars. Many well-connected members of the ruling elite have made fortunes by buying foreign currencies from the RBZ at official exchange rates and then selling them on the black market and pocketing the difference.

The ripple effect that farm seizures created turned into a tsunami that, in a few years, washed away some 60 years of gradual economic improvements. Mugabe's answer to the falling economy was to increase state patronage and the intensity of the looting. Mugabe, the Savile-Row-suit-wearing dictator, and Grace, his shop-till-you-drop wife, paid a Serbian construction company $12 million for a 25-bedroom house in a posh suburb of Harare that comes with two artificial lakes and a small army of bodyguards. His government now consists of 45 ministers and deputy ministers — including the "minister of information and publicity" — each of whom is entitled to a variety of perks, such as SUVs and (formerly white-owned) farms.

The government went on a shopping spree in 2006 and again earlier in 2007, providing influential police officers, ranking assistant commissioners, and army lieutenants with hundreds of imported vehicles. (Guaranteeing the loyalty of army and police officers does not come cheaply.) With the economy in shambles and the currency debased, Mugabe announced an "indigenization" program: the government will confiscate majority stakes in all private enterprises owned by non-black Zimbabweans. Ostensibly, those enterprises will be given to black Zimbabweans. In reality, they are certain to be distributed among government officials, and also among army and police personnel, without whose support Mugabe's regime cannot survive.

In November 2007, a mere two months after the indigenization measure was adopted by the Zimbabwean parliament, Mugabe declared his intention to confiscate 25 percent of shares in all non-state mining companies. Not surprisingly, the freedom ranking of the Zimbabwean economy plummeted. The Fraser Institute's 2007 Economic Freedom of the World report, for example, found Zimbabwe to be the least free economy out of the 137 economies surveyed.

On March 29, 2008, Zimbabwe held parliamentary and presidential elections. As most people expected, the elections were rigged in Mugabe's favor. The country has no free media and no freedom of expression or assembly. Prior to the elections, members of the opposition were persecuted, beaten, and, in some cases, tortured. Remarkably, in spite of all the intimidation; in spite of the extra ballots that the government printed before the elections; and in spite of the tens of thousands of dead people who "voted" for Mugabe and his ZANU-PF — the opposition party won.

However, Mugabe refuses to go. Ignoring the groundswell of public disgust with his economic policies and the corruption of his top officials, Mugabe has unleashed his repressive state apparatus against the opposition, driving many of their leaders into exile. As I write, the economic and political situation in Zimbabwe is deteriorating still further and could yet break out into widespread violence.

After Mugabe

As I returned to Botswana last November, the tourists whom I accompanied on the trip to Victoria Falls seemed content. The shops in Zimbabwe may have been empty, but the country remains filled with amazing natural beauty. In contrast to the other travelers, I felt relieved to leave behind a police state that makes it impossible for people to talk freely with one another: a state where taking photos of an empty grocery store can land you in prison. I was saddened by the sight of yet another African country that has failed to live up to its promise and collapsed into poverty, but I was also hopeful, for before us was Botswana: an increasingly prosperous market democracy whose citizens enjoy safety and political stability.

In his 2004 book, South Africa: The First Man, The Last Nation, R.W. Johnson, an erstwhile Oxford University professor, points out that national liberation movements in Africa generally do not give up power willingly. Men who win power through the barrel of a gun tend to develop ownership mentalities and treat their countries as private fiefdoms. Mugabe represents a generation of African leaders who came to power through the barrel of a gun. More often than not, men like that die in office or are forced out by a coup.

At 84, Mugabe is an old and, some believe, increasingly senile man. He may die in office or be forced out. The Zimbabwean diaspora is abuzz with rumors of flight plans and comfortable exile in Malaysia or Namibia. There is talk of Far Eastern bank accounts stuffed with treasure. Either way, Mugabe will be gone one day. When that happens, the new leader of Zimbabwe should look across the western border to Botswana. He will see that freedom and rising prosperity are possible — even in Africa.