July 4, 2014

NOW TO LEAPFROG OURSELVES...:

Can Africa leapfrog the welfare state? : The all-too-real incompetence of most African states could allow Africa to avoid the Western trap of stifling government involvement (Pascal-Emmanuel Gobry, June 30, 2014, The Week)

Leapfrogging is already a reality in many sectors. Mobile phones took off in Africa much faster than elsewhere, largely because there were no landlines. And in turn, this allowed mobile payments and mobile finance to take off faster in Africa than anywhere else, largely because there was little dominant financial infrastructure. In Kenya, you can pay for basically anything with a mobile phone. And this isn't just fancy technology. Mobile finance threatens to thin the ranks of the unbanked (those without access to a formal financial system, including savings and credit), which is a prerequisite for a modern economy.

So where else might we see some beneficial leapfrogging? Well, the rich world's overbearing government control is badly in need of rethinking. Increasingly, fields like education and health care look like the places from which the innovation we need will come, but they are precisely the fields that are stuck in stultifying limbo thanks to stifling government control. You don't have to be a raging Randbot to recognize that bureaucratic control of large sections of the economy can be unhealthy.

The Western welfare state is in monumental trouble. The combination of lower-than-expected real growth and an aging population means the rich world's welfare states are all actuarially unsound. Large middle class entitlements mean government mostly shuffles money around instead of investing in the future.

Is there a way we can get what we want to get out of a welfare state, without those many drawbacks?

Africa may point to a way. 
Posted by at July 4, 2014 2:26 PM
  
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