Gold in South Africa...

[Renegade7]

I was watching this show on TV today and I saw how there's this one gold production site in South Africa that produces on average two tons of a Gold a day and 400 tons of gold a year. That being said, why is Africa still one the poorest continents in the world? All that damn gold and all that damn money and still the majority of the continent's infastructure is a joke, the poverty rate rediculous. That makes no sense to me at all.

[Slateman]

Because there is no stable government to use that gold to rebuild the country. Too many people fighting over it and their heritage

[Big Weirdo]

I was under the impression gold didn't hold much value in todays world. Is that wrong?

[panel]

just because the gold is found there, doesn't mean it is spent there, it is probibly just a couple of families that own the rights to that wealth, and just don't spend it.

[panel]

I was under the impression gold didn't hold much value in todays world. Is that wrong?

One ounce of gold is worth $375,

As an investment, gold is ussually slow moving, and moves in the oppisite direction of the economy, so when the economy is good, gold doesn't gain, when the economy is bad, the value of gold goes up.

[Big Weirdo]

Ahh

Thanks panel.

[Seabee1973]

One ounce of gold is worth $375,

As an investment, gold is ussually slow moving, and moves in the oppisite direction of the economy, so when the economy is good, gold doesn't gain, when the economy is bad, the value of gold goes up.

You are way off on your price per ounce

http://www.forbes.com/business/feeds/ap/2006/05/12/ap2742815.html

Gold prices fell Friday, but ended the week with a gain of more than $30 an ounce.

The contract has rallied sharply this week above $700 an ounce to 26-year highs, fueled by fund buying. Investors are turning to the safe-haven metal due mainly to a weakening U.S. dollar, worries about inflation, and geopolitical instability.

[iheartskins]

I was watching this show on TV today and I saw how there's this one gold production site in South Africa that produces on average two tons of a Gold a day and 400 tons of gold a year. That being said, why is Africa still one the poorest continents in the world? All that damn gold and all that damn money and still the majority of the continent's infastructure is a joke, the poverty rate rediculous. That makes no sense to me at all.

Corruption. Pure and simple.

[twa]

Corruption. Pure and simple.

Yep,same reason most of latin america is poor.

[The 12th Commandment]

You know South Africa has a fairly solid government with little coruption and general stability. The rest of the continent is not so good, but SA did the change over from colonialism in a much more structured and colonist friendly way. Power is in the hands of the majority as it should be, but the system that was in place wasn't torn apart. The distribution of wealth is a different story entirely, but as bad as it is, it's far superior to the rest of the Africa and shows sign of improvement. It'a also a popular place to vacation. I would like to go sometime, the fishing off Capetown is really good.

[The Sisko]

Actually simply attributing Africa's low level of development to corruption is an oversimplification by a factor of about 10,000. True, it is a big factor however there's a lot more to it than that. For starters, there's the whole issue of the way the continent was divided up with political boundaries set by colonial powers based on the resources the colonizers wanted and with an eye towards keeping the subjugated people under control. Additionally, there is the factor of the loss of millions of the continent's young and physically able over the many centuries of the slave trade. Finally, there are more modern issues such as farm subsidies in developed contries, the effect of using developing countries as pawns in the cold war and the brain drain brought about by immigration among others.

OTOH I guess you're right. Is is just about corruption...and we wonder where the whole "ugly American" stereotype comes from:rolleyes:

[The Sisko]

...oh and WhoDel, if you've got any gold you want to get rid of I'd be more than happy to pay you $400 an ounce for it.

[iheartskins]

Actually simply attributing Africa's low level of development to corruption is an oversimplification by a factor of about 10,000. True, it is a big factor however there's a lot more to it than that. For starters, there's the whole issue of the way the continent was divided up with political boundaries set by colonial powers based on the resources the colonizers wanted and with an eye towards keeping the subjugated people under control. Additionally, there is the factor of the loss of millions of the continent's young and physically able over the many centuries of the slave trade. Finally, there are more modern issues such as farm subsidies in developed contries, the effect of using developing countries as pawns in the cold war and the brain drain brought about by immigration among others.

OTOH I guess you're right. Is is just about corruption...and we wonder where the whole "ugly American" stereotype comes from:rolleyes:

Yusuf,

I consider you a friend, so I'm a little surprised by what you wrote.

Where do you get off saying that I'm an Greene-esque "Ugly American" because I identify the importance that corruption plays in keeping Africa poor. Honestly? Corruption in Africa is costing the continent nearly $150bn a year, according to a recent report. See also: Beauracratic Corruption in Africa.

So too, is Robert Guest, an editor at the Economist, an "Ugly American" because he had this to say in his book The Shackled Continent: Power, Corruption, and African Lives?

Africa is a shackled continent because of the abuse of power by "vampire states": authoritarian governments that have failed their people comprehensively. Guest details their abuses thoroughly. An emphasis on exploiting mineral resources neglects other aspects of economic development. Property rights are rarely secure in law or practice. AIDS ravages entire populations. Tribal loyalties overshadow state identities. Western aid is siphoned off by thugs and bureaucrats, or displaces the private investment that is the only basis for long-term economic growth. Comprehensive corruption discourages the mutual trust required for complex systems to function effectively. Technological innovation is discouraged by government micromanagement. A particularly scathing chapter focusing on Zimbabwe and South Africa describes how post-liberation governments and their supporting elites take the short cut of expropriating assets instead of developing their own. As a cure, Guest recommends "simple ideas, rigorously applied." Governments must concentrate on providing basics: primary education, essential health care, piped water. Elites must stop spending other people’s money on limousines, mansions and first-class flights to conferences. Finally, Africans must stop arguing that Africa’s problems are someone else’s fault. Guest recognizes that the economic modernization he advocates comes with a price, but he is nonetheless optimistic. Readers may be moved enough to find ways of being so, too.

http://www.amazon.com/gp/product/158834214X/104-3948154-8546351?v=glance&n=283155

That reads to me like corruption, and its various incarnations, are largely to blame.

Just for your edification, I'm married to a South African.

-ihs

[Ghost of]

I'd hasten to counter Yusuf as well. This is not a 'racial' issue or one of stereotyping. Third world dictators and statist 'vampires' (good term) rely on First world guilt to continually separate them from their money and to parlay that emotion into swiftly-filled Swiss bank accounts, roads to nowhere, and outlets for local outrage at corrupt statists and tribalists. I don't doubt slavery had a negative impact but it's not like Haiti didn't gain independence quite early in the game. What explains that country? And going beyond that, between a 1/4 to a 1/3 of the populations of not only Europe but Asia perished in the dark periods of plague. How did they emerge from the ashes (particularly Europe) when so many had been lost? hell, Europe expelled and oppressed some of its most productive citizens, the Jews. How did the jews keep finding ways to succeed and overcome? How did Europe overcome this flaw and conquer and influence the globe? Who developed the ideas that dominate the modern world (for good and ill?) What written record did the sub-saharan african civs leave behind? What ideas and technology and medicine did they contribute even BEFORE the dark age of slavery and colonialism? Why did India benefit in SOME sense in its transition to modernity by the colonial presence where Africa did not?

Asia was colonized too, Yusuf. Korea and Nigeria STARTED OFF WITH THE SAME GDP in the 50s after liberation (in Korea's case from Japan, which had dominated since 1910.) Now, Korea was divided by the Cold War, but the side that stayed non-communist eventually developed into an economic world power with per capita GDP far exceeding Nigeria's, a country with far more natural resource wealth.

Now compare Nigeria with NORTH Korea. It's a little better, right?

Why? Statism, which is in full and absolute flower in North Korea.

You mentioned immigration--other countries had immigration from their lands in great numbers. Ireland is becoming an economic boomland despite the millions of their people 'drained.' China would be even more dynamic and powerful and economy despite losing millions of its own over the course of CENTURIES. Of course, those people who immigrated formed powerful communities in malaysia, Indonesia, Vietnam, Philippines and Thailand.

Maybe the answer lies in culture. Sub-Saharan Africa was home to great civilizations but what happened? The 'big man' is more important, supporting the village and making big show is more important there perhaps than in Asia. Why is Asian corruption so much more controlled than African corruption?

Maybe the answer is in where the elites were educated and when. Remember that Pol Pot and Khieu Samphan and many other villains of history learned their Marxian or fascist ideas in the academic laboratories of Europe. Hell, Ho helped found the French CP. many of the elites from African countries learned all the wrong trendy theories of governance and economics and applied those lessons to their nations.

----------- http://www.reason.com/0603/fe.th.why.shtml ---

That was an article I posted on this board some time ago, "why poor countries are poor." I'd also add that there are certainly unique circumstances in many of these lands, there's not a blanket diagnosis you can give. But that doesn't mean there arent' some commonalities and the lack of really successful nation-states/economies is not something you overlook. Latin America and Asia have all had problems with corruption and tyranny and societal decay but they also have had their successes.

Again, people don't want to analyze culture because they believe it is linked to race but nothing could be further from the truth.

[Jumbo]

When I read the first post, I was remembering that article you had posted, Nibbs, about economics in the "third world." It is a complex matter, and maybe another factor in the flow of events is related to the differences in access certain global hierarchies have to some venues over others because of long-term cultural fragmentation, including within adjoining countries, and/or the non-indigenous origin of locus for controlling interests. Thanks for re-posting a link to that article, I wanted to save it and forgot.

[The Sisko]

My point iheartskins was not that corruption plays no part in the plight of poor countries. Rather, I was simply pointing out that the issue is a bit more complex than can be explained in a one word response.

However I will say that after reading the various articles you and Nibbs posted I have adjusted my perceptions regarding the relative importance of corruption vs. the other issues I named. However, the fact remains that there is more to it than can be explained by one issue.

Furthermore, based on the issues raised in the reason.com article in particular, it appears to me that corruption in and of itself isn't the sole cause of the developing world's economic problems. I would argue that at it's core, the problem really boils down to a lack of both institutional competence and the rule of law that eventually ends up affecting macro/micro economic viability. For example, the Ottoman Empire, while a very corrupt entity, was ultimately rotted from within over the final centuries of its existance due to just these issues.

I would argue that corruption is a symptom of a lack of institutional competence and rule of law. However on some level I guess it's a chicken vs. egg argument.

Nibbs mentioned Haiti. Haiti is a good example of what I'm talking about. In Haiti the non-white elite has historically consisted mostly of mixed race mulattoes that were/are in part decendants of white slave owners. The French used them to help rule Haiti during the colonial/slavery years. After Haiti gained it's independence, the mulattoes used the education they received during French rule to continue to subjugate the majority black population, keeping them ignorant and uneducated and preventing/retarding the development of societal institutions and a middle class. Because of this, Haiti essentially split into two rival societies. The resulting long term political instability, military involvement in government and serial dictatorial rule eventually resulted in Haiti being the poorest country in the Western hemisphere.

Did/does corruption play a part in Haiti ? Of course. However, I think the political instability and the cultural norms there are probably as big if not bigger root causes. And that is precisely my point, that there are a lot of factors involved.

As for Asia and Europe, let us not forget that they had geographical advantages that allowed them to develop and share important technologies earlier and more readily than in Africa. This means they started and resumed their activities after the events you mentioned at a higer level of technology than Africa. As this response has gone on too long I'll simply refer you to the book Guns, Germs and Steel by J. Diamond. It's excellent reading.

Finally, iheartskins I apologize for that last cynical comment. I'm very accustomed to having similar discussions among folks that don't have quite the handle on this that you do. I'm sorry I jumped to conclusions and lumped you in with them.

[panel]

You are way off on your price per ounce

http://www.forbes.com/business/feeds/ap/2006/05/12/ap2742815.html

Gold prices fell Friday, but ended the week with a gain of more than $30 an ounce.

The contract has rallied sharply this week above $700 an ounce to 26-year highs, fueled by fund buying. Investors are turning to the safe-haven metal due mainly to a weakening U.S. dollar, worries about inflation, and geopolitical instability.

Ahh, good catch, when I looked up the price, I accidently quoted the price of gold in British pounds.

[iheartskins]

Yusuf, thank you for your reply and I sincerely appreciate your apology. That comment caught me off guard, largely because I carry such disdain for Ugly Americans.

In any case, I too concede that the issues are far more complex that the underlying statement of "corruption"; notwithstanding the fact that, in my mind, corruption remains that biggest barrier to preventing the economic growth in Africa. To that end, it's my belief that if African nations can reign in their corruption within their regimes, then the growth and establishment of rule of law and institutional comptenence will follow suit. But you're right in saying that it's a little chicken & egg.

To the extent that these countries are in the state they are, I also agree with you that colonialism has had it part in retarding their growth. The classic Roman colonizing technique of promoting local rivalries as a means of diverting espionage away from the colonizer and to the ruling local class worked wonders for them in the building of their empire. As you point out, it is what the French used, and what other colonial powers used in Africa and elsewhere--just like Haiti, it's also debilitated Rwanda, Pakistan and India, among many other countries.

I also can't underscore the importance that AIDS is now playing in the decimation of Africa. Take a leading reform candidate from South Africa, who The day after being cleared of rape charges, Jacob Zuma, South Africa's former deputy president, publicly apologized for having unprotected sex with a 31-year-old family friend infected with HIV. Who knows how the epidemic will end given that more than one-quarter of working-age adults are infected with HIV in some communities in sub-Saharan Africa.

The question, I guess, becomes how can we (as the non-African world) and the Africans stem the tide of corruption, install a formidable and incorruptable rule of law, and develop institutional competence. I hope an answer to that question comes in our lifetimes.

[Prosperity]

How can the problem be solved? Maybe this is one of those problems with no solution? Atleast not a quick and painless one... I mean, is it reasonable to expect that one day the governments will be less corrupt? The more corrupt they are the less the people have, and thus they get used to it, and accept it. Also, maybe a lot also don't know any better just because of a lack of education? It seems like a cycle that will only make things worse, and worse.

[Bang]

Woo..

look at the pretty rock.

I don't know, am I the only one that feels inherently stupid that when you boil it all down, all that it is is a glittery rock?

How much have we truly progressed since cave days?

~Bang

[Thanos]

Actually simply attributing Africa's low level of development to corruption is an oversimplification by a factor of about 10,000. True, it is a big factor however there's a lot more to it than that. For starters, there's the whole issue of the way the continent was divided up with political boundaries set by colonial powers based on the resources the colonizers wanted and with an eye towards keeping the subjugated people under control. Additionally, there is the factor of the loss of millions of the continent's young and physically able over the many centuries of the slave trade. Finally, there are more modern issues such as farm subsidies in developed contries, the effect of using developing countries as pawns in the cold war and the brain drain brought about by immigration among others.

OTOH I guess you're right. Is is just about corruption...and we wonder where the whole "ugly American" stereotype comes from:rolleyes:

Excellent post.Also factor in the tricks done by both sides during the "Cold War" and the impact of AIDS.

I've spent alot of time in Africa.Ghana is another stable country there.

[zoony]

I find it interesting that nobody has even brought up DeBeers yet.

.......

[shagman]

In South Africa along with almost every country, the mining industry isnt state owned or run. Most are privatly held companies that own a claim on the land. Sure they pay taxes im sure but im not too sure on the amount and whether it is a fixed price or one that is affected by the price of gold.

If anyone is interested in buying gold but not wishing to store it, there is an ETF called GLD that is equal to the cost of 1/10 of an ounce. I think all precious metals are skyrocketing in price. Platinum is over 1000 and silver is at 12 I think. Im not saying this wont drop back down to levels that we have seen before, like the 350 a couple years ago for gold but it might be worth it to buy some now.

[shagman]

I find it interesting that nobody has even brought up DeBeers yet.

.......

I was going to mention The Yankees of the diamond industry but held off

[shagman]

Woo..

look at the pretty rock.

I don't know, am I the only one that feels inherently stupid that when you boil it all down, all that it is is a glittery rock?

How much have we truly progressed since cave days?

~Bang

There are a lot of industrial uses for gold and platinum that drive prices up too. Its a commodity that is rare, and there is a demand for it. PLUS ITS SO SHINY