China Eliminated Poverty With Science and Infrastructure. It Can Be Done in Africa Too!

China's Long March Out of Poverty | African Agenda – A new ...
Deng Xiaoping, who put China firmly on the path of “reform and opening up.

August 14, 2020

If one examines the long path from the end of China’s disastrous “cultural revolution” in the 1970s to China’s 2020 modern miracle of eliminating poverty for 800 million Chinese, many lessons can be learned. China’s commitment to science and building infrastructure were two essential ingredients for this accomplishment.  William Jones discusses this interesting history in his article below,”China’s Long March Out of Poverty”.

China Employs Hamilton’s Principles of Credit  for Railroads

(EIRNS) —China’s exciting announcement of its plan to increase the pace of development of maglev and its high-speed rail network, is based on its assurance that it knows how to implement that, and to finance it on top-down principles of the type proposed by Alexander Hamilton.

China announced its plans to build a system of 600 kph (373 mph) maglev vehicles, after it successfully conducted its maiden test run of a maglev vehicle at a test track at Tonji University in Shanghai on June 21. Though the train-set did not run at top speed of 600 kph, but at a lower speed, various important features were tested. Prototype vehicles are approved for construction in 2021, and up to nine new maglev lines, totalling over 1,000 km (600 miles), are planned for the future.

Equally impressive, China’s plan to double its existing 35,000 km of high-speed rail already in operation, to 70,000 km by 2035, shows how a Confucian/Hamiltonian economy actually works. Based on estimates by the Lange Steel Information Research Center in Beijing, reported by the Wall Street Journal, China would have spent $180 billion for 35 approved railway projects in 2019, most of them high-speed rail, launching the next phase of HSR development.

In the first half of 2020, according to the Aug. 13 *China Daily), China invested $207 billion in combined railway, highway, waterway and civil aviation infrastructure, of which $46.9 billion was in railways. China’s transportation infrastructure investment alone, is 5-10 times that of every country on Earth. Featured in China’s railway investment is a new, 1700 km high-speed rail system between Chengdu, Sichuan and Lhasa, Tibet; high-speed rail in landlocked Shaanxi Province, etc.

China finances the rail and other critical infrastructure, through two methods of directed credit: China’s four largest state-owned commercial banks—the Industrial & Commercial Bank of China, the Bank of China, the Agricultural Bank of China, and the China Construction Bank—make ample loans directly to the China Railway company, the China Railway Rolling Stock Corporation (CRRC), which builds the rail equipment, etc. This is overseen by China’s three “policy banks.”

Second, the national government and local governments purchase bonds issued by China Railway Corporation, CRRC, and so forth.

China has announced its new rail construction program. The government plans to build 200,000 km of rail by 2035, about 70,000 of which will be high-speed rail. All cities with a population of 200,000 or more will be connected by rail, and all cities with 500,000 people or more will be connected by high-speed rail. China is also working on the next generation maglev train that could travel at speeds of 600 kph.

Pause for a moment from your daily activity. Let your imagination look into the future, and ponder what the nations of Africa would look like if, all cities with 200,000 people or more were connected by railroads. The topology of the continent would be different. China has proved it can be done. It is not a matter of Africa following the China model. Rather, it is comprehending the scientific principles of Alexander Hamilton’s economic system. Read my earlier posts: Alexander Hamilton’s Credit System Is Necessary for Africa’s Development and Nations Must Study Alexander Hamilton’s Principles of Political Economy

 

Click to access 45-54_4726.pdf

In his article below, William Jones provide an insightful analysis of the forces behind the anti-China mantra, rampant in the Trump administration.

As the ‘Five Eyes’ gear up to confront China, can anyone say that the British Empire is a thing of the past?

“A recent article published in the China Economic Diplomacy Watch pointed to the “Five Eyes” – the U.S., UK, Australia, Canada and New Zealand – as the key rallying group for Pompeo’s call for a containment policy toward China. The article has indicated a crucial element in the danger the world is facing. The unifying factor in this grouping is, firstly, that the “Five Eyes” are all English-speaking countries, and secondly, that they all at one time or the other belonged to the British Empire.”

Lawrence Freeman is a Political-Economic Analyst for Africa, who has been involved in the economic development policy of Africa for 30 years. He is the creator of the blog: lawrencefreemanafricaandtheworld.com

COVID-19 Tragedy Compels Revamping Globalization and Food Production

Dieudonne Twahirwa, 30, who runs Gashora Farm, examines chili plants at his farm in Bugesera District in eastern Rwanda on August 23, 2018.(Thomson Reuters Foundation/Thin Lei Win)
June 12, 2020

The article, Africa: COVID-19 Recovery Is a Chance to Improve the African Food System, reprinted below raises important issues concerning Africa’s food supply. The Covid-19 pandemic has revealed the failures of the global economic system. To wit: The gutting of healthcare in the so called advanced sector over the last half century left nations unprepared for what should have been expected, a new contagious zoonotic disease.  Nations that depended on thousand mile long supply chains for basic necessities, including medical supplies and drugs, proved to be disastrous for their populations. The absence of vitally essential products led to increased rates morbidity and mortality.

Tragically, Africa has been forced to devote large portions of its foreign exchange on debt service rather than building up its healthcare infrastructure. Adequate healthcare requires not only more hospitals, beds, physicians, and modern advanced equipment, but electricity, clean water, sanitation, roads, rail roads, adequate supply of nutrition, and elimination of poverty. A poorly fed population suffering from malnutrition provides an auspicious host for the spread of disease. Poverty is a co-factor of all diseases.

Last month, David Beasley, Director of the World Food Programme (WFP), warned that, if economic conditions continue to deteriorate and endanger the production and distribution of food to impoverished nations, we could witness famines in Africa, and other parts of the world. He said, “You could have 150,000 to 300,000 people die of starvation every day for several months.”

Africa has millions of acres of fertile but uncultivated land. The continent is reported to have over 60% of the world’s land lying fallow that could be developed for food production. It has been known since the early 1970s that the Africa continent has the potential to not only produce enough food for its own population, but could become a net exporter of food to help feed other nations.

The deadly COVID-19 pandemic has revealed what was there to see all along; Africa and large sections of the world have remained underdeveloped for decades due to the horribly defective policy of globalization.

To accomplish an agricultural revolution in Africa, we will also need to create an industrial revolution in Africa as well. The failure to industrialize Africa, to build manufacturing industries along with mechanized farming is a major contributing factor in reduced life expectancy, poverty, disease, and instability. The Physiocratic doctrine that all wealth comes from the land was efficiently refuted by President Washington’s Secretary of the Treasury, Alexander Hamilton.* The super productive family farms in the United States matured alongside manufacturing cities, and had access to abundant supplies of energy  for irrigation.

Let is use the tragedy of the COVID-19 pandemic to initiate a program to develop Africa’s full economic potential that will finally end poverty and hunger. To realize this absolutely achievable objective, we will need to create a New Bretton Woods System to drive economic growth. President Franklin Roosevelt intended the original Bretton Woods to be an institution to export his New Deal for developing nations, as was discussed with the Ethiopian delegation at the 1944 conference. Now, over a half century later we must realize this goal.

*Report on Manufacturers- December 5,1791

The World Food Programme has warned that the COVID-19 pandemic could cause one of the worst food crises since World War II. It predicts a doubling of the number of people going hungry – more than half of them in sub-Saharan Africa. While wealthier people stay inside and practise physical distancing, the economically marginalised populations risk going out in search of food. They take decisions between livelihoods and life in the most extreme cases. Such food inequities show the need for system-level action.

So far, the global food system has proven to be resilient to the COVID-19 pandemic. Food is still being produced, processed and distributed. Unfortunately, the system’s underlying injustices and inequities continue too. Around 1.58 billion people globally can’t afford healthy diets.

These inequities are especially stark on the African continent. Even before the COVID-19 crisis, the African food system was ailing. Food is perennially in short supply. In 2018, more than 250 million people in sub-Saharan Africa experienced severe food insecurity, incomes for farmers are lower than anywhere globally in real terms, and more than 30% of children are stunted partly due to poverty and poor diets.”

Read: COVID-19 Recovery: Chance to Improve African Food System  and Repositioning Agriculture for Africa’s Youth

Read my previous posts:

Lawrence Freeman is a Political-Economic Analyst for Africa, who has been involved in the economic development policy of Africa for 30 years. He is the creator of the blog: lawrencefreemanafricaandtheworld.com

World Needs New Economic Platform to Fight COVID-19

The World Needs A New Economic Platform to Fight COVID-19

Lawrence Freeman

April 5, 2020

Today April 5, the total cases of COVID-19-(coronavirus) in Africa are 8,536, deaths 360, and recoveries 710. On March 30, one week ago, the total cases were 4760, deaths 146, and recoveries 355. The diagram above shows the increased rate of the spread of COVID-19 across the African continent. In my March 30 article, New Economic Order Required to Combat COVID-19 in Africa, I concluded with a call for a New Just Economic Order, if humankind is going to effectively conquer the current pandemic.

We have come to a moment in the evolution of our civilization that we must acknowledge the failures of the present political-financial system. The Western-advanced sector nations, lacking an in depth and over-supplied health infrastructure have found themselves utterly unprepared to deal with the latest and most deadly zoonotic virus, COVID-19. The G-7 nations with a population of 750 million, and 39% ($34 trillion) of the world’s GDP are grabbling to muster the resources and capacity to defeat the coronavirus, while 90% of the world’s 7.5 billion people live with a frail health infrastructure, or none at all.

We have witnessed an increasing number of new zoonotic viruses (SARS, MERS, Swine Flu, HIV/AIDS) over recent decades. Humanity will only successfully defend itself by launching a global upgrading of healthcare including new scientific research into how human immune systems can become less susceptible to viruses that originate in animals.

Inadequate healthcare and impoverished living conditions in the developing sector cannot continue. It is a crime that has been perpetuated for decades, and the very survival of humanity screams out for a revolution in our thinking and practices. Ethiopian Prime Minister, Abiy Ahmed, stated eloquently the link between Africa and the advanced sector in this current crisis: “Advanced economies are unveiling unprecedented economic stimulus packages. African countries, by contrast, lack the wherewithal to make similarly meaningful interventions. Yet if the virus is not defeated in Africa, it will only bounce back to the rest of the world.”  (emphasis added)  PM Abiy “If Covid-19 is not beaten in Africa it will return to haunt us all” .The virus can only be overcome in Africa, and the rest of the developing sector, if we launch a new economic system, one that values human life above servicing debt and avariciousness.

Perilous Conditions in Africa

Dr. John Nkengasong, head of the Africa Centers for Disease Control and Prevention (CDC), said that COVID-19 “is an existential threat to our continent.” The Africa CDC and the World Health Organization (WHO) do not know the actual number of Africans infected with the virus, due to a lack of ability to test the population. Nor do they have an accurate count of the number of ventilators available in each African nation. Over a month since the appearance of the coronavirus on the continent, experts estimate that Africa is at the early phase of its proliferation.

The United Nations World Food Program warned that “the coronavirus pandemic threatens to cause food shortages for hundreds of millions of people especially in Africa,” according to Naharnet. “For many poor countries, the economic consequences will be more devastating than the disease itself.” Pandemic Threatens Food In Import Reliant States

An article published by Quartz, Africa Has About One Doctor for Every 5000 People cites a report by the (WHO), that Africa in 2013 “had a deficit of estimated 1.8 million healthcare worker that is projected to rise 4.3 million by 2035.”  One reason, according to the article is that: “Currently, there are only 170 medical schools serving the 47 countries of sub-Saharan Africa. Of those countries, 6 have no medical schools, and 20 have only one medical school.”

Statistics for the number of doctors per 1,000 population for African nations are horrifying. Physicians Per 1,000 People. When Compared to the figures for advanced sector nations that are now “hot spots” for COVID-19 to those of Africa, where the incidence of the virus is weeks behind Europe and the United States, Africa’s potential death rate is frightening.

Examine these estimates: U.S. has 2.3 doctors for 1,000 people, Spain 3.2, Italy 4.2, and South Korea 1.8. The average for sub-Saharan Africa (SSA) has an absurdly low 0.21 doctors for 1,000 people. Twenty SSA nations have .08 doctors or less to treat 1,000 of their citizens, with several at levels of 0.03 and 0.02 doctors. Two orders of magnitude less physicians than the nations that today are experiencing the highest mortality rates.

Governor Cuomo of New York, and Mayor de Blasio of New York City beg every day for more healthcare professionals, ventilators and PPEs (Personal Protective Equipment) to deal with the overload of coronavirus cases, Imagine what the potential death rate of Africa’s almost 1.5 billion population could be when one factors in extreme levels of poverty, weakened immune systems, and malnourishment, all prevalent on the African continent.

(Courtesy of SlideShare)

UNCTAD’s $2.5 Trillion Strategy

The March 30, 2020, statement by the United Nations Conference on Trade and DevelopmentUNCTADUN Calls for $2.5 Trillion Coronavirus Crisis Package for Developing Countries  is excerpted below.

“The consequences of a combined health pandemic and a global recession will be catastrophic for many developing countries and halt their progress towards the Sustainable Development Goals.”

UNCTAD’S strategy includes:

  • $1 trillion of debts owed by developing countries should be cancelled this year
  • $500 billion needed to fund a Marshall Plan for health recovery and dispersed as grants

Credit for a New Economic Order

Debt cancellation, and a Marshall Plan to build up health infrastructure for the developing sector nations are crucial for the survival of emerging nations. However, to break from the old political-financial system that has failed us, and to create a new economic platform, we must create credit for physical economic growth.

What is missing from UNCTAD’s proposal, and what is absent from all United Nations strategies, is the understanding of the importance of establishing a mechanism for the creation of credit. Following in the footsteps of President George Washington and his brilliant Secretary of the Treasury, Alexander Hamilton, we should establish a National Credit Bank. Nations Must Study Alexander Hamilton’s Principles of Political Economy. Wisely, the US Constitution provides for the federal government, not the states, to issue public credit to promote the general welfare.

Credit for production and infrastructure, unlike mere money, is the sine qua non for any healthy economy. This is not the same as printing trillions of dollars of money to bail out an over extended monetary system with a bubble of over one quadrillion of dollars in debt and derivatives.

Debts of developing sector nations must be cancelled to clear the decks for the issuance of new credit directed to fostering industrialized economies with healthy agricultural and manufacturing sectors. Extended credit with low interest rates must be issued for long term investments in vital construction of infrastructure. This is a life and death matter for the very survival of African nations.

Every government is obliged to create a national bank for the sole purpose of generating physical economic growth critical for the security and future health of that nation. Instead of relying on the present global financial institutions that dictate loan agreements at unnecessarily high interest rates coupled with arduous conditionalities we should create a new global economic system. One founded on the principles that promote the true shared common good for all nations and all peoples. Under this new system sovereignty is inviolate, and trade and credit agreements are premised on improving the material conditions of life for the people of those nations. All political and economic relationships between nations should be to benefit the general welfare of its citizenry.

Human beings are sacred, financial systems are not. We can and should craft new monetary systems to advance progress, not monetary profits. President Franklin Roosevelt created the Bretton Woods System, with the intention of uplifting the planet from the misery of World War II. He had magnificent ideas for promoting economic growth around the world, including greening the deserts of Africa.  Sadly, after his death, Bretton Woods was perverted, and became the opposite of what he intended.

While we must fight this deadly virus with all the resources that governments can assemble, we need to also think to the future; the creation of a more advanced economic platform. It is up to us create a new architype of relationships among sovereign nation states to transform the world out of the ashes of its present decayed state. Let us call this new paradigm by its proper name–A New Just World Economic Order

Lawrence Freeman is a Political-Economic Analyst for Africa, who has been involved in the economic development policy of Africa for 30 years. He is the creator of the blog: lawrencefreemanafricaandtheworld.com

 

Alexander Hamilton’s Credit System Is Necessary for Africa’s Development

October 4, 2019

Below is a half hour video presentation on the importance of Alexander Hamilton’s credit policy for the development of Africa. The forum was organized by Watch Democracy Grow, an organization promoting democracy and development in Africa, and was filmed Afrique Today.

As I discuss in the video and article below, African nations need long-term and low interest lines of credit to finance trillions of dollars necessary for infrastructure projects across the continent.  Government backed authorities or the government itself can issued public credit in the amounts required. To provide credit for the newly united colonies, Hamilton designed the National Bank of the United States in 1791 at the request of President George Washington. It was a corner stone of the successful American System of Political Economy. Similar institutions are appropriate for African nations to finance vitally needed infrastructure today.  Applying the Hamiltonian model, the Belt and Road Initiative, promoted by China, is helping Africa build and finance infrastructure that is essential for African nations to industrialize and expand their agriculture and manufacturing sectors.

 

Read my article from March of this year: Nations Must Study Alexander Hamilton’s Principles of Political Economy

 

 

How the Imperialist CFA franc Suppresses Growth in Africa

Africa’s ‘colonial’ CFA currency (courtesy dw.com)

The article in the link below is a detailed and useful expose of how the CFA franc, controlled by France, contributes to the suppression of economic development in Africa. We have now past a half century since many nations in Africa liberated themselves from colonialism. Yet the French banking system still exercises colonial domination over the finances of African nations that should be economically independent. African nations will never be truly independent until they are economically sovereign. This means having sovereign control over their own currencies and the issuing of credit for internal improvements of their economies. African nations should have National Banks and Development Banks for the issuing of credit, as first conceptualized by Alexander Hamilton. Hamilton’s concept of government-national credit was essential for the creation of an industrialized USA from thirteen agrarian based colonies.

Read: Towards a Political Economy of Monetary Dependency

For more analysis of Alexander Hamilton’s credit policy read: Nations Must Study Alexander Hamilton’s Principles of Political Economy

AU Demands: African Integrated High Speed Railway Network

July 4, 2019

The article below written by a friend of mine is a useful over view of the African Union’s plan to build High Speed Rail-lines in Africa.  High-Speed Rail together with the production of abundant supplies of energy are indispensable for the continent’s development and the industrialization of African economies. The link to the entire article that is worth reading follows the excerpts.

“The vital plan for an African Integrated High-Speed Railway Network (AIHSRN), approved by the African Union (AU) in 2014, appears to be going forward energetically. But in fact, Africa is getting only half a loaf at best. Standard gauge rails are being built, but to “save money,” they are not being built to standards permitting the high speeds that the African Union had specified. These “higher”-speed lines are not “high-speed” by any accepted standard. Or, worse, existing lines of the old colonial gauge are being rehabilitated—again because “there is not enough money.”

“Yet having “enough money” is not the problem it seems to be: The principle of Hamiltonian credit—credit extended by government, on the strength of nothing but the skills of the population, and earmarked for projects sure to produce leaps in productivity—has been known in theory and practice for 200 years, even if suppressed by the business schools.” Read my post from earlier this year on Alexander Hamilton: Nations Must Study Alexander Hamilton’s Principles of Political Economy

“AIHSRN is not a master plan for all rail transport in Africa. It is, rather, a plan for rapid rail transport across long distances. And Africa has long distances. To go from Cairo to the Cape of Good Hope by road or rail is more than 10,000 kilometers (6,200 miles)—the equivalent of going from New York to San Francisco and back again.

“Yet with the AIHSRN, an express train could depart from Cairo at 6:30 a.m. on Monday morning, travel at an average of only 220 km/h (137 mph), make only five half-hour stops—at Khartoum, Nairobi, Dodoma (Tanzania), Harare, and Johannesburg—and arrive in Cape Town in time for an early breakfast on Wednesday. The east-west trip from Addis Ababa in Ethiopia to Dakar, Senegal—“only” 8,100 km—will be quicker. The implications of such speed for the African economy—and for African integration in all respects—are enormous.

“The continental plan is for six west-east routes from the Atlantic to the Indian Ocean/Red Sea, and four routes that run from north to south—a 6×4 grid (see map).

“Because of their high speeds, the trains must run on dedicated, standard gauge lines that will not usually accept traffic from other, slower lines of the sometimes denser, surrounding rail network.

“The plan includes the construction of railway manufacturing industries, parts suppliers, maintenance facilities, and the building up of railway training academies.

“The AIHSRN is part of the African Union’s Agenda 2063, a fifty-year plan for the economic, social and cultural development of the entire continent, born in 2013”

Read full article: Africa Integrated High Speed Railway Network

Celebrate Africa’s New Free Trade Agreement: Terminate CFA franc

With the initiation of the Africa Continental Free Trade Agreement on May 30, 2019, now is the time for African nations to finally jettison the CFA frank, a relic of French Colonialism. No longer should 14 African nations have their sovereignty infringed upon by a former European colonial country. Economic sovereignty is inviolate. For a nation to develop its full economic potential it must control its currency, which is a from of national credit. One of the great accomplishments of the President’s George Washington’s Secretary of the Treasury, Alexander Hamilton, was his creation of a National Bank, which unified all the currencies and debt held by the thirteen colonies. A nation that does not have sovereign authority over its currency and credit will never be truly free, and its people will suffer from underdevelopment..

Map showing those countries using the CFA franc
It’s used by Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali. Niger, Senegal and Togo in West Africa, and Cameroon, Central African Republic, Chad, Congo-Brazzaville, Equatorial Guinea and Gabon in Central Africa

Read: Africa’s CFA Franc Colonial Relic or Stabilizing Force

Nations Must Study Alexander Hamilton’s Principles of Political Economy

Hamilton Versus Wall Street: The Core Principles of the American System of Economics
Nancy Bradeen Spannaus iUniverse, Bloomington, Indiana, 2019, 222 pp. $13.99 soft cover, $5.99 e-book.

Hamilton Versus Wall Street: The Core Principles Of the American System of Economics      By Nancy Bradeen Spannaus

A Review by Lawrence Freeman-March 28 2019

For those followers of our beloved Alexander Hamilton and for those new to his writings, this book is for you. Nancy Spannaus, in her just-released book Hamilton Versus Wall Street, makes a unique contribution to the existing volumes written on Hamilton’s political and economic thoughts.  In her relatively short easy-to-read book, she weaves together Hamilton’s revolutionary ideas on political economy that served as the pillars for the creation of the United States, their legacy in the next two centuries of America, and their influence internationally. Throughout her treatise, Spannaus also provides constructive historical analysis of the battle inside the United States to adopt Hamilton’s concepts. This book is a valuable complement to Hamilton’s economic reports and will aid those unfamiliar with his seminal texts. *

Spannaus polemically begins by countering the popular myth that Hamilton was an agent for the banks (Wall Street) against the interests of the “little man,” agrarian society and the states, as espoused by Thomas Jefferson and others.  She later devotes entire chapters to Hamilton’s opposition to the British central banking system and Adam Smith, exposing another slander which alleged Hamilton was a supporter of the British aristocracy.

Principles of Political Economy

            Unlike like other publications on Hamilton that gloss over or give insufficient attention to Hamilton’s ground-breaking concepts of banking, credit, and manufactures, Spannaus makes a great effort to elaborate Hamilton’s contributions to: “The Core Principles of the American System of Economics.”  **

All nations would benefit greatly, if their leaders and citizens studied Hamilton writings. American culture would not be at the low level it is today, if my fellow citizens had been taught Hamilton’s economic theories, which in fact were crucial to the creation of our nation from thirteen indebted, agriculturally-based colonies. Advanced sector countries that are dominated by financial systems dictated by Wall Street and the City of London, and underdeveloped nations that rely on resource extraction and farming, because they lack a manufacturing sector, could learn a great deal from Hamilton.

However, Hamilton’s thinking about economic growth was not limited to the mere production of goods. He understood for society to continually increase the productive powers of the economy, the development of the human mind was essential. Spannaus quotes Hamilton: “To cherish and stimulate the activity of the human mind, by multiplying objects of enterprise, is not among the least considerable of the expedients, by which the wealth of the nations may be promoted.” (p. 28).

Friederich List, a student of Hamilton’s philosophy in the nineteenth century, wrote that “capital of mind, capital of nature, and capital of productive matter” are all essential components to achieve economic progress. (p. 29)

Hamilton’s First National Bank (courtesy ushistory.org)

The Constitution and Public Debt-Credit

Hamilton knew that for a nation to be truly sovereign, it must possess the means to produce the physical wealth necessary to maintain the existence of its citizens and their posterity. It is no coincidence that the Founding Fathers embedded this concept in the profound Preamble to the US Constitution. As Spannaus emphasizes, for Hamilton, the importance of establishing federal credit through the creation of the National Bank, stabilizing the currency, developing the manufacturing capability of the young United Sates, and increasing the wealth of the nation through internal improvements, was coherent with the intent of the Preamble “to form a more perfect Union.”

Hamilton used the “general welfare” clause of the Preamble to justify his revolutionary idea to create a public-private National Bank to consolidate the separate states and establish a unified currency to promote national economic growth. Generations later, in the footsteps of Hamilton, Franklin Roosevelt, who studied Hamilton’s writings, would also rely on the “general welfare” clause to garner support for his New Deal and other programs he initiated to revive the U.S. economy wracked by the Great Depression.  

Public Credit, anathema today to virtually all Democratic and Republican leaders, was another key concept Hamilton fought for, knowing that private sector funds and privately-owned banks would never adequately fund a nation’s economic growth, especially for large-scale internal improvements, i.e. infrastructure.

To emphasize the unique role of public credit, Spannaus lists four exceptional periods in U.S. history when the efficacious application of government-issued credit led to a pronounced expansion of the American economy. These are administrations of Presidents George Washington, John Quincy Adams, Abraham Lincoln, and Franklin Roosevelt. (p. 55-56)

In chapter 7, the author concisely summarizes Hamilton’s outlook: “…it is the deliberate increasing of the productive powers of labor through technology, improvements in infrastructure, and the use of government power to create credit that will produce value in the economy.” (p.128) This is more than good advice that all public officials. government leaders, and informed citizens should follow to secure a joyful future for their nation.

In Africa and other underdeveloped regions of the world where nations have suffered from hundreds of years of exploitation of their natural resources, Alexander Hamilton’s wise words should be fully grasped: “The intrinsic wealth of a nation is be measured, not by the abundance of the precious metals contained in it, but by the quantity of the productions of its labor and industry.” (emphasis added p. 1)

*Hamilton wrote four major economic reports for Congress and President George Washington between January 1790 and December 1791: Report on Public Credit; Report on a National Bank; Report on Manufactures; and Opinion as to the Constitutionality of the National Bank.

**This is the subtitle of Hamilton Versus Wall Street.

‘Investigate or Legislate’: What Will the Democrats in Control of the House of Representatives Do?

With control of the House of Representatives, the Democrats have the opportunity to provide leadership for the United States. They will have to decide. Do they want to make their primary focus attacking President Donald Tramp, by continuing their impotent investigation of his alleged collusion with Russia in the 2016 election? Or will they actually provide a vision for the future of the USA, by enacting bold new legislation.  Any attempt to impeach President Trump would be a farce that would virtually ensure the Democrats would be defeated in the 2020 presidential election.

President Trump has demonstrated that he lacks a comprehensive understanding of the scientific principles that created the USA. He has also displayed an unAmerican phobia to non-white foreigners from a multitude of countries arriving in the USA.  However, President Trump has distinguished himself in forming a close relationship with the President of China, Xi Xinping. He has also attempted to establish a working relationship with the President of Russia, Vladimir Putin. To the detriment of the USA (and the world) many Democrats, along with some members of his own administration, have adamantly opposed these positive initiatives by President Trump. President Trump has many shortcomings, but to his credit, he is not an ideologue, and he is not a devout follower of the geo-political doctrine on foreign policy. If President Trump took the audacious step to partner with China’s Belt and Road Initiative, the world could be transformed.

Important polices must be implemented now to provide for the welfare of our citizens, which will require bipartisan action in the Congress. For example. Both the Republican and Democratic parties have made verbal commitments to support a Glass Steagall banking reorganization, yet no action has been taken by the Congress or this administration. Another opportunity for bipartisanship would be the passage of legislation for a transformative infrastructure plan to rebuild the USA.

Below is a useful article discussing how President Trump working with the Congress could fund large-scale infrastructure projects. 

A New Opportunity for a National Infrastructure Agenda?

Nov. 7, 2018—One thing is definitive about the results of the U.S. mid-term elections: Neither political party put a solution to the country’s economic and financial disaster on the national agenda.  That doesn’t mean that many of the new Democratic members of Congress don’t have a strong commitment to address the economic crisis, however. They can potentially galvanize the veteran Congressmen into action. The question is, will competent, workable proposals be put on the table in the 116th Congress?

Statements from President Trump and the putative incoming House Speaker Nancy Pelosi in the immediate aftermath of the election were notable for addressing the possibility of bipartisan progress on infrastructure. Both statements were quite vague, however—and, as some will recall, Trump has offered cooperation on infrastructure before. One need only look at his current blackballing of the New York City Gateway project to see how hollow that promise was.

Rep. DeFazio in his campaign photo.

More substantive have been remarks from the incoming chairmen of two House committees. Rep. Peter DeFazio (D-OR) is expected to take over the Transportation and Infrastructure Committee. According to a Nov. 7 Reutersarticle, DeFazio is prepared to put forward his previous proposal for a $500 billion plan, which would involve issuing 30-year bonds, using funds from  raising gas taxes. He believes Trump would accept an increase in the gas tax.

“There has to be real money, real investment,” DeFazio said today. “We’re not going to do pretend stuff like asset recycling. We’re not going to do massive privatization.”

Rep. John Yarmuth (D-KY), who is slated to take over the House Budget Committee, addressed the infrastructure question a few days before the election, according to an Oct. 30 Politico Pro article. He said he would be making a proposal which “involves some very long-term bonding authority that would help finance an infrastructure bank.”

The Issue of Funding

The inevitable sticking point in Congressional discussions of an adequate infrastructure bill—which should ultimately amount to spending trillions of dollars to meet the infrastructure deficit—will be funding. President Trump has already indicated his preference for off-loading the cost to local and state governments, and proposes to even cut the Federal contribution from today’s 80% to 20%. That’s a formula for non-action. The Democratic plans have not been specific.

The danger lies in a potential “compromise” that pushes Public Private Partnerships (PPPs) as the solution to the funding dilemma. PPPs are presented as a means of reducing, or eliminating, public costs, by contracting with private companies to either build, manage, or both the needed element of infrastructure. The claim is that the private company can do the job cheaper and more efficiently, and the public will benefit.

Moving ahead on Gateway would be a good place to start.

Not so fast. First, some of the cheapness comes at the cost of labor—by violation of Davis-Bacon standards–and quality. Secondly, private contractors only enter PPP agreements on the guarantee that they will receive a revenue stream to cover their costs, and provide a profit. This can amount to tolls on a road, water bills for a water company, and the like. And if the stream doesn’t provide what the company considers adequate profit, what will it do?  Cut maintenance? Cut off people’s water supply? Both results have occurred! And they are unacceptable.

So, forget PPPs. The solution lies in taking the lead from Franklin Roosevelt and Alexander Hamilton. The Federal government has a unique capability (and responsibility) to create credit to modernize and rebuild our infrastructure. That credit can in fact be issued by turning current (virtually non-performing) government debt into bonds supporting an infrastructure bank, against which it would then issue new loans to help finance the long overdue infrastructure projects.  These would not only be short-term, but also long-term projects, such as the Gateway Project, California High Speed Rail, and the desperately needed water projects in the nation’s interior, for starters.  If the right projects are selected, the infrastructure constructed will pay back more to the economy in increased productivity than is expended–as well as creating millions of new, high-paying jobs.

For a modern proposal for such an infrastructure bank, click here

 

The Debate On China’s Role In Africa; A Different Point Of View

The Council of African Security and Development-CASADE has published my article regarding the debate over whether China is forcing African nations into a new ‘debt trap.’ Despite the propaganda from some Africans and Westerners, China is not the new imperialist in Africa. You can read my analysis below.

CASADE: COUNCIL ON AFRICAN SECURITY AND DEVELOPMENT