I’m a big fan of the small island of Mauritius off the coast of Madagascar. I have been writing about its role in China-Africa trade for several years now, and it has struck me as a place that will be increasingly important over the next few decades. So, naturally I was pleased to read Joseph Stiglitz’s praise of the island in a recent piece on Project Syndicate, though I disagree with him over the nature of Mauritius’s success and what our country can learn from the island.
First, the question is not whether we can afford to provide health care or education for all, or ensure widespread homeownership. If Mauritius can afford these things, America and Europe – which are several orders of magnitude richer – can, too. The question, rather, is how to organize society. Mauritians have chosen a path that leads to higher levels of social cohesion, welfare, and economic growth – and to a lower level of inequality.
Second, unlike many other small countries, Mauritius has decided that most military spending is a waste. The US need not go as far: just a fraction of the money that America spends on weapons that don’t work against enemies that don’t exist would go a long way toward creating a more humane society, including provision of health care and education to those who cannot afford them.
Third, Mauritius recognized that without natural resources, its people were its only asset. Maybe that appreciation for its human resources is also what led Mauritius to realize that, particularly given the country’s potential religious, ethnic, and political differences – which some tried to exploit in order to induce it to remain a British colony – education for all was crucial to social unity. So was a strong commitment to democratic institutions and cooperation between workers, government, and employers – precisely the opposite of the kind of dissension and division being engendered by conservatives in the US today.
I sympathize with Stiglitz’s positions on healthcare, education and the military, but to an extent comparing a country with an area of 1865 sq km (smaller than Rhode Island) and a country with an area of 9,830,000 sq km is like comparing apples and oranges. Large scale home ownership and small military expenditures is a lot more plausible for an island country than for a country that spans a continent from East to West.
I also think he missed what is crucial about Mauritius’ diversity. Simply put Mauritius is successful because of its diversity, not despite it.
Mauritius is a favorite destination for both offshore finance and shipping, particularly for Indian and Chinese businessmen targeting the growing markets, and minerals, in Southern Africa. Mauritius has the advantage of being stable, being part of both COMESA and SADC – free trade groups that encompass 22 and 15 countries respectively (there is some overlap) – and having a large network of double taxation agreements that makes doing business on the island cheap and easy. Even the Chinese government is said to use Mauritius as a conduit for funds into some of Africa’s more risky regions. The island’s major competitor for this market is Seychelles, who has fairly few double taxation agreements, has comparatively tiny Chinese and Indian communities (1000 and 2000 vs. 35,000 and 850,000 on Mauritius) and has suffered a spate of kidnappings (mostly Somali pirates, but there have been more bizarre stories).
So, while I admire Mauritius’ success and largely agree with Stiglitz’s positions on education and healthcare, America is going to be hard pressed to turn itself into a small island in the middle of a major trade route, with preferential tax and trade policies, and long standing ethnic connections to its major trading partners.
Though New Orleans wouldn’t.
To a degree this was New Orleans’ historical role in the development of America. The city provided a conduit for goods coming from across the caribbean into markets along the Mississippi, and along land routes or connecting rivers from there. Often this trade was tariff free (smuggled), and assisted by foreigners who had little problem entering and leaving the country. New Orleans’ fortunes slowly waned, as Southern markets disappeared, and Atlantic, and then Pacific, trade came to replace the importance of trade around the Caribbean. But with Brazil an up and coming economic power (not to mention a stable source of oil), free trade pacts (hopefully) pending with Colombia and Panama, and even China, a country literally half a world away, seeing the potential of the Latin American market, creating a stable and friendly environment in New Orleans for the free movement of goods and people, could do wonders for turning this city around.
Of course there might be some legal complications if New Orleans were to unilaterally negotiate a free trade agreement with Brazil, or ease access to business visas for people from Latin American countries. But just because something is unconstitutional doesn’t mean it wouldn’t be a good idea.