Right on the Money: Doug Casey on Economics, Investing, and the Ways of the Real World with Louis James

Chapter 18

Doug Casey on Africa

February 22, 2012

Doug: Lobo, you were in Africa—the Congo—last time we talked. How did that go?

Louis: I saw a lot of changes from my previous visit to the DRC [Democratic Republic of the Congo, not the Republic of the Congo] in 2006. That brings up an interesting question, as we do invest in companies working in several African countries, and you’ve described the continent as “a perpetual basket case.” What’s your take on Africa today? Is it doomed to remain the heart of darkness, or could things be looking up at a last?

D: I think it’s very much an open question at this point, as to whether Africa has a dim or bright future. It’s all about management, not resources. Africa has always had plenty of resources, but the worst management possible. Resources are actually a liability for most places. The classic examples of places not needing natural resources for success are Japan and Hong Kong. They have essentially zero natural resources, but became immensely prosperous because they had good property rights and predictable laws. On the other hand, you’ve got countries like Venezuela and Nigeria that have been blessed—or cursed, as the case may be—with great mineral wealth, but are absolute basket cases. And they’ll stay that way until the governing philosophy changes.

Success of a society is totally a “people” thing—management. Without social systems that encourage prosperity—which is to say, encourage personal freedom—natural resources are counterproductive. ...