zambian mining case study

[Freeloader]

Stealing Africa- Why Poverty

youtubecom/watch?v=WNYemuiAOfU


Summary:
Glencore has mining operations in Zambia. Glencore acquired these mines/resources from the Zambian Governments privatization drive partly due to pressure from the IMF and World bank as conditions. The sale was rushed, the assets were not assessed accurately, leading to a drastically lower sale price, and the leader of that government embezzled money from the sale. Not only this but the contract Zambia had agreed to saw a $3 billion export with only $50 million paid back to Zambian government which was negated by the legal obligation of Zambia to provide electricity billing up to $150 million.

In response and with international help there was some temporary tax rises, in effect tearing up the contract which saw a capital strike against the Zambian government. Leadership Changed in the Zambian government, they caved into pressure. So what do you think should or needs to be done ?

Personally my instinct was shut it down, but didn't factor in the fact that that would increase unemployment and may actually be worse (hard to tell) it may be directly worse for the thousands directly employed.
Second was re-nationalize it, workers know how to run it, infrastructure is in place. But then you face the wrath of sanctions by the IMF, UN, the World Bank and other foreign Investors, and also current markets meaning you may be stockpiling copper.

So im left with temporary hike in tax, whilst securing market before re-nationalisation

[Crabbensmasher]

If the mine is nationalized by a corrupt government, then there is no real benefit. The idea is that the wealth should trickle down to everyday people, but I don't think the government even represents the people. There would have to be some major changes before re-nationalization is even put back on the table. And even if they did re-nationalize, they risk running it at a loss, as well as losing jobs if something goes wrong. Not to mention, foreign investors would be scared off, meaning further job cuts. And if jobs are cut, there will be less tax revenues, and more money spent on welfare. Basically, the government will be in an even worse position to develop their own natural resources, which will probably remain unused for many years. AND current services/entities operated by the government risk being cut as well, meaning an overall lower standard of living for everyone. These sort of things are doomed to failure in a capitalist economy.

And this is why market socialism is very unappealing to me.