As the editor of the Mercatus Policy Series, I am very happy to present our latest Mercatus Policy Comment by my colleague Karol Boudreaux: Taxing Alternatives: Poverty Alleviation and the South African Taxi/Minibus Industry (see here for pdf). In conjunction with the Free Market Foundation of Southern Africa (FMF) and the Institute of Economic Affairs (IEA) in London, and with the financial help of the Templeton Foundation, the Mercatus Center started the Enterprise Africa! project in 2005.
As William Easterly puts it in his latest book, The White Man’s Burden, grand plans to eliminate sustained poverty in the developing world have failed for 50 years, and $2.3 trillion were spent in vain. This is the greatest tragedy of our age. In spite of what Jeffrey Sachs and other luminaries say, we do not need another plan doubling foreign aid. In order to understand what the mechanisms of development are, we need to take a radically different approach and understand, in the light of economics (especially the entrepreneurial approach), the actual situation on the ground.
The goal of the Enterprise Africa! project is to provide a unique view of how the institutional environment created by local policy enables or inhibits productive enterprise and ultimately affects the well being of members of the community in question. Our approach relies substantially on local experience and knowledge. We aim at painting a picture which reflects the reality that people live every day and not the fanciful ideas that planners have about the world from their desks in Western capitals.
Karol has been twice to Africa already (she actually just came back from her second trip). This first publication is about the taxi industry in South Africa. It shows how, in spite of the apartheid, black South Africans started taxi businesses and made a living providing a very useful social service. While some deregulation took place in the 1990s, the South African taxi industry is now in crisis and is experiencing bursts of violence. In Taxing Alternatives Karol explains the context for the development of the taxi industry and what policy should be followed to remedy its current ills. It is a great piece of work!