Using Idi Amin's Hideous Mistakes to Correct Economic Illiteracy
Perhaps the most persistent delusion about economics is the lump of labor fallacy, the notion that the amount of work available in an economy is fixed and the more people you have, the more unemployment you have – instead of recognizing that the amount of work is not static, and people create more of it. One of the most vivid arguments against the lump of labor fallacy unfolded almost 50 years ago, when Uganda dictator Idi Amin expelled some 60,000 South Asians to ensure that “the average Ugandan enjoys the wealth of his country.”
Such massive dislocation of a people who had been productive residents of Uganda for decades is rightly seen as an obscene act. But to paraphrase Talleyrand, it was worse than a crime. It was a mistake. Instead of creating opportunities for Ugandans as Amin intended, the mass expulsion simply punched holes in the country’s economy – holes that have never entirely been closed. It is one of the most important reasons that Uganda became one of the poorest countries in Africa – while countries like Canada that accepted an outsized number of South Asians from Uganda have prospered.
Deep prejudice against South Asians had been simmering in Uganda for many years, as the commercial success of the minority group prompted jealousy and anger. Amin’s predecessor, Milton Obote, had pursued an “Africanization” policy that, among other discriminatory measures, included a system of work permits and trade licenses aimed at restricting the role of non-citizen Indians in economic and professional activities. But in 1971 Amin kicked the persecution up a few notches, launching a census of Uganda’s Asian population and a review of their status, aimed at narrowing “the wide (economic) gap” between Ugandan Asians and Africans.
Even as Amin paid tribute to Indians’ contribution to the Ugandan economy and their out-of-proportion participation in the professions, in August 1972 he ordered the expulsion of the country’s Asian minority – giving them 90 days to leave. As one of the reasons for his expulsion order, Amin called the Ugandan Indian community, which had often been the target of resentment and violence, "bloodsuckers" who had exploited the local economy. Amin defended the expulsion by arguing that he was giving Uganda back to the ethnic Ugandans, saying: “We are determined to make the ordinary Ugandan master of his own destiny, and above all to see that he enjoys the wealth of his country. Our deliberate policy is to transfer the economic control of Uganda into the hands of Ugandans, for the first time in our country's history.”
In other words, Amin was trying to transfer Uganda’s “lump of wealth” from an immigrant ethnic group to the majority. How effective was this pursuit of the lump of labor? Under the weight of the expulsion, as well as an accompanying nationalization of several key industries, the Ugandan economy fell into a deep crisis, with economic instability leading to the ballooning of an economic blackmarket economy. The sudden lack of experienced technicians and managers proved an insurmountable challenge for the Uganda Development Corporation, resulting in a restructuring, according to Uganda: A Modern History, by Jan Jelmert Jorgensen. Many African Ugandans did not like the expulsion, recognizing the Asian community’s essential role in the productive functioning of the economy. Many African Ugandans were left jobless, as the economy was thrown into disarray.
By 1987, the country had the poorest growth rate in Africa; the National Resistance Movement Party, which took office at that time, tried to address the problem by adopting free market reforms. The country’s leadership went so far as to invite the Indian expellees back, offering some incentives and compensation – but few took up the offer.
Meanwhile, the Indian community’s resettlement in other Commonwealth countries was recognized as an outstanding success – for the refugees and the countries that took them in. Canada, for example, opened its doors to some 8,000 Ugandan Indians, mostly Ismaili. In December of 1972, just after they were given refuge, approximately 3300 Ugandan Asians in Canada were receiving some form of government subsidy, but within 10 months this number had dwindled to fewer than 150. In a follow-up survey one year after the arrival of Ugandan Asians to Canada, eighty-nine percent of respondents who had wished to enter the labour force had done so, (at a time of high unemployment) and more than ninety percent planned on staying in Canada permanently. Today, the South Asian community is recognized as a major contributor to Canada’s economic dynamism.
The humanitarian lesson of Amin’s brutal expulsion order is clear. But so is the economic lesson. Jobs are not slots that anyone can suddenly fit into. Businesses are not vessels than anyone can immediately steer. Jobs do not create prosperity, people do.