Ghana's downfall was largely economic. The rulers forgot the thing which had made them rich and powerful: a free market in which miners extracted gold from the earth and in which people were free to trade gold and salt at whichever prices seemed reasonable to them. Gold mined from the earth came often in the form of gold dust, and sometimes in large pure nuggets. The kings became greedy, and as one textbook - World History: Patterns of Interaction (McDougal-Littell, 2007) - notes, "the king often demanded these gold nuggets as taxes."
This type of taxation was merely confiscation of private property: in a word, the government was stealing from the people. This reduced the eagerness of the miners to find gold, because they knew that if they found it, the king might simply steal it. Taxation reduces productivity and inventiveness among workers.
In addition to confiscating from the miners, the kings of Ghana began to demand a percentage of products which were bought or sold in Ghana, or which were transported through Ghana:
By the 700s, Ghana was a kingdom, and its rulers were growing rich by taxing the goods that traders carried through their territory.
The rulers were growing rich, but the people were growing poor: taxation is theft. Productive business activity, the kind that creates jobs and gives ordinary people a chance to gain wealth, was inhibited. Who would want to do business in an environment in which the government taxed, confiscated, and monitored transactions?
Merchants met in trading cities, where they exchanged goods under the watchful eye of the king's tax collector.
The marketplace was no longer free. The government distorted the natural equations of commerce. Normally, buyers and sellers negotiate and finally agree on some price. The government's actions, however, manipulated the give-and-take of the marketplace.
In his royal palace, the king stored gold nuggets and slabs of salt (collected as taxes). Only the king had the right to own gold nuggets, although gold dust freely circulated in the marketplace. By this means, the king limited the supply of gold.
By limiting the supply, the king manipulated the price. The 'natural price' of something is the price to which buyer and seller freely agree. When the government manipulates the supply by limiting it, prices are forced unnaturally upward. Although this action increased the king's power and wealth, it weakened Ghana.
By the time the Muslims attacked Ghana, its abilities to defend itself were diminished because of a sluggish economy. Taxes and the lack of a free market brought Ghana down.
Ghana was not the only power on the continent to be undermined by government interference in the economy. The empire of Songhai established a tax-gathering bureaucracy under the rule of Askia Muhammad. His taxmen were so efficient that Songhai fell behind in terms of technological development. When Muslims from Arabia and Morocco attacked (despite that fact that Songhai was a Muslim empire), the attackers had gunpowder, while the defenders of Songhai did not, and Songhai soon fell. Taxes had reduced both the will of the people innovate and the ability of the people to acquire new technology.
Likewise was the case of the powerful city-state Great Zimbabwe. Shortly after the year 1000 A.D., it was the major economic power in Southern Africa. But its leaders taxed the trade in the area, and by 1450, the city was a collection of abandoned ruins.
The pattern is clear. The twin evils of taxation and regulation will weaken a nation. In order to thrive, a healthy economy must allow buying and selling to be the product of free negotiations between customers and suppliers. Any interference, regulation, or taxation by the government will harm the process.
To be sure, taxes are necessary. But they must always be kept at a minimum, and the government must not be allowed to stipulate what that minimum is. Whatever the government may propose as a minimum, the real minimum will always be lower. As Senator Goldwater wrote:
But having said that each man has an inalienable right to his property, it also must be said that every citizen has an obligation to contribute his fair share to the legitimate functions of government. Government, in other words, has some claim on our wealth, and the problem is to define that claim in a way that gives due consideration to the property rights of the individual.
Whichever projects and tasks the government envisions for itself, the citizens must be ready to resist. The "legitimate functions" of the government are few, but the ambition of government is large. A very small amount of taxation will fund the things which a government must do. The distinction is between what the government must do and what it wants to do. The government's desire to enact its will is the source of poverty for the people and weakness for the nation.
