Episode 02 – Mansa Musa's kindness… not helpful?

In this episode, we travel seven hundred years to the Mali Empire in West Africa. In the year 1312, Muhammad ibn Qu, the eighth Mansa, meaning "ruler" or "emperor" in the Maninka language, decided to reach the end of the Atlantic Ocean. After a previous failed expedition, he took 2,000 boats, 1,000 for himself and his men, and 1,000 for water and provisions.  

Then the next emperor, Mansa Musa, recounts the following: "That was the last we saw of him and all those who were with him, and so I became king in my own right."

Perhaps Muhammad ibn Qu did not navigate the Atlantic, and Mansa Musa fabricated the story to justify and legitimize his own ascension to the throne. We will never know. 

Mansa Musa, the ninth ruler of the Mali Empire, is the protagonist of our episode. His good deeds in foreign lands are perhaps some of the first evidence in History of how an altruistic idea can cause adverse unintended consequences. There are such examples in our world today in what we call Foreign Aid, cases when the generosity of wealthy nations and international organizations, can cause adverse effects among those impoverished communities they aim to help. We will talk a bit more about this at the end of the episode after discussing the events related to Mansa Musa. We will also talk a bit about the California Gold Rush of the 19th century. 

"Lord of the Wangara Mines" and ninth Mansa, "Mansa Musa the First" ruled the Empire of Mali between 1312 and 1337. It was one of the largest empires in all Africa up to that moment. A territory that today corresponds totally or partially to a long list of countries: Mauritania, Mali, Niger, Burkina Faso, Ivory Coast, Sierra Leone, Guinea, Guinea-Bissau, The Gambia, and Senegal. Part of the empire was the city of Timbuktu, famous for its mosques and for being one of the centers of scholarship in the medieval Muslim world. Although it is impossible to assess Mansa Musa's riches with certainty, thanks to trade in gold, salt, copper, ivory, and tribute from vassal kingdoms, some estimates suggest that his wealth would be equivalent to around 400 billion dollars today, making him the wealthiest man in history. 

To put it in perspective, as of the moment I record this episode in mid-2025, Elon Musk's fortune is close to this amount, but his wealth is volatile, as it was half the amount a year ago. Even those who are at the top of the wealth list today, such as Jeff Bezos, Larry Page, or Mark Zuckerberg, are worth a bit more than half of what Mansa Musa owned. Even legendary names such as the Rothschild and Rockefeller families are worth today the equivalent of 350 and 340 billion dollars respectively, according to the BBC.

In 1324, as a devout Muslim, Mansa Musa embarked on a pilgrimage to Mecca, which Muslims refer to as the Hajj. Just 20-something years before, another Malian ruler, Mansa Sakura, had been killed while returning from the Hajj. This time, this is probably why Mansa Musa did not pack lightly. Some estimates suggest that his caravan comprised 8,000 soldiers and courtiers, 12,000 slaves, each with 4 pounds of gold, and 100 camels, each carrying 300 pounds of gold. For greater spectacle, another 500 servants preceded the caravan, and each one carried a gold staff of between 6 and 10.5 pounds. In total, when adding up the estimated amounts of gold, Mansa Musa carried around 40 tons of gold. As of today, in mid-2025, this is equivalent to carrying a camelback from one side of the African continent to the other, the equivalent of the gold reserves in the central banks of Finland, or Bulgaria, or Malaysia. Some accounts even mention a total of 60,000 men in this procession, which significantly increases the amount of gold carried by Mansa Musa.

On his way to Mecca, upon arriving in Cairo and visiting the Sultan Al-Malik an-Nasir for the first time, Mansa Musa gave him 50,000 gold dinars as a gesture of appreciation. To provide a rough idea, considering that the dinar weighed 4.5 grams and had a gold purity of between 22 and 24 carats, at today's gold price, this would be equivalent to almost 30 million dollars. I am referring to the current value of gold per se, not the purchasing power of those 50,000 gold dinars in the year 1324. In any case, it is surprising that Musa would hand over a fortune to the Sultan just to say hi. In turn, the Sultan offered a palace to the Mansa of Mali as a sign of hospitality, and there, Mansa Musa stayed with his thousands of companions for three months.

The next day after he arrived in Cairo, Mansa Musa began receiving visits from the city's most distinguished people, including the Caliph of Baghdad, who was formally the leader of all faithful Muslims. He also met with architects, engineers, jurists, philosophers, and even the ambassadors of Venice and Genoa. All of them received a royal present from the generous Mansa of Mali: gold coins, or gold nuggets, or gold dust. The Egyptian historian Al-Makrizi, who was born 40 years after these events, tells us that: "His gifts amazed the eye with their beauty and splendor."

Mansa Musa also befriended the Chief of Protocol of the Egyptian Sultan, who facilitated contact with the principal merchants of Cairo. These merchants sold chandeliers, maps, beautifully decorated scientific and religious books, and even five extremely rare compasses imported from China, which Mansa Musa personally bought. Needless to say, all these products were handsomely paid for with pure raw gold.   

The emissaries of the Malian emperor visited the city's bazaars and purchased many products, including incense, myrrh, porcelain, and silk. To the amazement and joy of the sellers, they were all, also, paid in gold.  

Mansa Musa and his entourage were paying what we know today as "tourist prices," and they were probably happy to do so. After all, the greater the generosity, the greater the prestige of the Malian Empire. 

Another part of Musa's generosity was his donations to the poor. You see, there are Five Pillars in Islam, they are five practices that are mandatory acts of worship for all Muslims. In order, they are the declaration of faith, the prayer, the Zakat (which means charity), fasting, and the fifth is the Hajj, which is the pilgrimage to Mecca. In addition to the Zakat, there is the Sadaqah, which means righteousness and refers to the voluntary act of charity. 

As a devout and extremely wealthy Muslim, it is logical to think that Mansa Musa's donations to the poor were also a big part of his journey. Professor John Goodwin states that Musa "gave 20,000 gold pieces in charity." Probably, gold nuggets.  

Al-Umari, a contemporary historian who visited Cairo 12 years after Mansa Musa, tells us that "This man flooded Cairo with his benefactions… (and) performed many acts of charity and kindness." 

After spending so much on luxury goods and making generous donations, one thought may come to your mind. Where is the catch? After all, this is the Cobra Effect Podcast, and these are stories of unintended consequences.  

You got it right. Combining the information provided by the two Historians of around that time, Al-Makrizi and Al-Umari, before Mansa Musa visited Cairo, one dinar, the name of the gold coin, was worth 25 or more dirhams, which were the silver coins. Al-Makrizi tells us that after Mansa Musa's visit, "the price of the gold dinar was lowered by six dirhams." This is a 24% loss in value. The other contemporary historian, Al-Umari, tells us that the value of gold "cheapened in price and has remained cheap till now. The dinar does not exceed 22 dirhams or less. This has been the state of affairs for about twelve years until this day by reason of the large amount of gold which they brought into Egypt and spent there." 

So, even 12 years later, Al-Umari tells us that the price of gold was still at least three dirhams below its original price when Mansa Musa visited Cairo, which means a loss of 12% or more in those 12 years. The sudden influx of gold caused a long-lasting effect on the value of gold.

 It is to be expected that, during those 12 years, the city's economy was not doing well either. Unfortunately, we do not have data to quantify the extent to which this increase in the gold supply impacted the rise in general prices and a decline in the purchasing power of gold and money in general. However, we do have a similar phenomenon that occurred in the US in the mid-19th century: the California Gold Rush.  

We must analyze each historical and economic phenomenon in its specific context. For example, one of the causes of inflation in California was the influx of gold miners, which increased demand and, with this, local prices. That being said, during the California Gold Rush, another factor, and almost certainly the most significant, was the sudden growth in the local gold supply that led to inflation, and in turn, a loss of purchasing power for the dollar. 

You see, and this is an important parenthesis, today in our economy we use fiat money. Our dollars, euros, pesos, and so on, are fiat money. Now, fiat money derives its value from our faith in the stability of the issuing government, as well as from supply and demand. For example, one of the most common causes of inflation is an increase in the money supply. The classic definition of too much money chasing too few goods. Let's say we live on an empty island with no resources, and we have only one coconut and one dollar. That dollar represents the value of the coconut. However, if we start increasing the money supply, if we go crazy on the printing machine and print four more dollars, we will end up with five dollars on one hand, while on the other, we still have the same coconut, unless we somehow magically multiply coconuts overnight. The coconut will now cost five dollars, instead of one dollar as before. With one dollar, I was able to buy one coconut, and now with one dollar, I am only able to buy a fifth of a coconut. Inflation ends up causing a decline in the currency's purchasing power, and this always affects the poorest the hardest. In an economy, when millions of wages cannot keep pace with the increase in general prices, then we have inflation. Those who suffer the most are the minimum-wage workers who see their wages' purchasing power reduced to nothing, as in the above example, to a fifth of a coconut.      

Before fiat money, the value of paper currency was backed by the government's guarantee that you could exchange that piece of paper for gold or silver. In the case of coins, the nominal value of the coin was backed by what the coin was made of, whether gold or silver. This was the case when gold was found in California in 1848 and when Mansa Musa visited Cairo in 1324.

 Economist Michael D. Bordo says, and I quote, "the California gold discovery in 1848 is an example of a monetary shock. The newly produced gold increased the US money supply, which then raised domestic expenditures, nominal income, and, ultimately, the price level." It is the same principle as the island, the coconut, and the five dollars I mentioned before. With more gold chasing the same amount of goods and services, general prices increased in California. 

There was a shortage of US-minted dollars to meet the rising needs of the miners. From food and clothing to entertainment, the gold extracted from the mines and rivers became actual money. Backed at a fixed US dollar price by the US government, gold dust became a means of payment. The University of Oxford tells us that during this time in California: "Merchants kept scales for weighing the dust that the miners brought them, often in retail quantities, to pay for goods. For some small purchases, the agreed price was a 'pinch.' The buyer would place a small quantity of dust on the counter, and the seller would take as payment as much as he could pick up between his thumb and forefinger." Now, does this remind you of something? Mansa Musa and his emissaries also paid with pure gold while purchasing in the bazaars of Cairo.   

Let me put it in numbers. I know I am deviating a little bit from Mansa Musa and his visit to Cairo, but what happened in California in the mid-19th century serves as an interesting comparison. In 1850, during the time of the California Gold Rush, while farmhands earned almost 14 dollars per month in Massachusetts, among the highest wages in the nation by the way, California farmhands earned 60 dollars per month. However, prices were astronomically higher in California. That same year, the journalist Edward Gould Buffum wrote in his book "Six Months in the Gold Mines" about how he paid 43 dollars for a breakfast for two in the town of Coloma, California. This is three times the monthly wage of a Massachusetts farmhand of the time, and approximately 1,700 dollars today, when comparing the purchasing power of the dollar in 1850. Now, imagine paying 1,700 dollars for just a breakfast of two. I guess this would be the time to split the bill. Also in 1850, a dozen eggs cost 23 cents in Massachusetts. Meanwhile, in California, "The annals of San Francisco" published in 1855 tells us that: "The time soon came when eggs were sold at one, two, and three dollars apiece," not a dozen for 23 cents as in Massachusetts, but one egg for up to three dollars. 

Not only did food prices skyrocket. According to Edward Gould Buffum, in his book "Six Months in the Gold Mines," a lot on Portsmouth Square in San Francisco was worth 15 dollars in 1845. The Gold Rush started in January 1848, and by May, the price had jumped to 6,000 dollars, and in October to 40,000 dollars. That piece of land went from 15 dollars to 40,000 in no time.

To end with this comparison with the California Gold Rush, Edward Gould Buffum also wrote in his memoir: "On the 18th of October 1848, I reached San Francisco, where a curious state of things was presented. Gold dust and coins were as plentiful as the seashore sands and seemed to be thought of as valuable. The merchandise of all descriptions was exceedingly high." To put it in simple terms, gold was so abundant that it was worthless and in consequence everything was too expensive.

Similarly, after Mansa Musa's trail of gold in Cairo in 1324, also plentiful as the seashore sands Edward Gould Buffum described in San Francisco, what if I tell you that the consequences of Musa's generosity did not end with a most likely increase in prices. The story gets even better. Professor John Goodwin tells us the following, and I will quote the whole paragraph because, of course… this is pure gold:

"The chroniclers of Cairo give a far less happy picture. With all his gold, his gifts, and his trading, King Mansa Musa had upset the greatest gold market of the medieval world. As he left Cairo, Mecca, and Medina, prices rocketed as everyone tried to pay in depreciated gold. However, Musa had not made ample provision for his return journey. On reaching Cairo once again, he borrowed back all the gold he could get. The moneylenders were entranced: they lent at a high rate of interest. The value of gold mounted to unprecedented heights; prices dropped accordingly. All went well until Musa got back to Mali. He immediately repaid the vast loan plus interest in a single astounding payment. The moneylenders were ruined as the price of gold fell through the floor. For the first and last time, one man had played ducks and drakes with the world price of gold. Gold dust was dust indeed."

For the second time, Mansa Musa's good intentions did more harm than good. 

A detail often missing from sources and online articles regarding Mansa Musa's 1324 visit to Cairo is that, at the time, Cairo was one of the most populated cities in the world and one of the wealthiest. While Cairo had a population of between 500 and 600,000 people, Paris was likely the most populated European city, ranging from 150 to 200,000 inhabitants. That's a third of Cairo's population. If Mansa Musa's transfer of wealth, let's say "generous transfer of wealth," disrupted the economy of a city such as Cairo, then we have an idea of how massive the influx of gold was.    

After returning to Mali, news of Musa's kindness was not covered… kindly. Malian griots, who were West African storytellers, historians, and praise singers, did not praise him that much, even to this day, despite the fact that Mansa Musa is perhaps the most famous of Malian Emperors. In an interview for the BBC, Lucy Duran of the School of African and Oriental Studies in London says that "He gave out so much Malian gold along the way that griots don't like to praise him in their songs because they think he wasted local resources outside the empire."

As a result of unintended consequences and despite Mansa Musa's good intentions, this may be the first case of failed foreign aid in history. It is NOT that foreign aid causes inflation, the specific case of the depreciation of the value of gold after Musa’s visit to Cairo is just one unexpected consequence in a case of transfer of cash to a foreign country. The beneficial prices offered to local merchants, along with the donations and gifts given by Musa, represented a transfer of wealth with a resemblance to programs implemented in modern times, such as development assistance to poor countries. The Encyclopedia Britannica defines Foreign Aid as "the international transfer of capital, goods, or services from a country or international organization for the benefit of the recipient country or its population." This transfer of capital goes from developed countries via private charities, but mostly government agencies. It also happens via international organizations such as the United Nations and its many agencies, or the World Bank, for example. This all began after World War II and the Marshall Plan in Europe, but it gained momentum in the late 1950s and 1960s as decolonization was underway in Africa and Asia. It was a way to win the support of ordinary people in poor countries while stopping the influence of the Soviet Union and communism. It then expanded to Latin America in the following decades and is now even present in former communist countries in Europe, such as Albania and Moldova. 

The answer to the question of whether foreign aid works for those impoverished nations has long been debated.

In 2005, Jeffrey Sachs, a well-meaning economist, argued in his book "The End of Poverty" that if rich countries committed 195 billion dollars of foreign aid every year, global extreme poverty could be eradicated by 2025. Also taking notice of the role of markets, Sachs mainly advocates for more financial development aid from wealthy countries to achieve this goal.

Contrary to Jeffrey Sachs' argument for increased spending on international development aid, fellow economist William Easterly responded that "the West has spent 2.3 trillion dollars on foreign aid over the last five decades. It's a tragedy that so much well-meaning compassion did not bring the results for people in need." This sparked a fascinating debate that continues to this day. I am leaving all the relevant links in the "transcript" for this episode. 

International relief in cases of natural disasters or assistance to fight epidemics and diseases are valid and necessary, in my opinion. But when it comes to financial assistance for medium- and long-term development, the critical voices argue that the flow of capital from developed countries only fuels the corruption of recipient governments, diminishes the accountability of these governments to precisely the people most in need, and postpones the necessary reforms for these countries to successfully integrate themselves into international trade under local sound democratic institutions and economies free of bureaucratic burdens. These are necessary reforms, to not only end poverty, but most importantly, bring prosperity. I will also leave in the "transcript" relevant links to each of these critical voices. Precisely among them are voices coming from countries that are recipients of foreign aid, such as economists George Ayittey, Dambisa Moyo, and Deepak Lal. 

In future episodes, we will visit more examples of The Cobra Effect in foreign aid.

It is not a matter of giving up on solidarity but of learning and being more effective in the noble task of helping those in need. 

It is not that simple, and although it may not seem so, sometimes generosity can be counterproductive as Mansa Musa's story illustrates.

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DEVELOPMENT ECONOMISTS REFERRED 

Anne O. Krueger : https://academic.oup.com/wbro/article-abstract/1/1/57/1677217?redirectedFrom=PDF 

Bela Balassa: https://ies.princeton.edu/pdf/E141.pdf

Christopher J. Coyne: https://www.cato.org/events/doing-bad-doing-good-why-humanitarian-action-fails 

Dambisa Moyo: https://dambisamoyo.com/news/ 

Deepak Lal: https://iea.org.uk/publications/research/the-poverty-of-development-economics 

George Ayittey: https://www.yalejournal.org/publications/smart-aid-and-the-unchaining-of-africa 

Ian Little: https://www.independent.co.uk/news/obituaries/professor-ian-little-economist-who-urged-pragmatic-thinking-on-issues-of-overseas-aid-8008517.html 

Jagdish Bhagwati: https://www.law.columbia.edu/faculty/jagdish-bhagwati 

Linda Polman: https://www.foreignaffairs.com/reviews/capsule-review/2010-11-01/crisis-caravan-whats-wrong-humanitarian-aid 

Michael Maren: https://fee.org/articles/the-road-to-hell-by-michael-maren/ 

Peter Bauer: https://www.elcato.org/desarrollo-economico-y-libertad-el-legado-de-peter-bauer 

Tomas Sowell: https://www.cato.org/commentary/standing-fast-against-planning-poverty-0 

William Easterly: https://www.williameasterly.org/publications