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culled from Thisday
What will economic policy look like once the global financial crisis is finally over? Will it resume the pre-crisis consensus, or will it be forced to contend with a post-crisis ‘new normal’? Have we made progress in addressing these issues, or does confusion remain? In April of 2015, the International Monetary Fund gathered leading economists, both academics and policymakers, to address the shape of future macroeconomic policy. This book is the result, with prominent figures—including Ben Bernanke, Lawrence Summers, and Paul Volcker—offering essays that address topics that range from the measurement of systemic risk to foreign exchange intervention.
“The chapters address whether we have entered a ‘new normal’ of low growth, negative real rates, and deflationary pressures, with contributors taking opposing views; whether new financial regulation has stemmed systemic risk; the effectiveness of macro prudential tools; monetary policy, the choice of inflation targets, and the responsibilities of central banks; fiscal policy, stimulus, and debt stabilization; the volatility of capital flows; and the international monetary and financial system, including the role of international policy coordination.
“In light of these discussions, is there progress or confusion regarding the future of macroeconomic policy? In the final chapter, volume editor Olivier Blanchard answers: both. Many lessons have been learned; but, as the chapters of the book reveal, there is no clear agreement on several key issues…”
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The foregoing is from the overview to a recently released book, “Progress and Confusion: The State of Microeconomic Policy”. Published by the MIT Press with contributions from 28 world-acclaimed experts in the field of economics, what makes the book unique is that it is not replete with the usual technical jargons such that it is easy to read and digest even by economic illiterates like me. And the conclusions are very disturbing, especially when those to whom we look for solutions for our current woes, including the challenge of deprivation and want that is now a global phenomenon, give the impression that they have little clue.
However, as a Nigerian, what is particularly striking is that in a 302-page book that deals with most of the issues affecting the global economy today, there is not even a single mention of our country. Lawrence Summers in his intervention titled “Rethinking Secular Stagnation after Seventeen Months” mentioned South Africa among the emerging markets while Jonas Vinals, in his “Introduction to the Monetary Policy Section”, also draws some illustrations from South Africa. And yet, as I stated earlier, there is not one reference to Nigeria.
What that says most eloquently is that we are not even part of the global conversation and that should worry the authorities. But perhaps more worrying is that, having last week announced that our country is in “technical recession”, the Federal Government has not communicated to Nigerians what exactly that means as well as their response and the sacrifices that would have to be made by citizens. Unfortunately, while the government is silent on these issues, all manner of economic “experts” are seizing the space.
In a piece being circulated widely online by a Mr. Da Thinker, the writer offers the following weird advice: “In a recession, liquidity is king. Avoid investing in long term projects. Keep your cash under your mattress if need be. The banks cannot be trusted. Have an active passport. Running away is not betrayal; it’s a tactical survivalist maneuver. Take all the loans you can take. It’s better for you to owe than for you to be owed. Do not lend money to no freaking body! They will not pay back. A recession changes people’s characters. That you knew them to be trustworthy before doesn’t mean they are trustworthy now. Recession changes character involuntarily. A recession turns people into liars and a government like ours that has been known to lie without reason will now be built on nothing but only lies. If you must make new investments, make sure it’s in your state of origin. You don’t want your gateman taking over your investments in case of an exodus.”
For sure, the reversal of the current recession would require a combination of fiscal and monetary creativity. And it would also take strategic communication not only for Nigerians to understand what the current challenges entail but also to know the efforts being made. Meanwhile, the worst thing that could happen in such circumstance is a resort to panic decisions based on some ill-digested ideas which many would take, in the absence of any assurance from government at a most difficult period.
Perhaps to illustrate the fact that there are no longer easy options for Nigeria, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) on Tuesday increased the Monetary Policy Rate (MPR) otherwise known as interest rate to 14 percent (from 12 percent); in a move the Financial Derivatives Company (respected by both local and foreign investors) Bulletin last night aptly summed up as “Hard Choice: Choosing to combat Inflation over Growth”. That the decision was taken by a vote of five to three is also very telling.
Indeed, if there is any virtue that is not golden for a leader in our circumstance today, it is silence. On Tuesday, an office was burgled overnight in Abuja and when the manager went to report at the police station, the officer on duty spoke in a note of both resignation and helplessness. “You are the 21st person that will be here to complain of burglary within the last 24 hours and in many of the arrests we have made, the culprits are basically desperate young people who are being forced into crimes for lack of any means of livelihood”, said the officer who concluded most ominously, “Nigeria is in trouble.”
According to the World Bank, poverty is becoming more entrenched in countries that are either conflict-ridden or overly dependent on commodity exports like Nigeria, notwithstanding the fact that we are still trapped in self-deceit. For instance, a recent publication quoting figures from the African Development Bank http://www.howwemadeitinafrica.com/why-africas-middle-class-statistics-are-questionable/ raises a poser from the 2010 rebasing of our economy: “How confident can one be about a 7% growth rate in a country like Nigeria when almost half of the economy was missing in the official baseline?”
So much has been said and written about the Asian countries which did not have our kinds of prospects for developments in 1960 but which have lifted their societies by dint of hard work and committed leadership and the example often cited is Singapore. Yet, Lee Kwan Yew could have been speaking about Nigeria when in a January 1972 speech he said: “You must have a structure in your society which makes learning and hard work rewarding…if you have a system where the chap who cuts corners is a man who gets rich and the man who studies hard is the chap who’s a mug, then you will fail. And that’s what is wrong with many countries that have not succeeded.”
That indeed is what is wrong with our country which seems to reward neither industry nor talents but mediocrity. And that also explains why Nigeria is almost always the universal reference point when it comes to squandering opportunities. In the book, “The Wealth and Poverty of Nations”, David S. Landes wrote: “Of all the so-called developing regions, Africa has done worst: gross domestic product per head increasing; statistical tables sprinkled with minus signs; many countries with lower income today than before independence. The failure is the more poignant when one makes the comparison with other parts: in 1965, Nigeria (oil exporter) had higher GDP per capita than Indonesia (another oil exporter); twenty-five years later, Indonesia had three times the Nigerian level.”
I sympathise with President Muhammadu Buhari because he inherited a broken system that is now coming under greater stress with deepening economic crisis; essentially because in the years of plenty, our Pharaohs had no Joseph who could see tomorrow. In the season we are now in, insecurity could worsen as unemployment and job losses lead many idle young hands into crimes of desperation. Labour agitations and strikes by workers will also most likely increase as more states get into trouble with payment of salaries. And for sure, we will see more of separatist tendencies, especially those driven by pecuniary demands as well as blackmail militancy and transactional kidnapping, all of which will stretch the authorities to the limits of their wits.
Therefore, to the extent that we live in an unusual time, there must also be a new approach if we must overcome. What we need now is a coherent response from the federal government in collaboration with the authorities in the 36 states who, by the way, should be told to drop their harebrained idea of a German trip for vocational training. And there must be a clearly articulated economic plan for job-led growth and development. Meanwhile, the hallmark of great leadership is simply to stay engaged with the people, to challenge them to innovate while coming up with policies that would empower them.
Above all, this is a time to reunite the people, not tinker with divisive tactics or dwell on a job that was lost over three decades ago, well before more than 50 percent of the current generation of Nigerians was born!
In a stirring (and very romantic) speech, rich with anecdotes of his relationship with his wife and Democratic party presidential nominee, Hillary, in Philadelphia on Tuesday night, former United States President, Mr. Bill Clinton, reminded those of us “who have more yesterdays than tomorrows” that the preoccupation should be more about the future (of our children and society), not the past.
Times indeed are very tough in our country today and, all factors considered, majority of our people can hardly see any prospects that their material conditions would Change for the better anytime soon. That is why the president cannot continue to stay aloof, distant and silent or keep reminding us of who did what in 1985. His full attention must be on our future. From the creeks of Oporoma in Bayelsa State to the IDP camp in Bama, Borno State, the President must visit to challenge the people to maintain hope beyond their present circumstances with assurances that the difficult times will not last.
That is the kind of leadership needed for a time like this. That is the kind of leadership President Buhari should offer
