TREATISE TO PRESIDENT BUHARI: THE ECONOMY SHOULD BE ABOUT THE PEOPLE

No matter who is in power, we must do whatever is in our capacity to do to steer the nation away from economic woe. The people have suffered too much hardship already.

As things stand, except the people see something new soon, they will doubt the ability of this government to run the economy differently from what Jonathan did. We pray that this new bunch of ministers will not take us borrowing and subtly push for naira devaluation in spite of Buhari’s extant stoic approach on that front.

Today, the economy is showing signs of going into a tailspin as a result of the crash in crude oil prices. All the symptoms of depression are here, huge poverty, high unemployment rate, social dysfunction, crime, filth, racketeering, mindless religiosity and the incursion of fraudulent ‘men of God’ who fleece people, dissonant governments and even corruption. There is therefore, the need to look at alternative way forward.

Nigeria is showing signs of ‘depression’. Yet, our ‘highly educated’ economists prefer to speak about Gross Domestic Product (GDP) growth, (a figure obtained largely by conjecture), and of ‘market forces’, when they know that markets here are terribly rigged. Forget the rosy GDP numbers. They signify a great economic and financial segregation between those who have and others who have not. If we continue with the policy preferences of the past administration, the haves shall become the ‘have “mores’ and the ‘have-nots’ shall become the ‘have even less.

The vast majority of the claimed GDP growth has fallen into the laps of those already enjoying obvious luxury. The rest of the people are left to gaze at the enormity of the income and wealth chasm separating them from the cabal orchestrating the discordant political economy. While a small group flourishes, the rest of the nation subsidises their economic bounty. For one group, the economy is effervescent. For the other, it is catatonic. Nigeria is one nation with two economies.”

The old argument is always that since the crude oil prices have depressed, government has little money for anything at all. And so, the people have to suffer the consequences. In Nigeria, it is far too easy to make the people bear the brunt of corruption, visionlessness and mismanagement. As can be seen with the trending news about the last administration, corruption like never before seen was happening while all this argument was going on. If we are to believe the kind of figures making it out of the grapevines these days, callousness of politicians was second to none.

The same hopeless, baseless and dangerous economic philosophies have always floated at the top with our economic managers who are always here, to recommend World Bank, International Monetary Fund (IMF) and of late, Goldman Sachs approaches. It is not easy to be lucky to have people from their stable who haven’t imbibed the one-track-minded approaches which have kept our economy down till date.

The great big argument around our economics is whether to use a ‘commonsense’ approach, which requires that we think for ourselves, because we know our society, our social psychology, our strengths and weaknesses better, or whether to continue along the ‘plastic path’; the path of the traducers of our people.

The meat of the story is not about the printing of naira, but the need to invert our economic development paradigm, to be honest and to start from scratch. It is about reinventing the Nigerian economy, and in my view, is the only available option we have. Nigeria has wasted much time and resources and we must stop listening to non-patriots who have put us in much trouble for selfish reasons, up till now.

All we have heard since the APC government rode in is…austerity. The people have been asked to be ‘patient’. We have been regaled with the fact that PDP damaged the economy over several years. ‘Baba’ has asked “albeit sternly on a few occasions “why Nigerians want him to perform magic. The underpinning ideology points to the need for the people to suffer some more in the hope that they, ‘in the long-run’, will enjoy. Maynard Keynes said we are all dead in the long-run.

As with the Euro zone, the past five years since the global financial crisis, austerity has not solved the dire economic weakness of the nations that employed this sickening remedy. All austerity has done is to tighten the grip of the wealthy on the economy while weakening the position of the middle class and the poor… “Austerity weakens aggregate demand, deflating an economy already fatigued and against the ropes. Those with hefty portfolios, profit as the value of their holdings appreciates by the very dynamics of deflation. Those who don’t have, find money even dearer to come by. Jobs and commerce disappear. Debt climbs. Deflation turns a noble but poor household into a committee of beggars and street urchins….

“The austerity that the western economics offers is insensitive, myopic policy that lends primacy of favour to meaningless accounting figures instead of to the material wellbeing of the people. Austerity undermines our economic pillars and breaks the spirit of the people. Austerity is the merchant of pessimism and hopeless futility. If you desire a nation of thralls, by all means continue this bleak path. If we want a nation of prosperity and economic justice, a different course is our due”.

That course advocates that where necessary, the government may print and spend, but dislink the economy from the current “dollar standard”. This will be radical, and may incur the wrath of those crazy financial market guys who are known as ‘masters of the universe’, but if we play our cards smartly, we can get away with it.

It is an anomaly to link our economy to a ‘dollar standard’, akin to the ‘Gold Standard’ which the world abandoned in 1971, courtesy of President Nixon: “…The dollar intake is basically irrelevant to determining the amount of Naira the government commands and places into the political economy.

There is no legal or moral restriction strictly limiting the amount of Naira in the system to match the amount of dollars collected via oil sales. More importantly, there is no economic justification for the close linkage. Nigeria should operate a Naira-based economy not a dollar-based one. The world jettisoned the gold standard in 1971, because it proved unworkable, reducing the policy space in which governments could pursue fiscal programmes promoting full employment and social welfare.

We should likewise reject the imposition of a dollar standard on our nation’s fiscal operations…. Because we operate a sovereign fiat currency, the federal government issues at its sole discretion, the federal government can never be rendered insolvent in naira. This means it can run naira fiscal deficits indefinitely. The only outer bound is to ensure the fiscal expansion does not incur damaging inflation rates…. There is no logical reason to peg the flow of naira into the economy to the flow of dollars received. The correct perspective is not to mechanistically restrict naira expenditure to dollar intake.

The better methodology is to ascertain, then achieve, the level of naira expenditure needed to expand the economy and create jobs without causing inflation to rise to dangerous levels. This is how broadly-shared prosperity is generated in a sustainable manner.”

The bottom line is that if we spend for the youth, and for low- paying labour, the money stays home. However, our successive governments seem more interested in large spending. We speak of power sector, manufacturing, infrastructure and so on being the next ways forward. But, this economy must be focused on the little things. The emancipation of this country lies with the youth. And there is much work for them to do, only that the government has not been able to see this for whatever reason.

In this way, the nation’s economic engineers should focus primarily on allocating value and opportunity to our under-utilised labour force and our idle, yet potentially productive capital in a way that promotes wealth creation and expansion of aggregate demand. It is this sustainment of aggregate demand that empowers the nation to rescue itself from the whirlpool of economic contraction.

Inflation can be contained to acceptable levels by ensuring additional government expenditures are for items that can be supplied domestically, particularly labour. Naira paid to poor and working class people mostly circulates in the domestic economy; spurring additional local commerce and production…This is because their consumption patterns do not approach the level of import expenditures associated with their wealthier compatriots. Related to this, we must decrease our level of superfluous imports.

Regardless of our partisan affiliations, let us consecrate this land by dedicating ourselves to the betterment of the poor, weak, and needy members of our national family. Let this moment not pass like so many others where we have demanded that the most vulnerable among us bear the greatest weight of the national burden. Let us give them the hope, change and dignity they deserve and human decency demands. This is how to make the nation great.

In the final analysis, all the arguments about the economy should be about the PEOPLE. Nothing else matters. If this government focus on money and ignore the people, the government will be repeating the same mistakes.