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‘Development versus debt peonage’

By Henry Boyo
The above title is from a paper presented by Brian Browne at an event organised, by Atayese, a Pan Odua Socio-political self determination group, in Ibadan last month, to mark the 90th birthday of distinguished Prof. Adetoun Ogunsheye.

Browne, by the way, is an African American, who with Asiwaju Bola Tinubu, co-authored “FINANCIALISM”, an explosive exposé on the inherent economic oppression confronting countries which embrace the injustice of Mainstream Economics.

The following narrative is the second of a 2-part summary of Browne’s expansive presentation. Please read on … “I will offer a few ideas on how to reshape our economies to provide more, but fairly for all. These ideas are founded on empirical evidence, unlike mainstream economics, I have tried to make my ideas fit reality instead of trying to amend reality to accord with my thoughts.

Debt

1). End the implicit peg to the dollar: African nations are commodity exporters. They create a new amount of national currency based on export dollars received. This way of determining the flow of national currency into the economy is an artificial, self-imposed limitation, which allows the whims of foreign consumers to shape our fiscal policies. There is no sound economic reason to perpetuate this servitude, which not only undermines African fiscal independence but, is also no less capricious than pegging government fiscal policy to how many stars are visible in the evening sky, on the third Monday of every odd numbered month!

Instead of pegging our fiscal determinations to foreign consumption patterns and a foreign currency, African nations should peg their fiscal policy to the amount of money they calculate will produce the optimal level of inclusive growth without sparking harmful levels of inflation.

2). Have the courage of deficit spending: Government deficit spending is basic to economic growth. When governments run deficits, the private sector runs a surplus and expands in socially beneficial ways. For example, when IMF and EU imposed massive budget cuts on Greece, so it could repay its debts to private banks, invariably, the private sector fell into a severe depression with reduced government spending and Greece is now a ghost economy with deepening poverty and jobless rates typical of third World Nations. Thus, the IMF/EU’s prescription is akin to the premeditated murder of a national economy. However, increased government expenditure must be geared to projects that yield jobs as well as those that sustain follow-on economic activity.

Greater deficit but no greater debt: Increased spending should, however not be linked to new borrowing. The artifice of government borrowing money that, it has sovereign right to print, is one of the world’s greatest scams. Mainstream economists say this ruse prevents inflation induced by printing too much money; this is a lie as this contraption was invented to provide banks with sure profit. Banks know that a government with its own currency can never default on a loan denominated in that currency. Trillions of dollars have gone to the largest banks under the guise of such institutional lending to government.
Industrialize: The steep decline in commodity prices teaches an age-old lesson, that a populous nation cannot attain prosperity based on natural resource exportation. A nation is better off manufacturing sturdy affordable cars or inexpensive machinist tools than in cultivating a perfect cassava or tomato plant.
Government must institute a package of tax credits, subsidies and protection from imports for local industries vital to national development, and also commitedly nurture domestic demand and intro-continental trade through trade groups such as ECOWAS.

Undeniably, most African states require national industrial plans, with same policies that moved America from a weak pioneer nation to become the strongest industrial power. US policies featured high import tariffs on foreign manufactured goods, and promotion of local industries and government funding of infrastructure. China has similarly rapidly transformed from a backward agrarian nation to the world’s second largest economy with the same industrial template.

Mainstream economists will complain that such models undermine their beloved theory of comparative advantage. Conversely I say judging by its practical effects their theory undermines itself. They parade the theory as one of general application, I contend it is one of limited application, that is only beneficial when items traded between two nations may be different but are at rough parity regarding the values of the traded products and the value of inputs required to make the product.

However, such a confluence of parity is rare; for more general application, I offer the theory of “initial advantage”. For example, if two Nations trade and one has a clear, even if small advantage, over the other concerning the export of a manufactured good, unless something occurs to change the terms of trade, the initial advantage of the one nation will compound over time to the benefit of that nation, but to the detriment of the other. Under free trade the rich get richer and the poor can’t figure out why they are falling deeper into the ditch.

Although, such trade arrangements might be called free, however, to call it fair is to insult moral decency. This is why America opposed free trade in the 19th century, but changed its tune to free trade when it became the world’s most dominant economy.

5.Help the farmer: Governments should consider establishing commodity boards which ensure minimum prices for certain crops. Improved warehousing systems will add food security and lower prices while improving farm incomes. For their produce, farmers should receive warehouse scrip or tickets which they can also use to borrow money in the short-term, while agricultural mortgage loan Corporations should be seriously considered.

In conclusion, opposition against any acceptable trade model is as old as it is strong. This is the fight of our times, but let me leave you with these thoughts:

“Our political economy can never be perfect as it is a human enterprise. Yet, it’s imperfection cannot be used as a pretext for wanton injustice and disregard for most of humanity. We must cling to the belief that man can attain higher levels of economic cooperation, in order to increase wealth and reduce scarcity universally.

Consequently, we must all be compelled to raise the alarm against debt peonage and how it has become fused with financialism to reshape us in their harsh image. We are in a fight pitting the imperfect against the utterly venal; the former has a civic purpose, the latter has no purpose, save the incessant feeding of its own selfishness. There really is no choice in deciding which side to join, we must do what we can to uphold the imperfection of man’s collaborative endeavors against the perfection of his selfish designs”

SAVE THE NAIRA!! SAVE NIGERIANS!!!


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