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NEWS ANALYSIS: CBN economic czarism and its consequences (2)

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The economist like anyone else must concern himself with the ultimate aims of man —Alfred Marshall, 1842-1924, Vanguard Book of Quotations, p45.

ALFRED Marshall, better known as the father of classical economics virtually laid down this law for every professional economics. However, since not every economist will eventually rise to a position where his policies, actions and utterances will affect millions of his fellow men, the injunction assumes paramount importance for those who will be fortunate to be selected or appointed to conduct the economic affairs of nations.

Fortunate is the economist who is placed in a position to experiment with his own ideas, because every economist has at least one, about how a society or nations can be better organized for optimum economic performance. Unfortunate is the nation whose economic helmsman leads the people astray either by doing too much or too little in the pursuit of policy objectives or who strays from prudential limits to his power.

Economics, like law or medicine, obeys the law of Nemesis, which is not the “goddess” of vengeance as generally assumed, but one of moderation. The minute the pendulum swings too far in one direction, the dire consequences start to follow. That includes national economic policy management. Once the emphasis is on too much monetary intervention and inadequate fiscal policy input, all of a sudden, the baseline objectives become impossible to achieve.

Budgetary objectives

That, in a way, explains the reason why the budgetary objectives set out by the Federal Government in the last twelve years have never been achieved. Except for the brief period when Dr. Iweala-Okonjo was the Minister of Finance and could match the Governor of Central Bank in stature and prestige, we have had ministers who were overshadowed by the CBN governors. Fiscal policy had been subordinated to monetary policy to the nation’s detriment. It was Professor Soludo versus “nobodies” and now Sanusi against “midgets” in the Ministry of Finance. The ministers need help!

Let me quickly offer two global comparisons to illustrate the point – the United States and the United Kingdom. Turn on the CNN, BBC News or any other global network these days and you will find leaders of the two countries fully engaged in fierce debates with opposition political leaders about the regime of taxes, tariffs, entitlements, etc., designed to either avert economic catastrophe or move their nations forward. David Cameron, the Prime Minister, and Chancellor of the Exchequer, lead the battle in Britain.

In America, it is President Obama and the Treasury Secretary who are in the forefront of the economic “war” for that country. The bosses of the Bank of England and the Federal Reserve Bank take a back seat. Their turns at bat will come later, and that is the way it should be because the ultimate aims of “man” in any nation, democratic or despotic, lie in the hands of the elected governments or dictators – for good or ill. The central banker, although occupying a position which carries enormous responsibilities and should also be concerned with the fate of his fellow men, actually plays, or should play, the second fiddle in the orchestra of policy makers and leaders.

Let me now return to where this series left off last week – the CBN governor’s pronouncement on the percentage of budget spent by members of the National Assembly, NASS, on themselves. The statement made him an instant hero in Nigeria and among Nigerians in the diaspora. Members of the NASS, at any rate, had become “Public Enemy No 1”. So any attack on them, justified or not, was bound to be well received by the public. And so it was. Last week’s column ended by referring to what followed as the beginning of demagoguery defined as “hanging the accused first and searching for the evidence afterwards”. Let us for now leave the substance of the pronouncement; to which we shall soon return. The questions for all of us to ponder are these: Was Malam Sanusi speaking as “citizen Sanusi” or as Governor of the CBN?

Like any Nigerian, he has the inalienable right to comment on anything about our country – as long as he makes it clear that he speaks in a private capacity when doing so. As Governor of the CBN, however, his roles are proscribed by statute and he is well advised to confine his comments to those roles. It is hard to imagine how consideration of the disbursement of funds by the NASS, however, distasteful to us, falls within the realm of monetary policy.

So in effect, the CBN governor had gone out of his way to start an unnecessary quarrel with the NASS just to play to the gallery. That majority of Nigerians, non-economists, agreed with him, notwithstanding, he had exceeded his brief and had taken up a role which properly belongs to the Auditor General, the Attorney General, the EFCC Chairman, the Inspector General of Police and the President.

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