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Deregulation, Subsidy Removal: My Stand — 1

By Dele Sobowale
“0802-758-8755
Quite unlike you, your article on fuel subsidy has no definite stand i.e is subsidy desirable economically or are the agitators at fault to insist on subsidy? What is really the long term solution? A story in the SUN Newspaper heightened our fears and gave an indication that the protest front runners were induced to do so…Talk or speak frankly to all of us. Thanks. Idris.

Perhaps the place to start is to thank Idris for the message. It is the sort of text message which engages the columnist in dialogue in a manner that would make it impossible to hide – if he accepts the challenge contained in the message.

I gladly accept because we are at a crossroad in our history and anybody who has an idea must place them on the table for all to read and either accept or reject – based on the merits of the arguments. Invariably, readers send messages accusing the columnist of settlement instead of stating why they disagree with his viewpoint.

However, before proceeding, some digressions are necessary. The arguments on subsidy have been characterized by a little bit of truth, mixed with more half-truths and wrapped in deliberate lies by government and its opponents – with government and its “supporters”, like N2N, taking the lion’s share of the blame.

First, since it has become accepted conventional wisdom that “war is too important to be left only to generals”, then economic policy is, perhaps just as, if not more important, than war to be left to economists. So, anyone is free to join in the debate.

Second, national policies on deregulation and subsidy removal are established within a political context, based on ideology and principles and should be influenced by them.

Finance Minister, Mrs. Ngozi Okonjo-Iweala

Thus, in any society, the ideology of the ruling political party frequently determines the policies to be introduced with respect to deregulation and subsidy. Unfortunately, in Nigeria, we have political associations which hardly approximate what can be called “political parties”.

American President Eisenhower, 1890-1969, provided what is probably the best definition of a political party. According to him, “A political party deserves the approbation of America [or Nigeria for that matter] only as it represents the ideals, the aspirations, and the hopes of Americans [and Nigerians let me add]. If it is anything less, it is merely a conspiracy to seize power”.

(Eisenhower, November 7, 1956). And political parties demonstrate their willingness to represent the ideals, aspirations and hopes of their people by stating in their political manifestoes how they will rule the country when elected into office. Nothing important is left out.

Indisputably, the things Nigerian political parties lack are distinguishing manifestoes or ideologies. The two words are not totally synonymous, but we can ignore the distinctions for now. Think back to the last Presidential elections and it will probably not come as a surprise that none of us can remember any specific economic policy positions taken by any of the leading presidential candidates – Buhari, Jonathan and Ribadu (in alphabetical order please).

Today, it is quite possible that no single Nigerian remembers anything else the winner – Jonathan – promised based on principle or ideology. Nothing, that is, except that he went to school without shoes. From that, millions assumed that he will pursue a pro-masses policy.

But, instead, he has advocated for “subsidy removal” – which most poor people believe –rightly or wrongly (we will soon come to examining the merits or otherwise of that) – is not in their own interest. An issue which should have been tabled during elections, has now separated the people from a president they overwhelmingly elected only last April. Make no mistake; Jonathan won the election by a large margin.

The problem was created by most, not all, of us in April. Most of the NLC, TUC, ASUU, as well as media (including my colleagues at THE NATION) voted for Jonathan. Even the “Progressives” of the Southwest and Edo, except Osun, states abandoned their own candidate –Ribadu – and dumped their votes for GEJ.

If these associations are not “conspiracies to seize power”, how does one explain “populist politicians” and voters crossing over to vote for the candidate of a “conservative” association?

Frankly speaking, in democracies where principles and honour count for everything, nobody who voted for Jonathan in April has the decency to march against “subsidy removal” now. Less honourable is the role of the progressive governors, ably led by chameleon Oshiomhole, who unanimously sided with their colleagues to support “subsidy removal” only to turn tail when the masses, all the elected officials betrayed, eventually reacted.

So, Idris, you and the other readers must forgive me if the write-up is largely theoretical. It has to be because the issues lack political context – which is vital. The economic policy package presented to a liberal government must be different from that submitted to a conservative administration. Right now, all we have are different cabals of “Chop-I-Chop” individuals masquerading as political parties.

That also explains why no economic policy works – they uniformly lack the underlying commitment which ideologies provide; even when the same party is elected over again. Each president or governor comes with his own unique “programme” – frequently unconnected to the previous one. The nation is dotted with uncompleted projects consequently.

Again before proceeding to answer the question, it is necessary to make the observation that deregulation and subsidy are not necessarily the same; neither are they mutually exclusive. Deregulation basically means that government, by and large, allows the private sector to provide most goods and services and government does not determine the prices charged.

Under ideal conditions, the competitors in the sector are forbidden from colluding to fix prices. In that case price-fixing becomes an offense punishable by fines and/or imprisonment. The closest we have come in achieving this ideal had been in five sectors, banking, aviation, postal services (courier), education (private institutions from primary to tertiary) and lately, communications, i.e, GSM.

Only in GSM charges, now per second, can the argument be sustained that deregulation brings down prices. Elsewhere, the charges (synonym for prices) have been riding upward moving escalators. So when government and its supporters argue that deregulation does not mean price increase, citing GSM, they are being economical with the truth. Look again at the list and go shopping for goods and services in previously deregulated sectors and it is indisputable that deregulation, almost always, results in permanent price increases….


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