The article below is a response to the first comment from Wallesmit on the last post entitled- The Myth of Trickle Down Economic Policies
A second response to his second comment will be posted soon on this blog, please be on the watch out.
Click this link- The Myth of Trickle Down Economic Policies to read Wallesmit’s first comment in the comment section.
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You say there is contradiction, in that I dismissed the recommendations of the Bretton Woods and yet still ‘prescribe’ their suggestions. As you highlighted the reason I dismissed their suggestions is that their plans are always for the interests of ‘foreign investors’ who actually front for the imperialistic shareholders of the Bretton Woods. As these countries can no longer pursue brazen economic exploitation, they do so through the so-called ‘foreign investors’ that brain-washed Nigerians hanker after. Are the Lebanese not foreign investors too? Don’t they take up Nigerian citizenship and integrate into local communities? Is this the same for the ‘foreign investors’ you and the Bretton Woods organizations speak for? The ‘foreign investors you so much defend are exploiters. They route in capital to develop local resources, without care to the environment or the effect that loss of jobs on their leaving will have on local communities.
Poor human scavengers in Abuja, Nigeria
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I work in the real economy and though you erroneously think that I am a doctor (you need to do a proper background check),my work unlike yours is not theoretical. I deal everyday with real people, with the real effects of these policies you say are 70% effective. I deal with the day to day fact that people die because they cannot afford hospital bed space in government hospitals nor can they pay for drugs as low as $10. I deal with the facts that ‘foreign investors’ capitalize on this to sell for cheap substandard medicines that don’t work while all the while making profit margins way above 1000% on a year to year basis. I see young people who have no choice but to accept underpaying marketing jobs because the real jobs that add value are non-existent. The policies you say are effective have turned this nation into a ‘buy and sell’ economy. As an economist who feels that the field should remain your forte and that ‘outsiders’ like us are mere dabblers, are these the policies you vouch for? Are you a collaborator too with these exploiters because your foreign training guarantees you one of the few high paying jobs created by these policies? If these policies are 70% effective as you say, you will not see hordes of men seating and doing nothing in broad daylight in our various communities. If they are working as you say you will not see an army of young women retailing their bodies to these ‘foreign investors’ every night on Victoria Island.
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These policies are good only if the end results are for the good of the people. But if you think that if by rebuilding infrastructure, instituting the appropriate legal framework etc that you have done your nation well then you are wrong. When the Bretton Woods ‘prescribe’ as you say) these policies the good they seek to do is for the foreign investors. This is why the infrastructure built e.g. roads is mostly not for local communities but for the elite and the routes through which their merchandise must be transported. Go to Abuja or Lagos just in case you are currently on a redoubt in the western hemisphere and confirm this. In saying that my ‘prescriptions are contradictory, you erred. Because though they may be similar the end gain is for local communities rather than ‘foreign investors’.
What I advocate is not insular. We need trade and true foreign investment. But more than these at the current, we need to enthrone good governance, cut public spending and create welfare programs. We need to make opportunities for economic advancement more amply available to a greater swathe of our citizens. And this goals need to be directly pursued. We should not expect them to happen by pursuing trickle down policies that simply do not work.
You say that inflation affects the poor more than the rich. I agree but in the Nigerian context it affects mostly the rich (political and working) and the working class. The ‘trading urban poor” and the agrarian rural poor can adjust to higher prices by marking up their wares. The Nigerian rich however lose real value for the stash of funds hiding in various local bank accounts and underground storage tanks. The working classes lose value because their employers cannot raise salaries to be in tandem with inflation rate. The working rich will have fewer funds to reinvest in and would have to take pay cuts or see their businesses stagnate. This I suppose you know but have cleverly refused to mention. The political rich however can cope with this what with their foreign accounts. It is the working rich and working middle class that to a large extent bear the brunt of Nigerian inflation.
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It is good for the CBN to fight inflation after all it helps the staffers feel they are adding value somehow. But when you target inflation control by policies that make life harder for the common people and budding entrepreneurs while ignoring another major cause of inflation- massive liquidity arising from frivolous government spending- then it is your den that is really a hub to irrationality and injustice. The Ghana you tout took up the IMF recommendations and modified it to their benefit of their common people. They created legal systems with a view to protecting their citizens and somehow these systems have come to provide a safe haven to true foreign investors. This method they pursued is opposite to what you recommended. They knew that if they pursued recommendations similar to yours that there will be no will for their elite to further institute legal frameworks beyond what was just necessary to help ‘foreign investors’ happy. They went the whole hog. Nigeria on the other hand instituted those policies in a manner that wiped off the middle class and destroyed local industry while all the while maintaining privileges for the political elite. Public waste was not reduced and ‘foreign investors’ were not mandated to integrate their operations into local communities. Is it therefore a thing of surprise to you that most of your ‘foreign investors’ reside in hotels and high rent mansions in Abuja and Lagos with suit cases at the ready to enable them escape from this hellhole they are looting at anytime?
The Nigerian government should take the IMF recommendations and modify and implement them in a manner that improves the livelihoods and protects the rights of its common people. Anything outside of this is to commit the people to economic slavery. This time though there will be no need for ships; the slave masters will carry out their enslavement within the homelands of the people.
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As to the derision you have for technical education, I find this baffling. Yet I have come round to understanding how you think. As a western trained economist you are most likely head full of western ideas and so-called best practices. It may therefore be too difficult for you to comprehend that there are various models of development each suited to the peculiar environments of various cultures. You need to transcend your euro-centric notions. All the development we trumpet about India and China is modeled on a strong technical education. Leave your safe nest in Europe and travel to these nations. If you cannot do this at least have the humility to Google these things up. It may surprise you that a so-called ‘doctor’ may have one up on you in development economics. Those who have been to these nations cannot help but exclaim that they are the work houses of the world. Are you aware of the numerous technical institutions in India? Why is it that the Nigerian government imports truckloads of Chinese to execute technical projects? If there were not many technically suave people in China do you think they will export technical expertise for cheap as they currently do? There is nothing laughable about my recommendation for remodeling of our education system to focus on technical/artisan education. Our economy and the funds in the banks need to be worked. We need a mass number of technically educated people who will start off small enterprises based on their skills. We need the banks to lend at low rates to these people rather than to rent-rendering oil and gas corporations that render limited value to the local economy. The banks should accept lower profit margins and should be made support small operators in the real economy.
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You and the Nigerian economic management team- who are mostly foreign trained-need to get off your high horses. Get real. Theoretical thinking has its benefits but you need to pound the streets in order to know how to modify your thinking to yield real value. It is my daily street pounding that gives me-the ‘doctor’ you deride some knowledge in the field you claim as your forte. But until you and your likes adopt my style, you may never know what the Nigerian grassroots feel about you and the policies you defend- and this no doubt is to your advantage.
One thought on “RE (I):The Myth of Trickle Down Economic Policies”
Insightful. The Nigerian situation requires a more pragmatic approach built upon strong theoretical principles. The real sector is what can drive any meaningful change. The Brits triumphed during the 18th century and so is China and India even now because of a strong real technical sector.