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By Obadiah Mailafia
2020 has been a rather tumultuous year for the global economy. The spread of the new coronavirus from the provincial city of Wuhan in China to the rest of the world was one of those Black Swan events that occur once a century. At the end of 2020, the total number of COVID-19 infections worldwide stood at over 80 million, with a total figure of 1,770,695 deaths.
It turns out that the worst cases have occurred in North America and Europe. In comparison with other regions, Africa has been rather lucky. Our continent has only recorded 2.7 million cases, with South Africa alone responsible for more than million cases. Nigeria officially recorded 89,163 infections and 1,302 deaths. Bill Gates was recently quoted as saying he remains puzzled as to why the pandemic has not been so devastating in Africa.
The global impact has been unprecedented. International trade and logistics have been crippled. The prices of basic products have fallen. Global oil prices fell to a low of $ 12 a barrel, before rebounding to $ 48.8 a barrel. Foreign capital flows have been curbed. Financial markets have fallen. Thousands of businesses have collapsed. Unemployment figures have increased across the world. Poverty and misery have worsened, especially in the poorest countries.
Global production has fallen 4.4 percent over the past year. The euro zone was the most affected with -8.3%. China, however, has shown some resilience, decelerating 1.9%, with strong prospects of rebounding to 8.2% by the end of 2021.
Together with Irish political philosopher Edmund Burke, we deplore the end of chivalry as we have always known it. Beyond the numbers, there is an atmosphere of fear, panic and subdued gloom. In Europe, the union is under strain, aided by the traumatic and untimely Brexit shenanigans. Central banks have implemented loose monetary policies that could increase national debts while spewing future financial crises. Advanced industrialized countries have reduced their ODA budgets. Commitment to the global sustainable development goals has weakened.
Unfortunately, the Beijing Mandarins did not behave like the technocratic scholars they have been known to be since the Ming Dynasty. When they managed to tame the COVID-19 monster in their home country, they appeared to have turned their backs on the world. In the reciprocal recrimination with Washington, a kind of bitterness Schadenfreude seemed to hold out. Meanwhile, they seized the opportunity to gobble up struggling businesses in Europe and the Americas with a mercantile, mercantile, and casual spirit. Such attitudes only further undermine the confidence that is badly needed to build confidence and the moral foundations of the international order.
Today Nigeria is officially in recession. My kind readers will recall that in 2015-2017 our economy suffered a pretty severe recession. The economic growth plan and relaunch, ERGP, has been deployed to relaunch the growth process during the years 2017-2020. Ironically, as 2020 drew to a close, we found ourselves struggling with yet another recession, this time more severe than the previous one.
It may not be necessary to list the woes that my kind readers are already experiencing: inflation, the decline of the naira, the decrease in remittances and capital flows, the slump in manufacturing, the deterioration of the business climate and a disastrous geopolitical environment of insecurity, uncertainty and collective anomie. Nigerians are beginning to be wary of figures released by the National Bureau of Statistics.
The overall annual inflation rate has been estimated at 14.23%, while food inflation is estimated to be around 17.38%. However, American economist Steve Hanke of Johns Hopkins University has criticized the figures. He estimates that annual inflation under the current administration has hovered well above the 30% mark.
In November last year, it was reported that 428 federal government agencies were unable to pay civil servant salaries for two consecutive months. This risks further weakening aggregate demand and public morale, given the prominent place of the public sector in our political economy. One of the key factors in the current recession is the decline in agricultural production. Rural banditry, especially in the Middle Belt, which is unmistakably our country’s bread basket, has resulted in food shortages which are reflected in rising prices and hunger among the poor.
About 70 percent of our population has agriculture as their primary economic concern. Murders, beheadings, kidnappings, kidnappings, rapes, banditry and plunder destroy rural food production and the livelihoods of rural people. Social capital is eroding. Millions of defenseless peasants are attacked. Many have flocked to towns and villages while many have become internally displaced persons in makeshift camps.
The harsh lessons of history clearly show that appeasement never works. In fact, it provides a system of perverse incentives for terrorists. We were once told that “an attack on Boko Haram is an attack on Islam”. Now that the chickens have returned home to roost, the North has become a wasteland of poverty, misery and despair. I hate the idea of negotiating with the insurgents. It has become a big deal for all key stakeholders in government and the military and security services. This vicious circle must be broken if we are to make progress as a country.
I am of the opinion that no exclusively technical economic nostrums – however important they are – will work under current distemper. Indeed, the roots of our economic difficulties are deeply rooted and structural. Even with the best economic team in the world, we have no hope of escaping our collective nightmares if we don’t tackle fundamental bottlenecks such as insecurity, degradation of public institutions and poor governance. .
The eminent Cambridge economist Joan Robinson was a fly in his time. Mentee and disciple of the great John Maynard Keynes, she noted that the goal of studying economics “is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists ”.
I couldn’t agree more. I started my university studies as a political scientist. I then turned to economics in order to confuse economists with their econometric games. The venerable ancient citadel of knowledge, the University of Oxford, does not offer a single B.Sc. course specializing in economics.
What they offer is a BA in Politics, Philosophy and Economics, PPE. They believe that offering pure economics as a subject to impressionable young minds without equipping them with the tools of political, moral and philosophical analysis is a recipe for disaster. This will turn them into one-eyed monsters who know the price of everything but cannot appreciate the value of anything.
Today, the PPE diploma is a highly sought-after qualification, for which the entrance examination is matched only by medicine and law. Past graduates include former British Prime Ministers Harold Wilson and David Cameron; Kukrit Pramoj, former Prime Minister of Thailand; former Pakistani Prime Minister Liaqat Ali Khan, Zulfiqar Ali Bhutto and his daughter Benazir Bhutto John Kufuor, former President of Ghana; Malcolm Fraser, former Prime Minister of Australia; and countless businessmen, finance ministers and academics from around the world.
A good economist, in my opinion, should be a leader who knows the cost of everything as well as the value of the most important things that matter to mankind and civilization. Addressing our current malaise requires sweeping institutional reforms and statebuilding. It requires top notch leadership skills. Just as war is too important to be left to generals, economics is far too important to be left to economists.
Vanguard News Nigeria
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