Category: Brian Browne

  • Bye bye Barack (3)

    Bye bye Barack (3)

    The more you look at something, the more
    you see yourself in it

    s in the domestic arena, Obama’ s soaring rhetoric concerning foreign policy dwarfed his actual feats.  His actions were pedestrian, lacking the depth of vision or appreciation for the complexity of world affairs during this era of gathering tensions. Afraid to place his hands in any effort that might not succeed, he did not oppose the political forces in America that sought global domination and in the process, that jerked the world closer to major war. This Nobel Prize Winner accommodated the advice of the warmongers more than he rejected it. He choose to be one of them. Not because it was right but because it was the easier way to go. When he entered office, America  was engaged in two wars. By the time he left, the American military had engaged in significant military or aerial campaigns in five additional countries. Obama spoke peace but performed war. That he deployed mostly drone and other aerial attacks meant no blood on his hands but it would spill rivulets of innocent blood on the ground; thus, his conduct amounted to brutal war nevertheless.

    Most charitably, his foreign policy approach can be described as pragmatic. This is but a euphemism for a perspective that,  lacking any reformist strategic element, was all to happy to compromise with the evil that it met in the halls of power.  The closest thing he had to a guiding principle was his aversion to loss. This trait was not so much a function of caution but one born to vanity. He did not want his name tainted by military setback. Thus, his was a foreign policy of focusing on what could be attained absent the threat of major defeat. His obsession with avoiding military failure would make diplomatic failure inevitable. No human is completely prescient.  Only after we walk into the forest, do we know if the beast will challenge our advance. If dread of the feral charge exceeds the value of the gain being sought, it is best not to venture into the thicket in the first instance. Obama would be cajoled by his war establishment to walk into situations like Syria, only to find the road tougher and longer than first imagined. He would ultimately retreat from his aggressive opinion to avoid confrontation. This waffling would prevent escalation of war but would also leave friend and foe perplexed as to how such a smart man could make such acute miscalculations.  It was because he was torn between two conflicting ideals he could never reconcile: his aversion to risk and the perpetual advance of the American war machine.

    Obama’s disappointing foreign policy legacy confirms the strength of a dangerous agency at play in the affairs of nations. American foreign policy is now dominated by the military machine which includes the phalanx of well-paid politicians and intellectuals who have attached themselves to it. The American Department of Defense is a misnomer. More accurate is the original nomenclature: Department of War. The military establishment is a massive organism comprised of the most powerful armed force ever assembled and the legion of private corporations and contractors that service this machine. This complex needs to be amply and always fed just to maintain itself. Sadly, the driving impulse of this enterprise is not to stay as is. Like any other large business it seeks to expand market share and maximize profits.

    The application of these expansionary business impulses to the war machine has but lethal consequence. The quest for profit means the machine has to be put to use in order to justify ever increasing budget request. For the denizens of this martial world, the pursuit of happiness means the pursuit of war. They seek a condition of perpetual conflict where money ceaselessly flows into the machine and misery flows out, being poured upon those recalcitrant nations that have been tardy in accepting American global dominance as a fait accompli.

    Entering office, Obama entered into a fateful choice. If change was truly in the offing, he would confront this soulless machine. The damage it has done to the world and to sanctity of America’s democracy is of weighty measure. Democracy at home is weakened by war abroad. The continuous application of men and materiel in foreign war is a sure way to defeat your own democratic self. America is now a less open and free society in actual practice than forty years ago. It is also more a militarized nation. This is no coincidence. Confronting this trend would have been the most principled thing to do. Massive political costs would have been the immediate dividend. It would have forever estranged the first black president from the conservative power base that has dictated the shape of things in Washington since Obama was born. Being the first black man to occupy the White House would have become exponentially more lonely and difficult.

    Adverse to tough fights that might be lost, Obama cast his lot with the war establishment that had barely countenanced his election. He would be tolerated by them because he surrendered unto them though not fully. He would go their way because he believed their myths of American greatness and righteousness in large part. He would do so also because he dared not fight these tougher fighters unless he had no other option. Yet, he would recoil when their adventurism placed him in a bind where the outcome risked a war too large and uncertain for his skittish political biology to stomach.

    To be fair, Obama had few role models for the confrontational approach. After the scandalous Bay of Pigs fiasco in Cuba, President Kennedy showed signs of an independent streak. He was taken from the scene before we could see if that streak might take full bloom and whether it might halt the militarization of American foreign policy. All presidents after Kennedy encouraged the growing juggernaut. Obama joined the blind parade. It would have been a monument to exceptional courage and principle for Obama to stand against the weight and blast of the war machine. After all, he was merely the Commander-in-Chief.

    A survey of Obama’s foreign policy reveals the easy resort to force and intimidation against the small and weak but of waffling in the face of the unexpected resistance by Russia against American intrusion into the former’s traditional sphere of geopolitical influence.

    America’s treatment of weak nations on its doorstep was an exhibition of malign interference.  Haiti  clearly displayed the ugly handiwork of American statecraft. During the 2011 presidential election, America’s favorite candidate and Clinton boot-lick, Michelle Martelly, didn’t even make the runoff. However, there is nothing that American power and pressure cannot alter. Secretary of State was dispatched to correct what the people’s will had done in error. She scowled, hectored and wagged her finger at every Haitian official in eyesight. The message was quickly understood.

    The erstwhile musician known as Sweet Micky was included in the runoff; the deserving candidate was summarily removed. The conclusion was foregone. Sweet Micky became President Martelly. The new job would only reinforce his penchant for dancing to America’s tune. He would give America, particularly the Clinton family, the keys to his nation. When poor Haitians sought legislation raising the minimum wage, Secretary Clinton vetoed the progressive move; it would increase the costs of American manufacturers seeking to locate there. Haitians came to icily refer to Bill Clinton as “the Governor General.”  He pranced about the country, facilitating the corporate takeover of vast tracts of important real estate and making sure an unqualified family member got the most lucrative contract to mine the nation’s gold reserves.

    Obama still would finish with the forlorn nation. During the 2015 presidential election, the Haitian electoral commission and the populace rejected the exercise as cast in fraud. The commission canceled the travesty and  called for new elections that would be free and fair. America vehemently objected to the Haitian desire to improve their democracy. Washington had concluded that the exercise was fair enough. The reason was obvious. Its chosen candidate had won even though that person and his party were unpopular.

    Imagine that! America the self-described bastion of democracy was telling the second oldest republic in the western hemisphere that it should not aspire to credible elections. Because of the Haitian show of independence, the American government suspended technical assistance to the electoral commission. American assistance to its favored candidate would increase. This was not America showing respect for the democratic hopes of another people. It was a naked display of power, dismissive of the will of a nation simply because that nation was small and poor.

    Haiti seems a land accursed to many people. The spiritual realm is beyond my range of clear sight yet I doubt such a conclusion. Haiti is a land too long and too heavily put upon. Haiti should stand as a testament to the Black race and our perseverance unto freedom despite the most odious slavery and odds. The Haitian revolution was more remarkable than the American.  It was the only instance in recorded history of mankind where an enslave population defeated a standing army of a great empire to gain freedom and fashion a new nation. Instead of being chronicled as a giant advance in the progress of liberty, Haiti has been punished for two centuries by economic boycotts, outrageous war reparation payments to France and armed invasion. This century that punishment has taken the form of blatant political interference and the wholesale diversion of humanitarian assistance. Had the nation been allowed to develop normal  trade and commerce as a nation equal to any other, it would not be in the present decrepit state.

    Strong earthquakes and hurricanes have shaken other nations. But none suffered the fatalities that befell Haiti. Haitian death tolls were not caused by supernatural curse. The proximate cause of the deaths is man’s own hand. Racism, compounded by the dastardly national leadership that racism helped produce, led directly to the chronic deterioration of the nation’s moral and physical infrastructure. In such conditions, when the wind blows and the ground trembles, many people lose their lives.

    The cerebral Obama is aware of this sordid history. Yet, he did not lift a finger to help the nation because this history meant nothing to him. Haiti was unimportant and its people mere human effluent. Instead of standing by the small nation when such a stand would have cost him little political capital, he placed his foot on it then gave it over to the Clintons and to the cold mercy of their larcenous grabbing.

    Obama’s normalization with Cuba was a positive step on balance. The move was long in coming. It also came with some political costs. However, the majority of Americans favored it. There was no chance of Washington suffering injury from detente with Havana. Cuba poses no threat. The more the Cuban economy is pried open, the more America regains control of adjacent market that had been artificially closed. Castro’s revolution will eventually be drowned in a sea of dollars and the inevitable dying of the old guard in Havana. The opening to Cuba became more a priority because of the wasteland Haiti has become.

    The elite had visions of turning northern Haiti into a tropical playground redolent of Cuba prior to Castro. With Haiti in such a sad state, the surer way to relive the glamour of old Cuba was to return to Cuba itself. Nothing is as it seems. With regard to the powerful, everything done for obvious good is also done for hidden wrong.

    Obama’s years have seen an escalation of violence and instability in the Middle East and Near Asia. His decision to follow, instead of to restrain, the American war machine abetted the turmoil. By his own admission, his intervention in Libya was gross error. It was also cruelty multiplied. A direct consequence of the intervention was to fuel superfluous death and terror along an arc stretching from northern Nigeria to western Iraq. America and its allies formed the air support and informal welcoming committee to jihadists from across the Maghreb whom Qaddafi had kept at bay.  On the even of the Western intervention, Qaddafi was on the cusp of decisive victory. He would have ended the rebellion with dispatch, within two weeks most likely. Qaddafi was not a threat to the West and had been helpful against terror networks. Yet America and its friends decided to align with terror to oust the mercurial leader. Qaddafi was a strange, imperfect force, a despot prone to ruthlessness. Yet his nation enjoyed one of the continent’s highest standards of living. The arbitrary decision, unhinged from any calculation of the true costs and benefits, was made that it was his time to go and even terrorists would become Washington’s allies in removing him.

    The intervention turned Libya into lawlessness.  America gave the jihadists shopping spree at Libya’s vast weapons armory. With Western aid, weapons would be funneled to support the rebellion in Syria. Syria is now a wasteland. Its people dispersed, economy made destitute and ancient historic legacy turned to rumble by madmen partially equipped by the world’s leading democracies. Weapons would also be transported southward into Mali and Nigeria, making Boko Haram a more potent force that would kill thousands and turn millions of Nigerians homeless. This darkness is Obama’s legacy. He went into Libya not caring if the effort was right or wrong. He did so because Secretary Clinton and the war machine of which she is a charter member pressured him. He relented not because he was later convinced of the propriety of the undertaking. He succumbed because he did not want to alienate the warriors in his midst over something so trivial as Libya.

    The Nobel Prize winner let the bombs fly simply because he could not be bothered to oppose those in his midst who championed the wanton destruction of an inconsequential if troublesome nation. He would couch the effort as a struggle for freedom and to protect innocents. The jihadists he supported would willfully depopulate the city of Tawargha inhabited by black Libyans, slaughtering many innocent people in the process. Obama shed neither a tear nor lifted a finger the halt the carnage. In effect, he had agreed to bomb Qaddafi so that jihadists could traipse the land engaging in gratuitous, lethal racism in their wanderings.

    Russia raised no objection to the Libya incursion. Qaddafi was not beloved and Libya was of no strategic import to Moscow. America misread Russian situational acquiescence to be sign of perpetual surrender. America was stunned when Russia opposed similar adventurism in Syria. Had Obama a finer understanding of geopolitics, he would have anticipated Moscow’s hardening. Russia had invested much in Syria. It had a strategic naval base there. The base protected Russia’s back door into the Black Sea and allowed Russian to project into the Mediterranean. Meanwhile, America suborned the Al Qaeda affiliated extremists in Syria not for love of democracy. A lucrative gas pipeline had been planned from Saudi Arabia to Europe. The project must traverse Syria. The financiers  need a pliant government in Damascus. Thus, the Western funding of those who would have Assad’s head. This was but a war inside a war, just this time gas had replaced oil as the reason for ruin.

    When Putin stood firm, Obama waffled. He did not want to be dragged into costly war that could well be lost. Defeat would bear his name and he could not bear that. Because Putin pushed back, Obama pushed against his war establishment clamoring for a hot fight with Russia. He was smart and scared enough not to risk it. In effect, he ceded Syria to Russia and kept the peace.

     

    Stumbling into the peace through the backdoor may be his greatest foreign policy achievement.

    Angered at Russian impudence over Syria, the war party would push America and NATO to punch into Russia’s sphere of influence in eastern Europe. Ukraine became the focal point. America helped fund the overthrow of a pro-Russian elected government. Russia reacted as a power does when its vital interests are threatened. Protecting to vital interests and its strategy of having buffer states to repel an incursion from the west, Russia engineered the secession of Crimea and its return to Russia as well as funded separatists in eastern Ukraine. Obama performed an even more nuanced dance here.  He went along with the American war machine to a degree. He funded the Ukrainian military lavishly,  pushed for economic sanctions and approved silly war exercises along the Russian front. He joined the American press in demonizing Putin. However, he resisted the call for more direct American intervention. While America has cast Putin as the outlaw and most of the world accepts the verdict, the opposite is true.  Putin is adhering to the principles governing the relations between great powers that evolved from the 1648 Treaty of Westphalia. America’s insistence that neither Russia nor any other nation except America can define national spheres of influence is a revolutionary and reckless departure from the maxims practiced for over four centuries. Again, this has been a victory of sorts for Obama. He juggled and danced between Putin and his own war party until his tenure expired. He resolved nothing but did keep his own political skin out of the fire of hot war.

    The Iranian nuclear deal was of the same stop-gap nature. Iran posed no threat. It has not attacked another country in centuries while America seems to engage a new foe on a yearly basis. Obama made the Iran deal to steal time. The deal is essentially a ten year grace period wherein both sides agree not to cross the point of no return. In this way, Obama again diverted the domestic chorus for war against Iran. The deal also preempted the contumacious Israeli Prime Minister Netanyahu from taking action that might have pulled Obama into a major fight not of his choosing.

    While sidestepping major war, Obama fed the martial beast a steady menu of minor conflicts. During his term, America has engaged in major operations in seven countries, outpacing George Bush in this regard. The former president ordered so many aerial raids that America’s inventory of bombs neared depletion levels last year. Thousands of innocent people have been killed. Yet after one drone strike, Obama is reported to have quipped that he is getting pretty good at this “killing thing.” Such a quote should be etched on the nonsensical Nobel Peace Prize he was given. This diet of nasty little wars that have no end and pose no genuine threat to America is a boon to the war establishment. These conflicts ensure that  politicians and public will be sufficiently frightened to increase military budgets in order to buy  the next generation of weapons and to surrender their civil liberties so that the national security state may better protect them from imagined threats. So frightened they have become that they think not of who shall protect them from the excesses of the national security apparatus.

    Obama did nothing for Africa.  His electrification program for Africa was a pretense, a fiction that has yet to see the light. It was a public relations announcement and nothing more. Some will apologize for him,  claiming he refrained from action because he did not want to be tagged as favoring blacks. That apology is wanting but even that is too generous. The reason backing his inaction is more ominous. He did nothing simply because he did not want to do anything for Africa.

    He sees his blackness as a social construct and a political reality that must be worked to his advantage and never to his discomfort. Psychologically, he is in equal parts repelled by and attracted to other black people. He loves his blackness as an abstract concept.  But he holds no true brotherly affection for most black people. He sees the pathologies and contradictions among whites as excusable human frailties; he sees those of black people as rendering us an inferior product in the aggregate. White society’s struggle with its demons marks the path of human progress for him. Black society struggling with its demons is nothing but two brothers fighting to determine which is the worst. He is an extraordinary amalgam of deep love of self commingled with a perplexed ambivalence to his race at large.

     

    CONCLUSION

    Obama personifies leadership in this era. He is not a maker of history. He is what history has made. Obama is a confluence of the shallow idealism of the Baby Boomer generation and of the virtual reality of the 21st century Millennials.  The idealism of the Boomers has the longevity of a Hollywood movie. They think grand and profound thoughts. When reality demonstrates how long and hard it will be to effect those ideas, the Boomer quickly jettisons the idea and rejoins the mainstream so that he can get on with his private advancement.  Thus, people like Obama and the Clintons have even confessed to “feeling Democratic but thinking Republican.” This is code for surrendering principle to the cause of personal ambition. As a politician of the computer age, Obama also understands the world of virtual reality.  If you say, write or text something, that is as good as doing the thing. The expression of intent, whether genuine or not, is more important than conduct. If it exists on the screen or in print, then it is. Thus, in his closing speech Obama actually took credit for simply wanting to close the Guantanamo holding facility although he did nothing concrete to close it and had the unilateral power to do so.

    In the end, Obama was neither hero nor villain. He was but a cog in the machine. He was a phlegmatic, risk adverse manager of a cold-hearted martial enterprise. He is gone. The machine rolls on.

    For those in need of symbolism, the Obama years have been good. He has proven that a Black American can be as coldly efficient and do the bidding of the elite as well as any good white politician. For some, I guess that is progress. For those of us who already knew this, Obama’s tenure is a disappointment. Obama’s presidency exacted a hidden cost that will be borne by the Black American tradition of progressive politics. Due to Obama, black politicians will no longer be seen as defined by a moral clarity and an urge toward justice and peace based on our history of being on the wrong end of injustice and racial violence.  To advance his career and smooth his time in high office, Obama obliterated in eight years what took centuries of pain and heartache to build. A black politician is just a white one in darker skin. This is a strong price to pay just to fulfill one man’s fleeting ambitions.  Now, who shall hold America’s moral compass up to the face of power and privilege?

     

    Next week: We begin the era of Trump.

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  • Bye, Bye, Barack (Part II)

    Bye, Bye, Barack (Part II)

    The vain ruler harks more to the applause of the rich than the cries of the poor.

    Last week, we reviewed how the cynical political strategy of Bill Clinton transformed the liberal Democratic party into a gossamer of itself; in many ways, it would become a replica of the Republican Party of the early 1970s. Clinton’s policies were of the harsh variety that did blacks and the working class whites little good. However, he spoke in a folksy idiom that disguised his elitist intent. Despite the damage generated by his policies, Clinton would remain a compelling figure in the political firmament. He made himself the reigning grand master of the political bait-and-switch, the shiniest mountebank in a galaxy of noticeably inferior emanations of the art of political deception.
    If there was anything of permanence to his term in office it was to place a target on the back of working class people. Poverty would well know where to shoot its arrows once economic crisis came. Such crisis was rendered inevitable by the policies Clinton fabricated while in office. Those who loved him the most, where those he most neglected. In this age of information, he showed misdirection was attainable for those who had the talent and vacancy of scruples for sordid undertaking. He proved that he could hoodwink most of the people enough of the time to be elected, reelected and even adored by the very people in whose face he flicked the mud from his boot. This brings to mind a principle of human nature: The more a person can deceive you, the less that person will respect you. He will relegate you to the floor of lowest contempt. As Clinton had done with the people, so too would Obama.
    Barack Obama disliked Clinton as a person. However, as political model to follow, Clinton became the Obama bible. As irony would have it, Obama would become the leading apostle and practitioner of Clintonian politics. In doing so, he outflanked dear Hillary for the 2008 presidential nomination. He “out-Clintoned” the Clintons. What Bill had mastered, Obama would subtly perfect. His black skin and the progressive stance that it connoted to many people would better mask the conservative menu he embraced.
    The 2008 election was deeply educative moment for me. I supported Obama without reservation and without sufficient thought as the pedigree of my decision. Like many, I was enticed by the slogans “Yes We Can” and “Change.” To me and millions of others, they signaled things that we would later discover where never in the Obama realm of action. He knew this; but would not move to negate these wrong perceptions because needed them to win. The corrections would come later: after he had benefited from our confusion to acquire the keys to the White House.
    Obama bantered in the language of a progressive. But his mind and objectives were dedicated to the Clintonian worldview. In other words, his personal ambition was vast and breathtaking. However, his vision for the actual reform was underwhelming. Yes, we can vote him into office; but no we cannot reform this nation so the poor and working class have a better chance and a weakening middle class is made once again secure. We can change the color of the face of the leadership but we will do no such thing with the color of our policies at home and abroad. Those policies would remain darkly elitist and menacingly imperial.
    On election day 2008, I remember standing among hopeful black faces waiting to cast votes with a sense of historic fulfillment rarely encountered. The feeling repeated itself as I watched with my mother as Obama gave his victory speech to an adoring crowd. My mother was born with the Great Depression and spent the majority of her life in a land ruled by the black codes, the American system of legalized racism. For her to see the advent of a black president was seven dreams come true. Tears of joy and pride streamed down her face. As I watched her and thought of the road of her years, I failed to resist the high emotion of the extraordinary moment.
    Within three months of Obama’s inauguration, I realized I had been a mark in a confidence game of epic dimension. Obama was not what he had hoped we believed him to be. I had dismissed troubling signs in his scant political record and in his waffling on key issues during the campaign. The symbolism was so powerful and picturesque to be shorted by the more unpleasant, obscured reality. His rise seem the perfect tableau of what modern America was meant to become. Like so many American political stories, the tale was more fabrication than fact.
    I had failed to heed Martin Luther King’s admonition. I had allowed Obama’s race to replace an objective evaluation of his character and the policies. Had I not disobeyed King, I would have more deeply questioned Obama’s meteoric rise. I would have been as uneasy with him as I was with John McCain, the Republican candidate. I would not have voted for either. I find no great utility in being presided over by a black man who sees me as a fool to use as opposed to a white man who uses me because he hates me. The difference between the two is so thin as to be nonexistent. In their policies toward me, they would significantly differ but once in one thousand.
    An overview of the eight Obama years shows his first as the most consequential and revealing one. From the churlish President Bush II, he inherited the worst financial crisis since the Great Depression. To his credit, Obama acted to prevent the 2008 recession from becoming another depression. However, we should not overrate the achievement. Faced with the looming calamity, only the most conservative ideologue would have stood idly to allow the dynamics of the market take its merciless toll on the financial system. Obama basically fine-tuned and expanded some of the things Bush had rushed into place before his exit.
    While Obama saved the financial system, he did little to reform it in such a manner that the excesses which caused the crisis would not be repeated. Instead, he pumped over 15 trillion dollars in various ways into the large banks to insulate them from their own reckless speculation. The banks had made a hash of the residential housing and mortgage sectors. Because of the gorging by the banks, millions of homeowners lost their homes. Obama barely twitched his little finger to help the homeowner in trouble. The financial aid to the banks would be the largest transfer of public funds into private hands in the history of humankind. By contrast, the programs established to assist troubled homeowners were minuscule and rigid. They were cast so that only a small percentage of people would qualify for the aid. Those who did, found the amounts were small and long in coming. Obama could then tout he had designed a program to help the average man. But it was a program only in name. In reality, it was a mean shadow, a mirage of false assistance that mocked the pain and loss of the aggrieved homeowner.
    Obama energetically worked to salvage the banks that caused the fall but he placed on perpetual hold the average person. He let them sink underwater without as much as tossing a lifeline. If he had really earmarked 50-100 billion dollars to liberally aid the broken American, a mere fraction of what he shoveled the banks, millions of people could have refinanced and kept their homes. The economic landscape would have been made much less brutal and the economic recovery more vibrant. Instead, he allowed people to go homeless and jobless because he cared not enough. After all, the banks and big corporations contributed more to his political success than had these poor fellows.
    No large financial crisis occurs outside the company of widespread fraud and crime within the financial industry. Obama was aware of this. The FBI had showed him its findings. He ignored them. Obama instituted a policy that no banks or bankers would be prosecuted for known criminal wrongdoing. During this period, Obama met the nation’s most powerful bankers. He told them he was the only thing keeping the public from revolting and demanding the bankers be punished. His was a telling statement. Obama recognized the public outcry. He did not say it was illegitimate. Even he knew it was grounded in fact. Still, he choose to side with the bankers. He would ally with the banks against the public interest because his mind was set on protecting the elite and letting the common man swim for himself.
    Obama made his greatest mistake in fiscal policy during that first year. With the economy descending into recession, a large fiscal stimulus was needed. Empirical evidence pointed to around 1.5 trillion dollars as sufficient to spur a decent recovery. The progressive thinkers in his economic council advocated expenditure of this magnitude. Conservatives balked at the figure even though their own economic models showed this was condign. They put objectivity aside in order to hold fast to their faith in the free market that was imploding before their eyes. They advocated a stimulus of 200-300 billion dollars. Obama knew the better course of action. However, he could not no bring himself to go against his conservative advisers. Thus, he cut he baby in half, moving for a stimulus of roughly 790 billion.
    Because of this middling approach, the economy would not recover quickly or firmly. A double-dip recession was barely avoided. Almost ten years after, the so-called recovery is the weakest in American history. All but the smallest fraction of GDP growth during the post-recession period has gone to the richest one percent of the population. Eighty percent of the people are worst off now then before the 2008 recession.
    Obama touted that his policy lowered unemployment. This is true but misleading. Unemployment was lowered not so much by his polices but by statutory definitions. The American jobless rate does not include those who have gotten so frustrated that they cease looking for work. Under Obama, those who dropped out of the job market reached its highest percent on record. If you include these people in the effective unemployment rate, the rate remains high and troubling. Obama’s boast rings but the tone is hollow not heartening.
    During his first year, he also advanced the foundation of his legacy, the Affordable Care Act also known as Obamacare. This insurance scheme did not originate with Obama. He borrowed it from a Republican think tank, the Heritage Foundation. He figured he would win points with the Republicans by delivering unto them their own creation. While Obamacare had some benign inclusions such as prohibiting insurers from rejecting people with preexisting illnesses, the measure is fatally flawed. When it was first proposed, I observed that its cost controls were too weak, too much of the cost burden would fall on the middle class and that the behemoth insurance companies would manipulate the labyrinthine system to their benefit in ways the solitary individual seeking insurance could not possibly match. These fears materialized with vengeance.
    Last year, insurance premiums rose nearly 25 percent nationwide. Incomes remain static. Two more years of like increases would mean a doubling of premiums from 2015 to 2018. The Affordable Health Care Act is swiftly becoming a misnomer vulnerable to sarcastic derision. Out of the 50 million then uninsured, the act covers 20 million. But a large bulk of the 20 million have bought policies fraught with numerous conditions and caveats indecipherable to normal beings. These people will find that their policies remain in good standing so long as they do not use it for any significant expense. If crisis comes, they will find the policy to be illusory just when they most need it.
    Obama’s two most significant domestic policy successes were actually failures. For the entirety of his tenure, Obama pursued a fiscal “grand bargain” with Republicans. He wanted to scale back social security and medicare, with a view to eventually privatizing both. This would have been the public execution of the New Deal, the bedrock of the Democratic party’s compact with the American electorate. This would have completed the transformation of the Democrats into Republicans on all economic policies of any deep consequence. He would have achieved what Bill Clinton could only dream. He would have sundered the social safety net for the elderly and poor, placing the people’s welfare in the hands of the very Wall Street profiteers that had just bled the financial system dry. This policy makes no sense except that the Wall Street gang stood to make additional tens of billions of dollars yearly if this took hold. Barack knows on which side his bread is butter and who owns the biggest knife and the most butter.
    Thankfully, the Republican Congress was full of racial animus. Racism blinded them to the fact that Obama was giving them what they most desired. They simply could not stomach agreeing with their own black servant because they were affronted that he sought to act as their leader. They rebuked his gift. The people’s New Deal benefits were sacrificed by their purported black champion only to be saved from his mercenary designs by racism itself. The Divine truly has a sense of humor.
    Failing to learn the lesson underlying the grand bargain impasse, Obama pirouetted to champion the Trans Pacific Partnership (TPP) agreement until his last day on the job. The TPP was more than a trade compact. It was an unprecedented shift of national sovereignty into the clutch of a global financial and corporate network. The agreement established a special private judicial system wherein foreign corporations could sue governments for enacting laws or regulations that affected the corporation’s existing investment in a country. If a nation decided to pass labor and environmental rules prohibiting a foreign company from continuing to bury toxic waste at a site, that company could sue the government for costs and lost profits resulting from the protective measures.
    The private court would be staffed by judges selected by the business sector. The outcome of any suits would be foregone. This provision alone would make major labor and environmental reform legislation prohibitive. Afraid of being sued, governments would be handcuffed in making companies perform as good citizens. Representative government and progressive policies would have become casualties of the TPP. Governmental sovereignty as we know it would have been forfeited in order to maximize global corporate profits. Companies would form foreign subsidiaries that would return to their home country to perform the work of the parent company, thus taking advantage of this provision. Nominally foreign companies and investment would proliferate while governmental regulation for the public good would diminish in proportion. Such a provision actually would give firms an incentive to invest in the cheapest, most labor and environmentally adverse ways then dare governments to pass laws to make them cure the wrongs.
    Based on this provision alone, there is no way that a person who truly cares more for people than for profit could support the TPP except out of mistake or ignorance. Obama’s could not claim ignorance. The treaty bore his mark. Where he wavered on helping the poor and working class, his support for the TPP was steadfast despite the strong opposition of most average Americans, particularly progressive Democrats. For him to support such a caustic device means his heart is not with the general welfare but with the special interests that populate the corporate boardrooms in tony office buildings. To support the TPP unabashedly, shows an Obama that had given himself over to the global elite completely, There is no other plausible explanation for such behavior so unfitting the progressive and Democratic cause. He again was lucky that the 2016 election came before he could realize this dream. It would have written his name in infamy.
    Next week we shall conclude with an analysis of Obama’s foreign policy legacy.

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  • Bye, Bye, Barack (Part I)

    Bye, Bye, Barack (Part I)

    How sad when the reflection bears more substance than that which is reflected.

    This article will be unpopular in the main. That is reason enough to compel its writing. Popular acceptance should never be a pursuit for a commentator on the political economy who seeks to do so with a modicum of integrity to his beliefs.  For me, popularity is mostly an assured bygone but at times an incidental byproduct of the quest to adhere to the finer truths among the rush of what is said and written for public consumption. Much of what passes as news analyses and information is like the fast food that entices us along every main street and avenue of every modern city. It fills but does not nourish. The taste is good but is of scant benefit. Consuming it prevents you from that which is better for you. I am sure some who read this will attach this negative description to what I am about to say.

    My pen leans left. I try not to disguise it or apologize for it. It is from that perspective that I make this case. So be it.

    The near veneration of former President Obama is a sad testament to how far black people have been led down the primrose path that leads away from our better future. We have been led to believe we move forward; but what I coming is a replay of bleak aspects of both our remote and immediate pasts. The path we now tread also betrays our tradition of progressive politics which has been an ethical, if not always effective, counterbalance to the American establishment’s attempt to control the known world while keeping us subservient at home. We always stood against the conservative establishment’s penchant to throttle the poor at home and to pillory recalcitrant but nonthreatening nations as the hallmark of an imperial foreign policy that exploits ideals such as democracy and humanitarian intervention to mask more pecuniary aims.

    President Obama is not the creator or the harbinger of a new and better age. He is a creature of his era.  He does not define our times; the times define him. He adroitly took advantage of what had been laid out before him.  Thus, you cannot understand the elevation of Barack Obama without first understanding the impact of Bill Clinton. There is no Obama without Clinton just as there is no Clinton without Reagan. Therefore, we must delve into history before we treat the Obama administration in earnest.

    A mercenary compromise was performed by black politicians thirty years ago.  In exchange for greater access to the establishment and its lucre, many blacks aspiring toward high profile political careers relinquished their predecessor’s roles as the foremost guardians of modern progressive politics in America.  While black politicians were lining up and crowding the doorway to tender their half of this Faustian deal, the Democratic Party was undergoing its own cynical transformation. The party began to tear from its liberal moorings. The Rooseveltian New Deal –  social security, public works, public assistance to the poor – had been the hallmark of the party for half a century. This served the party well.

    But the social-economic forces that begot the Reagan election changed things. Conservatism had regrouped to overturn the public order of things and with it, change the moral foundation of public policy and discourse. A more selfish, materialistic worldview would ascend. Ambitious young Democrats desired to be elected into office more than they wanted to champion programs for the poor and vulnerable. They formed groups such as the New Democrats and the disingenuously named Progressive Policy Institute, for progressive it was not. They co-opted the label “progressive,”  redefining its use in the American political lexicon to mean what it was not. By this subterfuge, they would dupe many naive souls into believing this group of Democrats wanted to safeguard the Rooseveltian legacy when their aim was to purge it.

    New Democrats warred against the New Deal.  As Reagan jerked the nation rightward, New Democrats were only too eager to follow his direction.  The New Democrats would also form the Democratic Leadership Conference. Bill Clinton was its head.  Black politicians who wanted to join the exclusive club to partake of the bounty given only to the elite not only checked their coats and hats at the door. They checked their consciences as well. As Reagan pulled white Democrats to the right, black Democrats ran after the white ones.  (Only after he was elected into the White House would Obama show his true inclinations.  During a meeting with Democrats, he exclaimed that he was a “New Democrat.”  He dared not say it while on the campaign trail; it would have undermined his false progressive posturing. But once in office, he suffered no such inhibitions. He could then boast that he had chosen to be a slave on the very ship he was to captain.)

    For a few pieces-of-eight, these black politicians sold their right to think independently and forfeited their position as the most left-leaning force in American electoral politics. Blindly following Clinton’s course, black politicians were in effect legitimizing Reagan. This is why President Obama could list Reagan as among his heroes even though Reagan launched his presidential campaign in the Mississippi birthplace of the Ku Klux Klan and never did anything during his years in office to atone for the obvious racism he came to represent. To this day, no mainstream black politician has the fortitude to call Reagan a racist when he so obviously was.

    For these black politicians the movement for fairer black political and economic rights had ended. As long as fellow blacks had the right to vote for them that was all these politicians cared for.  Their mission was no longer a collective one but a personal one. For them, politics was simply a game of thrones, not one of moral themes.

    Because of the campaign money and political structures he commanded, Clinton had black politicians swarming around him like fleas to an open honey jar. With this phalanx of black hirelings, Clinton maintained the loyalty of black America due to his gifted tongue and his knowledge of black cultural sensibilities because of growing up near the wrong side of the railroad tracks in the South.  However, the Clinton years laid the foundations for a diminution that black America is still suffering. Yet, Clinton’s words were sweet to the ear. He explained everything in terms that fooled most people into believing he was doing the bidding of the common man. He told people what he knew they wanted to hear. That he did the opposite had no great bearing on his conscience. His mission was to deceive not to lead.

    A clear look at Clinton’s major goals show how successful he deluded working class and black America into believing he was for them when he was actually undermining their core economic interests. First, he repealed New Deal financial regulation. This caused a boom of predatory lending that would bust a decade later, causing legions of black people to lose the only significant wealth asset they had, their homes. Thanks Bill. Second, he passed a crime bill highly discriminatory to black nonviolent drug users. This massively increased the black prison population without a like increase in white prisoners although white drug use is higher per capita than black. Strange how that happened. Thanks again Bill for loving black people so much that you want to keep more of us under lock and key.

    Third, his gutting of social welfare added to the suffering and destitution of millions who, through no fault of their own, had fallen through the cracks and had no real chance at employment. He expanded the cracks to make it a bigger hole that would be easier to fail down. In desperation, many of these people would resort to crime. Also, because of Bill, people with criminal records even for minor drug offenses could not receive in public assistance or live in public housing. Again, with no place to stay, little to eat and nowhere that would hire them to work, many had no alternative but to resort to even worse crime. Thank God, Clinton’s crime bill had been enacted to handle them. The private prisons Clinton championed were more than happy to take the influx. It meant greater profits. Fourth, Clinton would cut social services to balance the budget. As a result of this so-called prudence, the nation slank into mild recession. Without government running a deficit, the private sector is prone to contract. That is a cardinal lesson of empirical economics but not the conservative dogma to which Clinton affixed the fate of the nation.

    Clinton executed the North American Free Trade Agreement (NAFTA).  This accelerated the exit of factory jobs from American industrial cities. Clinton was shutting the door that was the traditional entry of blacks and other minorities into the working and middle classes. Bill wanted to privatize Social Security which would have decimated the pockets of the elderly poor. However, his tryst with Monica Lewinsky and subsequent impeachment trial gave old people a reprieve. Bill was no better at foreign policy. He watched and forbade strong UN action as the massacre slowly unfolded in Rwanda. He made a mash of Haitian democracy and still is meddling there to this day. Unknown to most, Haiti has significant untapped gold and oil reserves and picturesque land that would make for beach resorts. Bill wants a chunk of it all. His reckless policy of NATO’s eastward expanding is the parent of today’s trouble with Russian over the Ukraine. Clinton set in motion a dynamic that has brought the world closer to war much in the same way the series of competing blocs and alliances facilitated WWI.

    This is the man whom Black people loved although his track record suggests that his vocation is to spite us. Black apologists will claim the economy grew under his watch. True but inaccurate. The GDP grew but most of that growth was based on a boom in debt. Lending went on a spree that would ultimately kill or maim those who participated in it. Wages stagnated because of Clinton’s embrace of Republican anti-union and labor policies. However, financial deregulation allowed banks to lend money at rates that the previous generation of Americans would have recoiled against as being usurious. People borrowed to the hilt. This was fake affluence. GDP growth was a mirage. It was vinegar at the bottom of the champagne glass. The bottom would come years later in the 2008 financial crisis. President Bush II would bear much blame for the crisis and rightly so. Clinton would get off free in the public mind; in truth, he was more responsible for it than Bush.  When it comes to our economic well-being, Clinton was as much an enemy of black people as any Republican of his era.

    In short, during the 1980-90’s, a wretched transformation had occurred. The Republican party was becoming a throwback to the 19th century Democratic party that controlled the southern United States during the post-Civil War Reconstruction period. The party of Lincoln was turning into a party that would have expelled Lincoln had he the misfortune being alive for the politics of today. The New Democrats meanwhile were turning their party into the Old Republicans of the Eisenhower-Rockefeller-Nixon type.  Black politicians would be more influenced by the ideology of Reagan than that of Roosevelt.

    The stage had been set. Obama would climb it. He was among those black politicians who decided to ride the train where all the gravy and money were stored.  There was little allure in remaining a local community activist when he obviously had the talent for a much larger role. He had studied Clinton well. He would mimic man from Arkansas. In fact, there could be no Obama without there first being a Clinton to pave the way and set the mold.

    To his credit, Clinton was an innovative political mind. At the height of his political prowess, Clinton had the intuitive ability to see things before they took shape.  Obama lacked this uncanny gift.

    Obama was president eight years; yet, there is not one important original thought or idea attributable to him. The signature health care law that bears his name was actually developed in Republican policy laboratories and was first implemented in Massachusetts by Mitt Romney, Obama’s Republican rival in the 2012 election. While Obama’s persona may be original, his policy ideas are a rehash of a rehash. This is a remarkable lapse. However, he has compensated for this absence of originality by being a most brilliant imitator. He is smart, vain and disciplined. Thus, he studied carefully how to make the ascent to high office and how to proceed once there. Clinton was more glib and convivial but prone to scandal and excess. Obama would be a study of rectitude and measured tones. He would not go off script or let his guard down. He would be free of personal scandal. What Clinton had created Obama would perfect: the triad of a liberal tongue, a conservative mind and a calculating heart.  As with Clinton, the people would love the show without even knowing the reason why and without ample evidence from his policies that the show-master even cared for them.

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  • Oh, to where does the world turn?

    Oh, to where does the world turn?

    War is that peculiar child that often consumes the one who sired it.

    I am concerned. I am more deeply concerned that my concern will be transformed into molten fear by events soon to come. You should likewise be concerned. The acute Russo-phobia emanating from the United States should give us all pause. We have seen such unwarranted vilification before. The end results have been disastrous. The villain that had already been restricted to his village, Saddam Hussein was portrayed as a world class monster in need of immediate destruction. When American put its mind to it, Saddam was destroyed posthaste since he was but a cardboard god of minute dimension. But the real story is the destruction of Iraq and its people. This ancient land has seen many trials and triumphs. In its long history which coincides with the recorded history of Western man, this land has never experienced the confluence of death, pain and rupture of society as that visited upon it by the American juggernaut this past quarter century.
    The death and demise of so many people and institutions all because of one nation’s animus for the ruler of another nation is never sound policy. It is an even greater moral blight. Saddam has been gone over a decade. Iraq is no better for his exit. Death and killing of innocents persist as the nation has become a cauldron of pitiless violence, a magnet for blood lust of both the religious and secular bents. How is it that his behavior always approximates the devil’s whenever man takes it upon himself to play god?
    The history of humankind is scarred by the acts of those who exalted themselves to the position of knowing more and being better than the rest of us. Nations have decimated other civilizations in the name of peace and progress. They have committed the most despicable evils to advance the greater good and godliness. We have come so far despite these transgressions. Yet, we have far to go still, because these misdeeds have thwarted the best of what humankind can be.
    Due to the fever of contrived hatred against Russia currently infecting the American political establishment, the world enters the space more dangerous than any time during the past half century. Simply because Russian deigned to protect its vital strategic interests in both Ukraine and Syria, America has tarred Putin as the new Hitler. This grossly inapt epithet connotes war and extermination. As the light of the world and of global morality, America can no more tolerate a new Hitler than it did the old. No question is asked as to why and to what profit is it that America would so expand its reach as to encroach against the vital interests of the Eurasian giant. What is assumed but not spoken is that America alone has the right, not only to define its own vital interests but also to dictates those of other nations. For Putin to have defined Russia’s interests without bending to American dictates is a scarlet sin. The man must be mad; like any mad dog, he must be put down.
    The decision to vilify and choke Putin is tricky and dangerous. Disaster smiles because it may soon be given chance to show its wares. America and NATO have increased the number of troops in nations rimming Russia’s borders. The ostensible reason is Russia’s purported aggression in Ukraine. Lost in this version is the fact that the current Kiev government is the child of an illegal coup against the pro-Russian and democratically elected government that rebuffed NATO and US overtures to join the anti-Russian club. These overtures turned to blunt political pressure. When that did not work, pressure turned to overthrow. The West financed the coup against what was an elected government.
    That Ukrainian democracy would be the casualty of the antics of the Western democracies was no great ethical loss because the real aim was to push Russia out of Europe. America, a relative upstart in world history, sought to turn the great rival nation into one without friends, allies or influence in Europe. The aim was to rupture history and wipe out the centuries of Russian ties to nations west of it, to turn Russia into an isolated land, a strongly caged bear. With all it had to lose, including its lone warm water port on the Black Sea which leads to access to the Mediterranean, Russia would have been negligent if it simply watched Ukraine being plucked from its stall of allied nations. Russia could no more watch passively as the Ukraine was being reshaped than America watched in 1963 when the Soviet Union placed nuclear missiles on Cuba. America reacted with strong muscle to force the Soviets to retract the nuclear ordnance so close to American shores. This episode ended peacefully enough but not without first coming without a proton’s breadth of calamity.
    During the crisis, America established a naval blockade around the Cuban isle. America thought this action would prevent the Soviets from completing the installation of the nuclear missiles. This was a terrible misread by American intelligence. The Soviets already had deployed missiles in Cuba that could be launched against the American homeland. An act of war under international law, the blockade came actually too late functionally. Yet, it would become the centerpiece of real drama. A Soviet fleet, including nuclear submarines, was steaming to Cuba. A showdown was inevitable.
    Soviet surface vessels halted before the blockade. How, the underwater subs plied forth. Sensing the presence of submarines, American ships deployed depth charges. This disoriented Soviet submarine communications with the surface. The commander of a nuclear sub feared that war had broken out between the two nations. The Soviet nuclear force was decentralized one. Each individual commander had the authority to launch from his deadly inventory. He did not need confirmation from Moscow. The commander decided to fire his nuclear missiles on America. As providence would fashion it to save mankind, the second in command on that submarine was actually superior in rank to the trigger-frantic commander. He dissuaded the man from launching the weapons. This cool sailor prevented nuclear turmoil. The world we inhabit is all too mean and dangerous. It would have been an even more broken and shattered orb but for this man’s humane intervention. (Those who are movie fans may see a parallel in the film Crimson Tide starring Denzel Washington. That film is a fictionalized rendering of this episode. Of course, roles had to be inverted so that the hero would be American not Russian.)
    Back to the present. Not only are America and NATO playing intense war games in nations bordering Russia, they are set to deploy an array of offensive missiles in the area. The West says the missiles are aimed at Iran. Thanks so much for such lying courtesies but the truth lies elsewhere. All of this is to bind or provoke Russia. Last June, German Foreign Minister Steinmeier said these NATO antics were but “warmongering” and “saber rattling.” Given European history and the genesis of the two world wars, one should take heed whenever Germany’s top diplomat warns of war.
    Unless this dynamic is arrested, we are in grave danger of being led down the broad avenue of stupid war and destruction to sate the egos of people whose ambitions exceed their wisdom and whose clutch on power has erased their thin patina of self restraint and morality. Ah, to save the world, they would but destroy it. Limited to one person, such a perspective would be correctly diagnosed as dementia. Because this is the disease of the nearly the entire American political class it is called patriotism.
    The avalanche of American media reports about Russian intrusion in the American election must be viewed against this backdrop. The media has joined the chorus against Russia. The media has done so not because the evidence is overwhelming. The media has done so because to question the distortions would prove costly. When journalism becomes big business, it ceases being journalism; it must align its reportage in the interests of those who could harm the business. The unclassified American intelligence report on the alleged Russian intervention in the election is a monument to conjecture and speculation. The document opens with a statement that its authors cannot warrant the correctness of its contents. Meanwhile, Mr. Wikileaks, Julian Assange, has repeated stated that the information on Clinton did not come from Russia. In the past, Wikileaks has published too many sensitive documents without due consideration for the collateral damage caused. However, there is one thing Assange has not done as far as we know. He has neither lied about his releases nor tabled a false script. That cannot be said about the American intelligence community.
    The history of the American intelligence community is one surfeit in the concoction of false leads to justify otherwise unwarranted military action. In 1964, the military and intelligence agencies said North Vietnam attacked American vessels in the Gulf of Tonkin. In a show of lusty patriotism, Congress passed the Gulf of Tonkin authorizing military action. Only two senators had the decency to vote no. The Vietnam War went into hyper drive. Thousands of Americans would die or be broken by this war. Millions of Vietnamese were killed and maimed in the mechanized carnage of modern war. The landscape was marred by mines, white phosphorus and highly toxin Agent Orange. America would illegally bomb Cambodia and Laos, with American action in the former propelling the Khmer Rouge that would launch an unprecedented era of bloodletting in Cambodia that would claim several million lives. The chain of evil would lead to greater evil. The people and place became guinea pigs for the war industry to test its newest devices. Despite the march of history, man is still eager to derive so much profit from the spillage of blood. By the way, the alleged naval attack at Tonkin never happened. All of this destruction was based on a lie.
    During the Reagan years, America invaded the tiny island of Grenada claiming American medical students were under imminent threat from the leftist government. When the troops came to the rescue, they found the students in the library or lounging on the beach. The students were not in any danger until the invasion took place. This was just another lie by the intelligence community to justify the ouster of a government that refused to be servile. During the first Gulf War, a young woman was paraded to a session of Congress. Speaking impeccable English, she told how Iraqi soldiers had stormed the hospital where she worked, killing people and dismembering babies. The chilling tale added to the war fervor. America was going to attack Saddam to save innocent children! No one can fault such a sentiment nor fault fault any cruelty done in the name of it. However, the girl’s gruesome tale was untrue. This star witness was a daughter of the Kuwaiti royal family, She was going to school in America. She had not been in Kuwait. She and the American agencies that brought her to testify were lying so that everyone who heard would clamor for war and righteous vengeance. Once again the nation had been played by those who seek to advance their interests as those of the nation itself.
    The lie behind the second Gulf War needs no elaboration. It was the most egregious falsehood in modern military history. America would not learn its lessons. When they decided Gaddafi must walk the plank, they lied that he feed his troops Viagra to rape women and that he was massacring people. None of this proved true. If anything, the extremist fighters who America backed were more gruesome than Gaddafi’s effectives.
    The Director of National Intelligence, James Clapper, was the main figure presenting the report on alleged Russian election hacking to Congress. This is the same man who repeatedly lied in sworn testimony to Congress in 2012 regarding the extent of electronic surveillance of American citizens. These people dress in suits, have impressive titles and hold much power and influence. But none of these things can turn a lie into the truth. These people have thuggery and grand larceny at heart. Normal thieves take money. These one set nation against nation. They dress their crimes in love of country. But what they seek is not what America stands for. What they seek is the modern version of the type of empire that America was established to oppose. These people are American in name only. They are true citizens of imperialism through and through.
    Given this track record of deception, anyone should be wary of the cries about Russian hacking of the election. This accusation is being aired to stir the average American to anger. The average American bristles at the idea of outside interference with their way of life. There is no secret that the American establishment wanted Clinton to win the election. There is credible evidence that, as Governor of Arkansas, Bill Clinton facilitated the clandestine trade in weapons and drugs between American intelligence agencies and right-wing counterrevolutionary groups in Latin America. The cozy relationship between the Clinton and Bush families is no accident. It dates back to this black trade. Meanwhile, Hillary Clinton has never seen a war she did not like.
    President Obama is intelligent but lacks a moral courage equal to his personal ambition. He knows American foreign policy is too martial and bloody. Hillary drug him into the Libyan fiasco. He refused too be drug to deeply into Syria yet he dared not call forth a new policy of noninterference with an existing and legal government. While such a policy would have made sense and would have quickened the glacial path to ending the Syrian conflict, it would have set him at direct odds with his national security establishment. Being an establishment man himself, Obama decided he would tow the line but do so very slackly. He would thus keep the voracious military happy by feeding them little wars. He increased drone attacks. America is bombing Pakistan, Yemen, Somalia, Syria, in addition to its deployments in Iraq and Afghanistan. America would establish forward basis and engage in military deployments in 135 nations using over 800 foreign bases. This is the greatest military expansion known to human history. This man who won the Nobel Peace Prize was later quoted as commending himself for ordering drone strikes. That these attacks have killed several thousand innocent people seems not to cost him a wink of sleep. Because you are not holding the crimson-stained knife does not mean you don’t have blood on your hands.
    Obama is smart enough to understand that Putin is being more defensive than aggressive. Putin is just doing what Obama would do if a powerful enemy stretched its military operations to Mexico, Canada or once again into Cuba. Yet, Obama dare not stare down the military complex which is set on confrontation with Russia. Obama has engaged in a delaying strategy. He has cautiously upped the pressure on Russia without having gone too far. His aim is not to do justice or to resolve anything but to get out of office without having a major war bear his name. He leaves the mess for his successor.

  • The year that fate blew in

    The year that fate blew in

    Poverty’s answer is to turn neighbor into foe and brother into trespasser.

    I sit in front of the keyboard not knowing what words will come or where they will take me. Forgive me in advance for whatever rough ride lies ahead. Most of the time, a person is confronted with the situation where he has little to say but so many words from which to chose. I find myself in the opposite place: There is much to say but most words seem inadequate to the task for which I would enlist them. I am pinned to a dilemma. I am compelled to use the very same words in my humble attempt to uncover a bit of reality that have been used to obscure that reality. As such, we realize that words have not their own reality or objective use. Words are mere tools deployed in a competition to shape the minds and beliefs of those who hear them. Neither truth nor falsehood inherently reside in a word; but they do lie in the motivation behind the use of the word. We must not only listen to what is said we must also force ourselves to hear why something is being said.

    The past year was a harsh one. Most of us were diminished to the point where we were made smaller than the little things of life. We spent inordinate time focused on getting just enough money to eat, to keep our landlord from evicting us, to pay PHCN not to squelch the intermittent electricity we receive and to tender whatever sum we can to the schoolmaster so as not to send our children home in midday shame. For those  obedient Christians, you also paid a hefty sum as your churches ask you with increasing frequency to engage in the curious practice of giving thanks at almost every conceivable time interval for staying alive so that you may struggle to make all the other previously named payments. Something is wrong. No, a lot is wrong but mostly we are afraid to talk about it, fearing we will be called disrespectful or rebellious. I do not mind being called either if such is the path to a life freer from the myths and conventions that do greater harm than good to the material and mortal lives of those made subject to them.

    Don’t get me wrong. I am grateful for life and I know to whom I am grateful toward. God. Yet, there is some confusion that must be resolved. One can be properly grateful for life itself yet also be properly dissatisfied with key circumstances surrounding that life. The hurtful morality now  commerced is that people should be so grateful for life that they must also be grateful for their lot in it, even if that lot be cruel and hardscrabble. This is foolish of a descendant order, peddled to us by those who would rather see things remain static than be justly reformed. A poor person should not be any more grateful for his poverty than a poor nation should cease trying to improve its economic situation. A drug dealer would be called the most evil of men if he were to say he is thankful to be alive and to be a drug dealer. We would label a drowning man as foolish if he were to be grateful at be carried about and tossed to and fro by a raging flood. A smart person would pray to get out of that situation, not to be resigned to it. In a metaphysically or symbolic sense is not unjust poverty and lack much the same as being swept aside by a ruthless flood. If we should not not be grateful for being the victim of a natural calamity, why pray tell should we be grateful as victim of a man-made one? The answer is that certain men want you to accept your plight because your acceptance of  penury is their guarantee of eternal profit. Enough of that. We can and should be grateful for life but never should we seem grateful for occupying the weaker side of an unjust equation.  Life remains precious but the situation must change. We live to improve not to stagnant for another’s enrichment and perverse delight.

    Human civilization has existed several millennia. Man presently grows enough food to adequately feed all who exist so that none of God’s children are left ahungered. Man increases his expertise in armaments and technology such that those who can afford it can have a virtual universe of information at their fingertips because of their computer keyboards. Rich nations can project craft to the outer reaches of this and neighboring galaxies and further into the actual universe. With all this science and knowledge, man still cannot find away to feed his neighbor and clothe his brother. The issue is not lack of competence and knowledge. The verdict is that man is so enamored with the competence of his  greed that he has not enough room for compassion and mercy.

    When you attended Watch Night and Sunday Service, none of this did you hear.

    You would have been told that as bad things happen to others, you will be lifted up, provided of course you have been faithfully making your tithe and other required altar payments. In other words, while others fall and are further broken, you will prosper as long as you have paid for it. We will be asked to pray and believe in such a thing. Please don’t believe it.  God is not a merchant or a commodity that can be purchased retail. Such a prayer is a vile, selfish thing to place before a loving God. It is an embarrassment to place such a thing on the altar of love to a God who gave His only begotten son that the rest of us may be saved.

    A person is told to hope that God may rescue him yet all others may they be left to the nonexistent mercies of the dark one. This is the religion of today and now. I doubt if such a thing is the way of God. You also might have been told to pray that fire and brimstone engulf your adversaries. With all fervor millions will be deluded into voicing such wicked prattle, their bodies shaking with feverish conviction that such evil come to pass.

    Yet, God would have it that no soul perish. How then can we pray for the destruction of others? Such a prayer is as wrong as the wrong these enemies seek to do unto you. Better that we pray our enemy repents and that their ill devices be wasted for naught than to pray that these souls perish. We may criticize and assess what needs to be assessed. There is nothing wrong with saying that a person is doing wrong or evil if such is the truth of the matter. Yet, it is not our place to affix punishment or judgment. We condemn not lest we be likewise condemned by our own words. The world is afflicted by much too much woe and suffering. Let not our prayers add one notch to it.

    One can tell much about society by the type and number of religious institutions in it. The more churches a neighborhood, city and nation have, the more the place likely suffers from deep woes, both materially and spiritually. In the short term, this is to be expected. Churches should be established were wrongs need to be righted. Over time, however,  we usually find the number of churches grow and their quality diminishes while societal problems multiply for the worse.  Instead of the church fighting evil, it becomes comfortable and tolerant of it. Church and evil learn to coexist. Both become institutionalized as pillars of a warped social architecture. They come of lean on and support each other in ways distasteful to compassion and humanitarian morality.   The line between right and wrong becomes an irresolute endeavor, a function of money and status. There is very little that is deemed truly good or evil. It is all about what or whom may be bought and sold, fooled and deceived.

    While we have been lost trying to find our way through our little personal lives, the world itself is in the throes of grand issues that may turn our desperate individual exertions even more futile. For all but the most wealthy,  the global economy is a bleak house. Most of the global GDP growth during the past five years has gone to less than one percent of the people. Less than 1000 of the wealthiest people own more than the combined wealth of over 3 billion people of the world’s less well off people. The global economy operates according to a merciless efficiency that seeks to break the spirit of most of us. Take a good step back and look at the big sweep of world history.

    A recurrent theme of history has been the sacrifice of the many so that the few may live handsomely. In distant times, actual human sacrifice was sanctioned as a spiritual appeasement of capricious deities. In the economic realm, slavery became the equivalent of human sacrifice. The reward for the time, sweat, ingenuity and labor of one was forcefully taken by another. The wholesale transfer of the produce of one’s time and life energies to another person is only eclipsed by the actual sacrifice of a life itself. Slavery is the next worst thing.

    For thousands of years, slavery and serfdom were the bases for most economic systems. This ended less than 200 years ago. Wage labor as the economic standard is a relatively modern introduction. Ways and ideas that existed for thousands of years do not fade quickly. They endured for long because there were force and evil reason behind them. The leaders of the global economy almost always and everywhere attempt to return to a relationship akin to the slave-master dichotomy. During period of the great world wars, the elites outdid themselves. The wars they caused were another form of mass human sacrifice. However, they overshot their mark.

    Their competition against each other became too intense for them to properly manage. They wrought too much destruction, too quickly. To rebuild the world that they had destroyed, they needed to give more economic and political freedom to the common man than had ever occurred.  European workers got unions and social democratic government. Black Americans got civil rights. African achieved political independence. The world stabilized by the late 1960’s, with the old leadership basically back on perch and intact. The entire arch of global events since then has been to dismantle the brief, inchoate progress the common man had achieved during the preceding two decades.

    Wages have stagnated. Income inequality the world over is worse than in 100 years and still expands. Unions are in disrepute. Financial institutions such as the IMF dictate the fate of sovereign nations. Africa suffers greatly. Sellers of false goods go about heralding an African economic awakening and renaissance. They sound like cracked vuvuzelas. Walk the average street and enter the average home. There is little renaissance in these places. The global economic model is an exploitative one. Even in rich nations, this model reduces the majority of its people to sparse wages. The majority of people in the West suffer debt peonage. This makes their lives smaller or makes the small things in life bigger, however you prefer the describe the belittling situation.

    Sensing that the moment and their autonomy as living beings is being stripped from them, people in these places have begun to revolt. In the UK, Brexit was the response. In the US, the response was as varied as the white working class  voting for outlandish Trump on one hand and many Blacks refusing to vote for the elitist Clinton on the other. Native Americans led protests to prevent an unnecessary oil pipeline being constructed on sacred land and over sacred waters. These people are awakening and reacting to the assault against them. Things are even more foul in Africa; yet the people are quiescent, having been told that the Lord will come to individually pluck the blessed ones from the mire. We wait for Godot!

    More than any other region on this globe, Africa is the place that should be championing a new economic course. Instead, it mimics those who have crucified it. For centuries, the West stole your children into bondage and used their labor to erect cathedrals to injustice and might. You, Africa,  were chastised by the bonds of colonialism by the same harsh hand. For centuries, these people led you astray. Still, when they tell you how to shape your economy, you follow them, believing they mean the best for you. Its too absurd to believe. You place trust in nations and institutions that crippled your very civilizations. Gullibility seems to have no bounds. You even thank these nations when they give you “assistance.”  This is akin to the man thanking a thief for returning a Naira when he stole ten thousand. We should not thank any one for returning what does not belong to them. We should be demanding the remainder, for it is not assistance. It is just restitution. But because it is just, we also know it will not come. We must make our own way.

    We should pray for the boldness and insight to fashion a more equitable economy for ourselves and the world. Instead of succumbing to the dictates of those who want to return former slaves and formerly enslaved nations to their loathsome status, we need to fix a structure where labor, capital and finance get their fair share of economic profits and where those in control of the money do not exact exorbitant rents from the working class. We cannot achieve this by listening to what those who have shackled us want us to do. If they really wanted us free of the shackles, they could have freed us long ago. It is not that they want us free; it is that they no longer want to place the chains on us. They would rather we do so ourselves.

    As we say goodbye to 2016 and walk into 2017, it is no longer sufficient that we partake of the same worn rituals and drink of the same empty thoughts. Time is not with us.  Greater civilizations than this have crashed for want of care and the inability to resolve their contradictions. We need to study history for guidance and study ourselves to see where we lack or have gone wrong. Let us seek wisdom that we may begin to resolve the problems that buffet us. It does little good to ask God to pull you from calamity while leaving your brother and neighbors to suffer the viper’s bite. This is a form of escapism no more more condign than the bottle or any drug.

    We inhabit a time and place where money is now scarce and the temptation is everywhere to be mean and selfish. People who once had no plenty no longer have enough. Many who used to give now borrow. Those who lent dun those who borrowed of them. Husbands look at wives with the cruel eye of lack.  Parents see witches in their children. Son steals from father and mother. This is the way of poverty for poverty is first born of the pocket and cupboard then of the mind and spirit.

    We only defeat it by compassion and wisdom. Compassion to share what exists and wisdom to create more to share. Lets us pray and work for these things so that 2017 does unto us better than 2016. The moment is hard but not insuperable. We can achieve something good. God’s hand is stretched out before us but so is that of the enchanter. We must summon the resolve to follow the right, and not the tempting, one.

    I end here at least for the moment. Again, I apologize for the bumpy ride but often a timely jolt will jar us awake so that we do not sleepwalk into approaching calamity. Let it be so with us.

    May you and your be blessed this new year.

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  • Nigeria: Where did thy prosperity go? (the end)

    Nigeria: Where did thy prosperity go? (the end)

    Wisdom lies not in the might to command others but in the ability to lead thyself

    his is my concluding piece on the Nigerian economy. With the National Bureau of Statistics declaration that the Nigerian economy has entered recession some might consider this writing timely.

    Here, I must proffer an indelicate claim but do so with fraternal intention. As Black people, we must become more discerning and less superficial in our analysis of profound things. We too often get swayed by what is salient than by what is of deep importance. We fixate on blaring headlines then give brusque reaction thereto. Yet, it is prudent thought,executed with strict attention to detail, that best answers the menacing quandary. One should not be unduly moved by the official announcement of recession any more than one should cast all worries to the wind to celebrate when the NBS soon says the technical recession has passed. With due respect toward the NBS, its definition of recession is but an arbitrary demarcation that should not be used as the dividing line that differentiates economic health from sickness.

    Do not allow oneself to become transfixed by the arbitrary definition of recession. Devote your attention more to the trends that dictate the big movements in the economy; yet, eschew the temptation to worship the numbers that statisticians may attach to these movements. Numbers obscure as often as they illuminate things. Most people bore the yoke of recession long before the NBS numbers confirmed the gravity of what had already come. The truth be told,most people will still be mired in real recession when the NBS some months from now trumpets that recession has ended.

    In other words, we must distinguish between true recession and the numerical one. The latter departs in relatively brief time. Itcan be dispatched by jiggering a few numbers. The former is a more persistent fellow who offends by his unwillingness to depart unless great exertion is committed toward his exit. For example, one percent GDP growth finishes a technical recession;such meagre growth does little to dispatch the more genuine recession the average person feels. For the common person, minimal growth imparts much the same pain as recession. Given the nation’s precarious aggregate economic state, Nigeria has not the luxury to be moved or stilled by such “technical” pronouncements either good or bad. You must delve into the essence of things. Only by a deeper understanding of what has broken can we hope to repair the breach.

    Nigeria may well walk into a trap of its own device should we take the technical definition of recession asthe demarcation between good and bad. If we do this, we will celebrate the departure of the technical recession as if a great victory has come. To provide true solace, the exit from recession must be accompanied by the robust expansion of economic productivity and wealth creation. If not then the ending of recession exists little more than as an admission that defeat is inevitable instead of confirmation that significant progress is achievable.

    Last week, we laid the conceptual underpinnings of the recommendations contained in this piece. To refresh the memory of those who tortured themselves by reading the last submission and to assist those who did not read it, here is the briefest summary of the points raised.

    First, given the limitations inherent in fiscal and monetary policy, a nation cannot simultaneously treat both inflation and recession with equal efficiency. Government must concentrate on one or the other. Second, a poor man can better endure a moderate increase in inflation than he can an economic downturn. Third, fiscal policy is a more effective weapon against recession than is monetary policy.

    Fourth, a heavy reliance on monetary policy to fight inflation,as opposed to using it as the minor partner in the battle against recession, will prove destructive.Fighting inflation via monetary policy renders money even scarcer. Scarce money bites the poor more so than the rich. A focus on taming inflation creates a negative dynamic in an economy described by high import levels and an entropic domestic productive sector.

    The anti-inflationary thrust will choke domestic firms faster than it attenuates imports. This will result in a perverse import encouragement instead of an import substitution policy. As domestic production wanes, once relatively cheaper, but now fewer, domestic goods command higher prices. Compounding this, the import market becomes more open in order to compensate for suppressed domestic production. The same amount of money chases a more damaging configuration of aggregate goods described by fewer, incrementally more costly domestic products and by explosively expensive imported items in greater quantities. Trying vainly to fight inflation, such errant monetary policy will only fuel it.  Also, the vast gap between the interbank exchange rate and the parallel rate encourages currency arbitrage. This misdirects significant funds from productive use into the rentier wheel of fortune,compoundingour inflationary ache that much more.

    Fifth, the practice of basing federal fiscal expenditure on the government’s intake of hard currency is founded more on ritual than on reason.This practice wrongly substitutes the discarded gold standard with an equally restrictive dollar standard that becomes acutely harmful during an economic downturn.

    Sixth, a government should not treat its own currency as if it is a commodity with finite limits set either by nature or by a third hand. Theoretically, a government has the ability to print money ad infinitum.

    Seventh, to prevent unacceptable levels of inflation, a government must peg its money to some standard that places a ceiling on the supply of money into the system. Eighth, increased taxation either through higher rates or more aggressive collection will further cripple the private sector, thus intensifying recession.

    Ninth, there is a great difference in the macroeconomic and social utility of private money(bank-created money that carries an interest payment for its recipient) as compared to public money(government-created money that bears no interest duty). History shows that whenever private money predominates, aggregate debt grows too steeply and an economy drifts into stagnation that only serves the moneyed elite.

    As best I could, I have outlined the conceptual foundation for the recommendations that follow. These recommendations seek the dual objectives of finding a one-way exit from recession. They also are proposed as a progressive way to erect a durable and just economy by casting the right balance between private and public money, enhancing the fiscal space occupied by the federal government, strengthening the real economy via pragmatic industrial and infrastructural plans, stemming the flow of unneeded imports, enhancing farm incomes, and breaking the fetters on land conveyance and ownership.

    1. Remove the dollar straitjacket. Peg fiscal policy to inflation targets:The starting point of progressive fiscal policy should not be how much foreign currency Nigeria periodically acquires; the flow foreign currency is authored in part by design and part by chance.It is not a sound base upon which to found a government’s fiscal activity, particularly when that foreign revenue intake is limited to a sole commodity.

    A more pragmatic and compassionate starting point should be the calculation of how much money is needed to achieve optimal growth within a given period. Then we balance and temper this objectivewith the vigilant awareness that we dare not issue money unless it promises a certain level of productive return so that we do not issue more money than our appetite for inflation will stomach.

    The best way to assure this balance is to establish a fiscal policy inflation maximum ceiling. Up to the point of that ceiling, the federal government is free and even duty bound to issue naira and expand fiscal expenditure notwithstanding the amount of dollars earned. Once inflation rises above that point, federal expenditure should be tamed that it falls below the warning level.

    In this current environment where recession is more threatening than inflation, the allowable inflation level will be higher than in normal times.

    1. Deficit Spending is apt. Budget surplus or balancing is deficient economics: Because government can issue naira to the extent that its heart and commonsense may allow, collection of naira as tax revenue is nonessential to government fiscal operations.

    In recessionary times, a surplus or balanced federal budget and enhanced tax collection further dampen the economy. They counterproductively siphon money from the private sector.The federal government should maintain a budget deficit during a recession.

    1. Deficit funding but not debt accumulation: The most straightforward way to achieve fiscal spending levels of the magnitude required to pull out of the current economic drag is for government to directly issue currency in the amount of the increased deficit levels. There is no logical reason the federal government must borrow its own currency from private banks than except to assure banks of a guaranteed profit. If government is to borrow, let it borrow from itself: the Central Bank.

    From a strictly objective point of view, the economy is better served when the federal government funds the deficit with new money it creates than by borrowing from private hands. Borrowing, in the form of selling bonds, should only be done if government needs to buttress the banks or needs to extract liquidity from circulation. In the present circumstance, there may be utility in borrowing to support the banks but not to the extent that all new deficit spending should be the offspring of federal borrowing.

    This approach to deficit funding would also have the benign secondary effect of rectifying the balance between public and private money. It would also compel banks to engage in more business with private customers.

    1. Create “TAX BONDS” to augment the money supply and lubricate the economic activity: Deficit funding can also be accomplished through an innovation called “tax bonds.” These would be naira-denominated instruments with a perpetual or indefinite maturity date. They should also be interest free or bear only nominal interest. In effect, the bonds would constitute quasi-money used for more restricted purposes than regular cash and thus be less liquid than cash.

    The tax bonds would be used to partially pay for services or work done for government by large companies and institutions, including banks.Bonds would be redeemable for naira on demand at banks and by the Central Bank. They also could be used to purchase other government-issued securities. The entities initially receiving the bonds, of course, may use them to pay their taxes or pay for other government services or fees they might incur.

    Using these bonds to partially pay large contracts would free actual money to fund smaller contractors, pay for basic social services and to help finance special projects such as areconstruction plan for the Boko Haram-affected Northeast. The bonds would effectively increase the fiscal reach of the government, adding more heft to the money supply, thus fueling the economic activity needed to end the recession. However, because of their restricted purpose and inferior liquidity, the bonds would not increase inflation as much as would an equivalent value of new currency.

    1. Implement industrial and infrastructural plans:The weight of urban joblessness and poverty hangs heavily upon this economy. Unless the situation is addressed, the burden will worsen over time.

    To end pervasive poverty in urban Nigeria, the manufacturing sector needs therapy. As currently structured, the private sector is too weak to revive manufacturing on its own. It needs government assistance. The situation clamors for anational industrial policy is that encourages development of strategic industries that lie along the critical path to sustained growth and employment.As part of this industrial plan, government must institute a package of tax credit, subsidies and protection from imports for critical sectors.

    An essential complement to the industrial plan is a national infrastructural plan.  Government must shepherd its resources and the nation’s idle labor force to undertake a massive modernization and expansion of road, port and rail systems as well as bring sewage and potable water systems to cities while providing farmland with small-scale irrigation systems that can be maintained by local hands.

    This is where the vast majority of government’s new deficit spending should aim. This is the crucial factor that liberated other nations from depression in past eras. It should have the same salubrious consequence here. When the world tells Nigeria to clip its sails by spending less and hunkering down hoping for the storm to pass, Nigeria must gather the fortitude to believe it has a better destiny than to sit idly that it may be buffeted about to the tempest’s delight. It must say that it has the ability, vision and drive to forge a better and more just economy notwithstanding the strong headwinds that now confront this vital land.

    1. Dash interest rates. For industrial policy to work, the banking system must be an active not hesitant player. Modern Industry is based on credit. However, Nigeria’s interest rates are too high for a borrower-manufacturer to be competitive.Interest rates must be compressed. For industrial sectors designated as strategic by the government’s industrial plan, interest rates must be reduced to the lowest levels possible.

    Banks must be mandated to devote a quota of loans to key enterprises at the lower rates, no exceptions permitted. In return, banks will be given tax breaks and other incentives to make these manufacturing loans.

    1. Don’t tax the people, tax foreign goods instead: Enhanced tax collection on Nigerian firms and people will deflate the private sector. This aggravates not alleviates the recession.

    Imports drain foreign currency, levying downward pressure on the exchange rate. While there really is little that can be done in the short-term to reduce import levels, tax or tariff policy is one application that may have some use. Higher taxes should be posted on luxury and nonessential imports; these taxes should be paid in hard currency. These may be joined by price controls on the sales of certain luxury items. Tariffs increase the costs of goods. But people might still be willing to spend more. Price controls will limit the suppliers’ profits, thus eliminating his incentives to import such goods. The problem with this would be enforcement. 

    1. Reduce the differential between the official and parallel market exchange rate: The gap between these rates is too vast. It begs for currency arbitrage. No successful economy tolerates such a discrepancy for any significant period. It is a market distortion that has been institutionalized. There is no objective benefit to the productive sector of the economy. It perhaps is a discreet way to subsidize the banking industry. However, if the purpose is to suborn that sector, the economy would be better served by giving banks an open and transparent subsidy up front. Write them a check, make them tax free. With the relief openly provided that all may know and see, the banks may then be free to engage in what should be the true business of financial intermediation instead of dabbling in the occult art of currency arbitrage.
    2. Free the land and feed the people:Land ownership and tenure is antiquated. It suppresses the ability of economic actors to use the land as a means to access credit and investment. Nigeria needs urgent land reform converting much of the land in productive use or potentially in such use into private ownership.This is especially true for farmers. Clearer private ownership of and title to land will allow them to use the property as collateral for credit to enhance their yields and productivity.

    An agricultural mortgage loan corporation should be established. Its main objective will be to create a secondary market for farmland mortgages.

    In addition, commodity boards setting a minimum price for certain crops need to be revived.

    These recommendations are not exhaustive but are intended as an outline of how to proceed to resolve the extant economic predicament based on progressive ideals and standards. These ideas are offered not as a final answer but as an alternative grounded in a progressive analysis of the problem and in our conceptual understanding of core economic principles as enumerated in the prior submissions on this subject.

    In summation, these ideas seek to help inform you how to look at the economy we now face; more importantly, they are possible lens through which to see perhaps how to resolve the present economic crisis in a manner that facilitates, not inhibits, the structural reformation of the economy in the longer-term. Only  by improving our framework so that it allows for more jobs, high domestic production levels and productivity, reduced imports, better infrastructure and amore utile banking system  shall be demonstrate that we have learned the right lesson from the challenge now at hand. Whether the house stands cannot depend on the futile hope that storms will not come. Harsh tides shall arise. Whether a nation stands secure or struggles not to be washed away depends on the integrity of the economic house it builds. Remember that he who always does what has been done before is blinder than the blind. May Nigeria possess the wisdom to discern the new course and be of the strong courage to follow it. See you next week.

     

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  • Nigeria: Where did the prosperity go? part (3)

    Nigeria: Where did the prosperity go? part (3)

    Love of money is root of all evil; the lack of money are its trunk and its branches

    My intentions were to make this the concluding piece on Nigeria so that we may assay the Greek and Venezuelan situations in this series of economic articles. That is not to be. Instead of tendering my list of recommendations this week, it would be more instructive to embark on a bit of a conceptual journey that you may better understand the thought process underpinning the suggestions waiting to come. Please remain with me on this excursion. The treatise that follows may seem abstract; yet, it is via such intellectual abstractions that we be afforded the insight to novel and creative approaches to the situation at hand.

    All things that man fashionshave their accustomed use; this is ritual or custom. Yet, there is an underlying rationale for the use of any and all things. Custom or ritual is a manifestation of that rationale but is never the full expression thereof. The underlying rationale is always more expansive in the uses it theoretically allows of a thing than does custom afford. Custom tends to numb or limit what reason otherwise puts on offer.

    To develop the best path forward, we must free ourselves from the strictures of convention and tried ritual in order to discover how our fiscal and monetary instruments may be applied to a better use in this given situation.

    At this point, I must restate from the prior installments on this topic afew postulations that willguide this excursion. First, given the limitations inherent in fiscal and monetary policy instruments, a nation cannot simultaneously treat both inflation and recession with equal efficiency. Focus must be singular. To focus on both is to see neither adequately. One cannot swim and cast a fishing net in the same stroke. Second, despite the views espoused by most mainstream economists and financial minds, recession is a more diligent burden for the poor man than is a moderate increase in inflation. A modest rise in inflation makes things more costly; recession makes funds so scarce that the poor can barely afford to pay even a lower price for the thing desired. Inflation increases prices and thus decreases purchasing power. Recession reduces aggregate wages by increasing unemployment, labor casualization and salary cuts. Inflation means one can buy less. For the widening number of jobless or job-impaired it creates, recession means one can buy nothing or next to it.

    Third, fiscal policy is a more effective weapon against recession than is monetary policy. Imprudent monetary policy can put a nation in a bind. Almost every recession has a material financial component; in fact, recession usually first manifests as a monetary problem. However, wise monetary policy cannot lift a nation from this pit. Monetary policy is more effective combating inflation than it is at dispatching recession. Moreover, monetary policy has very narrow transmission channels into the real economy. The primary beneficiary of monetary policy is always the relatively affluent financial sector. The benefit for the working class is always delayed and diluted if not almost wholly diminished.

    Fiscal policy is the potential equalizer in another wise unbalanced system that favors those well-lubricated in money. Fiscal policy can channel money or value directly from government to the poor via grants, employment and provision of services. This can be done without passing funds through financial intermediaries as is the case with monetary policy interventions. Starkly put, monetary policy is a rich man’s province but fiscal policy gives the poor man a chance at a more just allocation of government priorities, resources or largesse.

    With these axioms in mind, let’s attempt to define the economic recession that now faces Nigeria. The drop in oil prices, compounded by the slump in oil production caused by the Niger Delta political morass, has disheveled Nigeria’s hard currency position. Government’s foreign currency earnings are a minority fraction of what they were when oil fetched 100 dollars per barrel. Because we peg the amount of naira government injects into the system to dollar oil revenues, the amount of naira has also been dashed. In sum total, Nigeria lacks sufficient quantities of dollars and naira to sustain the economy let alone expand it. The economy needs more funds and then we need to understand how better to deploy those funds to increase productivity and wealth creation. Still, before you fashion a garment, you must have the cloth the sew it.

    (The new flexible exchange rate and the subsequent depreciation of the naira, in part, addresses the dire lack of naira. Had the rate stayed at its defended level in vain defiance of market reality, recession would have bitten more deeply still. However, thisis but a half-step taken without a clear strategic direction when the situation requires a long walk that hews to a strategic purpose.)

    Wenow approach fields some of youmay recall but these fields are ones worth re-plowing. Here, we must explore the nature and essence of money. Mostly, we have mean indoctrinated that money is an inherently finite object. We have been taught to view money as if it were a limited commodity. For example, in the minds of many, gold and silver are real money. They see the paper currency that we use is a sham if not literally counterfeit. We have also been taught that commerce began as barter and money was later introduced due to the inherent limitations of the barter system. Coincidence is vital to barter – two traders must meet while in possession of something the other wanted.  We all recognize these teachings. Now, we all must discard them. They are not supported by anything but conservative mythmaking. Historic fact refutes it all.

    The best evidence economic anthropologists have uncovered shows that money has been with man as long as commercial exchange has. In fact, the impetuses for ancient writing may well be religion on one hand and the creation of money on the other. Often the two motives were inseparable. In ancient Mesopotamia, where the oldest form of money has so far been discovered, the priests and temple scribes first created money on clay tablets that were hardened by heating. In this way, things would be “etched in stone.” These first forms of money were statements of accounts of debts one person may own to another or to the temple. The underlying debt initially would be something material. Overtime, these statement of accounts, being evidence of debts, could be traded and transferred as something having the value of the debt recorded thereon. Liquidity, an essential ingredient in modern money, had been created.

    Thus, at its inception, money was not some privately–created commodity, but a government-created instrument. However, profit-seekers understood the rentier power and profit at their beckoning if they might control a nation’s currency. There has been a struggle between private and public money ever since.

    History shows that whenever private money predominates, aggregate debt grows too steeply, the poor slip into debt peonage, economic stagnation becomes chronic and the moneyed elite gain inordinate financial and political power, partially by taking over the property distressed debtors.

    In 599 BCE, Athens was in turmoil. A private monetary system which charged interest on most coins issued had made the oligarchy extremely rich. Every bit of money was accompanied by aninterest debt. In other words, the money was worth more and would always be materially more valuable than its face value to the issuer-creditor. For to the recipient–debtor, the money would be inferior to its face value due to the interest payments they would have to make. This meant many farmers were stricken with unsurmountable debt; increasing numbers were losing their property and being sold into slavery to satisfy these debt obligations.

    One of the seven famous sages of Greece and the Athenian leader at that time, Solon, enacted reforms ending this unjust dynamic. In addition forgiving the debts of the poor, Solon reintroduced government issued, interest-free money; in so doing, he made money more available and affordable by ending the exclusive use of interest-bearing private money. In correcting this overreliance on private money, Solon’s reforms restored both the economic and political balance, ushering Athens into a prosperous era and securing Solon’s place as one of the great statesmen of Antiquity. Praisingthe wisdom of the Solon enactments, Aristotle would later observe, “Money exists not by nature but by law.”

    Colonial America faced a dilemma instructive to present-day Nigeria. There were no enormous gold or silver mines along the east coast of what is now the United States. If the colonies had adhered to the gold standard then prevalent in England, those colonies would have languished in perpetual stagnation. Jolted by this realization, the colonists did what common sense required. They shunned the gold standard. They created their own government- issued, fiat paper currencies. They began to prosper. When the Seven Years War ended 1763, both England and the Colonies had been bruised economically by the expensive and long military undertaking. Trying to regain its footing as fast as possible, England imposed the Currency Act which required the colonists to pay all obligations owned England or its merchants in either gold or silver.  Imposition of the gold standard, put knife to the bruise caused by the war; the colonial economy stooped in lethargy. Benjamin Franklin would cite this deflationary measure as the most important single factor leading to the American Revolution.

    At the onset of the Great Depression, all leading western nations were married to the gold standard. With depression all about and with bank credit and private money drying up, there was not enough liquidity to sustain economic activity. To overcome this dire predicament, those nations divorced the gold standard. They began to issue fiat paper money with no direct relationship to the gold reserves they held. They began to issue the amount of currency they calculated was needed to rescue them from the cleft of depression.

    Of course, they did not just toss the money in the air. They had to direct the money toward productive avenues.But a crucial beginning of their economic repair was the idea of severing the tether of the gold standard that they may gain the fiscal space and extra money required to fight the debilitating contagion.

    These instances from Antiquity to modern times of nations that have jettison the gold standard  or rectifies the balance between public and private money were not raised that you might recite them and sound intelligent when evening chats with friends enter the arena of historical trivia. There are lessons to be learned.

    The gold standard no longer exists. To a large degree, however, the gold standard has been replaced by the dollar standard. Many nations have pegged their fiscal policy to the dollar. Nigeria is among them. In effect, Nigeria has voluntarily relinquished much of its currency sovereignty and fiscal space by treating its sovereign currency as if it were a mere commodity. Any foreign currency is a commodity. We do not control its level of production. Thus we, even government, must buy and sell it the same as one would a slab of butter, a cellphone or a shipment of rice. By pegging the production of naira to our intake of dollars, we thus relegate the naira to the same status. This means Nigeria allows the dollar to dictatethe quantity of naira in the economynotwithstanding the fact that Nigeria’s ability to produce naira is nigh infinite.

    If not a commodity, then what is money? At its source, money is a social invention; it is not a natural phenomenon. Thus, there is no true form or sham form of money. Paper currency is as legitimate as any coin of the realm. Money is also a startling and ingenuous circularity for it is an obligation to repay a debt that is itself. The American monetary system is the best example of this unique spectacle.

    The American dollar which so many of us crave is technically called a Federal Reserve Note, meaning it is actually a promissory note issued by the American central bank. When the Federal Reserve puts a note in circulation, than note is logged as a debit on the Fed’s balance sheet. It is an IOU. But what the Federal Reserve owes will surprise. It owes only the same.  If you go to redeem the IOU, you would get another IOU in its place. Money is thus the record of a debt that is payable by the same amount of itself. This system is the conceptual descendant as the Mesopotamian clay tablet earlier cited.

    Money is really an intangible. The gold that was once used and the paper and electronic impulses now in use are merely physical manifestations of the immaterial idea. In the course of human history, things as disparate as bear skins and cowrie shells have been used as money.

    At its most elementary level, money is a means of exchange. More subtly, it is an attempt to give universal objectivity to something that is inherently subjective: Value. Money, and financial instruments in general, are stores of value that can travel across space and forward through time unlike any other economic instrument at man’s disposal.

    In that it is essential an abstract idea that has no exclusive physical manifestation, a government has the infinite capacity to issue itsown currency. When all other things that are grown by nature or extractedfromthe ground becomescarce, money is the one thing government can always produce without concern of exhausting its supply. However,it is precisely at the moment of the scarcity of other things, that government tends to reply by making money scarce as well. We do so without sufficient thought whether the monetary scarcity will resolve or worsen the paucity of material items. We do so because we have been conditioned to treatmoney as the commodity it is not.

    Please do not take what I have written has given free license to the thoughtless issuance of currency for any and all reasons, both the lunatic and the sublime. There must be clear limitation place on its issuance. Money must be pegged to something. Because it must be peggedto something does not mean, however, that we simply continue to tie it to the dollar because that is what our father and his father before him did. Such conduct is ritual not reason. I suggest there is perhaps another objectively discernable measure to which Nigeria may link its currency issuance and that this measure will better foster the economic activity needed to free Africa’s most populous nationfrom the clutch of recession.

    We have come to the end of the conceptual excursion. With that now complete, we are ready to examine some policy ideas that may suggest a way forward. Until next week.

     

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  • Where did prosperity go? (part 2)

    Where did prosperity go? (part 2)

    The true wealth of a nation lies in its wisdom not in its wares.

    Last week, we underscored certain principles that might better shape economic thought and policy formulation. An important consideration was the fact that fiscal and monetary policy mechanisms were not of such an ambidextrous nature that a nation may effectively resist both inflation and recession at the same time. To fight both full bore is to make the exertion of going both north and south in one step; the benefit of all one’s fierce labor is to remain much in place. Related to this was the observation that recession weighs more heavily on the poor than does a moderate increase in inflation; recession is also a more stubborn phenomenon to evict once it has established foot in the land.

    Because of these real limitations that describe our economic policy mechanisms, attacking recession should be first priority. This means we must tolerate a modest increase in inflation so that we may revive the economy sufficiently to escape the more onerous bite of recession. In this vein, I questioned the Central Bank’s decision to raise interest rates. The rate decision was apparently fueled by the dual objectives of increasing financial portfolio investment and decreasing inflation.

    Last week, we examined the trouble inherent in leaning too heavily on portfolio investment in the present clime. Such investment rarely translates into real sector improvement. It is also volatile by its very nature, chasing up financial asset values one day, then chasing them down the next; the net flow of such investment can change with the slightest hint of change in the economic situation here or in another potential investment destination. Portfolio investment is like the wind. Even when it is here, it isn’t.  The wind can be comforting; but even a good wind is not such a thing upon which we can build a recovery. In times like these, we need to base the economy on a more solid, less ethereal foundation.

    Additionally, Central Bank’s use of higher rates to cut inflation may not be an efficient undertaking in the current circumstance. Inflation can emanate from several sources, some foreign, some homegrown. This leads to two observations. In that inflation can be driven by domestic as well as foreign processes, all inflation is not the same even though it results in higher price levels. We must remember that inflation is always a byproduct of a more fundamental occurrence or activity in the economic sphere.

    While high inflation is a terrible thing in its aggregation, not every single bit of the inflation rate is something malign. Some portion of the thing we call inflation is indicative of something that is actually condign to the health of the economy. Contrary to conventional wisdom, condemning all aspects of inflation is the work of policy in error. Moreover, not every bit of inflation we experience is susceptible to the appeal of our policy remonstrations. Inflation imported from abroad is generally more insulated from changes in our interest rate policies than is locally grown inflation.

    Now, we are ready to face the dilemma of using interest rate policy to contain inflation in an environment of simultaneous recession and increasing inflation that is also characterized by high levels of imports. Import-driven inflation should almost always be viewed with suspicion. It is predominately a sign of danger. Sadly, where demand for imports is relatively inelastic as compared to the demand for domestic goods, an elevation of interest rates may invite minatory consequence. Due to import inelasticity, the rate change may not materially lower the demand for imports. Thus, inflation fueled by this dynamic will continue relatively unabated notwithstanding the rate change.

    The interest rate change, will more likely effect domestically driven inflation. However, part of that domestically produced inflation is beneficial. Healthy intercourse between reliable supply and robust demand must produce added inflation when we move beyond the short-term. This is because demand drives an economy forward more so than does supply; in balancing the global aggregate of things desired on one hand and the aggregate of things produced on the other, demand outstrips supply when an economy is healthy and buzzing. Thus, a dose of inflation is an innate quality of a vibrant economy. In other words, a little fat is good for us and is definitely better than none at all.

    Sadly, the Bank’s policy is not sufficiently refined to differentiate between helpful and harmful inflation. Its policy will likely have scant bearing on import driven inflation while it may well extinguish that aspect of inflation which stood at the congenial intersection of domestic supply and demand. There is high danger of this policy suffocating good inflation while leaving bad inflation mostly unbothered.

    The policy will likely deepen recession without providing sufficient respite from inflation. The costs of undermining the battle against recession are too dear to pay for the minimalist downturn on the inflation side of the scale. The Central Bank needs to fine tune its policies to the extent that it can possibly segregate benign from malignant inflation then it may more prudently ticker with the interest rates. To the extent that it cannot disaggregate inflation, the Bank should head the inflation rate southward toward lower digits instead of northward.

    Also, the government should reassess its policy on taxation. Over the long-run, Nigeria requires much greater tax compliance for this is an important trait of an orderly and efficient economy. But not all things good are to be introduced during trying times. Exercise is good but it would be misplaced to ask a sick man to end his convalescence by taking up the decathlon. The domestic private sector is in a weakened state. It needs succor not added stress.

    A focus on increasing tax revenues at this moment undercuts the expansionary fiscal stance the government has correctly taken to counter the harsh recession now faced. The drive to increase tax revenues is tantamount to a tax increase. However, empirical evidence shows that it is a caustic tonic to effect a tax increase amidst recession. Such a move serves to intensify not alleviate economic hardship.

    By definition, recession is a period of suppressed private-sector economic activity. By pulling additional money from the private sector, extracting more taxes will cause private sector activity to further contract. This is probably not the best option to pursue in these times. Yes, government would like to have more funds at its disposal. Taxes are one way to obtain the funds but the relief comes at the despair of the private sector.

    Such a move does not increase the overall amount of money in the system. It merely reallocates money across sectors. It will not make appreciable progress in combatting recession. The money government gains in one hand is the very money of which the private sector has been deprived on the other. The only gain that can be had from this scenario is if government can demonstrate that its use of the funds has a materially higher degree of marginal productivity than had the funds remained with the private sector. To some degree, this argument can be made and defended; but history tells us the difference in productivity of the marginal spending of the two sectors is too slight to warrant the reallocation of limited financial resources that an effective tax increase implies.

    Also, there is a subtle spiritual or relational dissonance with the pursuit of higher tax revenues at the moment. Increased taxes strengthen government but weaken the purses of the people. This truth poses the fundamental question we must always ask and answer when in pursuit of wise, cogent policy. We must determine whether economic policy and the people are intended to serve the interests of government or if government and its economic policy are meant to serve the people.  The better formulation is that government is the servant. Then it makes for better policy to forestall higher tax revenues during a recession so that the people do not have to further depart with more of what already is a dwindling quanta of  wealth.

    Moreover, since government has the sovereign right to issue currency, it actually does not require taxation to finance its operations. In the modern economic context of governments operating a fiat currency monetary regime, taxation should not be viewed as a mechanism necessary to fund government operations.

    In theory and increasingly in reality, government should rely on its ability to issue currency to fund its operations. While the reality of fiat money expands a government’s fiscal latitude, the reality of that latitude must be keenly tempered by the knowledge that too much money chasing too many unproductive endeavors will produce higher than acceptable inflation. With these ideas in mind, a true reformation of fiscal policy will result in taxation being viewed as an important fiscal tool to modulate inflation and aggregate economic activity, to reallocate wealth between different socio-economic sectors and to discourage or encourage certain types of economic behavior.

    For Nigeria to surmount this recession, it cannot hold to old economic myths and shibboleths. Conservative economics offers no exit that a just society would like to take from this and presents no basis on which to establish amore productive and just economy that will benefit all sectors of this precious, important nation and its people. Those who tell you the recession will soon end and all that we need do is hunker down are selling you hollow solace.

    Technically, the recession will end. All recessions do. But the end of recession does not mean the beginning of healthy growth. A terrible storm comes and will end but not before ripping the roof from a house. The end of the storm means the end of further damage. For that, the owner gives thanks. However, no one dare state to him that the end of the storm means the house has been returned to good repair.

    Weathering the storm does not fix the damage done by the tempest. To repair the damage, we must take positive action to rebuild the roof. Moreover, our knowledge of the damage done must lead us to building a stronger roof that it might withstand the next storm to come. We do ourselves a disservice if we ignore what the storm has taught and simply rebuild the roof as it was before.  The same goes for the economy. At some point, the recession will end. But the damage wrought is such that it will not suffice to have simply survived the ordeal.

    If, after the recession, the economy is characterized only by minimal and uneven growth, such a situation would be tantamount to accepting to live in the house without a new roof. We must revamp and reform the economy that it can growth in a manner that raises the living standard of the average person; the economy must become sufficiently strong and diverse that it may withstand the next storm better than it did this one.

    Next week’s piece will begin to explore possible suggestions for how this can be done.

     

    08060340825 sms only

     

  • Nigeria: Where did prosperity go? (part I)

    Nigeria: Where did prosperity go? (part I)

    Poverty barters away morality. It turns saint into sinner and kindness into conflict.

    e will shift from American politics for the next few weeks. With the Democratic and Republican conventions behind us, the campaign veers into the trenches. The candidates will engage in the prosaic fare of daily rallies and stump speeches memorizes by rote. Barring unforeseen happenings, the contest will not intensify until mid-September when the series of debates commences.

    At the moment, the contest is in Clinton’s hands. She enjoyed a significant boost from the well- choreographed Democratic convention. Meanwhile, Trump appears to be doing his utmost to caricature into an even odder version of himself; he appears intent on making his campaign implode and his chances of winning disappear. Since the Democratic convention, not a day has passed without Trump committing somejaw-dropping verbal miscue. Because of Trump’s clumsiness, Clinton’s relativelystaid, unenthusiastic campaign has surged to a nearly double-digit lead in most national polls.

    During these anticipated electoral doldrums, I hope to examine the weakness of the global economy and the particular vulnerabilities of strategic states within it. Barring a spectacular event that diverts my pen, we will look at Nigeria, Brexit, Venezuela, Greece/Italy and finish the series with some general observations on global economic trends.

    The central theme underlying this discourse is the belief that the world economy will regularly be crippled by frequent crises and near crises because the model upon which it is based is a malign one. The undue financialization of the global economy has shifted too much power to the banking and financial sector. This deprives the real economy of the resources and policies needed to achieve levels of production and employment adequate to sustain growth that benefits the bulk of the people. Increasingly, people have to assume higher debt in order to maintain their already modest living standard. Modern peonage will be in the form of mounting debt not chains and shackles. Yet, it will still bring a neo-feudal taint to the structure of society. As the financial sector gains, the real sector loses and most of us along with it.

    Moreover, current economic and social policies are skewed in manner that perpetuates the imbalance. The populace is inculcated into believing this injury to their wellbeing is the inherent order of things, that at every point in time the world is as good as it can get and that reform will simple make matters worse. We are handed subjective conclusions about economic policy and about how the economy is to be structured as if these biased views are inexorable natural laws. With our minds so conditioned, we gaze into the mud and plod away step by step, trying to hold forth in a world that, day by day, offers us less to hold to. We are told not to look up so that we never venture to see a better avenue than the sodden path we tread.

    We are mentally bludgeoned to not question anything. To do so is to invite criticism for being irresponsible, disruptive or naïve. We are told we are too ignorant and dumb to understand the complexities of how we are employed (or not) and at what wage we work. We are commanded to leave our fate to those who know better. Yet the only thing they know better is how to get what they want. This is what guides the actions of those controlling the global economy. They call it policy. I know it by its truer name: deceit.

    With no further delay, let us grapple with the tight fix into which the dynamics of the global economy and the financialist mindset have placed Nigeria.

    To make this journey, we must learn to distinguish between nominal feats and genuine progress, between myth and fact. If not, we shall always be vulnerable to side-plays and artifices distracting us from the kernel we should be seeking.

    During the Jonathan administration, its economic team lauded that Nigeria had become Africa’s largest economy under their stewardship. Today, that victory seems more mockery than achievement. The elevation in GDP was accomplished without any material improvement to the nation’s productive capacity or output. It increased not the amount of food on the average family’s table nor the disposable income in the pocket of any working person. It was all done with the stroke of a pen. They altered figures on paper then persuaded us that reality had been improved by their cunning handiwork.

    Now, we know the truth. It was a cynical endeavor not meant to change reality as much as insult it. Reality has given its apt reply. We must learn from this. Gimmickry is a vain substitute for wise, frank policy. In the end, better one step truly taken than five steps fancifully imagined.

    Slumping oil prices have severely afflicted this economy. This disruption was caused by a convergence of geopolitical and technological factors. For the past two decades, geopolitical considerations and technology generally worked to the national benefit. This time they became the villians. North American oil fracking brought more oil into the market, depressing the price thereof. Saudi policy to maintain market share and to counteract the intrusion of American oil fracking by elevating Saudi production further eroded prices. A languishing global economy did the rest.

    This external shock to the economy had compound negative effects. It reduced domestic activity while also lifting price levels. As such, it brought recession and inflation at the same time. Unfortunately, monetary and fiscal policy cannot adequately battle both simultaneously. Because of this limitation, we are compelled to focus policy on defeating them in detail, one at a time. Economic elites tend to see inflation as the worst of the tandem. Empirical history indicates that a modest increase in inflation is easier to withstand that is a protracted economic downturn. For the majority of the economy, recession is more ominous. It is the one that should first be tackled.

    This realizationshould lead to certain policy options and emphases yet away from others. One unavoidable decision in this situation was to move to a floating currency regime. Here we must pause a moment to understand the significance of the exchange rate.  Discourse on the exchange rate has been voluminous. Perhaps my submission here will add nothing; but, better a helpful word repeated than one left unsaid. Thus, in hopes that it does add to the collective understanding, I venture forth.

    Proponents of a so-called strong currency often seemed to have embraced the position that a low exchange rate automatically begets a vibrant economy. Thus, they see the exchange rate as an important economic objective. Yet, it is not. Exchange rate policy is more prudently a tactic employed toward the more fecund objective of maximizing national economic output and wealth creation. The exchange rate is not any end in itself; it is a means to a salutary end. The overall welfare of the economy should not be sacrificed for the purpose of maintaining an exchange rate any more than a tree should be sacrificed to please one of its branches.

    We must divorce ourselves from the fallacy of defining the currency as strong or weak simply by looking at the exchange rate. If the exchange rate is low but the economy lagging, the currency is weak. Conversely, if the exchange rate is high yet the economy growing, the currency is sufficiently strong. We must not confuse cause and effect. A vibrant economy gives rise to a low, stable and strong currency. A low rate does not result in a strong economy. If the exchange rate and economic health do not jibe, the exchange rate eventually will give way or it will result in additional distortions pullingthe economy deeper into the shoals.

    Also, we must see beyond the false dichotomy that net economic gain is only and always associated with good economic policy and netloss with bad policy.  There is much space and complexity between these polar opposites. During idyllic times when some level of gain is almost inevitable, imprudent policy may still yield positive,albeit not optimal, growth. Gain in such a convivial environment is not evidence of fine policy. Progress would be said to have come despite policy not due to it. Conversely, when inevitable downturn takes form, sometimes the best that even thewisest policy can do is to reduce,not reverse, economic loss in the short-term. The move to the flexible rate is of this latter type.

    There are basically two types of rate devaluations: offensive and defensive. An offensive devaluation occurs when a nation purposefully devalues its currency to bolster preexisting export opportunities. This implies a heretofore idle but ready capacity to increase exports. A defensive devaluation takes place when a nation’s foreign exchange inflow is materially reduced while outflows remain unchanged or perhaps grow. This latter description fits Nigeria’s situation.

    The slide in oil prices altered net foreign currency flows to the national detriment. As the dollar became less available, it became dearer. The naira became less valuable in comparison. To maintain the old rate was to ignore this inexorable fact. Facts may be unsavory; in the end, we are forced to swallow them.

    Downed oil prices placed the economy in retreat. The lone question was whether retreat would be orderly or chaotic.  To have stuck to the old exchange regime invited chaos. The new regime brings more order and reason. Yet, make no mistake. It is still a retreat. The retreat was necessary; it will help us find better ground on which to defend the economy. But victory is never defined by the orderliness of one’s retreats. It is won by the soundness of our advances and the ability to repel subsequent counterattack.

    At this point, we must accept the downward direction the exchange rate has taken. Even with the reform, the divergence between the bank and parallel market rates is too extreme. This roughly 25 percent gap lends itself to arbitrage and corruption. Both vices will misdirect precious financial resources away from the productive enterprise needed to revive the economy and thus bolster the currency.

    For exchange rate policy to be effective in the long-term, it must be complemented by other monetary and fiscal policies redressing the conditions that occasioned devaluation in the first place. While our devaluation was initially defensive, we must institute policies that, in the longer-term, place us on footing similar to that suggested by an offensive devaluation. Ideally, devaluation would have taken place with Nigeria having industrial capacity in place that could have exploited the cheaper naira by quickly expanding non-oil exports.

    Because our manufacturing sector has become a crippled limb, Nigeria could not make this adjustment quickly. That we could not engage in this more beneficial sequencing of policy and economic adjustment does not mean we can never reach a like result. We can attain the same outcome in the long run.

    This requires that we augment the exchange rate decision with policies favoring domestic manufacturing and industrial production. We can invert the optimal sequence and still achieve a benign outcome. This is because there is no causal relationship between exchange rate policy and these other industry- and employment-friendly policies. Although complementary and made more effective by the other, neither policy is wholly dependent on the existence of the other. This means the sequencing can be changed yet still arrive at nearly the optimal result in due season.

    If we fail to marry the two policy sets, we not only reintroduce chaos to our retreat, we make the retreat longer and more onerous than need be. Recovery will be feebler when it finally arrives. It would be like carefully pruning the branch while neglecting to water and fertilize the roots of the tree upon which the branch depends.

    Against this backdrop, the Central Bank’s recent decision to increase the interest rate must be seen as a half-step backward. The decision was done with good intentions but was captive to the financialist ideology that has jailed the global economy. The decision intends to attract investors, particularly foreign investors, and to combat inflation. This is revealing.

    Note the type of investors the Bank seeks.The type of investors influenced by such interest rate changes are those who invest in financial instruments that pay a return directly or indirectly based on the rate set by the Central Bank. The bank’s policy is thus intended to encourage financial sector investment. On the other hand, the rise in interest rates discourages investment in the plant and equipment needed to fuel real sector expansion and job creation.

     

    Financial sector investors are those most strongly attracted by high interest rates. Real sector investors see high rates as an impediment. The eyes of real sector actors are fixed on the profits derived from the sale of their goods. Tight money and higher rates undermine their profits in two ways. Steeper borrowing costs reduces profits. Steeper costs mean higher prices on what they produce; this suppresses consumer demand which means sales will be leaner still.

    Added to this is the uncertain nature of the financial investors the policy seeks to attract. These are “hot money” investors; their money has no firm home. Primed to sniff out high interest rates, their nose is for interest rate arbitrage. Minute change in interest rates here or abroad will cause them to pull stakes faster than when they came it. Nigeria has acted this play before. The entry of such investors was hailed 10-15 years ago. During the global recession of 2008-9,the fast exit of such investors contributed mightily to the domestic banking crisis. Courting such investors merely sets Nigeria for similar disruption, particularly given the weakness of the global economy.

    While the Bank’s tack may alleviate some short term money shortages, the medium- to long-term consequences are much less benign and certain. Once the money is here, it must be paid returns or it leaves. Unless more portfolio investment is constantly arriving, financial portfolio investment becomes more of a drain than an augmentation. This type of investment is mostly incestuous. In remains in the financial sector and doe little good for the productive sector. Thus, a focus on this investment merely perpetuates the financialist imbalance that has ill served the national and global economy over the past two decades.

    Perhaps worse is the fatalism the Bank’s move implies. For this decision to have taken shape, the Bank implicitly concluded the domestic real sector will be less a catalyst of the economy than foreign portfolio investment. This is an extraordinary admission.

    The decision connotes that neither government fiscal policy nor expansionary monetary will fillip domestic private sector growth to any discernible degree. Signaling its belief that neither it nor the government are up to the task of reviving the economy, the Bank thus surrendered the real economy to defeat in hope of rescuing its precious financial sector. All that can be done is to blow some hot air into financial asset prices, unduly inflating them for a transient moment. This comes at the expense of the real sector by hoisting an even higher interest rate on its borrowing.

    Implicitly accepting the present condition as beyond the ambit of fiscal and monetary policy to change, this move will not help the overall economy recover. The decision does open the door to higher nominal profits for international Big Money and its local allies. However, it moves in a direction opposite to that required to fight the recession that weighs on the back of the average person more heavily than does the marginal increase in inflation which seems to spook the moneyed class. This is an unfair transaction that ensures moneyed people against greater loss at the expense of leaving the rest of the population to their own meager devices. This is policy defeatist when courage and vision are most needed.

    (Next week’s piece will suggest policy steps that just might help Nigeria exit this economic dilemma.)

     

    08060340825 sms only

     

  • Nigeria: Where did prosperity go? (part I)

    Poverty disdains morality. It turns saint into sinner and kindness into conflict.

    We will shift from American politics for the next few weeks. With the Democratic and Republican conventions behind us, the campaign veers into the trenches. The candidates will engage in the prosaic fare of daily rallies and stump speeches memorizes by rote. Barring unforeseen happenings, the contest will not intensify until mid-September when the series of debates commences.

    At the moment, the contest is in Clinton’s hands. She enjoyed a significant boost from the well- choreographed Democratic convention. Meanwhile, Trump appears to be doing his utmost to transform into an even odder version of himself; he appears intent on making his campaign implode. Since the Democratic convention not a day has passed without Trump committing ajaw-dropping verbal miscue. Because of Trump’s clumsiness, Clinton’s relativelystaid, unenthusiastic campaign has surged to a nearly double-digit lead in most national polls.

    During these anticipated electoral doldrums, I hope to examine the weakness of the global economy and the particular vulnerabilities of strategic states within it. Barring a spectacular event that diverts my pen, we will look at Nigeria, Brexit, Venezuela, Greece/Italy and finish the series with some general observations on global economic trends.

    The central theme underlying this discourse is the belief that the world economy will be crippled by frequent crises and near crises because the model upon which it is based is a malign one. The undue financialization of the global economy has shifted too much power to the banking and financial sector. This deprives the real economy of the resources and policies needed to achieve levels of production and employment adequate to sustain growth that benefits the bulk of the people. As the financial sector gains, the real sector loses and most of us along with it.

    Moreover, economic and social policies are skewed to perpetuate the imbalance. The populace is inculcated into believing this injury to their wellbeing is the inherent order of things. We are handed subjective conclusions about economic policy and about how the economy is to be structured as if these biased views are inexorable natural laws.  With our minds so conditioned, we gaze into the mud and plod away step by step, trying to hold forth in a world that, day by day, offers us less to hold day. We are told not to look up, so we do not and thus never venture to see a better avenue than the sodden path we tread.

    We are mentally bludgeoned to not question why. To do so is to invite criticism for being irresponsible, disruptive or naïve. We are told we are too ignorant and dumb to understand the complexities of how we are employed or not and what wage we work. We are commanded to leave our fate to those who know better. Yet the only thing they know better is how to get what they want. This is what guides the actions of those controlling the global economy. They call it policy. I know it by another name: deceit.

    With no further delay, let us grapple with the tight fix into which the dynamics of the global economy and the financialist mindset have placed Nigeria.

    To make this journey, we must learn to distinguish between nominal feats and genuine progress, between myth and fact. If not, we shall always be vulnerable to side-plays and artifices distracting us from the kernel we should be seeking.

    During the Jonathan administration, its economic team lauded that Nigeria had become Africa’s largest economy under their stewardship. Today, that victory seems more mockery than achievement. The elevation in GDP was accomplished without any material improvement to the nation’s productive capacity or output. It increased not the amount of food on the average family’s table nor the disposable income in the pocket of any working person. It was all done with the stroke of a pen. They altered figures on paper then persuaded us that our reality had been improved by their cunning handiwork.

    Now, we know the truth. It was a cynical endeavor not meant to change reality as much as to insult it. Reality has given its apt reply. We must learn from this. Gimmickry is a vain substitute for wise, frank policy. In the end, better one step truly taken than five steps simply imagined.

    Slumping oil prices have severely afflicted this economy. This disruption was caused by a convergence of geopolitical and technological factors. For the past two decades, geopolitical considerations and technology generally worked to the national benefit. This time they became the villians. North American oil fracking brought more oil into the market, depressing the price thereof. Saudi policy to corner market share by elevating its production further eroded prices. A languishing global economy did the rest.

    This external shock to the economy had compound negative effects. It reduced domestic activity while also lifting price levels. As such, it brought recession and inflation at the same time. Unfortunately, monetary and fiscal policy cannot adequately battle both simultaneously. Because of this limitation, we are compelled to focus policy on defeating them one at a time. Economic elites see inflation as the worst of the tandem. Empirical history indicates that a modest increase in inflation is easier to withstand that is a protracted economic downturn. For the majority of the economy, recession is more ominous. It is the one that should first be tackled.

    This realizationshould lead to certain policy options and away from others. One unavoidable decision in this situation was to move to a floating currency regime. Here we must pause a moment to understand the significance of the exchange rate.  Discourse on the exchange rate has been voluminous. Perhaps my submission here will add nothing but better a helpful word repeated than left unsaid. Thus, in hopes that it does add to the collective understanding, I venture on.

    Proponents of a so-called strong currency often seemed to have embraced the position that a low exchange rate is a core economic objective.  However, exchange rate policy is more prudently a tactic to be employed toward the truer objective of maximizing national economic output and wealth creation. The exchange rate is not any end in itself; it is but a means to a salutary end. The overall welfare of the economy should not be sacrificed for the purpose of maintaining an exchange rate any more than a tree should be sacrificed to please one of its branches.

    We must divorce ourselves from the fallacy of a defining the currency as strong or weak simply by looking at the exchange rate. If the exchange rate is low but the economy lagging, the currency is weak. Conversely, if the exchange rate is high but the economy growing, the currency is sufficiently strong. We must not confuse cause and effect. A vibrant economy gives rise to a low, stable and strong currency. A low exchange does not result in a strong economy. If the exchange rate and economic health do not jibe, eventually the exchange rate must give way or it will result in additional distortions that further drive the economy into the shoals.

    Also, we must see beyond the false dichotomy that economic gain is only and always associated with good economic policy and loss with bad policy.  There is much space and complexity between these polar opposites. For example, during idyllic times when some level of gain is almost inevitable, imprudent policy may still yield positive growth, albeit not optimal. Economic growth in such a convivial environment is not evidence of fine policy. Progress would be said to have come despite policy, not due to it. Conversely, when downturn takes form, sometime the best that wise policy can do in the short-term is to reduce,not reverse, economic loss. The move to the flexible rate is of this latter type.

    There are basically two types of rate devaluations: offensive and defensive.  An offensive devaluation occurs when a nation purposefully devalues its currency to bolster preexisting export opportunities. This implies that the capacity to increase exports exists but is presently idle. A defensive devaluation takes place when the level of a nation’s foreign exchange inflow is materially reduced while outflows remain unchanged or perhaps grow. This latter description fits Nigeria’s situation.

    The slide in oil prices altered net foreign currency flows to the national detriment. As the dollar became less available, it became dearer. The naira became less valuable in comparison. To maintain the old rate was to ignore this inexorable fact. Facts may be unsavory; in the end, we are forced to swallow them.

    Downed oil prices placed the economy in retreat. The lone question was whether retreat would be orderly or chaotic.  To have stuck to the old exchange regime invited chaos. The new regime brings more order and reason. Yet, make no mistake. It is still a retreat. The retreat was necessary; it will help us find better ground on which to defend the economy. But victory is never achieved by the orderliness of one’s retreats. It is won by the soundness of our advances and the ability to repel subsequent counterattacks.

    At this point, we must accept the downward direction the exchange rate has taken. Even with the reform, the divergence between the bank and parallel market rates is too extreme. This roughly 25 percent gap lends itself to arbitrage and corruption. Both vices will misdirect precious financial resources away from productive enterprise needed to revive the economy and thus bolster the currency.

    For exchange rate policy to be effective in the long-term, it must be joined by other monetary and fiscal policies redressing the conditions that occasioned devaluation in the first place. While our devaluation was initially defensive, we must institute complementary policies that, in the longer-term, will place us on footing similar to that suggested by an offensive devaluation. Ideally, devaluation would have taken place with Nigeria having the industrial capacity in place that could have exploited the cheaper naira by expanding our non-oil exports. Because our manufacturing sector has become a crippled limb, Nigeria could not make this adjustment quickly. That we could not engage in this more beneficial sequencing of policy and economic adjustment does not mean we can never reach a like result. We can attain the same outcome in the long run.

    This requires that we augment the exchange rate decision with policies favoring domestic manufacturing and industrial production. We can invert the optimal sequence because there is no causal relationship between exchange rate policy and these other industry- and employment-friendly policies. Although complementary and made more effective by the other, neither policy is wholly dependent on the existence of the other. This means the sequencing can be changed yet still arrive at nearly the optimal result in due season.

    If we fail to marry the two sets of policies, we will not only reintroduce chaos to our retreat, the retreat will be longer and more onerous than need be. Recovery will be longer in coming and feebler when it finally arrives. It would be much like pruning the branch while failing to water and fertilize the roots of the tree upon which the branch depends.

    Against this backdrop, the Central Bank’s recent decision to increase the interest rate must be seen as a half-step backward. The decision was done with good intentions but was captive to the financialist ideology that has jailed the global economy. The decision intends to attract investors, particularly foreign investors, and to combat inflation. This is revealing.

    Note the type of investors the Bank seeks.The type of investors influenced by such interest rate changes are those who invest in financial instruments that pay a return directly or indirectly based on the rate set by the Central Bank. The bank’s policy is thus intended to encourage financial sector investment. On the other hand, the rise in interest rates discourages investment in the plant and equipment needed to fuel real sector expansion and job creation.

    Financial sector investors are those most strongly attracted by high interest rates. Real sector investors see high rates as an impediment. For the eyes of real sector actors are fixed on the profits derived from the sale of their goods. They know that tight money and higher rates undermine their profits in two ways. Steeper borrowing costs reduces profits. The steeper costs also suppress consumer demand which means sales will be leaner still.

    Added to this is the uncertain nature of the financial investors the policy seeks to attract. These are “hot money” investors, meaning their money has no firm home. Primed to sniff out high interest rates, their nose is for interest rate arbitrage. Minute change in interest rates here or abroad will cause them to pull stakes faster than when they came it. Nigeria has acted this play before. The entry of such investors was hailed 10-15 years ago. During the global recession of 2008-9, however, the fast exit of such investors contributed mightily to the domestic banking crisis. Courting such investors merely sets Nigeria for a similar disruption, particularly given the weakness of the global economy.

    While the Bank’s tack may alleviate some short term money shortages, the medium- to long-term consequences are much less benign and certain. Once the money is here, it must be paid returns or it leaves. Unless more portfolio investment is constantly arriving, financial portfolio investment becomes more of a drain than an augmentation.

    Perhaps worse is the fatalism the Bank’s move implies. For this decision to have taken shape, the Bank implicitly concluded the domestic real sector will be less a catalyst of the economy than foreign portfolio investment. This is an extraordinary admission.

    The decision connotes that neither government fiscal policy nor expansionary monetary will fillip domestic private sector growth to any discernible degree. Signaling its belief that neither it nor the government are up to the task of reviving the economy, the Bank thus surrendered the real economy to defeat in hope of rescuing its precious financial sector. All that can be done is to blow some temporary hot air into financial asset prices. This comes at the expense of the real sector by hoisting an even higher interest rate on its borrowing.

    Because it implicitly accepts the present condition as beyond the ambit of fiscal and monetary policy to change, this move will not help the overall economy to recover. It is a move that will open the door to higher nominal profits for international Big Money and its local allies. However, it moves in the direction opposite that required to fight the recession that weighs on the back of the average person more heavily than the marginal increase in inflation which seems to spook the moneyed class. This is an unfair exchange that ensures moneyed people against greater loss but leaves the rest of the population to their own meager devices.

    Next week’s piece will suggest policy stepsthat just might help Nigeria exit this economic dilemma.

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