,The President breaks social contract with the
people (1)
JANUARY 12, 2012 BY BOLA AHMED TINUBU 7
COMMENTS
As Nigerians gathered with family and friends to
celebrate the New Year, the Federal Government was
baking a national cake wrapped in the scheme that
would instantly make the New Year a bitter one. Barely
had the public weaned itself from last year when
government dropped a historic surprise on an
unsuspecting nation. The Petroleum Products Pricing
Regulatory Agency issued a statement abolishing the
fuel subsidy. By this sly piece of paper, the government
breached the social contract with the people. This
government, which owes its very existence to the
people’s desire to be governed by someone more
humble than elitist, has turned its back on the collective
will. By bureaucratic fiat, government made the most
fateful economic decision any administration has made
since the inception of the Fourth Republic and it has
done so with an arrogant wave of the hand as if issuing
a minor regulation. Because of the terrible substance of
the decision and the haughty style of its enactment, the
people feel betrayed and angry. At this moment, we
know not to where this anger will lead. In good
conscience, we pray against violence. Also in good
conscience, it is the duty of every citizen to peacefully
demonstrate and record their opposition to this
draconian measure that is swiftly crippling the economy
more than it will ever cure it.
By taking this step, government has tossed the people
into the depths of the midnight sea. Government
demands the people swim to safety under their own
power, claiming the attendant hardship will build
character and add efficiency to the national economy. It
is easy to make these claims when one is dry and on
shore. Government would have us believe that every
hardship it manufactures for the people to endure is a
good thing. This is a lie. The hardships they thrust upon
the poor often bear no other purpose than to keep them
poor. This is such a time.
I am not calling President Goodluck Jonathan an evil
man. I do not believe he is perverse. However, the
economic ideas controlling him are so misguided that
they have a perverse impact. Because he is slave to
wrong-headed economics, the people will become
enslaved to greater misery. This crisis will bear his name
and will be his legacy. The people now pay a steep tax
for voting him into office. The removal of the subsidy is
the “Jonathan tax.” This situation shows that ideas count
more than personalities. People may occupy office but
how that person performs depends on the ideas that
occupy his mind.
Though someday, Nigeria will have to remove the
subsidy, the time to do it is not now. This subsidy
removal is ill-timed and violates the condition precedent
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http://www.punchng.com/opinion/the-president-breaks-social-contract-with-the-people-1-2/

The President breaks social contract with the people (1)
January 12, 2012 by Bola Ahmed Tinubu 7 Comments

As Nigerians gathered with family and friends to celebrate the New Year, the Federal Government was baking a national cake wrapped in the scheme that would instantly make the New Year a bitter one. Barely had the public weaned itself from last year when government dropped a historic surprise on an unsuspecting nation. The Petroleum Products Pricing Regulatory Agency issued a statement abolishing the fuel subsidy. By this sly piece of paper, the government breached the social contract with the people. This government, which owes its very existence to the people’s desire to be governed by someone more humble than elitist, has turned its back on the collective will. By bureaucratic fiat, government made the most fateful economic decision any administration has made since the inception of the Fourth Republic and it has done so with an arrogant wave of the hand as if issuing a minor regulation. Because of the terrible substance of the decision and the haughty style of its enactment, the people feel betrayed and angry. At this moment, we know not to where this anger will lead. In good conscience, we pray against violence. Also in good conscience, it is the duty of every citizen to peacefully demonstrate and record their opposition to this draconian measure that is swiftly crippling the economy more than it will ever cure it.

By taking this step, government has tossed the people into the depths of the midnight sea. Government demands the people swim to safety under their own power, claiming the attendant hardship will build character and add efficiency to the national economy. It is easy to make these claims when one is dry and on shore. Government would have us believe that every hardship it manufactures for the people to endure is a good thing. This is a lie. The hardships they thrust upon the poor often bear no other purpose than to keep them poor. This is such a time.

I am not calling President Goodluck Jonathan an evil man. I do not believe he is perverse.[size=14pt] However, the economic ideas controlling him are so misguided that they have a perverse impact. Because he is slave to wrong-headed economics, the people will become enslaved to greater misery. This crisis will bear his name and will be his legacy. [/size]The people now pay a steep tax for voting him into office. The removal of the subsidy is the “Jonathan tax.” This situation shows that ideas count more than personalities. People may occupy office but how that person performs depends on the ideas that occupy his mind.

Though someday, Nigeria will have to remove the subsidy, the time to do it is not now. This subsidy removal is ill-timed and violates the condition precedent necessary before such a decision is made. First, government needs to clean up and throw away the salad of corruption in the Nigerian National Petroleum Corporation. Then, proceed to lay the foundation for a mass transit system in the railways and road network with long term bonds and fully develop the energy sector towards revitalising Nigeria’s economy and easing the burden any subsidy removal may have on the people.

But we know this is about more than the fuel subsidy. It is about government’s ideas on the role of money to better the lives of people, about the relationship between government and the people and about the primary objective of government’s interaction in the economy. It is about whom, among the Nigeria’s various social classes, does government most value. This is why public reaction has been heated. It is not so much that people have to spend more money. It is because people feel short-changed and sold out.

Government seeks to convince us that the Jonathan tax is an unavoidable decision mandated by immutable economic principles. If you accept their premise, you must agree with their conclusion. However, their argument falters at its inception. There are few immutable economic principles. Economics is not an exact science with unbreakable rules like physics.

Economics is no less subjective than politics. It was born an offshoot of politics and there it remains. What this government claims to be economic decisions are essentially political ones. As there are progressive politics, there are progressive economics. As there are elitist politics, there are elitist economics. It all depends on what and who in society government would rather favour. The Jonathan tax represents a new standard in elitism.

This whole issue boils down to whether government believes the general public is worth a certain level of expenditure. It is like the situation where a man dates more than one woman. To each, he promises love thus nothing can be deduced from his words. However, we know he will spend and dote more on one and she will be the one he loves above the others. When banks were in distress, government produced billions of naira out of thin air and in record time. It was explained the swift expenditure was needed to stop the banking system from imploding. There was no worry that government would be bankrupted. If the banks were to fall twenty times in the future, government would jump twenty times to their rescue. It does so because this government lives a conservative economics placing it in close alliance, if not collusion, with corporate power.

However, because the distance between government and the people is far and genuine level of affection is low, government sees no utility in continuing to spend the current level of money on the people. In their mind, the people are not worth the money. Government sees more value in “saving” money than in saving the hard-pressed masses.

Yet, what does government actually save by this measure? The concept of a government that has the unfettered ability to print its own currency needing to save that currency for fear of insolvency is an anachronism. That his economic advisors would cling to this notion is like a person insisting on taking to the expressway in a horse-drawn carriage. For a government that prints its own currency, attempting to save in that very currency in order to defend against bankruptcy in that currency is a relic of the gold standard abandoned forty years ago. If government thrashed the fuel subsidy based on considerations that it will run out of naira then it based its decision on a factor that has not been relevant since the time of the Biafran war.

In 1971, the world left the gold standard replacing it with “state” or “fiat money.” Under the gold standard, a nation had to save gold to support its currency or risk insolvency. After 1971, bondage to gold was broken. Since then, the worth of a nation’s currency is not tied to gold which means that the ability of a nation to print currency is not determined by its holdings of gold. The worth of the currency is based on the strength of the economy and the amount of money the nation prints is determined by that strength as well as the nation’s future economic objectives. A nation can no longer fall insolvent concerning debts or payments issued in the national currency. As long as the fuel subsidy is paid in naira, then Nigeria cannot go bankrupt paying it any more than the ocean can run out of salt water. In a fiat money system, the problem with the fuel subsidy is not impending insolvency as the government asserts. The serious constraint is inflation. Here we must ask whether the payment is so inflationary as to distort the economy. We have been making the payment for years and inflation has not wrecked the economy. This historic evidence refutes the imminent disaster claimed by government.

In advancing the argument that subsidy would lead to imminent bankruptcy, government reveals its lack of trustworthiness on important matters of fact. Is this the same government that several weeks ago claimed Nigeria was among the world’s best performing economies with a GDP growth rate of 7 per cent annually? It seems government has a vast canvas on which it can paint a number of different scenarios of Nigeria depending on the whim of the moment. While government may alter its portrait of the nation, the people are forced to live one reality at a time. Is Nigeria a fast growing economy? If the nation’s GDP is growing so strongly, the subsidy or a similar expenditure on the people cannot be the lethal burden government now maligns it to be.

Nigerians have a collective stake in the ownership of our oil resource held in trust by the government of the day. What we need then is the effective management of this scarce resource that will beget long term prosperity to the suffering people of Nigeria and not the present racket in which those in power abuse access and control of NNPC and oil revenue to warehouse money to fund their election campaigns.

This brings us to another inconsistency. On one hand, government states the expenditure is unsustainable yet on the other it claims the amount now earmarked for the subsidy will be used to fund other people-oriented programmes. However, the two assertions cannot exist at the same time side. If the subsidy is bankrupting us, then reallocating funds to different programmes will be no less harmful. A bankrupting expenditure retains this quality whether used for the subsidy or another purpose. Earmarking the funds to something else will not change the fiscal impact. If government is sincere about using the funds for other programmes, then it must be insincere about the threatened insolvency.

•Tinubu is a former governor of Lagos State.

we don talk am before - GEJ is better off listening to his enemies . his friends and hangers on will lead him to the path of doom

Don't mind Jonna.