lump in oil prices: A progressive way out (1)

Awash in the great tide of politics, we must not forget why politics can be a noble endeavour. It leads to governance. When done correctly, governance can reform a nation and improve the lot of the people. In the hands of the ignorant and the mean, governance casts abundant misfortune upon a nation and upon the welfare of its citizens.

This commentary concerns governance and policy more than it does politics. I offer it to generate debate on an important economic issue. No matter who is in power, we must do whatever is in our capacity to do to steer the nation away from economic woes. The people have suffered too much hardship already. Neither side of the political divide should seek to purchase transient advantage at the high price of dousing the people in greater economic calamity. Thus, I suggest this progressive position on how best to shape economic policy during this period of falling oil prices. I state this hoping those in charge will take pertinent advice from any quarter. My prayer is that they are not so stubborn as to adhere to a strategy that will deepen the economic misery of our people even when better policy measures are proffered.

I confess to writing this also for a reason essentially political but non-confrontational. It accentuates the distinction between the conservative Peoples Democratic Party and the progressive All Progressives Congress. The nation faces momentous elections when next year turns to its second month. The choice is a stark one; but many people do not believe as such. The differences are vast especially regarding economic policy. On the one side, the PDP champions a conservative, elitist economic model based on the theory that wealth money must first go to the already rich and well-heeled who shall determine how small a fraction of it will trickle down to the rest of society.

On the progressive side, we believe government can fillip economic growth and development in such a way that brings the fairness of prosperity to all of society. We don’t seek to penalise those who already have but we will do our utmost to remove from the clutch of poverty the bulk of our people. We seek to turn the hungry suffering of our poor and working classes into a dignified livelihood that provides a dignified existence for all.

Global oil prices have fallen from over $100 a barrel to approximately $80 per barrel. This slide has caused a corresponding drop in government’s dollar revenues. With this, the Federal Government claims it has less money at its disposal and the paucity of dollars necessitates austerity measures. Most people accept this position as gospel; debate about its correctness has been nil. Yet, the stakes are much too high to assume this subjective position as an economic certitude or uncritically accept its propriety. What they proclaim as policy is not based on any unassailable economic principle. It is statement of economic bias that beckons to the wealthy while auguring unnecessary hardship for most Nigerians.

Look at jobless and poverty levels as well as the diminished status of our middle class. After viewing these statistics, most objective economists would conclude Nigeria is mired in a long-term, secular depression. Forget the rosy GDP figures. They signify a great economic and financial segregation between those who have and others who have not. If we continue with the policy preferences of the current administration, the haves shall become the “have-mores” and the “have-nots” shall become the “have even less.”

The vast majority of the claimed GDP growth has fallen into the laps of those already enjoying obvious luxury. The rest of the people are left to gaze at the enormity of the income and wealth chasm separating them from the cabal orchestrating the discordant political economy. While a small group flourishes, the rest of the nation subsidises their economic bounty. A tight confederacy rides an economic skyrocket while the bulk of the people languish in the swamp. For one group, the economy is a effervescent. For the other, it is catatonic. Nigeria is one nation with two economies.

For this government to speak of austerity is to further enrich the affluent while casting the average Nigerian into greater hardship and deeper socio-economic depression. As with the Eurozone the past five years since the global financial crisis, austerity has not solved the dire economic weakness of the nations that employed this sickening remedy. All austerity has done is tighten the grip of the wealthy on the economy while weakening the position of the middle class and the poor.

Austerity weakens aggregate demand, deflating an economy already fatigued and against the ropes. Those with hefty portfolios, profit as the value of their holdings appreciates by the very dynamics of deflation. Those who don’t have, find money even dearer to come by. Jobs and commerce disappear. Debt climbs. Deflation turns a noble but poor household into a comity of beggars and street urchins. The austerity that the current administration offers is an insensitive, myopic policy that lends primacy of favour to meaningless accounting figures instead of to the material well-being of the people. Austerity undermines our economic pillars and breaks the spirit of the people. Austerity is the merchant of pessimism and hopeless futility. If you desire a nation of thralls, by all means continue this bleak path. If we want a nation of prosperity and economic justice, a different course is our due.

Listen carefully to the position of the Jonathan administration as articulated by the finance minister and you shall collide into the barricades of illogic and its weighty consequences. The claim is that government is low on funds because the lower price of oil means fewer dollars are being collected from oil sales. This sounds logical but for one fundamental point. The dollar intake is basically irrelevant to determining the amount of naira the government commands and places into the political economy. This fundamental point reveals the government’s position to be the antiquated relic of a past era. It is the way of the gold standard which ceased to exist over 40 years ago. As such, government’s stance is based more on superstition than on the actual functioning of modern economy with a sovereign fiat currency of its own.


written by Asiwaju Tinubu, a National Leader of the All Progressives Congress

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This is not for those who are intellectually lazy. Pls lets read and discuss constructively. Also, kindly note that this is the part 1.

sorry I do not fully understand how falling oil prices would not effect our economy. You lost me there.

Here I was thinking that he wanted to give a clear and unbiased way to go above this oil price decline and once again I was proved wrong. He raised good points though but he didn't fail to bring in their usual PDP vs APC battle and blackmail. A typical example of enriching the rich which he accused pdp of is Lagos State. The govt schools are suffering, those living in the slumps are either chased out or are still suffering. He controls almost every govt investment in lagos state. The atlantic city and banana island and lekki etc are not meant for the poor. I will only hope they keep telling us how they will change the country by coming out the way he did. I like it and that's what nigerians are asking them to do but he spoilt it with his progressive and conservative speech. Why was fayemi voted out? Was it not cos he was more of an elitist governor? Anyway these are his ideas, they may be good or right they may also be bad or wrong. We shouldn't forget that the president is working with seasoned economists.

brainpower:
Here I was thinking that he wanted to give a clear and unbiased way to go above this oil price decline and once again I was proved wrong. He raised good points though but he didn't fail to bring in their usual PDP vs APC battle and blackmail. A typical example of enriching the rich which he accused pdp of is Lagos State. The govt schools are suffering, those living in the slumps are either chased out or are still suffering. He controls almost every govt investment in lagos state. The atlantic city and banana island and lekki etc are not meant for the poor. I will only hope they keep telling us how they will change the country by coming out the way he did. I like it and that's what nigerians are asking them to do but he spoilt it with his progressive and conservative speech. Why was fayemi voted out? Was it not cos he was more of an elitist governor? Anyway these are his ideas, they may be good or right they may also be bad or wrong. We shouldn't forget that the president is working with seasoned economists.

You have a point there, but that was why I put the caveat above that this is the part 1. I'm wont to believe he wants to use this part 1 to table they issue. 'MAYBE' he will proffer his solutions in the part 2.