Gbawe, see my response in the other thread.

In a nutshell, mouth alone will not allow you to fix a deficit nearly 1/3rd of your proposed budget.

aribisala0:

i really do not accept the dichotomous reasoning that somehow spending more on capital expenditure is always or even generally better than more on recurrent expenditure. This assumption is implicit in the conclusion of the poster that this swing in weighting from last year is a good thing  or desirable one.

Well if you don't spend money on capital expenditure, then your infrastructure falls apart, your state becomes much less attractive for people to invest and start businesses in, unemployment will rise, etc, etc.

And there is no entity in the state (aside from the FG) who is going to invest in public infrastructure (at least at sufficiently high levels), for somewhat obvious reasons.

I have no doubt that Ajimobi will deliver, He is a fine and responsible man. He has no trait of rascality! But that is not to say that Alao-akala did not do something in Oyo state, at least to some extent, He 'tried'!

no one said you should not spend on infrastructure.
Simple question

why must it be MORE than recurrent.
was that on the tablets of stone Moses brought down from Mount Sinai??

It doesn't have to be larger than recurrent.

There is no law saying it must be X.

The point is that, the less you spend on recurrent, the better off you'll be in the future.

The % represents a tradeoff between future benefit and present enjoyment, basically.

When I see a state like Akwa Ibom with 80%+ spent on capital expenditure, I know that it'll become a juggernaut in the future.

I want SW states to also be at least 50% capital, and preferably closer to 60%.

Gbawe:

To be honest, if we pander to philosophical dissection of matters and a subjective interpretation of issues then everything can become relative. I.e Ajimobi's budget may not be better than Alao Akala's and vice versa. If , however, and as is normal, we look at issues purely from an economic and scientific point [/b]of view then it is immediately obvious that Ajimobi's budget is far better than the 2011 budget of Alao Akala.

Even simplistically, voting substantially more in favour of capital spending is already a winner for those who know the reality of Nigeria to understand the atrocious fiscal policy that has seen, year after year, more money devoted to subsidizing the existence and activities of a small percentage of Nigerians within public office . [b]Any economist would tell you , regardless of recourse to subjective philosophising, that anything reversing that trend is already a massive step in the right direction. Let us just focus on statistics and the very obvious implications of those statistics instead of arguing for the sake of being contrarian.

Note that philosophising means:

1. Speculate or theorize about[size=14pt] fundamental or serious issues[/size], esp. in a tedious or pompous way.
2.    Explain or argue (a point or idea) in terms of one's philosophical theories.

http://www.google.co.uk/#hl=en&q=philosophize&tbs=dfn:1&tbo=u&sa=X&ei=DI_zTtevB87O4QSp3dWNCA&ved=0CB0QkQ4&bav=on.2,or.r_gc.r_pw.,cf.osb&fp=440660d03c957758&biw=1280&bih=921

GBAWE
PLS STOP THE BS
You made a claim and when called upon to back it up  is  this is the best  you can come up with.
Note i claim no knowledge on this subject so you back up your claims
If you say you speak from a "scientific/economic" viewpoint fine ; dem onstrate itor should we just say Gbawe said so.
without being disrespectful you think you are being scientific and those who disagree with you or even question you are speculating . YOU made a claim show your SCIENCE otherwise you are equally culpable of speculating
My question is a simple one where is the evidence demonstrating any claim on what should be the optimal weighting for recurrent versus capital expenditure in Oyo state.
If you can't provide EVIDENCE then admit you are expressing YOUR OPINION which is perfectly fine and I shall say no more. I have not even disputed  this opinion so I am not being pompous but i have seen nothing to convince me that this is a better budget. it could be but that remains to be seen

if that "Any economist will tell you " line is the best you can do let us forget it and agree you are NOT in a position to back up your claims

you say we should focus on statistics that is what i want

provide them please

that link you provided is really irrelevant . I patiently await the stats

ekt_bear:

It doesn't have to be larger than recurrent.

There is no law saying it must be X.

The point is that, the less you spend on recurrent, the better off you'll be in the future.

The % represents a tradeoff between future benefit and present enjoyment, basically.

When I see a state like Akwa Ibom with 80%+ spent on capital expenditure, I know that it'll become a juggernaut in the future.

I want SW states to also be at least 50% capital, and preferably closer to 60%.

Generally I have a problem with assertions and I ask this respectfully better off in what way? What evidence do you have for this bolded statement?
Donald Duke spent a lot of money on Capital project i.e Tinapa,.Ajaokuta was a capital project ati bebelo. I think this assertion is a myth. Spending good money on education  and training our youth via recurrent expenditure would have done Nigeria a lot more good than the billions wasted in Abuja
Spending money educating your children=recurrent
buying a car/marrying a new wife= capital

buy cooking utensils for aso rock = capital expenditure

Your best bet is to Google around, DL an economics book from bit torrent. Or read lots of articles on sites like the Economist/FT/WSJ etc.

No offense intended, but not really the best use of my time to explain why spending more on capital expenditure is a good thing, heh.

it is clear you do not know what you are talking about.
If you keep quiet no one will notice you or call you out but if you creep out of your lair and spout inanities it is quite likely you will be kicked right back
really better not to make claims you cannot substantiate and then cop out with lame lines like that.
if it was as simple as reading a textbook Nigeria should not have have any problems
you probably heard it from sanusi lamido.

Sigh.

I've already stated some of the reasons why spending money on capital expenditure is good. You bring up spoons purchased at Aso Rock.

Hopefully you can see why this discussion isn't going to be a particularly good use of my time.

The information you need can be found elsewhere on the internet. Or if you like, by going through some of my old posts.

Between those two resources, you should be able to find the answers you seek.

I believe I have satisfied my obligations as far as argument goes. Surely I am under no obligation to provide what you can easily find elsewhere.

aribisala0:

buy cooking utensils for aso rock = capital expenditure

NO. Cooking utensils are not capital or infrastructural expenditure. Capital assets are used to generate income. Roads, power stations, internet access, hospitals, railway lines etc are capital expenditures. Take a quick look at Fashola, and you will see that he focuses almost exclusively on capital projects.

your bombast is misplaced i do not seek information from you. you do not know what i read but  your reading list suggestion is funny . it is always a mistake to assume you know more than the next guy. you never know,.,.,.,.
anyway all i ask is you justify claims you make.

i cited the utensil example as a rhetorical device and  to illustrate to you that such bland categories as "capital expenditure" mean nothing without analysing descriptives of components. Also cooking utensils at Aso rock are topical now
often so called capital investment turn out to be liabilities when the running costs exceed the initial outlay e.g a SIM card or a mobile phone and we can see similar analogies on a catastrophic scale with government spending

ekt_bear:

Sigh.

[b]I've already stated some of the reasons why spending money on capital expenditure is good. [/b]You bring up spoons purchased at Aso Rock.

Hopefully you can see why this discussion isn't going to be a particularly good use of my time.

The information you need can be found elsewhere on the internet. Or if you like, by going through some of my old posts.

Between those two resources, you should be able to find the answers you seek.

I believe I have satisfied my obligations as far as argument goes. Surely I am under no obligation to provide what you can easily find elsewhere.

. Depending on need and so many variables e.g liabilities which are more often social and political and NEVER set in stone the proportion of recurrent to capital varies. Recurrent may even reflect loan repayments on monies use for capital projects. Anyway i see you an arrogant guy and insecure too so you use
veiled sarcasm as a form of defence. good luck but just bear in mind when you express dogmatic ideas you may be called out so be prepared to back up what yo say . that every primary school boy in my village knows it so don't waste my time routine is risible.

i have NOT said Capital expenditure is NOT good whatever good means. I question the basis on which you determine it must be a greater proportion of the budget . why is 60/40 a "good" thing??

aribisala0:

GBAWE
PLS STOP THE BS
You made a claim and when called upon to back it up  is  this is the best  you can come up with.
Note i claim no knowledge on this subject so you back up your claims
If you say you speak from a "scientific/economic" viewpoint fine ; dem onstrate itor should we just say Gbawe said so.
without being disrespectful you think you are being scientific and those who disagree with you or even question you are speculating . YOU made a claim show your SCIENCE otherwise you are equally culpable of speculating
My question is a simple one where is the evidence demonstrating any claim on what should be the optimal weighting for recurrent versus capital expenditure in Oyo state.
If you can't provide EVIDENCE then admit you are expressing YOUR OPINION which is perfectly fine and I shall say no more. I have not even disputed  this opinion so I am not being pompous but i have seen nothing to convince me that this is a better budget. it could be but that remains to be seen

if that "Any economist will tell you " line is the best you can do let us forget it and agree you are NOT in a position to back up your claims

you say we should focus on statistics that is what i want

provide them please

that link you provided is really irrelevant . I patiently await the stats

My brother, we are not going anywhere with this debate because you are not the sort to hold up your hand and say "I see your point". By your own admission you "claim no knowledge on this subject" yet , instructively, the best specialised brains in the world , knowledgeable far more than you, tell us that , for our infrastructural and developmental deficit, capital spending must urgently increase while bureaucracy and the cost of running Government must decrease !!! When this happens emphatically why are we here introducing subjective interpretations to issues that are fundamental in clarity?

The link below should clarify the definition of capital expenditure and operational expenditure.

http://en.wikipedia.org/wiki/Capital_expenditure

we are getting somewhere. so if we accept that we have an infrastructure deficit which I agree with does that mean most of our money should be spent on that.
Infrastructure deficit is one thing but there are deficits too in areas requiring recurrent expenditure for example education and social security.
The point i am making is the choice about where you choose to prioritize i.e capital versus recurrent is a political one as well as it is an economic and social one and to argue that one's politician's choice is superior to another's is a political argument. NOT a scientific one as you would have us believe

The other thing is recurrent expenditure budget may represent interest repayments on money used for capital projects.
I have admitted i know little on the subject this is true but I am quite capable of processing any information you throw at me. i am able too to discern those who are like me in knowing little on the subject but would pretend otherwise

so far what  I get is your opinion. and all I am saying is perfectly rational people have opinions that are the exact opposite of yours and there is no reason other that personal choice to choose one over the other

i asked you a very clear and succinct question which you cannot answer so let us leave it. Bottomline these are political choices which reflect different priorities and focus and there is really no SUPERIOR ARGUMENT

without analysing the budget i don't know for sure but I understand Akalla borrowed a lot of money and it is possible that the massive drop in recurrent may reflect some debt rescheduling

I've made no assumptions about knowing more than the next person.

My point is that I am not particularly interested in discussing this particular position with you. If you don't agree with me on it, that is fine. We can agree to disagree. If you are not convinced by what has been said so far, also fine.

That you think this is arrogance or insecurity is your business, not mine.

you made a silly assumption by referring me to economics textbooks.
do you know if i have authored any?
the issue is a political one too not just economic

this is a public discussion forum if you don't like being called out don't come here if you do you may be challenged that's all there is to it
if you keep misguided opinions to yourself life will be peaceful and quiet

I don't know for a fact that you haven't authored any textbooks. But by your own admission, you are not an expert. Certain inferences then follow, heh.

At any rate, you are correct in stating not all recurrent expenditure is bad. I don't think anyone here is advocating slashing the budget for primary or secondary school education, for example.

However, to my knowledge, these states which are at 55 or 60%+ recurrent are not spending most of the money on K-12 education. They are spending it on unproductive and idle civil servants, make-work programs, ghost workers, free amala (or things of this nature), etc.

Money that is mostly flushed down the toilet.

This is what people are against.

that is an entirely different matter but capital expenditures are not magically immune from the waste phenomenon either through corruption or just being inappropriate or unfit for purpose.

There is also the question of whether government is the right entity to manage certain infrastructure.The national stadia and airports as well as highways come to mind
I already mentioned ajaokuta and tinapa but there is interstitial leakage(those little things that  fall into the cracks and seem inconsequential) which individually might seem small but on aggregate is massive when you add them all up i.e the cooking utensils example which may seem insignificant when examined in isolation.

Anyhow,it is NOT an economic question really but of governance and politics which in a genuine democracy will reflect the wishes of the people. i am just arguing that one should question the assertion that capital expenditure must trump recurrent. There really is no FINAL WORD on that issue .

The argument is not that there are no leakages in infrastructure development.

The point is that, yes we all agree that spending money on education is a good thing. But that doesn't mean recurrent expenditure as a whole is desirable, or increasing it is desirable.

Regarding national stadia, airports, ajaokuta, tinapa, etc, that is not really what I'd be spending money on at the state level, if it were up to me. I'd look instead to upgrade basic infrastructure. Not putting money into things (like Tinapa) that should probably be done by the private sector anyways.

Regarding your last comment, the wishes of the people are important, but not the be-all end-all. They'd vote for the free amala candidate over the candidate that wants to be reasonable. Sometimes people want things that aren't good for them.

i know we need capital spending and recurrent as well.

recently we have been fed a diet of the notion that

recurrent <capital = good

capital <recurrent = bad
i say on what basis is that any better than the claim that Amala is better than tuwo.
Maybe maybe not

i don't know which is most desirable as i said i am not an expert on that but those who claim to know should be willing to tell us how they know.
Often they find they are mortal,like the rest of us.

OK, so we are back to where we were earlier.

Perhaps someone else will be interested in jumping in.

Just as a thought experiment, think about what would happen to you in your life if 100% of your income were spent on feeding yourself/rent/immediate needs/desires, and none of it were saved for the future when you get old.

(Though I guess in the UK they probably have some mandatory retirement savings plans so that people can avoid exactly this situation.)

I guess after thinking about that for a few minutes then the answer should become clear.

The parable of the ant and the grasshopper (which I suppose you'd have heard or read about as a kid) is also useful.

that is using an extreme scenario. i already said there has to be some of both so your thought experiment is patronising and silly really.
the question is what proportion of revenue should be spent on what. I have not advocated any one particularly all i am saying is it is a political choice NOT one based on any superior knowledge or arcane insights hidden from ordinary men.
The premise of this thread is that one particular course is better. I am open to being convinced but so far it would appear the only persuasion on offer is of the bullying.badgering or sneering variety which confirms my view that this is one of those areas best described as "unknown unknowns"

Once again you are back to your obnoxious arrogant sniping . keep your cognitive exercise recommendations to yourself and focus on the subject of the thread. I do not need reading lists or any form of advice from  you.
Bottomline is you have an opinion on what proportion of money should go on what and there are other intelligent people who feel otherwise. It is by no means clear than anyone is right
you have had a good opportunity to put your case forward and the best you can tell me is  i should do a thought exercise.
Young man you are cheeky!

Extreme examples are often the easiest for learning purposes. Perhaps you should think about the examples rather than immediately concluding that they are patronizing or silly.

In the real world, you try to spend as little as possible on the basic needs to get by in life. If I could spend 0% on my life needs and put 100% into savings/investment, I'd be very happy. But unfortunately there are some basic bills I have to pay that are unavoidable.

Recurrent expenditure (minus spending on social services) is the cost of running a government. Generally one wants to keep their costs in life as small as possible.

(Of course, the discussion of what we think the minimum basket of services society should provide to citizens is enough for an entire thread of its own. Some believe that society must provide free/subsidized university education, some believe in free healthcare, some believe in US-style social security, welfare, etc. I personally don't believe in most of those things.)

Anyway, there is nothing "unknown unknowns" about this. You just didn't think hard enough about it.

I apologize for any perceived rudeness.

Gbawe:

My brother, we are not going anywhere with this debate because you are not the sort to hold up your hand and say "I see your point". By your own admission you "claim no knowledge on this subject" yet , instructively, the best specialised brains in the world , knowledgeable far more than you, tell us that , for our infrastructural and developmental deficit, capital spending must urgently increase while bureaucracy and the cost of running Government must decrease !!! When this happens emphatically why are we here introducing subjective interpretations to issues that are fundamental in clarity?

gbawe i asked you a question please answer it
if you cannot just accept that you are spouting your opinion which is fine but there are other opposing opinions and there is no absolute certainty on this issue.
it does not have the same kind of exactitude as how much petrol does a rolls royce engine need to make the trip from new york to London.
The best brains are free to espouse their grand ideas and fools will question them
the strenghth of an idea not not derive from who espouses it.
Perhaps you have heard that
A fool can ask more questions than a wise man can answer.
That is why wise men assert very little

My question again;
How do we know that this budget is better than Akala's so far all you have said that I can hold on to is "the best brains say so" You are the resident latin expert so perhaps you will tell us the latin for that particular variety of fallacy.
So far I have NOT said you are wrong all I have asked you to do is
back up your claims
you huffed and puffed about statistics , i am still waiting.
You are not "trying to dump us in a portmateaus of indicipherability" (apologies to Honourable Patrick Obia,.,.,.) with all this bluster just answer my question as I am not disagreeing with you just asking you to back up your assertions

ekt_bear:

Extreme examples are often the easiest for learning purposes. Perhaps you should think about the examples rather than immediately concluding that they are patronizing or silly.

In the real world, you try to spend as little as possible on the basic needs to get by in life. If I could spend 0% on my life needs and put 100% into savings/investment, I'd be very happy. But unfortunately there are some basic bills I have to pay that are unavoidable.

Recurrent expenditure (minus spending on social services) is the cost of running a government. Generally one wants to keep their costs in life as small as possible.

(Of course, the discussion of what we think the minimum basket of services society should provide to citizens is enough for an entire thread of its own. Some believe that society must provide free/subsidized university education, some believe in free healthcare, some believe in US-style social security, welfare, etc. I personally don't believe in most of those things.)

Anyway, there is nothing "unknown unknowns" about this. You just didn't think hard enough about it.

  It is clear you are quite uncouth. It is not perceived it is real
There is a reason why Africans ask young people not to use proverbs with their elders. Often they misuse them or like one who has found a new toy or experienced a novel thrill they misuse them.
Talking to me about real life coming from you is funny really. don't make assumptions about people.
In theory one would expect a country like Nigeria with a huge infrastructure deficit to spend more on that than a country with well developed infrastructure.
In practice this cannot be divorced from revenue streams/income and so there is some truth in the aphorism of the rich getting richer and the poor getting poorer. If the income can only cover the most basic needs those must be met even if it means remaining in poverty .
We cannot spend blindly a fixed proportion of income on capital projects and ignore the harsh social reality of squalid poverty and unemployment
the primary thing for any living entity biological or sovreign is to survive which means paying salaries and running cost of the army and the police  and security service FIRST. That is what ensures the survival of any modern state ,after that there are basic amenities that will ensure social/public order and peace . Those two must be met before anything else and it is only after that that  a state will be in a position to make "investment" expenditure.
It is conceivable that a state is so poor,corrupt or otherwise dysfunctional that its revenues are so small that they barely cover the basic issues and so it cannot develop.


Most states in Nigeria are in a similar position and the kinds of infrastructure they require are beyond their means. In such a situation to mechanically allocate x proportion of revenues to capital expenditure may have no more impact than ritual tokenism.
Infrastructure are best developed through Investment in partnership  rather than government capital expenditure alone

There are those who see continuous education /training as investment i.e upgrading your workforce because it attracts investment. This is a recurrent expenditure too.

You are mistaken I think very hard before i talk and I take epistemiology very seriously

The minimum basket of services argument is not particularly germane because they will invovle capital as well as recurrent expenditure and so does not swing this discussion in any particular direction e. roads,rail lines, power stations,hospital will all attract recurrent expenditures unless they are business
. Recurrent expenditure may also include as I said before DEBT SERVICING for monies deployed on capital projects and finally some capital projects have recurrent running costs
e.g maintaining a road fuelling vehicles repairs or depreciation depending on accounting conventions

there are those who know nothing and think they know it all and there are those who know,very well, how little they know and are humbled by this fact.
For me this issue is one of the unknowns on which i have called Gbawe the poster on to share what he believes he knows and you likewise

so far all I have got is vainglorious verbiage and no answer to the most simple question
[b]On what evidence do you determine that capital expenditure should be greater than recurrent [/b]and what is the optimal proportion and what do i get?

Breezy,belligerent,bullying bluster.

@ Aribisala, it's  no-brainer that spending a bulk of your income on capital is the best way to go. You indeed highlighted some 'white elephant project' but that doesn't make your point valid. The reason we don't benefit from capital spending as we ought to is because of government's mismanagement.

Investments ( budget spent on capital) breeds investment, it generates more taxes in the long-run, reduces debt, increases output, generates employment and keeps inflation steady.


Would you rather build more roads in Oyo or Increase workers' salaries?

All i ask for is evidence and you say its a no brainer. I must be a complete dunce  so please explain it to me so I can explain it to my even more idiotic mistress or should I just mention your name and tell her that you said so so it must be true??

Those things that are no brainers are quite easy to explain , I hear
Recurrent expenditure does not necessarily mean salaries.
It could mean

DEBT SERVICING
Depreciation on Assets
Education
training
road repairs
Equipment for
police,army customs
fuel for vehicles,generators
electricity
rent

When i hear "its a no brainer " that usually tells me you really do not know what you are on about or you are going to say "The bible says"
There are many so called investment projects that have a lifetime running cost much more than the capital e.g a mobile phone.
So even so called investment carry a recurrent expenditure BURDEN.
If you buy a dog you MUST feed it too . When you buy a car you must service it . So every capital investment ADDS to the recurrent bill for the next year
The greatest asset in Nigeria right now are our people and that is where investment is required it is called
upgrading the workforce and increasing their productivity. That entails recurrent expenditure

the primary thing for any living entity biological or sovreign is to survive which means paying salaries and running cost of the army and the police  and security service FIRST. That is what ensures the survival of any modern state ,after that there are basic amenities that will ensure social/public order and peace . Those two must be met before anything else and it is only after that that  a state will be in a position to make "investment" expenditure.


   

If we pay our Police the best salaries in the world, but roads are really bad, how will they chase and catch criminals? Use Juju?  

If we don't have proper tele-coms infrastucture, how will they communicate?

If we don't have constant power supply to power street-lights and CCTV's, how will they see criminals?

Most criminals in Nigeria, are they not product of infrastructural decay? Infrastructural decay breeds few or no investment which in-turn breeds unemployment which in-turn breeds crime.

I once read a book, in that book, the author asked a group of investors why they don't really fancy investing in Nigeria. The answer they gave was simple, they said if you want to set-up your company in Nigeria, you have to bring in virtually every apparatus you would need to develop a virgin island from scratch.


Imagine a tyre firm trying to set-up a company in Nigeria, then realises it has to build it's water source, canals, supply it's power, build it's road, build it's railway, observes that our Ports aren't fit for purpose, imports its oil, e.t.c? Aribisala, imagine if we have all these in place?

you are misrepresenting me i did not say best salaries and did not imply that
do not ATTRIBUTe things I have not said .I was just saying for any state to function even at the most primitive level there must be law and order an so you must have security services and that is a RECURRENT expense. so do NOT misquote me. Before you do anything you must have LAW AND ORDER.
Next you must have peace and it is better that the peace is one in which citizens have a stake rather than peace that comes from the barrel of a gun.
Telecommunications and all the other infrastructure needs are good IF YOU CAN AFFORD THEM. Most governments cannot and need some investment partner.
Again investors like peace.
They also prefer a quality well educated/highly skilled workforce
Your imagination is as good as mine .

Imagine if bilikisu omo iya alata has an IPAD.
the reality is we are a poor country and if we are to develop we will do so by upgrading our people and their brains not building things.
We really need to [b]educate our people [/b]because if we do that you will find that the government will be more accountable and there will be less of this boko haram trouble.