The Italian sociologist, Vilfredo Pareto, in 1909, published his "Manuel D' Economie Politique". In it, he attempted to separate equity from efficiency in an economy. Economics is the branch of the social sciences that tries to answer the questions of what, how, and for whom to produce in a society. It is a task that always begs for allocation of often scarce resources; the role of the State in all this equation is purely to allocate resources efficiently and not to squander it. Pareto argued that an efficient allocation of resources, for a given set of consumer tastes, resources, and technology, will only be when it is impossible to move to another allocation that would make some people better off and nobody worse off. Making some people well off and nobody worse off demands a strategy; in most part, the government of the day can only make a balancing act based on value judgment. This is what many people in Nigeria seem not to understand and are demanding "change" in a hurry. The present economic summit is an opportunity to devise a befitting strategy - a normative side of our economy. I, for one, welcome it.

Exactly 30 years ago, the debate on the restructuring of the Nigerian economy took a centre stage. It was the last time the country had what could be described as a public deliberation on welfare economics. It is no wonder, that the last holdout against the advice by IMF 30 years ago - now President Buhari, would want to take us back to where many now believe we took the wrong turn on our economic journey. Welfare economics is a part of the social sciences that deals with normative issues. Its purpose, unlike macroeconomics or microeconomics, is not to explain how an economy works, but to assess how well it works. Welfare economists use Pareto-efficiency as a tool for resource allocation. Juggling between equity and efficiency, however, in resource allocation has became an art by smart politicians and their economic advisers. Economists use two concepts of equity or fairness - vertical or horizontal. In vertical equity, identical treatment is given to identical people; however, in horizontal equity (the Robin Hood principle of take from the rich people to give to the poor) different treatments are given to different people in order to reduce the consequences of these innate differences in a social class.

The Industrial Revolution gave rise to capitalism, where wages were paid for the first time in human history. At that same time, humankind evolved from feudalism into a modern statehood and a democracy. The issue of equity then came to the fore. The feudal lord had paid no wages but provided shelter, clothing and food to the "slaves" or workers, if one could classify them thus. The capitalist, on the other hand, gave more freedom to the worker by paying wages and allowing the workers to allocate their resources as they wished, which by doing so generated and propelled the economy further. The function of the State is to tax both the capitalists and the workers to raise the administrative funds needed to provide security, enabling economic environment, and reduce the natural friction generated between the haves and the haves-not in the society. This last one is generally the Robin Hood principle of robbing the rich to subsidize the living standards of the poor in the community to reduce societal friction. The rich, let us not forget, has economic advantage either through opportunities or licenses like the likes of Dangote and has the responsibility to the larger society through higher taxed regime for the purpose of equity.

The road Nigeria embarked on, 30 years ago, has led to "wandering in the economic desert" without a global positioning systems (GPS). We mistook high oil receipts for economic wonder. Now the chicken has come home to roost. The State abandoned the Tax Route to populate the public treasury for as long as the oil receipts were robust. That damaged, more than anything else, our collective psyche; we did not have to work as the oil companies dole out our share of oil sales. Couple with the facts that we had just come out of the colonial mindset that sees paying tax not for our own public good, but to the sovereign - our colonial masters. We did not have enough time to domesticate the idea of tax payment and benefits. Even long after the colonial masters left, we still generally see payment of tax as "us and them". It never occurred to us that after independence, whatever tax paid is for the community and no percentage goes, legally, to Whitehall in London, UK, anymore. This is one of the fundamentals of the flaw in our economy. Tax payment ought to have been more of symbolism of contract between the citizens and the State, than even the amount collected itself. Every Nigerian over the age of 18 years old should be made to pay personal tax, no matter how small the amount; working or not; in the diaspora or within the borders of Nigeria as a form of commitment to the State. There is no surer contract with the Nigerian State and its citizens than this. Only then can a citizen put his "mouth where is money is".

Three fundamentals have tied down the Nigerian economy for too long; they have to be unleashed for the economy to prosper, particularly in a large population like ours. These are Tax, Insurance and the Exchange Rate (TIE). The economic council should consider Tax Reform with urgency, the Reform of the Insurance Industry and a stable Exchange Rate. Power, roads, rail, education, health, security, housing, portable water and food security are all dependent on these 3 fundamentals. I will start with tax, which in my opinion is the crux of the matter. Our carefree attitude to the responsibility as a citizen hinges on payment and nonpayment of tax. The late "Iron Lady", Baroness Margret Tatcher said in the 80s that, "when people pay nothing, they care nothing". We all experience this in our clubs and associations. It is the excess liquidity, that the State ought to have mopped up as tax, that fuels corruption.

The major route the Naira should travel to fund the public treasury ought to be the tax route. Civil servants overheads, salaries and emoluments should be contained within the tax receipts and not on oil receipts. This will limit the size of government and could be achieved by legislation within a four-year grace. The police and the judiciary also should draw their overheads, salaries and emoluments from within the tax receipts for proper policing of tax dodgers. This process could release the oil and solid minerals receipts for capital projects. States and federal allocations from the federation accounts would then go directly to fund projects identified by each states governing body and that of the central government instead of cash. It is the only way the citizens would feel the impact of Nigeria's natural endowment. Multiple taxation should be avoided, but each component of the tax paid should be highlighted to the taxpayers. For instance if I paid N1000.00 as tax and the components are for education, security, road maintenance, rail, health, etc. it should be indicated on my tax receipts, i.e. I should know how many kobo went to each and believe that in a Treasury Single Account regime those components are credited immediately my tax paid hits the treasury.

The cost of borrowing money in an economy is known as the Interest Rate and cannot be practically decreed. However, government could have it under control. In most economies, the Insurance Industry plays a vital role in government's control of the interest rates. A reformed insurance industry is usually backed by legislation that compels some economic activities to be guaranteed by the insurance industry through a premium of not more than 2%, thus safeguarding the interests of the third party in such transactions. In doing so, the little drops of premiums sooner become the major deposits in the local banks. This will be a contrast to the individuals and even the pension funds dominating the deposits in the Nigerian banks as of today. As confidence grows in the Insurance Industry, so also will be its volume of wealth that can be tapped for borrowing. With the influence of government for the high level of business in the sector and the commanding deposits of the industry in our banks, the government financial instrument could then dictate interest rates and only then it could be effectively controlled. A robust insurance industry also allows higher risk-taking for economic growth.

The Exchange Rate is the third key solution to our stagnated economy and a gateway to foreign involvement in a local economy. It is said that a foreign investor is influenced by 2 key elements - Returns on Investment and the Security of Invested funds. In the past 30 years, the direction of factory-floor investments have gone towards fixed exchange rate economies. This is not far fetched; factory floor investments take longer time to yield, but they are the only ones that create massive employments also. In contrast, mercantile investment is quick, but create very little jobs. So the stock exchange, banking and trading, though they generate high commissions, but usually with small workforce. A floating currency does not provide security of funds for an investor in a developing economy. If an investor, for instance, brought say $1 billion of investment into the Nigerian economy when the exchange rate was N155.00, it would have filed for bankruptcy by the time the exchange rate rose to N197.00 before it even opened its factory doors. The unstable exchange rate also upset the cost of labour as workers demand more pay to maintain a decent life. Demand for salary increase has been most frequent in unstable currency economies during the past 30 years than at any other time. A liberal currency is often manipulated by speculators thereby wiping off the advantage of cheaper labour in the production chain.

There is no area in our psyche that we have got it wrong more than the power sector. There is a general misunderstanding about our hunger for electricity. Since the restructuring of the Nigerian economy (SAP) that weakened the buying power of the majority of our people, our desire for electricity had heightened, but this has not translated to profitable market for electricity companies or potential investors in electricity. It is like saying that there is a market for genuine Gucci goods in the slums even though there are desires for such goods in the same slums. Electricity is a volatile commodity that is presently not affordable to a lot of Nigerians. Since once produced and it cannot be stored, electricity must be utilized immediately, otherwise it is lost forever. Who pays for that loss? There is, however, a section of the economy, which with a high percentage of installed capacity utilization, that can afford electricity. That is the manufacturing sector of the economy, and in addition they also create wealth. Presently, the industrial need of electricity is still a low market for an investor - local or foreign - because of low installed capacity utilization. This means we have to first of all grow the market for our industrial products that will guarantee the use of power that will attract an investor.

To grow the markets for what we produce in our farms and on our factory floors, we need to subsidize power to these industries in order for them to compete globally. By this, we will be subsidizing production instead of consumption. We are so lucky we have vast reserves of oil, gas and coal that we can use as incentives to investors to fire our industries. We also have a teeming educated population that can easily be converted into skilled labour. My advice is for the heavy electricity users to be disconnected from the national electricity grid tomorrow as the beginning of the solution to our problems. This may not go down well with many people. We are only fooling ourselves by continuing to connect the Industrial Sector to the electricity grid that is an irritation to all sectors of the economy. The Nigerian banks could be encouraged to finance the cost of self power generations of manufacturing initially, whilst the public treasury would then reimburse through subsidy paid yearly based on credits earned by the number of jobs created or sustained; volume of goods produced; foreign exchange earned, and contribution to the national grid if they sold their excess to the power grid. As we increase our grid capacity, we reconnect them on by one and subsidies stop.

We are in an economic quagmire and thinking outside the box is what I believe would take us out. The economic journey we embarked upon 30 years ago on a train to nowhere, ought to be turned around back to the last junction that saw investors in our factories disembark. It was not surprising, in retrospect, that the floating of our currency coincided with when most of our foreign investors left our economic train; it also coincided with the emigration of the backbone of our economy - the super trained technocrats into the diaspora. It is foolhardy to continue to "panel-beat" an unworkable system that is not factory floor friendly, but instead promotes a blossoming mercantile option that at best creates little wealth and little jobs, but mainly commissions that is not adequate to feed a large population like ours. Okonjo Iwela, the last Minister of Finance was right when she said that a blossoming economy in a high GDP regime does not necessarily translate to job creation. It is the classroom stuff. What she did not elucidate was that this could be true for a mercantile focused economy, where commissions are generated. In a factory floor focused economy, increase in GDP translates to jobs creation all the time. We have, for the last 30 years a wrong economic model for a country with large mouths to feed. Some of the suggestions above may sound crazy, they might just work in an economy that had defied the classroom stuff.

I wish the economic council good deliberations.

Samuel Akinyele Caulcrick