Beyond Subsidy : The Moral Crisis Hindering Economic Progress

altThis week has been spent in a bit more anger than my tolerance management typically allows. The target of my tempered rage has been that insufferable breed, the people who borrow your books and forget to return them. They have stirred me up this week because I discussed Petrol subsidy with an old friend on a flight to Port Harcourt and had needed to refresh myself of a process of liberation from economic prescription that is sterile because of the disingenuous pattern of prescribing from a social and economic distance that insulates those offering counsel from the effects of their suggestions.
The book I could not find on my shelves is the fair size volume, Wealth, Poverty and Human Destiny. It was edited by Doug Bandow and David Schindler. I felt like reading a few of the chapters again after this Bank MD asked if I really did not think subsidy should be removed because there exists a huge subsidy being paid that could be used for better. As I looked at him with lots of love, recognizing that 20 years ago I would have said the same thing, I felt a little like Jesus must have felt as the rich young man walked away forlon, really sad, after he was counselled on how to get to heaven.
As we alighted in Port Harcourt and several people rushed forward to relieve the MD of his bag and usher him to a motorcade I wondered when this banker, who I had just reminded that I have stronger credentials in preaching deregulation, last paid for petrol. I had to remind him subsidy removal is not deregulation free of bottlenecks that will allow for near perfect competition to determine price levels. How do I explain to him that it does not make sense to sum up transaction costs and opportunity cost from prices in the international markets that is the outcome of a cartel formed when a Venezuelan President called Betancourt got so frustrated with his American friends using economics of Oil production to explain why they could not pay more for crude, in response to his pleas he needed more cash to develop the country and stave off communist insurgency. He then flew to Baghdad in 1960 and OPEC was born.
The trouble with forgetting these things is that it makes it easier for technocrats of a certain type to just look at budget lines and label waste subsidy, where they are distant from the effect of what they recommend, like my travelling companion.
As US President, Lyndon Banes Johnson could not understand how a Secretary, for Transportation, would not travel to work in public transport, I could understand why people who are outside of the scope of the policies are quick to recommend without sober reflection on the consequences. This really is at the heart of the many iatrogenic policies that have done more damage than the problems they were meant to solve in Nigeria. With due apologies to Daniel Patrick Moynihan, the late Harvard Professor and US Senator, who borrowed from medical lexicon to describe prescriptions of policy that end up doing more damage than the ailment they were aimed at, distance from the people is major culprit of bad policy.
Surely the collapse of culture manifested in mindless corruption in public life, profligacy in the use and abuse of public resources and disconnect of power from purpose, has created conditions that must be treated before the burdened poor who have shouldered the brunt of poor governance through the years are again penalized with the weight of corrective action like ‘subsidy removal'.
The search for the Bandow and Schindler book, and some reflections of Michael Novak, after the flight to Port Harcourt, was motivated by the need to find again the process of my liberation from sterile analysis. Paradoxically, that process has a relationship with the noted economist Jeffry Sachs, who was waved, in Abuja, as a flag of support for ‘subsidy removal' with United Nations authority, apparently because he advises the UN Secretary – General.
It was in Durban at the World Economic Forum and the launch of the Africa Competitiveness Report in 2000. Sachs was the principal on the production of the report and I was fortunate to contribute a chapter. At a plenary, one of the Heads of State had complained about SAP policies not delivering on the promise of investment flows, in a very humorous manner. There was the question over how much gain comes readily to the poorest in society, from the pain of reform.
It set me off on a journey that took me through many thought leaders on poverty, economic development, and how values shape human progress. The later search included ruminating through some of the great Christian thinkers of the 20th century on the subject of wealth, poverty, society and human destiny. Michael Novak and his strong sense for human dignity, man as gift to the other, and human solidarity, shaped my path of inquiry. I decided I could not write about poverty without understanding what the poor dealt with and how they engaged the possibilities.
Final liberation came for me in researching my 2006 book; Why Nations Are Poor. I had my research assistants spend some time with some truly poor, including some widows from the Widow Support Centre I founded 20 years ago to help widows from the lowest socioeconomic segments of our society. One of the widows had spent half of the microcredit loan she got from the Centre on fines by in-laws and had to distribute her children to friends. You do not have to be poor to make choices that work for the poor but you have to feel them and feel for them, not to offer sterile prescriptions that make apparently, logical macroeconomic sense, but gets sabotaged by the values that govern implementation.
As evidence from the public hearings on petrol subsidy now reveal much of what constitutes the so called subsidy is criminal round tripping, extreme inefficiency as in an annual wage bill of N12 billion for a Kaduna refinery producing nothing, and very opaque accounting that left much room for abuse.
The truth of Nigeria's recursive economy which makes it underperform some of the poorest countries in Africa on the MDGs, rank among the lowest on the planet on the HDIs like infant mortality and maternal mortality, is that it has traditionally been a coalition of detached self serving politicians and incorporated intellectuals as technocrat support offering sterile policy advise devoid of heart for the people, and, with rent seeking elements in the business community who are so consumed in a narcissism that blinds them to how unsustainable the current order is. This is in spite of the great potential in a changed order being so palpable. The extant reality is therefore a moral crisis that has frozen progress.
Nigeria as paradise deferred is this moral crisis. Reclaiming the promise of Nigeria is reconstructing value coordinates that bring to the fore politicians of sacrifice and a sense of service who work with an intellectual class with a soul for the people and thought rooted in the common good, and a business elite that is entrepreneurial and wealth creating. This kind of coalition of influence will claim the vision of Nigeria offered by British Prime Minister David Cameron at thee Lagos Business School last year – the fastest growing economy in the world for the next 40 years. Such progress will require a raising of the voice of the voiceless.
The moral crisis has implications for how we govern ourselves now as we aspire to better governing arrangements. In the short term we need to accept that the integrity of governance is of such poor standing that it is not in the interest of the common good that more revenues flow into public coffers. We need therefore to see value in thesis offered by economists like Xavier Sala-i-Martin who would rather that these revenues be distributed as dividends to citizens. This idea is not as exotic as it used to be when Arvind Subramanian and Sala-i-Martin wrote an IMF paper that was critical of the Nigerian experience. The World Bank itself seems set to present this as a model for South Sudan. In the meanwhile we should rely on PPPs to bring in private capital to develop infrastructure. In addition, if the democratic model, which is more amenable to wealth creation, is to be the way forward, then while we govern in these ways we must help make citizens by helping people find their voice. This is why sending out soldiers to molest peaceful protestors in Lagos when an insurgency of civil war dimensions was in progress elsewhere did not seem so clever.
Stephen R Covey suggests in his 8th habit that helping people find their voice may be the most important habit of the 21st. In many ways I think this is the function of an intellectual class that must redeem itself from the betrayal I pointed out in the Idea of a University lecture I gave at UNEC about a decade ago.
The application of intellect to solving social problems has, as a matter of urgency, to interrogate why the dominant political class and the technocrats they are comfortable with, miss the essence of being people centred and the moral crisis fostered by the distance between those who govern and the people they purport to represent. This all relates to values.
That values shape human progress is a truth long established. One important truth rooted in the fact that man is a gregarious being is that we are gifts, one to the other. When policy or leaders lose a sense for human solidarity, because decision makers are people of privilege, earned or stolen, and thus hold sterile or anti people policy positions, the result is grievous error. I am convinced this is at the heart of Nigeria's governance challenge and troubled development experience. To miss it on human solidarity is to miss why man lives in community. This is why whereas I identify with Samuel Beer's criticism of collectivism and the decline of collectivist Britain until Thatcher's rescue, I also think public policy thrust that is not people centred is fated to doom.
It may be an inconvenient truth that elite culture, primarily denominated in corruption and rent seeking behaviour is why a country that should at the least be a middle income economy with world class infrastructure has an atrocious misery index. This point is captured in the title of the first chapter of the very reflective book by Dr Uma Eleazu. The book is titled Failed Dreams and chapter one is titled How Nigerian leaders under Nigeria.
Professor Utomi is Founder of the Centre For Values in Leadership.


1 2
Re: Beyond Subsidy : The Moral Crisis Hindering Economic Progress
Colosus posted on 02-04-2012, 15:04:10 PM
Pat Utomi's public engeagement cannot stand on its own without having validation through copious references to Harvard, LSE, Yale, Princeton, Oxford and Cambridge intellectual juggernauts. He hardly quotes Nigerian intellectuals which is quite sad for a man who called himself a pan-Africanist. He struggles to sound that he knows too much which is the bane of every public intellectuals except.....yeah right. I won't name names. Utomi may have spoke about moral crisis but he has his own hyper-intellectual crisis. I enjoyed the article though. However I am not happy that he has done a runner from this site.
Re: Beyond Subsidy : The Moral Crisis Hindering Economic Progress
Benjani posted on 02-04-2012, 18:21:02 PM
Pat Who?
Oh, thats the dude that only shows up during presidential elections canvassing for votes. With no ground breaking, no street level activities, no serious campaign, yet, he wants your votes. People wouldn't vote for you if they don't know you or heard about you.
Many Nigerians do refrer to him as an intellectual. The fact of the matter is that you are no intellectual if you are still doing things same way Shehu Shagari did them 31 years ago.
Ka Chineke mezie okwu!
Beyond Subsidy : The Moral Crisis Hindering Economic Progress
Pat Utomi posted on 02-04-2012, 18:43:28 PM
user posted imageThis week has been spent in a bit more anger than my tolerance management typically allows. The target of my tempered rage has been that insufferable breed, the people who borrow your books and forget to return them. They have stirred me up this week because I discussed Petrol subsidy with an old friend on a flight to Port Harcourt and had needed to refresh myself of a process of liberation from economic prescription that is sterile because of the disingenuous pattern of prescribing from a social and economic distance that insulates those offering counsel from the effects of their suggestions. The book I could not find on my shelves is the fair size volume, Wealth, Poverty and Human Destiny. It was edited by Doug Bandow and David Schindler. I felt like reading a few of the chapters again after this Bank MD asked if I really did not think subsidy should be removed because there exists a huge subsidy being paid that could be used for better. As I looked at him with lots of love, recognizing that 20 years ago I would have said the same thing, I felt a little like Jesus must have felt as the rich young man walked away forlon, really sad, after he was counselled on how to get to heaven.

As we alighted in Port Harcourt and several people rushed forward to relieve the MD of his bag and usher him to a motorcade I wondered when this banker, who I had just reminded that I have stronger credentials in preaching deregulation, last paid for petrol. I had to remind him subsidy removal is not deregulation free of bottlenecks that will allow for near perfect competition to determine price levels. How do I explain to him that it does not make sense to sum up transaction costs and opportunity cost from prices in the international markets that is the outcome of a cartel formed when a Venezuelan President called Betancourt got so frustrated with his American friends using economics of Oil production to explain why they could not pay more for crude, in response to his pleas he needed more cash to develop the country and stave off communist insurgency. He then flew to Baghdad in 1960 and OPEC was born.

The trouble with forgetting these things is that it makes it easier for technocrats of a certain type to just look at budget lines and label waste subsidy, where they are distant from the effect of what they recommend, like my travelling companion.

As US President, Lyndon Banes Johnson could not understand how a Secretary, for Transportation, would not travel to work in public transport, I could understand why people who are outside of the scope of the policies are quick to recommend without sober reflection on the consequences. This really is at the heart of the many iatrogenic policies that have done more damage than the problems they were meant to solve in Nigeria. With due apologies to Daniel Patrick Moynihan, the late Harvard Professor and US Senator, who borrowed from medical lexicon to describe prescriptions of policy that end up doing more damage than the ailment they were aimed at, distance from the people is major culprit of bad policy.

Surely the collapse of culture manifested in mindless corruption in public life, profligacy in the use and abuse of public resources and disconnect of power from purpose, has created conditions that must be treated before the burdened poor who have shouldered the brunt of poor governance through the years are again penalized with the weight of corrective action like 'subsidy removal'.

The search for the Bandow and Schindler book, and some reflections of Michael Novak, after the flight to Port Harcourt, was motivated by the need to find again the process of my liberation from sterile analysis. Paradoxically, that process has a relationship with the noted economist Jeffry Sachs, who was waved, in Abuja, as a flag of support for 'subsidy removal' with United Nations authority, apparently because he advises the UN Secretary - General.

It was in Durban at the World Economic Forum and the launch of the Africa Competitiveness Report in 2000. Sachs was the principal on the production of the report and I was fortunate to contribute a chapter. At a plenary, one of the Heads of State had complained about SAP policies not delivering on the promise of investment flows, in a very humorous manner. There was the question over how much gain comes readily to the poorest in society, from the pain of reform.

It set me off on a journey that took me through many thought leaders on poverty, economic development, and how values shape human progress. The later search included ruminating through some of the great Christian thinkers of the 20th century on the subject of wealth, poverty, society and human destiny. Michael Novak and his strong sense for human dignity, man as gift to the other, and human solidarity, shaped my path of inquiry. I decided I could not write about poverty without understanding what the poor dealt with and how they engaged the possibilities.

Final liberation came for me in researching my 2006 book; Why Nations Are Poor. I had my research assistants spend some time with some truly poor, including some widows from the Widow Support Centre I founded 20 years ago to help widows from the lowest socioeconomic segments of our society. One of the widows had spent half of the microcredit loan she got from the Centre on fines by in-laws and had to distribute her children to friends. You do not have to be poor to make choices that work for the poor but you have to feel them and feel for them, not to offer sterile prescriptions that make apparently, logical macroeconomic sense, but gets sabotaged by the values that govern implementation.

As evidence from the public hearings on petrol subsidy now reveal much of what constitutes the so called subsidy is criminal round tripping, extreme inefficiency as in an annual wage bill of N12 billion for a Kaduna refinery producing nothing, and very opaque accounting that left much room for abuse.

The truth of Nigeria's recursive economy which makes it underperform some of the poorest countries in Africa on the MDGs, rank among the lowest on the planet on the HDIs like infant mortality and maternal mortality, is that it has traditionally been a coalition of detached self serving politicians and incorporated intellectuals as technocrat support offering sterile policy advise devoid of heart for the people, and, with rent seeking elements in the business community who are so consumed in a narcissism that blinds them to how unsustainable the current order is. This is in spite of the great potential in a changed order being so palpable. The extant reality is therefore a moral crisis that has frozen progress.

Nigeria as paradise deferred is this moral crisis. Reclaiming the promise of Nigeria is reconstructing value coordinates that bring to the fore politicians of sacrifice and a sense of service who work with an intellectual class with a soul for the people and thought rooted in the common good, and a business elite that is entrepreneurial and wealth creating. This kind of coalition of influence will claim the vision of Nigeria offered by British Prime Minister David Cameron at thee Lagos Business School last year - the fastest growing economy in the world for the next 40 years. Such progress will require a raising of the voice of the voiceless.

The moral crisis has implications for how we govern ourselves now as we aspire to better governing arrangements. In the short term we need to accept that the integrity of governance is of such poor standing that it is not in the interest of the common good that more revenues flow into public coffers. We need therefore to see value in thesis offered by economists like Xavier Sala-i-Martin who would rather that these revenues be distributed as dividends to citizens. This idea is not as exotic as it used to be when Arvind Subramanian and Sala-i-Martin wrote an IMF paper that was critical of the Nigerian experience. The World Bank itself seems set to present this as a model for South Sudan. In the meanwhile we should rely on PPPs to bring in private capital to develop infrastructure. In addition, if the democratic model, which is more amenable to wealth creation, is to be the way forward, then while we govern in these ways we must help make citizens by helping people find their voice. This is why sending out soldiers to molest peaceful protestors in Lagos when an insurgency of civil war dimensions was in progress elsewhere did not seem so clever.

Stephen R Covey suggests in his 8th habit that helping people find their voice may be the most important habit of the 21st. In many ways I think this is the function of an intellectual class that must redeem itself from the betrayal I pointed out in the Idea of a University lecture I gave at UNECÂ about a decade ago.

The application of intellect to solving social problems has, as a matter of urgency, to interrogate why the dominant political class and the technocrats they are comfortable with, miss the essence of being people centred and the moral crisis fostered by the distance between those who govern and the people they purport to represent. This all relates to values.

That values shape human progress is a truth long established. One important truth rooted in the fact that man is a gregarious being is that we are gifts, one to the other. When policy or leaders lose a sense for human solidarity, because decision makers are people of privilege, earned or stolen, and thus hold sterile or anti people policy positions, the result is grievous error. I am convinced this is at the heart of Nigeria's governance challenge and troubled development experience. To miss it on human solidarity is to miss why man lives in community. This is why whereas I identify with Samuel Beer's criticism of collectivism and the decline of collectivist Britain until Thatcher's rescue, I also think public policy thrust that is not people centred is fated to doom.

It may be an inconvenient truth that elite culture, primarily denominated in corruption and rent seeking behaviour is why a country that should at the least be a middle income economy with world class infrastructure has an atrocious misery index. This point is captured in the title of the first chapter of the very reflective book by Dr Uma Eleazu. The book is titled Failed Dreams and chapter one is titled How Nigerian leaders under Nigeria.


Professor Utomi is Founder of the Centre For Values in Leadership.

Read full article
Re: Beyond Subsidy : The Moral Crisis Hindering Economic Progress
Mutti posted on 02-04-2012, 18:43:28 PM

altThis week has been spent in a bit more anger than my tolerance management typically allows. The target of my tempered rage has been that insufferable breed, the people who borrow your books and forget to return them. They have stirred me up this week because I discussed Petrol subsidy with an old friend on a flight to Port Harcourt and had needed to refresh myself of a process of liberation from economic prescription that is sterile because of the disingenuous pattern of prescribing from a social and economic distance that insulates those offering counsel from the effects of their suggestions.


The book I could not find on my shelves is the fair size volume, Wealth, Poverty and Human Destiny. It was edited by Doug Bandow and David Schindler. I felt like reading a few of the chapters again after this Bank MD asked if I really did not think subsidy should be removed because there exists a huge subsidy being paid that could be used for better. As I looked at him with lots of love, recognizing that 20 years ago I would have said the same thing, I felt a little like Jesus must have felt as the rich young man walked away forlon, really sad, after he was counselled on how to get to heaven.



As we alighted in Port Harcourt and several people rushed forward to relieve the MD of his bag and usher him to a motorcade I wondered when this banker, who I had just reminded that I have stronger credentials in preaching deregulation, last paid for petrol. I had to remind him subsidy removal is not deregulation free of bottlenecks that will allow for near perfect competition to determine price levels. How do I explain to him that it does not make sense to sum up transaction costs and opportunity cost from prices in the international markets that is the outcome of a cartel formed when a Venezuelan President called Betancourt got so frustrated with his American friends using economics of Oil production to explain why they could not pay more for crude, in response to his pleas he needed more cash to develop the country and stave off communist insurgency. He then flew to Baghdad in 1960 and OPEC was born.



The trouble with forgetting these things is that it makes it easier for technocrats of a certain type to just look at budget lines and label waste subsidy, where they are distant from the effect of what they recommend, like my travelling companion.



As US President, Lyndon Banes Johnson could not understand how a Secretary, for Transportation, would not travel to work in public transport, I could understand why people who are outside of the scope of the policies are quick to recommend without sober reflection on the consequences. This really is at the heart of the many iatrogenic policies that have done more damage than the problems they were meant to solve in Nigeria. With due apologies to Daniel Patrick Moynihan, the late Harvard Professor and US Senator, who borrowed from medical lexicon to describe prescriptions of policy that end up doing more damage than the ailment they were aimed at, distance from the people is major culprit of bad policy.



Surely the collapse of culture manifested in mindless corruption in public life, profligacy in the use and abuse of public resources and disconnect of power from purpose, has created conditions that must be treated before the burdened poor who have shouldered the brunt of poor governance through the years are again penalized with the weight of corrective action like ‘subsidy removal'.



The search for the Bandow and Schindler book, and some reflections of Michael Novak, after the flight to Port Harcourt, was motivated by the need to find again the process of my liberation from sterile analysis. Paradoxically, that process has a relationship with the noted economist Jeffry Sachs, who was waved, in Abuja, as a flag of support for ‘subsidy removal' with United Nations authority, apparently because he advises the UN Secretary – General.



It was in Durban at the World Economic Forum and the launch of the Africa Competitiveness Report in 2000. Sachs was the principal on the production of the report and I was fortunate to contribute a chapter. At a plenary, one of the Heads of State had complained about SAP policies not delivering on the promise of investment flows, in a very humorous manner. There was the question over how much gain comes readily to the poorest in society, from the pain of reform.



It set me off on a journey that took me through many thought leaders on poverty, economic development, and how values shape human progress. The later search included ruminating through some of the great Christian thinkers of the 20th century on the subject of wealth, poverty, society and human destiny. Michael Novak and his strong sense for human dignity, man as gift to the other, and human solidarity, shaped my path of inquiry. I decided I could not write about poverty without understanding what the poor dealt with and how they engaged the possibilities.



Final liberation came for me in researching my 2006 book; Why Nations Are Poor. I had my research assistants spend some time with some truly poor, including some widows from the Widow Support Centre I founded 20 years ago to help widows from the lowest socioeconomic segments of our society. One of the widows had spent half of the microcredit loan she got from the Centre on fines by in-laws and had to distribute her children to friends. You do not have to be poor to make choices that work for the poor but you have to feel them and feel for them, not to offer sterile prescriptions that make apparently, logical macroeconomic sense, but gets sabotaged by the values that govern implementation.



As evidence from the public hearings on petrol subsidy now reveal much of what constitutes the so called subsidy is criminal round tripping, extreme inefficiency as in an annual wage bill of N12 billion for a Kaduna refinery producing nothing, and very opaque accounting that left much room for abuse.



The truth of Nigeria's recursive economy which makes it underperform some of the poorest countries in Africa on the MDGs, rank among the lowest on the planet on the HDIs like infant mortality and maternal mortality, is that it has traditionally been a coalition of detached self serving politicians and incorporated intellectuals as technocrat support offering sterile policy advise devoid of heart for the people, and, with rent seeking elements in the business community who are so consumed in a narcissism that blinds them to how unsustainable the current order is. This is in spite of the great potential in a changed order being so palpable. The extant reality is therefore a moral crisis that has frozen progress.



Nigeria as paradise deferred is this moral crisis. Reclaiming the promise of Nigeria is reconstructing value coordinates that bring to the fore politicians of sacrifice and a sense of service who work with an intellectual class with a soul for the people and thought rooted in the common good, and a business elite that is entrepreneurial and wealth creating. This kind of coalition of influence will claim the vision of Nigeria offered by British Prime Minister David Cameron at thee Lagos Business School last year – the fastest growing economy in the world for the next 40 years. Such progress will require a raising of the voice of the voiceless.



The moral crisis has implications for how we govern ourselves now as we aspire to better governing arrangements. In the short term we need to accept that the integrity of governance is of such poor standing that it is not in the interest of the common good that more revenues flow into public coffers. We need therefore to see value in thesis offered by economists like Xavier Sala-i-Martin who would rather that these revenues be distributed as dividends to citizens. This idea is not as exotic as it used to be when Arvind Subramanian and Sala-i-Martin wrote an IMF paper that was critical of the Nigerian experience. The World Bank itself seems set to present this as a model for South Sudan. In the meanwhile we should rely on PPPs to bring in private capital to develop infrastructure. In addition, if the democratic model, which is more amenable to wealth creation, is to be the way forward, then while we govern in these ways we must help make citizens by helping people find their voice. This is why sending out soldiers to molest peaceful protestors in Lagos when an insurgency of civil war dimensions was in progress elsewhere did not seem so clever.



Stephen R Covey suggests in his 8th habit that helping people find their voice may be the most important habit of the 21st. In many ways I think this is the function of an intellectual class that must redeem itself from the betrayal I pointed out in the Idea of a University lecture I gave at UNEC about a decade ago.



The application of intellect to solving social problems has, as a matter of urgency, to interrogate why the dominant political class and the technocrats they are comfortable with, miss the essence of being people centred and the moral crisis fostered by the distance between those who govern and the people they purport to represent. This all relates to values.



That values shape human progress is a truth long established. One important truth rooted in the fact that man is a gregarious being is that we are gifts, one to the other. When policy or leaders lose a sense for human solidarity, because decision makers are people of privilege, earned or stolen, and thus hold sterile or anti people policy positions, the result is grievous error. I am convinced this is at the heart of Nigeria's governance challenge and troubled development experience. To miss it on human solidarity is to miss why man lives in community. This is why whereas I identify with Samuel Beer's criticism of collectivism and the decline of collectivist Britain until Thatcher's rescue, I also think public policy thrust that is not people centred is fated to doom.



It may be an inconvenient truth that elite culture, primarily denominated in corruption and rent seeking behaviour is why a country that should at the least be a middle income economy with world class infrastructure has an atrocious misery index. This point is captured in the title of the first chapter of the very reflective book by Dr Uma Eleazu. The book is titled Failed Dreams and chapter one is titled How Nigerian leaders under Nigeria.




Professor Utomi is Founder of the Centre For Values in Leadership.



..Read the full article
Re: Beyond Subsidy : The Moral Crisis Hindering Economic Progress
Emj posted on 02-04-2012, 18:43:28 PM

altThis week has been spent in a bit more anger than my tolerance management typically allows. The target of my tempered rage has been that insufferable breed, the people who borrow your books and forget to return them. They have stirred me up this week because I discussed Petrol subsidy with an old friend on a flight to Port Harcourt and had needed to refresh myself of a process of liberation from economic prescription that is sterile because of the disingenuous pattern of prescribing from a social and economic distance that insulates those offering counsel from the effects of their suggestions.


The book I could not find on my shelves is the fair size volume, Wealth, Poverty and Human Destiny. It was edited by Doug Bandow and David Schindler. I felt like reading a few of the chapters again after this Bank MD asked if I really did not think subsidy should be removed because there exists a huge subsidy being paid that could be used for better. As I looked at him with lots of love, recognizing that 20 years ago I would have said the same thing, I felt a little like Jesus must have felt as the rich young man walked away forlon, really sad, after he was counselled on how to get to heaven.



As we alighted in Port Harcourt and several people rushed forward to relieve the MD of his bag and usher him to a motorcade I wondered when this banker, who I had just reminded that I have stronger credentials in preaching deregulation, last paid for petrol. I had to remind him subsidy removal is not deregulation free of bottlenecks that will allow for near perfect competition to determine price levels. How do I explain to him that it does not make sense to sum up transaction costs and opportunity cost from prices in the international markets that is the outcome of a cartel formed when a Venezuelan President called Betancourt got so frustrated with his American friends using economics of Oil production to explain why they could not pay more for crude, in response to his pleas he needed more cash to develop the country and stave off communist insurgency. He then flew to Baghdad in 1960 and OPEC was born.



The trouble with forgetting these things is that it makes it easier for technocrats of a certain type to just look at budget lines and label waste subsidy, where they are distant from the effect of what they recommend, like my travelling companion.



As US President, Lyndon Banes Johnson could not understand how a Secretary, for Transportation, would not travel to work in public transport, I could understand why people who are outside of the scope of the policies are quick to recommend without sober reflection on the consequences. This really is at the heart of the many iatrogenic policies that have done more damage than the problems they were meant to solve in Nigeria. With due apologies to Daniel Patrick Moynihan, the late Harvard Professor and US Senator, who borrowed from medical lexicon to describe prescriptions of policy that end up doing more damage than the ailment they were aimed at, distance from the people is major culprit of bad policy.



Surely the collapse of culture manifested in mindless corruption in public life, profligacy in the use and abuse of public resources and disconnect of power from purpose, has created conditions that must be treated before the burdened poor who have shouldered the brunt of poor governance through the years are again penalized with the weight of corrective action like ‘subsidy removal'.



The search for the Bandow and Schindler book, and some reflections of Michael Novak, after the flight to Port Harcourt, was motivated by the need to find again the process of my liberation from sterile analysis. Paradoxically, that process has a relationship with the noted economist Jeffry Sachs, who was waved, in Abuja, as a flag of support for ‘subsidy removal' with United Nations authority, apparently because he advises the UN Secretary – General.



It was in Durban at the World Economic Forum and the launch of the Africa Competitiveness Report in 2000. Sachs was the principal on the production of the report and I was fortunate to contribute a chapter. At a plenary, one of the Heads of State had complained about SAP policies not delivering on the promise of investment flows, in a very humorous manner. There was the question over how much gain comes readily to the poorest in society, from the pain of reform.



It set me off on a journey that took me through many thought leaders on poverty, economic development, and how values shape human progress. The later search included ruminating through some of the great Christian thinkers of the 20th century on the subject of wealth, poverty, society and human destiny. Michael Novak and his strong sense for human dignity, man as gift to the other, and human solidarity, shaped my path of inquiry. I decided I could not write about poverty without understanding what the poor dealt with and how they engaged the possibilities.



Final liberation came for me in researching my 2006 book; Why Nations Are Poor. I had my research assistants spend some time with some truly poor, including some widows from the Widow Support Centre I founded 20 years ago to help widows from the lowest socioeconomic segments of our society. One of the widows had spent half of the microcredit loan she got from the Centre on fines by in-laws and had to distribute her children to friends. You do not have to be poor to make choices that work for the poor but you have to feel them and feel for them, not to offer sterile prescriptions that make apparently, logical macroeconomic sense, but gets sabotaged by the values that govern implementation.



As evidence from the public hearings on petrol subsidy now reveal much of what constitutes the so called subsidy is criminal round tripping, extreme inefficiency as in an annual wage bill of N12 billion for a Kaduna refinery producing nothing, and very opaque accounting that left much room for abuse.



The truth of Nigeria's recursive economy which makes it underperform some of the poorest countries in Africa on the MDGs, rank among the lowest on the planet on the HDIs like infant mortality and maternal mortality, is that it has traditionally been a coalition of detached self serving politicians and incorporated intellectuals as technocrat support offering sterile policy advise devoid of heart for the people, and, with rent seeking elements in the business community who are so consumed in a narcissism that blinds them to how unsustainable the current order is. This is in spite of the great potential in a changed order being so palpable. The extant reality is therefore a moral crisis that has frozen progress.



Nigeria as paradise deferred is this moral crisis. Reclaiming the promise of Nigeria is reconstructing value coordinates that bring to the fore politicians of sacrifice and a sense of service who work with an intellectual class with a soul for the people and thought rooted in the common good, and a business elite that is entrepreneurial and wealth creating. This kind of coalition of influence will claim the vision of Nigeria offered by British Prime Minister David Cameron at thee Lagos Business School last year – the fastest growing economy in the world for the next 40 years. Such progress will require a raising of the voice of the voiceless.



The moral crisis has implications for how we govern ourselves now as we aspire to better governing arrangements. In the short term we need to accept that the integrity of governance is of such poor standing that it is not in the interest of the common good that more revenues flow into public coffers. We need therefore to see value in thesis offered by economists like Xavier Sala-i-Martin who would rather that these revenues be distributed as dividends to citizens. This idea is not as exotic as it used to be when Arvind Subramanian and Sala-i-Martin wrote an IMF paper that was critical of the Nigerian experience. The World Bank itself seems set to present this as a model for South Sudan. In the meanwhile we should rely on PPPs to bring in private capital to develop infrastructure. In addition, if the democratic model, which is more amenable to wealth creation, is to be the way forward, then while we govern in these ways we must help make citizens by helping people find their voice. This is why sending out soldiers to molest peaceful protestors in Lagos when an insurgency of civil war dimensions was in progress elsewhere did not seem so clever.



Stephen R Covey suggests in his 8th habit that helping people find their voice may be the most important habit of the 21st. In many ways I think this is the function of an intellectual class that must redeem itself from the betrayal I pointed out in the Idea of a University lecture I gave at UNEC about a decade ago.



The application of intellect to solving social problems has, as a matter of urgency, to interrogate why the dominant political class and the technocrats they are comfortable with, miss the essence of being people centred and the moral crisis fostered by the distance between those who govern and the people they purport to represent. This all relates to values.



That values shape human progress is a truth long established. One important truth rooted in the fact that man is a gregarious being is that we are gifts, one to the other. When policy or leaders lose a sense for human solidarity, because decision makers are people of privilege, earned or stolen, and thus hold sterile or anti people policy positions, the result is grievous error. I am convinced this is at the heart of Nigeria's governance challenge and troubled development experience. To miss it on human solidarity is to miss why man lives in community. This is why whereas I identify with Samuel Beer's criticism of collectivism and the decline of collectivist Britain until Thatcher's rescue, I also think public policy thrust that is not people centred is fated to doom.



It may be an inconvenient truth that elite culture, primarily denominated in corruption and rent seeking behaviour is why a country that should at the least be a middle income economy with world class infrastructure has an atrocious misery index. This point is captured in the title of the first chapter of the very reflective book by Dr Uma Eleazu. The book is titled Failed Dreams and chapter one is titled How Nigerian leaders under Nigeria.




Professor Utomi is Founder of the Centre For Values in Leadership.



..Read the full article
Re: Beyond Subsidy : The Moral Crisis Hindering Economic Progress
Patcho posted on 02-04-2012, 21:20:37 PM
Pat Utomi came down this time from his Middle East skyscrapper-like Utopian base to make us feel that he can and does perceive the breath of the poor.

Well, what is resoundly true in your current treatize is that "man....are gifts...one to the other." How this 'gift' of nature is experimented and or demonstrated in daily living is another matter because it appears that some "man" are not qualified as "man". In other words, when the people upstairs discuss "man," it is related...for instance, in what sense???
Re: Beyond Subsidy : The Moral Crisis Hindering Economic Progress
Ceekay posted on 02-05-2012, 05:28:22 AM
We are all in a learning curve and those that do not change with reality are those in either in the asylum or in the cemetery, because they can't. I admire your courage and please forgive these people. They are reacting to the betrayal of those that migrated to elitism on our backs; we are all frustrated.

Our problem is socio-economic and not political or sectionalism. Only a group of well-meaning people can lead us out of this mess. The British did it through the Fabian Society that concentrated on public education of the rights of individuals.

From what you wrote, the fundamentals for the way forward are still lacking. I am a lay man, but I know that for the Nigerian economy to move forward, three key things have to be addressed.
1. There must be Tax Reform, so that government will only be funded through tax.
2. The method used to determine the value of the naira has to be other than the auctioning of the petroldollar, becuase those willing to buy the dollar are under-taxed. For this reason, it is a disincentive to foreign investors, who fear that WDAS would dilute their investment down the years. Only quick-get-in and out investments are ready to come.
3. There must be reform of the Insurance Industry, so that a pool for cheaper borrowing could be created. Since the need to insure is legislative, governemnt could use that leverage to control the cost of borrowing.

We need people like you to champion this cause and it must be apolitical.
Re: Beyond Subsidy : The Moral Crisis Hindering Economic Progress
Obi posted on 02-05-2012, 10:57:00 AM
If the misery of the poor be caused not by the laws of nature, but by our institutions, great is our sin.
~Charles Darwin
Re: Beyond Subsidy : The Moral Crisis Hindering Economic Progress
Anonimi posted on 02-05-2012, 12:08:21 PM
When Pat Utomi leads an apolitical civic education project for the masses starting with university students downwards then I will take him serious. Something like the Fabian Society referred to above by Ceekay did in Britain in the late 1800s.

For now Pat Utomi is just another opportunist preying on the gullibility of the Nigerian masses rather than seriously helping their enlightenment. His waiting to be crowned the presidential candidate of some mega party last year said so much about his modus operandi.


QUOTE:
2012 - Year of VIGILANCE for Victory (V4V)
Re: Beyond Subsidy : The Moral Crisis Hindering Economic Progress
Kemet posted on 02-05-2012, 22:38:43 PM
This article is a great disappointment. If you remove the pseudo-literature review, the original contribution from Mr Utomi to this very serious issue is nil.

Perhaps, it is time for the Prof to consider retirement.
1 2
Please register before you can make new comment