Playing with Fire

PM Meles Zenawi was, in fact, at the nick of time in his observation except that there are a few skewed outlooks that could be misleading, an2d as a diehard communist, the better part of him might have been dictating to him when he started lashing out a2t the neo-liberals. Yet, his view that neo-liberalism would not work effectively in developing countries like Ethio2pia is true simply because there is only one strong and able entity in such countries, and that entity is the government. The PM wants governments to be interventionist and his pretext for that was in his opinion the Asian tigers showed that kind of success because the governments were interventionist.

But the truth of the matter is in almost all third world countries, a strong and thriving private sector is non-existent simply because of the lack of advancement and when that is the case if governments do not intervene, everything will come to a standstill. Of course, the PM did not try to deny the fact that neo-liberalism works in Western countries and governments for the most part are like he said it, laissez faire observers and night watchmen or guardsmen that are guiding everything by simply sitting at the helm that has a state of the art control system.

Raising interest rate a few points in a given intervals will have more than a ripple effect in any highly developed market. Raising, lowering taxes, or introducing new taxes or rescinding existing ones will make a big difference in any Western market and it is those who live in these countries who can feel the effect firsthand. What about subsidy that is a household name in the third world countries, simply because they want to sell their agricultural products to the Western market, and someone said such an attempt is ludicrous, because no one with the capacity to feed its own community wants to be fed by someone else, because it is like handing over control of a vital sector. Even if the price offered could be cheap it could have some long term ramification. It is not only that there are still some portion of the members of these communities who are eking their living from farming, not to mention big farms that are exporting globally that could easily be undersold.

Another household name among third world countries is tariff or protectionism for the same reasons that have to do with third world farmers’ need of unobstructed access to these foreign markets. It is not only that all such measures are taken by governments, but such examples abound, which means in countries where market liberalism is flourishing the governments are interventionist. Governments are interventionist by nature almost everywhere, but the only difference is if there is a highly developed private sector that is the backbone of the overall economy that is driven by profit motive, where market forces are running things, they put a cap on governments’ intervention. Otherwise, at one point, it could turn out to be counterproductive and will not avail any advantage, in fact it could derail advancement. That is what the dread is in the Western countries. If governments are too interventionist they could slow the economy, hence the robust growth. But if there is anything lacking because of lack of ability, it is governments that will take charge, and space exploration in the US and elsewhere is a good example, because the private sector is crawling in that sector simply because the undertaking is huge. It will be difficult to catch a government competing with a manufacturing sector even if it knows certainly it can beat its competitors, but it can help-out ailing companies in the name of national interest.

Therefore, most of the subject matters that were touched in the publication tend to miss their focus simply because the main reason why neo-liberalism is not working, even in the most advanced third world countries is because there are so many things that are lacking, and one of them is a thriving middle class that is allowed to tend to its own interest. The PM has touched on this particular subject as the final solution where creating a robust and thriving middle class will make a difference in the long haul, yet what we have in our country is close to an oligarchy when seen from any conceivable vantage point, and sadly that is the case in most third world countries. If we look at the percentage point, 70 to 85 percent of the population lives in the rural areas, and among those who live in the urban centers more than 60 percent eke a living from the informal sector and more than half of them live in the slums leaving less than 40 percent participating in whatever is available in a form of formal employment. This means agriculture alone will not change this reality.

It is not only that the backbone of any private sector, which is private ownership is missing in Ethiopia, and what this demonstrates is the PM is approaching neo-liberalism from a Marxist point of view. Putting something in writing and practicing what is being preached will have somehow to work in tandem in order to see some discernable outcome from the effort. Every known administration in our country, especially after the Era of the Princes had a crucial contribution to make to the nation. Just to look at the recent one, the Derge, for example, was able to lift the yoke of oppression and exploitation from the general rural population with a stroke of a pen, by simply nationalizing the land by decree, and that was a huge achievement, but it cost it an arm and a leg. If it were not for the cold war, the measure Derge took would have locked out the whole country in the cold. However, since there are a huge number of people involved, as we know it, what is required of the leaders is to be visionary and judicious, or on a moderate parlance they have to be a good ballplayers, and the world will love them for it, simply because their being accommodating will save a big number of lives.

If we take EPRDF’s case, it is difficult to say what their stellar achievement is to say the least, other than being subtle diplomatic players with the Western countries that was going lacking at the time of the Derge. Other than that the problems among the massses are not relenting, which means, after all these years the people are not having it near as good as they used to, to everyone’s dismay, and they are at a subsistence level in many areas. The reason might be, especially in the rural region, due to the amount of work they are allowed to perform that is too small simply because of the meager land allocation and they can hardly harvest enough to take to the market. And when this is the case, we know that the first group that will feel the pinch are the urbanites who at the same time are suffering from high unemployment simply because there is not enough work being created, and for the most part most urban centers are swollen by migrants from the rural areas.

It is also possible that whatever extra harvest is available could fetch a better price if it is exported exacerbating the situation in the nation. Here again the PM is telling us that the one and the only sure means of bringing third world countries out of the doldrums they are in is agriculture, and nothing seems to be farm from the truth, because he should know that it is not agriculture that catapulted the Asian tigers to what he called a miracle, but since they had to feed themselves and become sustainable, and had other lucrative sidelines, there were no reasons why they would not have given their agriculture sector a boost, and their major exports were not agricultural products.

There are other third world countries that have other means to draw upon to bolster their agriculture sector and one of them is natural resources, but still the number of countries that are blessed with natural resources is not that high to throw the towel in and delegate agriculture as a second or third place engine of growth, and certainly Ethiopia is not one of them. The theory that agriculture could be the engine of growth for third world countries might have some truth in countries where land is owned privately and all the farming population is not growing at a subsistence level. At the same time the situation will be much better if they have some sort of a sideline, which includes a cash crop that is a source of foreign currency to bolster the agriculture sector. It is possible that what he meant is exactly this and not clarifying it might sound like he is vouching what is taking place in the agriculture sector of third world countries, which is at a subsistence level and cannot serve as an engine of growth. There are other external as well as internal factors that will have to be taken into consideration here.

That used to be the case in Ethiopia before the land reform even if it was not highly mechanized. Bringing such issues to the attention of a hard-liner communist will definitely fall on deaf ears, because there is fear that if people are allowed to sell their lands, a big number of them will end up in city slums within a few years time like it is happening in most third world countries, where the market economy is the engine of choice to forge the economy forward.

And the PM does not seem to be very much concerned about the land tenure issue, but it is a known fact that those who are around him had said that unless there is something else that will absorb the would be displaced farmers, we will be in big trouble. It is true to an extent, but we cannot undermine the ability of the private sector, no matter how small it will be on the outset, to employ all these people, because we cannot deny that it used to employ them constructively even if there arose a misunderstanding and there had, of course, been a class and wealth differentiation. What this means is it is not possible to say liberalism does not work in third world countries, because saying so is comparable as saying that there is no need for airplanes because they cannot land and take off without a suitable airport or field at their disposal, and the same applies to vehicles whose use would be curtailed unless there are long winding roads crisscrossing the country.

As it was touched on, the achievement of EPRDF is only limited to the harmonizing of the ethnic strife by allowing some kind of regional independence. Other than that it is the Western world through TPLF that worked itself back into the Ethiopian system after an absence of more than a decade, because without the aid they are giving out they know nothing could be achieved, and that is short of saying people will suffer much more than they are suffering now with all these money pouring into their system.

Consequently, whether they will continue to stay at the helm or they would be replaced, anyone who is assuming the responsibility of running the nation will have to worry about is allowing a liberal free market economy in the country where able people, hand in hand, with their hard-working countrymen and women will have to work primarily to be benefited and they do that by accomplishing something for themselves and others. One way of attaining that is to let people decide by being optimist that people would take advantage of the better uses of owning their farm, like borrowing or renting it out while they do other things. Currently, it seems that they are almost tied to their land because it has to be ploughed year in and year out, which shows that there is something wrong, and it could be a forced existence for many.

This whole effort is to show the PM that his stated stand that neo-liberalism cannot work in third world countries is a little bit skewed. It could work as good as anywhere else if the needed infrastructure is put in place, one of them being a robust private sector that is driven by a free market economy that is accompanied by democratically elected governments that would change hands in running the country and adhere to good governance and transparency, because like the PM said it, as long as there is a well-built national consensus, the fundamental principles will remain the same even if governments change frequently through a democratic process.
Most probably, one good way of cleaning a house from individuals that are enriching themselves at the expense of others might be to change hands on them frequently and when that is the case it is only those that are doing business scrupulously who would survive. Otherwise, all the things the PM mentioned like corruption, patronage, nepotism, and favoritism will send deep roots into the community that would require another uprising to uproot them, and as usual, any such undertaking will force starting everything from square one.

Since this administration had been first in some key areas if they allow real democracy to take root in the country without retreating into some kind of revisionism, by making things unnecessarily complicated, it will be counted among their first achievements, and it seems that they are liberalized enough to do that, because the next preferred leadership is an administration that will take decisive measures in solving these problems. If the number of years that had lapsed had been put to proper use, solving some of the problems that are gripping the nation currently should have been the things of the past, but they are not.

On top of that, the PM is talking about a dominating coalition, and there might not be nothing seriously wrong with it as long as it is through a democratic process, because the outcome could be far-reaching. Otherwise, it would mean that the whole system would be hijacked by a fortunate interest group that will somehow make it to the frontline, and no matter how subtle they are going to be people will start grumbling since they see many wrongdoingaround them. Every determined businessman with acumen would prosper in any system, because there were people thriving at the time of the Derg, but if there is good governance everything achieved will have permanence and the breadth of the development would always encompass more, fulfilling the creation of a well-established middle class. Otherwise, what would happen is those who kill by the sword will die by the sword, and someone new, without having what it takes to lead the nation would have no choice other than sitting at the helm just to prevent wrongdoers from taking advantage of the situation, and when that happens it will be another de’ja vu.

What it is required currently is only a goodwill gesture and if the PM who has become the man of the hour sees the advantage of a long term stability that will easily be translated into a lasting and a sustainable prosperity, he will do something about the next succession. By no means the only solution is succession, but the addressing of the prevalent grievances that are causing unrest currently before they escalate out of control is crucial, because signals have already started to appear that some kind of disintegration is in the making.