Disaster capitalism: Nigeria’s upcoming firesale and other toxic advice (1)

“Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable.” […]

“Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable.” – Milton Friedman
It was Naomi Klein, in her 2007 book Shock Doctrine, who amplified the subtle and sometimes not so subtle patterns of disaster capitalism. Whereas she was criticized by some intellectuals who believed that she came down too hard on Milton Friedman (the ‘father’ of monetary economics and a firm believer of ‘market forces’ and little or no government, Naomi did have a very strong point. Friedman claims that he doesn’t like big government because of its corrupting influence on markets and how government operatives give favours to their friends who run business. In a counterintuitive manner, he claims that big governments are easily captured, and I wonder whether small government will not even be easier to wrap up and stuff in a briefcase.
But Friedman – the patron saint and guardian angel of the ‘Chicago’ school of thought which became quite prominent around the 1970s and which holds sway till today as manifested in the predilection of most managers of national economies around the world for ‘inflation targeting’, extoling ‘market forces’, promoting entrepreneurship, asking the youth to go and sort themselves out, planted an evil seed in the minds of men with the quote above. It was Friedmanian economics being echoed when Ronald Reagan said at his inaugural speech that, “In this crisis, government is not the solution to our problem; government is the problem”. Many so-called economists in Africa – a lot of whom are running economies here today – took that as gospel from St Reagan and are presently using the mantra to justify their inefficacy, even as they allocate most national resources to themselves and theirs for their convenience.
Note that I am not advocating big government. But I am against irresponsible government. Big or small, the attempt should be to get government to be responsible. On a per capita basis, how much of resources have we dedicated to an average government employee here in Nigeria, vis a vis what they do in, say the USA? My friends in Kogi State, despite being unable to pay staff salaries for upwards of one year, recently borrowed (or guaranteed in their words), $12.1million (N5.14billion), to buy 109 SUVs for their government officials. At the going market rate of N425 to one US Dollar, each car costs an average of N47.1million. That is big government. In the same USA we try to parrot, government officials drive their own cars to work themselves. Senators take the train to work, some cycle, some even skate!  So no one should try and hoodwink us here with some gibberish.
Back to Friedman. He and his acolytes tried to deny that they endorsed disaster capitalism. But what do we make of his statement that only crisis, actual or perceived produces real change? Or that his followers should always look out for moments of immense crisis to roll out their own alternatives because by then, what seemed politically outrageous will become acceptable?  If Friedman wants to lay claim to holiness, does he know that there are rogue economists, businessmen and goons in government, who took what he wrote by the letter? Did he and his protégés know that as a prominent economist he gave endorsement to those who see nothing wrong in stoking crisis in order to roll out their own well-honed plans? And where did it all lead? It led to libertarianism, the pursuit of personal gains by every means. Where did it all lead the world? It led us to a world where we are more fearful. It led to crippled economies around the world, to war torn countries, to terrorism, to a global recession, it led to the present state a country like Nigeria has found itself.
For Friedman and his people, like Kenneth Rogoff, and Eugene Fama, who promised us that markets were totally efficient and were perfect with whatever prices they presented, have left us in the lurch. Fama hides away somewhere in the University of Chicago still. A few people have challenged him, but he sticks to his guns. Richard Posner is one of those who disproved the nonsense that these guys peddled. Stigltz too. He proved that there was no way some people will not have extra information in a market with which they game that market. Robert Reich; Clinton’s Labour Secretary is doing a great job, pointing the world to the things that matter. The Freakonomics boys – also based out of Chicago – are putting a new behavioral spin to economics away from the one that defines human beings as robots, or Homo Economicus, a soulless specie which exist, only to make money and is so rational in everything. These guys – Steven Dubner and Stephen Levitt, provide shocking but true insights into the way the mind works and how economic decisions are made.
Did we take notice in Nigeria? I doubt. Our so-called economists mount rostrums and repeat the garbage that some right-wing economists wrote in some textbook 50 years ago. At best, they have become traveling salesmen of policies which lead to the decimation of their own country’s economies in favour of those who brainwashed them into their present position. Ability to speak phonetics is an added advantage. If you studied in one of the ivy leagues, better for you. Work with World Bank and IMF seals the deal. You are on your way to becoming a minister of finance or something that juicy. It is a tight patronage network.
Privatization, for example, has always been on the agenda. It ties up with the ‘market forces, government is useless’ rhetoric. Of course government will be useless if you want it to be useless. Our pain here in Nigeria is that government is useless but also extremely expensive; spending 40% per cent of the commonwealth.  Why not make government useful, lean and efficient? Do we not have much work for government to do in a country like Nigeria? I think we do, but the powerful men and women of our economy think otherwise.
That is why Africa’s richest man, Mr Dangote, fired a salvo on CNBC during the week, and specifically mentioned the NLNG – perhaps Nigeria’s only partly state-owned company that makes some money and was able to bail out the Buhari government last year by providing monies that state governments were to use for salaries but embezzled instead. The company has been working silently and is fairly well-run. Dangote says it MUST be sold. Senate President Bukky queued up behind him and also echoes the need for Nigeria to free up PENSION funds so that they the ‘investors’ can take a dig. Before Uncle Bukky, Minister Fashola had set his eyes on the pensions. As things stand, these gentlemen are scouring the Nigerian space for anything to sell for quick cash.  Maybe they should also consider selling Aso Villa, Federal Secretariat, or if the money they are looking for is not enough, they may kindly consider resuming slave trade. This is Disaster Capitalism powered by Junkie Economics. “Junkie” because only drug addicts sell off everything within sight for a quick fix.More next week.“Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable.” – Milton Friedman
It was Naomi Klein, in her 2007 book Shock Doctrine, who amplified the subtle and sometimes not so subtle patterns of disaster capitalism. Whereas she was criticized by some intellectuals who believed that she came down too hard on Milton Friedman (the ‘father’ of monetary economics and a firm believer of ‘market forces’ and little or no government, Naomi did have a very strong point. Friedman claims that he doesn’t like big government because of its corrupting influence on markets and how government operatives give favours to their friends who run business. In a counterintuitive manner, he claims that big governments are easily captured, and I wonder whether small government will not even be easier to wrap up and stuff in a briefcase.
But Friedman – the patron saint and guardian angel of the ‘Chicago’ school of thought which became quite prominent around the 1970s and which holds sway till today as manifested in the predilection of most managers of national economies around the world for ‘inflation targeting’, extoling ‘market forces’, promoting entrepreneurship, asking the youth to go and sort themselves out, planted an evil seed in the minds of men with the quote above. It was Friedmanian economics being echoed when Ronald Reagan said at his inaugural speech that, “In this crisis, government is not the solution to our problem; government is the problem”. Many so-called economists in Africa – a lot of whom are running economies here today – took that as gospel from St Reagan and are presently using the mantra to justify their inefficacy, even as they allocate most national resources to themselves and theirs for their convenience.
Note that I am not advocating big government. But I am against irresponsible government. Big or small, the attempt should be to get government to be responsible. On a per capita basis, how much of resources have we dedicated to an average government employee here in Nigeria, vis a vis what they do in, say the USA? My friends in Kogi State, despite being unable to pay staff salaries for upwards of one year, recently borrowed (or guaranteed in their words), $12.1million (N5.14billion), to buy 109 SUVs for their government officials. At the going market rate of N425 to one US Dollar, each car costs an average of N47.1million. That is big government. In the same USA we try to parrot, government officials drive their own cars to work themselves. Senators take the train to work, some cycle, some even skate!  So no one should try and hoodwink us here with some gibberish.
Back to Friedman. He and his acolytes tried to deny that they endorsed disaster capitalism. But what do we make of his statement that only crisis, actual or perceived produces real change? Or that his followers should always look out for moments of immense crisis to roll out their own alternatives because by then, what seemed politically outrageous will become acceptable?  If Friedman wants to lay claim to holiness, does he know that there are rogue economists, businessmen and goons in government, who took what he wrote by the letter? Did he and his protégés know that as a prominent economist he gave endorsement to those who see nothing wrong in stoking crisis in order to roll out their own well-honed plans? And where did it all lead? It led to libertarianism, the pursuit of personal gains by every means. Where did it all lead the world? It led us to a world where we are more fearful. It led to crippled economies around the world, to war torn countries, to terrorism, to a global recession, it led to the present state a country like Nigeria has found itself.
For Friedman and his people, like Kenneth Rogoff, and Eugene Fama, who promised us that markets were totally efficient and were perfect with whatever prices they presented, have left us in the lurch. Fama hides away somewhere in the University of Chicago still. A few people have challenged him, but he sticks to his guns. Richard Posner is one of those who disproved the nonsense that these guys peddled. Stigltz too. He proved that there was no way some people will not have extra information in a market with which they game that market. Robert Reich; Clinton’s Labour Secretary is doing a great job, pointing the world to the things that matter. The Freakonomics boys – also based out of Chicago – are putting a new behavioral spin to economics away from the one that defines human beings as robots, or Homo Economicus, a soulless specie which exist, only to make money and is so rational in everything. These guys – Steven Dubner and Stephen Levitt, provide shocking but true insights into the way the mind works and how economic decisions are made.
Did we take notice in Nigeria? I doubt. Our so-called economists mount rostrums and repeat the garbage that some right-wing economists wrote in some textbook 50 years ago. At best, they have become traveling salesmen of policies which lead to the decimation of their own country’s economies in favour of those who brainwashed them into their present position. Ability to speak phonetics is an added advantage. If you studied in one of the ivy leagues, better for you. Work with World Bank and IMF seals the deal. You are on your way to becoming a minister of finance or something that juicy. It is a tight patronage network.
Privatization, for example, has always been on the agenda. It ties up with the ‘market forces, government is useless’ rhetoric. Of course government will be useless if you want it to be useless. Our pain here in Nigeria is that government is useless but also extremely expensive; spending 40% per cent of the commonwealth.  Why not make government useful, lean and efficient? Do we not have much work for government to do in a country like Nigeria? I think we do, but the powerful men and women of our economy think otherwise.
That is why Africa’s richest man, Mr Dangote, fired a salvo on CNBC during the week, and specifically mentioned the NLNG – perhaps Nigeria’s only partly state-owned company that makes some money and was able to bail out the Buhari government last year by providing monies that state governments were to use for salaries but embezzled instead. The company has been working silently and is fairly well-run. Dangote says it MUST be sold. Senate President Bukky queued up behind him and also echoes the need for Nigeria to free up PENSION funds so that they the ‘investors’ can take a dig. Before Uncle Bukky, Minister Fashola had set his eyes on the pensions. As things stand, these gentlemen are scouring the Nigerian space for anything to sell for quick cash.  Maybe they should also consider selling Aso Villa, Federal Secretariat, or if the money they are looking for is not enough, they may kindly consider resuming slave trade. This is Disaster Capitalism powered by Junkie Economics. “Junkie” because only drug addicts sell off everything within sight for a quick fix.More next week.