Revitalizing the Nigerian economy: Beyond western dependence (ii)
Kola Olaniyi
Olaniyi is a graduate of Electronic and Electrical Engineering, Obafemi Awolowo University, Ile Ife, kellokelington@yahoo.com, 08068495313
3.0 THE DOOMSDAY SCENERIO OF THE WESTERN WORLD CONVEYING GREAT DEPRESSION FOR NIGERIA
The too-big-to fail economies that collapsed like a pack of cards during the global recession live an unprecedented mark in many countries, having been premised on the maladjustment of their economies.
History, as they say in economics would always repeat itself. Recession, downturn or meltdown as the case may be, occurred way back and funnily global economy had risen from that through timely solutions afterwards. That the world experienced an economic downturn during the 07-08 years does not spell a permanent doom to economic prosperity (albeit the prosperity achieved hitherto the latest economic meltdown were rooted in financial speculations, risk creation). The panacea is to look outside the box for hard-line solution to the economy malady.
In the light of the aforesaid, the problem needs to be understood, the future occurrences need to be nipped in the bud, and the status-quo needs to be changed. The first bug bear is to determine the economic recession and its co-comitant degree. It is perhaps at this moment axiomatic to stress the financial contraction of the world economic giants going by their antecedents in being the world movers and shakers. It is also disheartening to stressfully opine that massive wealth acquired by the capitalist few belies the expansive growth rate of the economy.
Before the bubble burst the wealthiest (especially in the US economy which is the prime mover of global economy) saw their income rose as never before. The Euro zone and European Union had lots of financial exposure by disregarding banking ethics. The result now is catastrophic. Global economy is on its kneel. Unemployment rate in the west has risen. Economic contraction has replaced expansion. Jobs are outsourced like never before to cheap labour, consumer spending is low which in turn has shot up social security for the unemployed. All these without an ounce of doubt portend little revenue for government and high expectation for government on the path of citizens.
The Western world having been trapped in her own nest shouldn’t be hoisted by her own petard. It was her making. She opened up the Pandora box. She should bear the brunt just like it was pointed out that recession is not new to global economy. The world has gone and come out of it. This would not be the last. My worry is to disillusion economies dependent on the US and the West for help/bail-out.
The West is going through all facet of reforms be it macro-economic or micro or even foreign to get herself out of economic quagmire. If would only be tom folly to posit that a man in danger would still afford to rescue another man in dilemma. Yes for a capitalist mode of economy, it’s all about exploitation; Moving and swerving to where labour, raw materials are cheap. That presupposes ordinarily the failure of one should be at the advantage of the other. That explains the loss of job before the outset of economic meltdown. Job growth for the US then was starkly insufficient for growing population. Manufacturing industries were leaving her shores for developing economies. Jobs were outsourced; being in realization of the aim of capitalism called exploitation (capitalism would even disregard theory of consideration for aim of greed/avarice). She brought out a policy for the wealthy in issuing tax cut even when foreign policies were of great expenses.
Banking is greed and its unquestionable thirst for avarice is enunciated in its attempt for making super-abnormal profit forsaking nobility.
Globalization in tandem with trade market liberalization is now a huge pain in the ass for the European Union. European banks had provided an important helping hand in sponsoring the US housing bubble of the 2000s. It was later made clear that European banks had behaved especially recklessly in their gamble in foreign lands by tolerating a huge short dollar position that was outside the purview of European central bank and the US Federal Reserve (Bilbow, 2012).
That act of recklessness which banking is noted for created a financial contagion for the European Union. As bubbles were bursting in the US, more bubbles eventually burst in the euro zone which led to financial impairment. When a bank/insurance company has about 50% of its capital wiped out, it then depicts it as technically insolvent and chronically illiquid. The policy of fixing individual nation’s economy is fully operational as United States runs a deficit in budget due to massive stimulus packages pumped into the automobile industry to reduce unemployment rate. The structure has created huge deficit that got her president thinking on reducing the huge deficit to disallow passage of debt burden to future generation. Policies to bring back job to the US economy are underway with loads of incentives and tax rebate ready to be offered.
Decrease in defense budget of the US-for her defence budget is greater than the cumulative of what the whole world spends- is underway for the redistribution of spending to domestic and pivotal areas of her economy. Foreign diplomacy has been made the window of opening up of economic trade for more export for the US economy. The bilateral agreement/relations are having a segue from defence to economic trade. If the mighty US economy could be going through this trying to bounce out of economic recession, then nations especially Nigeria who are ready to kow tow to the US whims and fancies are suffering from illusion of bail-out.
The US is quite effete in bailing countries out even as already stated. When she had the power (way back during the heydays of budget surplus and economic prosperity) she decided to offer exploitation as a sine qua non for exploration.
The Euro zone which has a unilateral monetary policy has had her number 1 biggest economy based on size i.e Germany reneged on the stability and growth pact guiding the zone.With the European central bank(ECB) being the issuer of Euro-zone currency, member countries commitment to monetary policy is a dissideratum. In terms of inflation rates, wage to labour size, Germany having suffered for a while on deficit budget, reneged on the monetary rule of embarking on relative base disinflation(Bilbow,2012).ECB’s one size fits all monetary stance became relatively tighter for Germany than in countries with higher wage and price inflation.It has paid Germany by stimulating non-euro net export: being a converse trend from the regionally concentrated export experienced before and during euro-appreciation that made non-euro exportations unfavourable.It secondly gave Germany the comparative advantage of being a safe haven as interest rate and labour are cheap.
With the seeming rise of Germany as a new super power in the euro zone, other members are crying fool for bail-out and economic rejuvenation. Germany’s discontinued obeisance to the SGP caused more harm to her counterpart in the increase of cross boarder trade and shift of labour. With Germany now left with a singular choice of either writing-off the bad sovereign debt marredd by other Euro zone member or bailing her own banks that are tedinically insolvent, it is most reasonable that a bail-out to her bank is the next port of call while she would prefer calling the shots to other members in term of relief or economic renaissance. This is the michiavellian method Germany used in making herself economically relevant in the euro zone.
All the aforesaid is to point to the mind of the reader the need for self evaluation. Proof of the Western grapple with the unherent doom caused by her own making is enough to promptly accept the Western incompetence in helping Nigeria for economic transformation. With the US trying to regain her lost power of economic dominance with new implementation of industrial repartration policy embarked on and also to urge deficit spending to keep unemployment rate falling to a considerable level by the President,it is therefore plausible that aid accorded Nigeria within this period of economy reappraisal would be paltry than it used to be even if there would be any.Afterall, as at the time of economic prosperity, aid received during them never transformed Nigerian economy.It was to whet the apetite of government and provide the keys for economic hegemony on Nigeria. Little wonder the growing concern of the United States about Nigeria and her security challenges,the raison de tre being economic interest/investments.
The EU has not fared better, with growing concerns for austerity, it is most certain her primary concern is to retrace her steps and begin an economic rejig. Days of pouring reliefs to Nigeria are temporary over although we too know well that the aid received are way too small for turning the ignition of economic transformation.
The Nigerian economy seems to have been left in the lurch. Solutions to her recurring problem of stagnation are beyond the reach of the West. The thought, search and look out should change and emphases should be on home grown solutions that would foster the much needed economic renaissance.The search for help from the West is quixotic; the looking inward for bail-out is mostly expedient bearing in mind of individual nations inventing policies that would suit her whims and fancies for accelerated development.
