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Friday, 3 October 2008

Politics and poverty....

Azwell Banda has written an interesting piece in the Post on politics and poverty, which touches on two key fundamental points - lack of ideological differentiation and the relationship between the power and poverty.

Politics and poverty, Azwell Banda, The Post, Commentary :

It is always during times like these, during any kind of election, that those who want to be elected tell us all sorts of lies about what our poverty is, how and why we are poor, and, most importantly, what they are going to do about our poverty.

Now, to be sure, the election to fill the vacancy left by the death of president Mwanawasa is unique in many ways.


First, of course, is that this is the first time Zambians will go to the polls specifically for the purpose of electing just the president of Zambia. Last Friday, Chief Justice Ernest Sakala declared that Brig Gen Miyanda, UPND leader Hakainde Hichilema, Patriotic Front (PF) leader Michael Sata and acting Republican Vice-President Rupiah Banda had validly filed in their nomination papers as presidential candidates for the October 30 presidential election.

The second, and perhaps most important question of this strange forthcoming-election is whether all those Zambians who will bother to vote can rise above their narrow party loyalties as happens in other elections, and, instead, choose the best man for the job to complete Mwanawasa's term.

The idea that it is no longer important to stick blindly to one's political party candidate has in fact been given weight during the reign of Mwanawasa. Twice he gave Zambia vice presidents who had no personal
political constituency in the MMD. Mwanawasa himself came from almost a similar background – he had been a relatively dormant member of the MMD when Chiluba asked him to be the MMD presidential candidate.

Rupiah Banda and Michael Sata have long histories in UNIP. In fact, we have been told by the current leadership of UNIP that they will support Rupiah Banda because he comes very close to their UNIP ideals. Sata and Miyanda have been leaders in the MMD, both at very senior levels.

The only real dark horse in this race to State House is Hakainde Hichilema. However, he too is running a political party which is full of ex-UNIP and ex-MMD members. And there is nothing new about his politics.

What all this tells us is that in fact we have no fundamental philosophical, ideological, and political or class differences between all the aspirants to Sate House, in this presidential election. We are left to choose only on the basis of minor personality quakes, between these four men. And this is what is at the heart of the poverty of our politic!

We have here, essentially, four men cut from the same philosophical, ideological, and
political and class linen. Their ages notwithstanding, none among these men represent any real new politics for Zambia. They in fact differ only in the manner they think the country should be managed along the same and current socioeconomic trajectory.

Listen very carefully to all these men when they talk about our poverty. All of them treat our poverty like any event, any phenomenon. Poverty is identified and discussed as a problem at a surface level, the level of phenomenon, of superficial appearance; its deep underlying basis is consequently not addressed, but simply assumed.

When talking about our state of mass poverty, they isolate and separate our poverty from any social, economic and historical reality; thus its interconnectedness to other issues and the whole is lost.

Our poverty is not understood and analysed as a human relationship, as the manifestation of unequal power relationships in our society and country – as an integral and chief feature of the unequal power relations which are the foundation of our Zambian capitalist society.

None of these four men are willing and able to unveil, to reveal, the political, social, moral, ideological, economic and cultural mechanisms which produce and reinforce the situation in our country that is characterised by mass poverty and ensures that this situation is not only possible, but strangely also actually acceptable.

All these four men will easily tell us that our poverty is the state of not have access to food, shelter, education, and employment opportunities. They know us as poor because millions of us do not own anything apart from our miserable lives.

They abuse us politically because they know we have no money to buy for ourselves the things we need to stay alive. They thrive on our condition of destitution. They know we need the money they use to buy our votes with, urgently, because we need to buy, in particular, food.

During their campaigns they suddenly appear nice, good, generous, loving, and caring: they mock our poverty and insult our collective intelligence with their empty shallow promises to move us out of our poverty status if only we could vote for them.

They promise us they will end corruption in the government. They tell us they will create jobs for all of us, miraculously and without first destroying the systems and structures that together form our economy and society – a society which thrives on inequality and our poverty.

They tell us they can simply unbelievably reduce our tax, manage our unequal economy better, accelerate and improve the delivery of poor quality social services to all of us, and of course they all are best placed to carry on 'the legacy' of President Mwanawasa.

None of them appear to respect the fact that there is a unique set of complex historic forces and factors that have combined with our present circumstances to lock us firmly at the bottom of the global capitalist food chain.

None of them have shown the slightest respect of the role their kinds of politicians have played the history of the making of our poverty status. They are all blissfully oblivious to the inherent connection between the poverty in our politics and the mass poverty in the land. I bet none of them has ever heard nor read the words of that fearless African liberation struggle revolutionary, Almicar Cabral, who wrote the
following, in 1970, about oppressed and dominated peoples:

"The principal characteristic, common to every kind of imperialist domination, is the negation of the historical process of the dominated people by means of violently usurping the free operation of the process of development of the productive forces. Now, in any given society, the level of development of the productive forces and the system for social utilisation of these forces (the ownership system) determine the mode of production."

Our poverty is a direct consequence of the negation of our historic process by imperialism. Our poverty is a direct consequence of the continuing violent usurping of the free operation of the process of development of our productive forces. This situation in our history violently set the scene for the continuing poverty that afflicts us today.

All these men will undoubtedly mock such thinking, as expressed in this article. This is to be expected, as none of these men are willing to pay the intellectual price it takes to understand the origins of, and the systems and structures, which perpetuate our status of poverty.

For the real fight against our poverty and the corruption which always attends such
poverty, we all must strive to think hard and to uncover and imbed the relevant social relational factors that produce and reproduce our poverty, in all that we do, in our fight against our poverty.

We must not fail to study and understand the political, social, moral, ideological, economic and cultural mechanisms which produce and reinforce poverty and makes Zambia a country in which concentrated mass poverty exists side by side with a revolting concentration of wealth owned by a small minority.

Above all, we all must understand and appreciate the most obvious point: history is about the present. Unless we come to appreciate how our history reproduces our present circumstances of mass poverty, we will always live in our history, forever locked in our state of grinding mass poverty. Only such an appreciation of history will arm us to change our present circumstances.

We must go and vote, on the voting day, all those of us who are qualified to vote. For, it is better to choose the best from among these mean similar political characters, than not to vote at all.

Azwell is definitely onto something with the lack ideological differentiation. An issue which was exhausted on the blog The death of UNIP? After 71 comments, there was only convergence that the parties were similar ideologically, but what was the case remains a mystery. Is it because that is what the media Zambian voter wants or is due to the electoral system? Questions remain. Azwell for his part appears not have even begun to comprehend the complexity of the pandora box.

That said, I agree with his other point - the distribution of power is at the heart of the poverty struggle. As I have previously note in the blog
In rich Zambians' palm.. - there's a clear relationship between poverty alleviation and the distribution of power in society. Tackling poverty therefore requires an appreciation of the external forces but how the current internal forces are shaped historical and cultural processes, which in turn ensures that the poor continue being kept out of the top table. Zambia is stuck in a perpetual political equilibrium that has perpetuated continuous under-development led by the educated or corrupt elite. The balance of power in society is stuck against the poor which prevents the emergence of pro poor policies. What we need is an institutional realignment that will alter the balance of power and give the poor a greater say in the development of the nation - not just platitudes, but a real and fundamental shift in dynamics. That is our best hope for incentivising future governments to deliver policies that are more pro-poor and pro-growth in the long term.

12 comments:

  1. Above all, we all must understand and appreciate the most obvious point: history is about the present. Unless we come to appreciate how our history reproduces our present circumstances of mass poverty, we will always live in our history, forever locked in our state of grinding mass poverty. Only such an appreciation of history will arm us to change our present circumstances.

    I will put it very simply: FOLLOW THE MONEY.

    Instead of capitalizing the Zambian econonmy, profits from the mines end up in western corporate bank accounts, instead of being poured into infrastructure and agriculture.

    That is why the Zambian people are poor. There are other reasons such as lack of land ownership, but this is the essence. If Zambia cannot benefit when copper prices are at historic world highs (and they still are, even at $6900 per tonne, when before 2001 it was at or under $1000 per tonne).

    If the $2400 million ($2.4 billion) of profits the mines make every year was even taxed at 50%, or was all owned by the Zambian state, and it was put into building irrigation works to create year-around agriculture and prevent flooding, and the money was used to help chiefs and hire villagers to build feeder roads, it would do so many things:

    - create high levels of employment
    - give a huge boost to agricultural output
    - make hunger a thing of the past
    - prevent floods
    - lay the basis for manufacturing
    - lay the foundation for Zambia's future role as a logistical hub, strategically situated between Southern and Central Africa, and between the Indian and Atlantic Oceans.

    As long as the present candidates all want to uphold the current system of exploitation of the country's resources and people.

    Jobs with high wages are the way to go to get the economy going.

    There is a huge wave of inflation coming our way, and there is going to be a real premium put on real world stuff and products - especially food.

    Zambia should be ahead of the curve and start to make agriculture work for the people and the country - in that order.

    ReplyDelete
  2. Mr K,
    "There is a huge wave of inflation coming our way"

    That remains to be seen. The recent increases in prices has already begun stimulating production around the world. Also for many years there was underinvestment in agriculture due to low prices, this has begun to change, so output can increase by adding more fertilizer for example. Probably now prices increases will be more gradual.

    http://www.iht.com/articles/2008/08/06/business/farm.php

    http://africa.reuters.com/top/news/usnBAN925719.html

    Mr K,
    "Instead of capitalizing the Zambian econonmy, profits from the mines end up in western corporate bank accounts,"

    These profits can be used to continue expansion projects, especially now that copper prices have started falling. High profits rarely last since they attract new entrants into the field, and can be used to fund operations during times of falling prices.

    ReplyDelete
  3. Kafue001,

    "There is a huge wave of inflation coming our way"

    That remains to be seen. The recent increases in prices has already begun stimulating production around the world.


    Oh no, that does not remain to be seen. The US just inflated their economy with $700 billion, which is (I think) about 7% of GDP?

    That is money they are going to print to make good the bets made on Wall Street.

    This means higher inflation, businesses closing, more unemployment, a far weaker realestate market, all of which are already evident right now. This inflation is going to have an impact over the coming years.

    A Depression.

    ReplyDelete
  4. Mr K,
    "Oh no, that does not remain to be seen. The US just inflated their economy with $700 billion, which is (I think) about 7% of GDP?
    That is money they are going to print to make good the bets made on Wall Street.
    This means higher inflation, businesses closing, more unemployment, a far weaker realestate market, all of which are already evident right now. This inflation is going to have an impact over the coming years."

    No, because:
    1) The $700 billion is an exchange of assets (bad mortgages for cash), not a direct purchase of new goods and services.

    2) "businesses closing, more unemployment, a far weaker real estate market" means that the US economy is in anticipatory deflation mode (not inflation mode) since there is expected to be a drop in demand for goods and services, the unfreezing of bank lending will reverse that mode.

    3) $700 billion is 5% of the $14,000 billion US economy - too small to have big inflation consequences

    https://www.cia.gov/library/publications/the-world-factbook/print/us.html

    ReplyDelete
  5. The $700 billion exchange of assets with banks is intended to unfreeze bank lending. It is not additional spending to that which existed before this crisis started.

    ReplyDelete
  6. Kafue001,

    " No, because:
    1) The $700 billion is an exchange of assets (bad mortgages for cash), not a direct purchase of new goods and services. "


    Yes, those are basically worthless derivatives, and bad loans no one will pay back. They're buying garbage. And the few good assets they're buying are not coming back in value any time soon. It will be a long time before we are going to see the conditions that led to those high valuations for real estate return - low interest rates, low inflation, low unemployment.

    So there are no real goods being bought. As a free marketeer, you should recognize this instantly as misinvestment, by the state. Moral hazard, if you wish.

    What is worse, higher inflation will result from even a 5% inflation of the economy will lead to companies closing, more joblosses and even more foreclosures, because people cannot afford any payments when they're unemployed.

    2) "businesses closing, more unemployment, a far weaker real estate market" means that the US economy is in anticipatory deflation mode (not inflation mode) since there is expected to be a drop in demand for goods and services, the unfreezing of bank lending will reverse that mode.

    Unfreezing bank lending will only be a short term measure.

    Underlying is the fact that the derivatives, credit and banking markets and sectors are overleveraged. Buying up these debts does not eliminate them, it simply shifts ownership from Wall Street to the state. There is too much credit in the economy, and now there is $700 billion more, at the stroke of a pen.

    From what I have seen, this bill will not keep people in their homes, lower the price of fuel or stop businesses from closing down. In other words, all Paulson did was throw more wood onto the fire.

    3) $700 billion is 5% of the $14,000 billion US economy - too small to have big inflation consequences

    Compared to which country? The US right now is used to low inflation and low interest rates. That is what the housing market and economy are attuned to. That can't stay the same even if the economy inflated with 'only' 5%, mainly to make good on Wall Street bets.

    What I am seeing, is that a lot of states are going to go bust. They won't be able to collect enough taxes to provide basic services or maintain infrastructure.

    Right now, a lot of gas stations are running out of gas in the Southeastern US. There are hours of lines just to fill up:

    Georgia Gas Crisis
    http://www.youtube.com/watch?v=pXqC1Zn9Tbc

    Atlanta (Alpharetta) Gas Shortage
    http://www.youtube.com/watch?v=0U01djSaI9c&NR=1

    GAS CRISIS: Interviews w/Gas Station Patrons, Orange, CA USA
    http://www.youtube.com/watch?v=Tid9hOsupZA

    The Coming Consumer Credit Crisis (Part 1)
    http://nl.youtube.com/watch?v=78arZYr02uk

    Meredith Whitney, back in May 2008:

    $800bn credit card debt
    $4.7 trillion unused credit lines outstanding

    $7 securitized/$1 in mortgages

    Securitisations: Average Quarterly Volume Residential Mortgages

    91-95 $ 9.8 bn
    96-00 $ 59.7 bn
    01-04 $174.4 bn

    Source: Oppenheimer & Co.

    http://www.youtube.com/watch?v=78arZYr02uk

    So unless this plan involves the deleveraging of the consumer credit markets and the mortgage derivatives markets (and lowering fuel prices), just transferring debt from the banks to the state is not going to help with the economic problem, and the buying up of bad debt in itself is inflationary.

    And another thing. Almost every time, it is leverage of new and poorly understood instruments that leads to disaster. Futures did it for Barings Bank and Nick Leeson, junk bonds were the downfall in the 1980s, and this time it is Credit Default Swaps.

    Capitalism cannot exist without regulation, and this is the proof. Free markets inevitably lead to lawlessness, monopoly formation, collusion - all the things that regulation is there to protect businesses, the consumer and the environment from.

    ReplyDelete
  7. Mr K,
    "Yes, those are basically worthless derivatives, and bad loans no one will pay back. They're buying garbage. And the few good assets they're buying are not coming back in value any time soon. It will be a long time before we are going to see the conditions that led to those high valuations for real estate return - low interest rates, low inflation, low unemployment.
    So there are no real goods being bought. As a free marketeer, you should recognize this instantly as misinvestment, by the state. Moral hazard, if you wish."

    The bad mortgages being bought by the government do have some value, just not their face value. If the government buys them at firesale prices, they could make money, Warren Bufffet and Bill Gross think so:

    ``I think the Treasury will pay back the $700 billion and make a considerable amount of money,'' Buffett said, adding that if he had $700 billion on the government's terms to buy distressed assets, he would. ``Unfortunately, I'm tapped out.''

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aRef_DUx6AcU&refer=worldwide

    http://www.reuters.com/article/ousiv/idUSTRE48O4AH20080925

    Mr K,
    "Underlying is the fact that the derivatives, credit and banking markets and sectors are overleveraged. Buying up these debts does not eliminate them, it simply shifts ownership from Wall Street to the state. There is too much credit in the economy, and now there is $700 billion more, at the stroke of a pen."

    There is good credit and bad credit. To the extent that the bad credit is removed, there will be some decrease in associated economic activity and some deflationary forces.

    Mr K,
    "Compared to which country? The US right now is used to low inflation and low interest rates. That is what the housing market and economy are attuned to. That can't stay the same even if the economy inflated with 'only' 5%, mainly to make good on Wall Street bets."

    There will be some inflation, but nothing that the US can't handle.

    Mr K,
    "Right now, a lot of gas stations are running out of gas in the Southeastern US. There are hours of lines just to fill up: "

    Yes, this is because of the Texas hurricane which shut down refineries supplying the south eastern US. When they come back online in a few weeks, the shortages will disappear.

    http://www.gastongazette.com/news/gas_25262___article.html/green_gifford.html

    Mr K,
    "So unless this plan involves the deleveraging of the consumer credit markets and the mortgage derivatives markets (and lowering fuel prices), just transferring debt from the banks to the state is not going to help with the economic problem, and the buying up of bad debt in itself is inflationary."

    I agree with the deleveraging to a certain extent, although it should be done gradually. Fuel prices should be based on supply and demand.

    Mr K,
    "From what I have seen, this bill will not keep people in their homes, lower the price of fuel or stop businesses from closing down. In other words, all Paulson did was throw more wood onto the fire."

    People who bought houses that they could not afford will lose their homes. Price of fuel is based on supply and demand, nothing can be done about it. Good businesses utilizing credit that would have closed down because of the credit freeze have a chance of remaining open if the government plan works.

    There no doubt will be future economic bumps to overcome but the government is taking necessary steps to prevent the (good) credit market from freezing up.

    Capitalism has been regulated for many years, the regulations will evolve to meet new challenges. It is still the best system around.

    ReplyDelete
  8. Azwell Banda and fellow believers need to read Easterly's article
    with an open mind, and then to comment on the points he makes. If
    poverty is imposed on us by history, we shall continue to be poor. But we know very well that many peoples around the world have in large measure overcome it by creating wealth. We need to learn from their examples, instead of pointing fingers and blaming our poverty on others.

    ReplyDelete
  9. Murray,
    "We need to learn from their examples, instead of pointing fingers and blaming our poverty on others."

    Which is why I have said to look at Asian countries such as Malaysia and see how they have grown themselves out of poverty

    ReplyDelete
  10. http://finance.yahoo.com/expert/article/futureinvest/112537;_ylt=Ap.iJndY0RWwLa2PCxZR0yO7YWsA

    ReplyDelete
  11. Murray,

    We need to learn from their examples, instead of pointing fingers and blaming our poverty on others.

    Who is pointing fingers and blaming poverty on others again?

    ReplyDelete
  12. Bill Gross believes that the threat of headline inflation is long past.

    http://biz.yahoo.com/rb/081007/business_us_financial_centralbanks.html

    ReplyDelete

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