The spectacle of a senior adviser on economics to the Tinubu government dissing the numbers on the economy issued by the National Bureau of Statistics (NBS) offered far more lessons than the first reactions to the television interview suggests. Sure, there were considerations of politics in the adviser’s responses. Ahead of a general election, his brief must have been to “Go there and make the government’s position on these matters look as good as possible!” And, as Aeschylus may not have said, in politics as in war, truth is the first casualty. Was there a smidgen of one-upmanship? Probably. In Nigeria, we do not discuss to advance the boundaries of mutual understanding. No. The goal of every conversation, which is why they invariably breakdown into verbal slugfests, is to outdo or keep one jump ahead of other discussants. If this practice involves excruciating mental contortions to keep one’s reasoning from keeling over, it also presumes a trusting and dim-witted set of listeners — in this case, with some hope, potential voters, too.
Even then, the numbers from the NBS matter, not just as fire-and-forget projectiles in partisan disputes. They, more importantly, inform how the economy works. If nothing at all, the planning and strategy decisions of a lot of economic actors, both local and foreign, depends on the pictures that our national bean counters paint. Which sectors of the economy are growing, and where the unemployment level is at, all this drive investment decisions. To say that these numbers ought not to be trusted is to invite the question: “Which other data sources are available for government use besides the publicly available official ones?”
|
|
Knowing what datasets the government relies on to make its choices will assist those who look to profit from such decisions or to hedge against their more adverse outcomes. Indeed, the whole point of “forward guidance” as a policy principle is to make market expectations and behaviour less muddled today, by communicating future policy intentions. More important still than the statistics that go into government’s decision-making is a working acquaintance with government’s thought processes. Successive Nigerian governments have, sadly, dropped the ball on this dimension of governance. Most carry on as if they are treasurers of social clubs and party organising committees. In these roles, their job description requires them to put together the most impressive parties in whatever ecosystem they happen to inhabit. The only let to these bookkeepers’ ambitions in this circumstance are the subscriptions that club members pay. Raise this high enough and you have the social clubs that were the staple of Yorùbá juju musicians’ paeans in the 1970s.
It is no accident that few of those clubs survive today. Most had no way of influencing their members incomes and ability to meet their membership subscriptions on an ongoing basis. While this left the clubs and their managements vulnerable to whatever vicissitudes affected their patrons, it is still one of the main differences with running an economy. Government managers and the choices they make have a deeper and wider reach. Increase the subscriptions due from eligible citizens (the tax they pay) and you might find that you have reduced the share of domestic output accounted for by consumer spending.
|
|
|
|---|
How does the added government revenue from an increase in taxes matter? By a painstaking choice of how, where, and what it pays for (salaries as against investment in fixed capital growth in the efficient production of public goods, for instance) government spending can boost or impede aggregate domestic demand. Moreover, in democracies with fixed electoral cycles, there is an extra incentive for government to loosen its purse strings in the run up to general elections. Just about everywhere, this siren song is almost impossible to resist.
It helps in this circumstance that macroeconomic management readily decomposes into fiscal and monetary policy components. When the tax and spend side is suckered by political considerations to return money to potential voters, the monetary policy side tightens monetary conditions to avoid inflation taking off. This is to avoid rising prices ratcheting consumer spending down. In turn, falling retail purchases put businesses off new investments — sometimes forcing them to retreat from current operations. When businesses stop spending, unemployment rises. And with a lot more people out of jobs, consumer spending falls farther. Is a vicious cycle, thus kicked off? Yes.
Far more significant, however, is the fact of the connectedness of the different parts of an economy that this cycle points to, and which the special adviser’s blasé treatment of domestic economic statistics seems to have missed. Nigeria’s continuing difficulty with managing this cycle, by, as The Economist recently described it in a piece on India, “…cleaning up public finances and letting central bankers fight inflation in peace,” arises from the fact that the dynamics of the business and economic cycle, of course, do not make much sense to folks who are at their best when running social clubs.
Uddin Ifeanyi, a journalist manqué and retired civil servant, can be reached @IfeanyiUddin.
Discover more from Premium Times Nigeria
Subscribe to get the latest posts sent to your email.
