Wednesday, January 5

Malthus, Hobbes and the Red Queen


Malthus Yiwdum!
Hobbes Yiwdum!
Kuy Nigistwa Tiwdum!
Capitalism Yikdem!

(updated Amharic revolutionary slogans of the 1970s ...
'Down with Malthus, Hobbes and the Red Queen!
Capitalism First! (or victory to Capitalism!) ')


The post Ethnicity , Poverty and War discussed the issue of poverty in terms of per capita GNP and GDP over time. Our figures depended on memory, that provided a sense of the trends over time, but was not as accurate as the subject demanded. We will now give some of those trends more definition.

GDP (Gross Domestic Product) is the total output value of goods and services of a country in a year. GNP (Gross National Product) is GDP plus income from abroad. Both are convenient measures of national wealth. GNI (Gross National Income) is used by the World Bank and appears to mean essentally the same thing as GDP.

There is no single source we have found that can provide data from the post World War II period or even the 1970s until the present so we will shop around various databases and sources while using an inflation calculator where appropriate.

The Cross-National Time Series is a rich source for economic data that gives a 1973 per capita GDP figure of $66 but it is not clear what adjustments are made for inflation. The Military Balance for 1981-82 published by the International Institue for Strategic Studies (no link available) gives a calculated per capita GNP figure of about $134 for 1980 while the same publication for 1975-76 gives a per capita GNP figure for 1974 of about $100.

According to the World Resources Institute the GDP in 2003 dollars was $142 in 1981, rose to $192 in 1992 and was $94 in 2003. World Bank Documents (no link available) track closely to the above and show the GDP in 2003 dollars was $134 in 1981, rose to $183 in 1992 and was $97 in 2003. Another World Bank source give a current dollar figure of $90 for 2003. A world ranking of GNI and PPP by the World Bank lists Ethiopia dead last at #208 for per capita GNI and at #201 for PPP.

According to this International Monetary Fund Report, "Government expenditures ... is estimated to amount to 39 percent of GDP in 2002/03 ... largely reflecting the high level of food aid received." In addition, 2-3% of annual increases in GDP are simply due to population increases. Overall performance is superior to the Dergue years but that is certainly an exceedingly poor standard for reasonable judgement.

Any way you look at it 70 million Ethiopians are in desperate straits.


straight out of addis ...

The Ethiopian Economic Association website has an excellent and impassioned piece by Berhanu Nega (translated from the original Amharic by Y. Admasu) that traces the course of the economy over the recent past and projects its performance into the future.

The situation he describes is like that of the classic "The Red Queen Syndrome." Akin to Alice in Wonderland, who was running as fast as she could to stay in the same place. Just like Ethiopians who are struggling and even falling behind economically.
A good indicator of Ethiopia’s general economic performance is its overall economic growth and the associated per capita income.

For the purpose at hand, the annual rate of increase of this income is sufficiently reliable to indicate whether or not the population’s livelihood has been improving. According to the estimate based on this indicator, the Ethiopian economy has been growing at an annual rate of 2.6% over the last four decades. At the same time, however, the population has been growing at an annual rate of a little over 2.6%.

Precisely because of this, the people’s per capita income has not only remained where it had been at the time, it has, in fact, declined, however little the amount. The average per capita income (at 1980/81 constant prices) was Birr 228 in 1960/61 and Birr 257 in 1964/65, while the average per capita income for 2001/02 was only Birr 261, and for 1995, Birr 244 only.
[...]
Our economy has not scored any structural change in the course of such a long time. The majority of the people are still scraping through life by means of a highly backward agricultural economy totally dependent on nature as it is. Even worse, as the size of the country’s population continuously increases, the per capita income gained from this economic sector has been declining, as a result of which the people have reached a stage where they could even barely make it through life.

The per capita income from the agricultural sector has been declining at the rate of 1.2% per annum for the last 42 years. Because the industrial and service sectors’ share of GDP has shown some improvement, the livelihood of that population engaged in economic activities outside of the agricultural sector has managed to stay afloat.

Even then, the improvement these sectors have shown is really not something we can speak of as worthwhile. The per capita income of the population engaged outside of the agricultural sector has been increasing at an annual rate of 0.8% in the period under consideration.
[...]
In our country, where the large majority of the population lives in rural areas, we need no further evidence than the ever-worsening poverty situation of the rural population to demonstrate what kind of pitiable livelihood the rural population and, therefore, the majority of the country’s population leads.

Although, relatively speaking, the livelihood of the urban population appears better than that of the rural population, there are concrete data that confirm the increasing proliferation of poverty in the urban areas as well. According to government estimates, the size of the urban poor has increased by 12% in the five years between 1995/96 and 1999/00.
The author goes on to provide a pointed summary of recent history and the linked economic and social results of policy from recent governments. Significantly he looks forward and is not happy at the projection of current trends into the future. Income, particularly rural income (where the great majority of the population lives) would decrease through the year 2028, the furthest year of his analysis.
This kind of proliferation of poverty in the country is sure to affect other aspects of our life. If, therefore, the situation continues at the current trend, our very dream of living in peace will itself be thrown into doubt. The political, social and psychological crises that have come in the footsteps of the poor economic conditions over the past forty years will inevitably head for the worse.

The worsening poverty situation, coupled with the mutual suspicion among the different ethnic groups, would more than likely encourage divisive forces who are after solutions inimical to our vision of Ethiopianness, and not paying heed to this possibility is, once again, to fail to learn from the lessons of history. Moreover, as the intensity of the poverty the country is experiencing now increases, by that much will favorable conditions be created for all sorts of religious extremists (fundamentalists) to flourish.

And that such a situation will put to the test the long-standing mutual respect and coexistence among the different religions of the country, which is one of the emblems of our pride as a country, cannot be doubted. For one who observes closely, the symptoms of such a trend are clearly visible and widespread in our society.
Wondering if Ethiopia’s future could become better than it is now, Ato Berhanu answers with a resounding YES! Given that a capitalist society is allowed to develop with its requisite institutions based on a new civic contract between government and citizens.
It is, therefore, such individual initiative and creativity, on the one hand, and policies and governance that encourage such initiatives and creativity, on the other, that together help bring about productivity and economic growth, as well as the cultural and social prosperity that necessarily results from the former.
The author sees the modern manifestations of government as the major obstacle to this alternate future.
In Ethiopia’s modern history, the power of governments has invariably been absolutely unchecked, while individual freedom has been highly stifled. During the imperial era, the Emperor, who believed he was the Elect of God, perceived the limits of his power as concurrent with his lifetime and, but for the fear of God, the then rulers could do anything they wanted to their subjects.
This is an astute and fair observation by the author. The imperial rule of Haile Selassie, while by no means a liberal democrat, did have crucial limits on its behavior based on tradition and religion. The Dergue and the current government do not because both inhabit moral universes inspired by Marx and Lenin. Two 'gods' who will never be remembered for being in touch with their inner children. To be fair we should note that the current government is a great improvement over the Derg exactly to the degree that today their shared communist roots have been betrayed.
At the time of Mengistu, this was not considered enough, so that he turned an individual’s life into something he could manipulate and play with, as flies are to wanton, little boys, if you will. By so doing he completely desiccated the inner sense of freedom the people had, of which there was not much to speak of in the first place.

This inner sense of freedom, which forms one of the bases of economic growth, one would have expected, would get a second chance at replenishment after the demise of the Derg regime, but as things stand now, it couldn’t even convalesce to an even modest degree. The people’s inner feelings are still entangled in fear. It is not many people who believe they have the ability, as well as the capacity, to bring about the necessary change, whether individually or through collective effort.
What Ato Berhanu defines as the most crucial aspect of the new civic contract is enfranchisement and democracy to give people a sense of their own potential as opposed to the current resignation to a harsh fate.
Although there are multiple political, economic and social causes for this sense of impotence, when we think particularly of seeking solutions to the problem, our main focus should be on how we could curb the unchecked power of government that has for long prevailed in our country.

In order to achieve this, our starting point should be effecting fundamental changes in the society’s perception and view of government, as well as government’s perception of the people and its own power. The people should learn to see the government and the institutions it oversees, not as some kind of monster but as the phenomena they themselves created for their own benefit and as instruments for facilitating their economic growth and peaceful life.

Government officials and civil servants, for their part, must be the type that respect the people; they must be the type that recognize the fact that the political power that they wield is bestowed on them by the people and that it is absolutely transitory, that any time any day they could relinquish this power and become ordinary citizens living among the people.

They should, accordingly, use their power properly. It is my belief that, when the power of any government is unconditionally subordinated to the principle of the sovereignty of the people, it will play a critical role in the enrichment of the people’s inner sense of freedom.

I also believe that this enrichment of the people’s inner sense of freedom is absolutely without alternative for our economic growth. That the existence of a democratic government is a prerequisite for a country’s peace, stability and economic prosperity is, over and above being just a matter of principle in the abstract, supported by concrete evidences drawn from the experiences of many countries.

That this link between a democratic system and peace, stability and economic prosperity, should apply to the Ethiopian situation is beyond any doubt.
Rural areas where most people live have been getting poorer for sometime now and given current trends the future looks even worse. A very few sectors of urban areas (especially those dependent on government spending and foreign aid) alone register growth that is offset by otherwise rising urban poverty and the generally declining state of the national economy as a whole - again trends are not positive. The likelihood of a 'poor, nasty, brutish and short' future for Ethiopia without significant reform should terrify her friends and humanity in general. There is no vaunted 'third way' but there is a clear path to the future. The reader should take a look Berhanu Nega's whole paper.

As anyone who has ever visited this blog can imagine, it has been a pleasure for us to discover this article by him.

# posted by ethiopundit : 1/05/2005


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