Thursday, September 29

Cargo Cult Economics 5 - Cheerleaders

Contemporary Ethiopia has its own band of intellectual cheerleaders who defend the government from rationality and smooth its place in despotic power. The Ethiopian government is literally doing everything wrong in terms of economic development.

The ruling party and the politburo at its core directly or through a web of illicit relations own the government, own all of the land in the country (there is no right to own private property and the threat of losing it is used as a potent political weapon), own the lion's share of the economy from the commanding heights of the hard currency monopolies all the way down to the softest parts of the service economy.

The same people regulate themselves, control the media, control the instruments of coercion from the secret police to private militias to the armed force, demand medieval fealty as a condition of successful participation in national life at any level and rule by pitting tribes, regions and religions against eachother.

The only people or tribe the government cares about is literally within the skins of a few hundred revolutionary aristocrats but even most of them are disposable in extremis - what really matters is a few dozen of the revolutionary nobility. The ethnic group in whose good name they allegedly rule are simply the first victims within a whole nation united in opposition to a tiny ruling cique at the top of a pyramid of suffering.

Ethiopia is rated internationally as one of the most corrupt, badly managed and closed governments and economies in the world with one of the lowest possible rates of per capita foreign investment on the planet. Per capita foreign direct investment comes to less than $1.00 and much of that is from just one generous person.

Another way of saying this is that aside from money generated by pity such as foreign aid and aside from money sent from Ethiopians abroad - there is almost no where else in the world that is less attractive for investment than revolutionary democratic Ethiopia.

Under the current government Ethiopa has actually managed to grow progressively poorer than in the days of Mengistu's horrific Dergue.

Where a famine under the old Imperial government meant hundreds of thousands of victims and under Mengistu a few million - today over 15 million people are continually dependent on foreign aid to survive every day and are victims of a government that plans to do nothing different in the future at all except ask for more aid. Indeed, the national budget is financed by aid and the faintest illusion of progress comes from diaspora remittances and Western taxpayers.

All plans for the future depend on the status quo or dreams of massive aid such as the Millenium Develoment Goals. All that is needed for growth and prosperity is already present within Ethiopia's borders, indeed as one author commented, within the Ethiopian brain. Left alone it can accomplish what any other set of brains in any other nation from South Korea to Botswana but is prevented from doing so. After all, the successes of capitalism aren't Caucasian or European or determined by any factor but the nobility and the sanity of giving a nation the proper institutions of success.

Actually, there is nothing new to figure out. What took Europe centuries to do through trial and error is free knowledge today - why should any of the rules be different for Africans? The main reason is their own leaders and those that enable them.


Recently there was controversy about the Ethiopian Prime Minister winning a $200,000 prize from a Norwegian company. The details of that tragic absurdity can be found in Negussay Ayele's excellent Norway, Ethiopia and the Yara Foundation. In a nutshell: the Ethiopian government which is indistinguishable from the ruling party muscled everyone else out of the fertilizer business from the beginning (imagine the ironical possibilities of that statement).

Ethiopian per capita grain produciton has been steadily falling on this government's watch. The use of land ownership as a political weapon and a lack of basic investment because of tenure insecurity hurt even the most basic farming. What limited security farmers have is in using ever increasing amounts of fertilizer.

Fertilizer can only be bought on credit from government / party owned businesses that are identical to local government. Credit, repayment and taxes are used as instruments of political coercion and human rights violations in perfect timing with threats on land ownership. In some regions the whole web of abuse includes requirements that the local tribal sub-village houselhold level of party officials be asked for permission before peasants can visit even the next village.

Let us repeat: in rural Ethiopia people have to have government permission to go beyond the confines of a few adjoning farms, they are constantly in debt to the party / government which routinely denies them basic rights, can take away their land at a whim and taxes them without mercy. In the post Civil War American South such a situation described sharecropping and Jim Crow in the life of African Americans.

To the revolutionary aristocracy at the top of this pyramid of feudalism sees all of the masses below and always figures that an extra buck can be squeezed from each of them. Imagine, per capita GNP is below $100 (less than a quarter in constant dollars than it was in the mid 1970s) and given unequal distribution of money an entire peasant family together probably sees far less money than that a year.

Even squeezing just one extra dollar from every peasant makes for tens of millions. Hey, that is enough money to by a single SU-27 jet fighter, to build a corporate office in Addis with marble executive washrooms or even just finance the activities of an army of spies, agents and cadres for a few months. Squeeze out even an extra buck and that means property is for the taking in Europe or America and an army of public relations agents can be hired there too - all it takes is some minimally creative accuonting and a complete lack of morality.

Both qualities are in abundance in revolutionary democracy as opposed to scarce items like daily bread and freedom.

Despite Ethiopia's abundant human and material capital there are only three main earners for the government. One is coffee which the government of course stuffs its coffers with through selective and high taxes, owning all the land, owning or dominating all of the private, public and semi-public companies that deal with it. Even then the dollar value of the all important coffee crop is a fraction of the value that it had in the 1970s or even 1980s.

Another similiar cash crop is the semi-narcotic khat plant whose fresh leaves are picked in Ethiopia and delivered, sometimes in a matter of hours to Somalia, Djibouti and Yemen. Be assured that the government, the party and its cronies take a very healthy cut of this trade.

The other main earner and the most valuable one of all is the blood, sweat and tears of the Ethiopian people. The country has the status of the poorest on earth and a permanent beggar because the government sees poverty and suffering as both a money making venture and a means of preventing the evolution of economic or political rivals that would accompany the empowerment that not worrying about survival and starvation would bring.

To make that image particularly grotesque, severe and appropriate imagine a man being whipped and picture that each drop of blood, every drop of sweat and every teardrop from the victim translated into cold hard cash for the torturer. That is an accurate picture of today's Ethiopia.

Think we are being extreme? Well, the Ethiopian government is financed based on how much Ethiopians suffer. Where some countries see cash in development, Ethiopia's rulers see cash in wretched poverty. They calculate that is safer than letting Ethiopians become independent and prosperous - at which time their demands for political rights may become more acute.

The whole world sees this clearly but what are they going to do about it? Send in the US Marines or UN Inspectors to make it all better? No, they all just recognize that the Ethiopian people are effective hostages of their own government and know that they must treat the government with some modicum of respect lest 70 million people fall even further into despair.

The government has a policy of not only divide and rule but of emphasizing abroad every chance it gets that Ethiopia is on the verge of genocidal tribal religious chaos. This is not at all true but it tends to silence critics who worry that like an evil Samson, that the Ethiopian government will make the whole nation come crashing down around it if it is sufficiently threatened.


Of course dear reader you mustn't worry, there are golden parachutes in reach for the revolutionary nobility. The only problem is that as the brutal face of the government becomes more clear to the world that unharried, comfortable exile becomes a more distant possibility for those that give the orders.

There may be no Mugabe to save the current band of neo-communists in the Gibee but that is actually a problem for Ethiopia. The more easily they can let go of the Tiger's Tail the better. Perhaps a worldwide Tyrant Protection Program is a good idea.

Oh yeah, the Norwegian Company that sells fertilizer to the exemplary government described above gave the Prime Minister his $200,000 prize. Such a prize is normally called a kickback, indeed by cutting out the corporate middle man, just a few tens of thousands of Ethiopian peasants could have had their finances runined with easy and the money sent directly to its destination.


Getting back to the point, lust for power for a few has made Ethiopia a place where suffering is now tradition. How then do we explain the intellectual academic cheerleading crowd at the ceremony in Norway cheering the authors of so much human misery on. The cheerleaders are not ignorant men. They know exactly what their new friends are all about.

The cheerleaders are also not bad men, they don't want Ethiopians to suffer. The problem lies in their esential intellectual's dilemma. They are so wrapped up in their ideas that they imagine themselves to be above petty politics and therefore petty realities of human concern. By having their eyes on some ever more distant mirage of even minimal improvement with no attention to the road or the people being trod on, they hope to mean something to humanity and to history.

Well, they do and it is not going to be a good legacy. The ends do not justify the means especially when the same means have been proven rotten at achieving good ends repeatedly over a century of human experience in dozens of countries at a cost of a hundred million lives, the suffering of billions and the waste of trillions of dollars.

Given a chance those worthies would have cheered on Nyerere or Nkrumah in their day as well. Some of them probably did. Actually they would have cheered on Idi Amin, Bokassa and Mengistu as well if they made the right progressive noises.

Ultimately the differences between all the despots listed above amounts not to death and suffering itself but to fine and convenient calculations of how much. Public relations and acting go a really long way too in getting the blessing of influential intellectuals. Some tryants just come across as 'Africans we can deal with' and fine cocktail party company while others are just more unabashedly dictatorial and rather embarassing or boorish dinner partners.

We would argue with confidence that with better manners and by being less forthright about the total gallons of blood he shed, that Mengistu could have easily survived in power until today. He would have been the new renaissance African leader of everyone's dreams in the 1990s and a humanitarian prize winner today who just won an election in a 'maturing democracy'.

The only way folks can justify such nonsense is by convincing themselves that Africans have different standards, or can't be blamed so they don't deserve as much - one can't say that out loud or pat them on the head but the message gets through loud and clear to anyone who is paying the least attention.


A simple way to avoid that 'romance of the primitive' trap in evaluating a government is to carry out this excercise every time someone, of any origin hears or encounters a dictator.

Close your eyes and imagine that the dictator is white and that their subjects are black or brown. Visions of Apartheid South Africa will immediately pop into place and depending on the country, sometimes even worse systems of government.

Keep listening and wonder if it makes sense that oppressing and killing one's own should lend some moral justification to what is done to innocents.

Someday, in a rational universe the litany of African dictators will include generations from all over the continent including Botha and his ilk in no particular rank of importance or wrong done.

Until then we will celebrate the victories over Apartheid in Zimbabwe and South Africa and wonder why Zimbabweans suddenly mattered less after Mugabe took over and why other Africans aren't worth mentioning at all.


Every word you hear dear reader about how money transfers will make the third world rich or even better are a massive lie. Not just based on common sense but on experience of hundreds of billions of dollars spent over the past half century in games played with a billion lives.

It all serves some complex internal need we all have to be moral, to find simple solutions and to serve the common good. Problem is that it just does not work, it never has and it never will.

What the third world and particularly Ethiopia needs is the institutions of accountability in freedom and democracy. They need ownership and a sense of possibility over their own and their children's fate independent of corrupt and brutal authority. People who are enfranchised , who have choices never starve - they even improve their own lives on a regular basis.

What is really amazing and tragic is also the reinforcement of failure. Leaders who do the right things are more likely to be bothered by the world than the ones who do wrong.

You can build billions worth of things or at least as much as they are worth when a thieving system allows actual funds to trickle down. However, it is all nothing without maintenance and care. The rich world is not rich because it has things ... it has things because it is rich ... and it is rich because the right institutions were allowed to develop and build all those things.

What is the purpose of human life in the modern era? We should certainly be beyond the point where survival in a "poor nasty brutish" state is commendable or acceptable. Actual human progress that the basic laws of liberal democracy and capitalism have proven that they can deliver is the current minimal demand of all men and it should be that of Ethiopians.


We speak in turn to everyone native and foreign who cheers on such authors of a permanent Hobbesian nightmare in the service of their own interests, ideas and egos from any stage. You share blame with every despot and dictator for the human condition in places like Ethiopia. That includes all of the cadres, sycophants, yes men, cronies, opportunists and agents of such despotism.

What you serve does not work, indeed it brings only suffering and death. You know it and can't pretend you don't or that you were only following orders or that everyone else does it too. That was the lesson of the bloody 20th Century, that saying all the right things and even feeling all the right things on any theme or subject for anyone's benefit at all usually meant doing all the wrong and inhuman things to milliona if not billions of actual humans.

Sure it feels good to replace the Ethiopian people and be the ones the government desperately seeks approval from - thereby shortcircuiting democracy. Sure no one would ever let you do those experiments on real people's lives in Ohio or Bavaria, and sure those places got rich doing the exact opposite of what you reccomend. Sure you are a better person than someone seeking mere profit. ... on and on .... Sure, just keep your dreams for yourself and get out of the way of liberal democratic capitalism. It actually works. It made you rich didn't it?

In the end, the enterpirsing businessman, the farmer, the inventor, the herder and their ilk who just follow the rules of a rational society stand far above the dreamers who "only want to help". The first group actually does all the right things given a chance. The second group is so in love with its own self image and brain that just spins recycled ideeas around in some eternal dream world of short term memory and no consequences that are noticed.

For some folks, the whole thing ends up a nightmare. Imagining that it is OK for them to live under different rules than you would expect for yourself is an example of the vile sentiment of actual romance and purpose that is found by some in other people's suffering.

<< Home