‘It's the economy, stupid’
Let me start by elaborating the title of this essay before all the purveyors of form over substance get all hot and bothered, feign indignation and unrighteous anger, which will only distract the ‘Tarzanomics’ teach-in on why our currency is fleeing faster than an Usain Bolt sprint run.
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“It’s the economy, stupid” was the campaign catchphrase of “The Man from Hope”, who though many said had no hope, managed to unseat the hero of the first Gulf war to become the 42nd President of America. A related phrase which contributed to the unlikely victory of William Jefferson Clinton over George Herbert Walker Bush was the latter’s fatal promise of “Read my lips, no new taxes” in his campaign to succeed his boss, Ronald Reagan, whose legacy to America was gargantuan debts.
As with everywhere else in the world, we the people of Ghana elect our government to make our lives and those of our children better; circa “in whose name and for whose welfare the powers of government are to be exercised”.
Better means measurable improvement in the quality of our lives and perceptively upward movement on Maslow’s hierarchy of needs; going up the ladder from 1)Physiological (basic ); 2) Safety; 3) Love/Belonging;4)Esteem; and, 5) Self-actualisation. The least we expect is to move away from the basic needs, and even dare to hope to reach the top of self-actualisation excess.
The wealth of a nation and the well-being of its people are measured by three key indicators; 1) Gross Domestic Product (GDP); 2) the Structure of the economy; and, 3) the Purchasing Power Parity (PPP).
Here in Ghana, we know and gloat over the first, trumpeting our middle- income status, have some idea of the second, and say very little about the third and most important, PPP.
‘Money makes the world go round’ predates globalisation but it is still the currency of well-being. Harold Wilson, Britain’s prime minister in the swinging 60s, talked about ‘the pound in your pocket”; and we who are consumed to spend all the money we don’t have on seeing off the dead, seek refuge in Big Joe’s ‘sika ye mogya’. The Rev Ike, my favourite charismatic pastor, sums it all up cynically as, “Praise God and pass the buck; the lack of money is the root of all evil”
When folks have money in their pockets, they go out and spend, spend, spend and spend; on nice houses with running water and electricity; good quality education for kids, good food at home and at restaurants; shiny cars, a few beers at the drinking spot and the obligatory tithe.
Spending it constitutes the service sector of economies; whose proportion is almost always the real indicator of both the wealth of the nation and the well-being of the people. Almost 80 per cent of America’s GDP, the largest economy in the world, comes from the service sector; with nearly 70 per cent in retail.
We hear very little about PPP in Ghana, although it is probably the thing we should worry most about right now. Without getting too technical, PPP defines the relative buying power of our cedi for the same goods and services in comparison to other currencies. Here is the rub; our currency is in free fall; it has lost more than 30 per cent in the one year of President Mahama’s presidency.
The cedi in our pockets is buying less and less and we are busy trumpeting our middle-income status. Accra is now ranked as more expensive than Lagos and indeed among the most expensive cities in the world. And what is the response of government; impose more tax, tax and tax directly and consequentially on the survival services of utilities, transportation, basic health and social provision. A falling cedi translates to rising fuel and utility prices. It also translates to higher food prices as we have become more dependent on imported perfumed rice and bread from imported wheat as our staple foods.
We compound the misery of our people by touting near double-digit inflation, which further shrinks the cedi in our pocket as a major achievement of economic management. When you finish it all off with the “bolo” punch of 30 per cent cost of doing business, the hackneyed phrase of ‘the private sector is the engine of growth” rings as hollow as a clapped-out car on the roadside whose engine parts have been cannibalised.
How do we get out of this pretty mess? We should start off by putting a stop to living beyond our means. A seemingly poor country where land sells for US$2 million and posh condominiums start at US$400,000 is living in a fool’s paradise of drenching sleaze and corruption, nothing more, nothing less. A poor country that spends almost 70 per cent of the wealth of the citizenery on the consumptive lifestyle of 600,000 of its 25 million people cannot be serious.
When those who come to our aid worry about balancing their budgets, our rulers of all shades smugly pronounce that the notion of a balanced budget is alien to us. When they worry about trade deficits, we go on our merry sweet way to increase enormous and suffocating burden of excessive borrowing to sustain the want and greed of the rulers and their crony capitalists.
On the simple INPUT / OUPUT platform, we need to stop spending more dollars than we are earning, never mind the fact that petrol-dollars are fuelling our boast of middle income status. The peoples of the economic giants of this world are able to spend more because they have created more wealth from their own sweat and seek continuously to live within their means
If you think I am being too simplistic, look at the examples of our benefactors. Since 2007, all the major economies: America, UK ,the EU and even the BRIC nations, have had to cut excesses from their economies in response to the deep recession and economic downturn. They have also pursued policies which kept the cost of borrowing very low (<1 per cent ) to give incentives to their wealth producers and also to protect the value of the people’s spending money.
Someday in the near future, we will have to achieve a new independence and liberate our economy from the colonial structure that is still in place after almost 60 years as a self-ruling nation state. Until we do that, and even to ensure we can get there, all governments of Ghana should ensure that even if they cannot increase the well-being of we the people in whose name they govern, they should ensure that they spend within the country’s means instead of doubling our pain and agony by heaping more taxes on our sorely aching heads.
As for William Jefferson Clinton, he managed the economy so well so that not only did he bequeath gargantuan budget surpluses, a grateful America, God’s own country, decided that the meaning and morality of what constituted sexual intercourse was a matter between him and his Maker in the hereafter. He had done right by them here on earth and that was good enough.
And what of all the money Bill left? George Bush the son gave it all away to the very rich and greedy bastards to ‘chop chop’, leaving Barack Obama to adopt the Man from Hope’s refrain and become America’s first black president.
Governance is about putting money into the people’s pocket and retaining its purchasing power. It is not about taking money away from the people through crippling taxes and daily falling currencies. That is why “It‘s the economy, stupid” will be the most lasting legacy that the Man from Hope bequeaths to all those who seek and get the people’s mandate to govern in their name.