Notable economic trends in other countries

Currently, one of the books I am reading is Charles Darwin’s The Origin of Species. I am impressed by how often the man regarded as one of the greatest British scientists of all the time acknowledges the debts he woes to other scientists and scholars like Thomas Malthus and Herbert Spencer. This is the secret of people we call geniuses; they build their reputation on the brain and experiences of other people.

It is the same with countries that have made economic and social advancements. They want what other countries are doing from both their success and failure. We Malawians and fellow Africans must be doing the same thing, keeping abreast with what others are doing and learning from them.

At the moment some of the problems confronting us are how we can alleviate the poverty of the poorest among us when our resources are meager. Must we wait until we have become a middle income country, meanwhile what happens to the desperately poor?

In the past three or four decades, the per capita incomes of Malawi and Ethiopia were almost at par, at the bottom of the ladders. The Economist magazine of July 2-8 says an Ethiopian scheme to help the poor could be a model of other countries. The scheme named Urban Production Safety Net Project was launched as recently at the year 2017 and is among the largest in sub-Saharan Africa, outside South Africa. It is designed specifically for urban areas. About 400 000 poor Ethiopian in 11 cities are already enrolled. It is the first step towards building a national social security scheme.

Ethiopian rural social scheme is widely recognised as a success. It has reduced rural poverty and helped the poor. At the beginning of the multi-party in Malawi, the Bretton Woods institutions and the donor introduced into our economic vocabulary at least two terms. These were structural adjustment and poverty alleviation. Have we done some auditing to find out what success or failure we have made? Would our embassy in Addis Ababa together with officials from there contact the Ethiopian technocrats and try to learn something about their social schemes, which encourage the poor to work.

Two of the bogeys threatening Malawi at any time are hyper-inflation and budgetary as well as current account deficits. These bogeys have at one time or another almost made some countries ungovernable. I will cite two European countries bordering the Mediterranean Sea, Turkey and Greece.

In his well-researched book The Rise and Fall of Nation, Ruchir Sharma speaks of what had happened in Turkey before Erdogan became president as an illusion of how leaders who don’t understand basic economics and those who meddle too much and invest too little can nurture inflation.

“In Turkey,” says Sharma, “Religious or not all these parties shares a penchant for populist spending promises. At election times, they would vie to one-up each other in guaranteeing voters more government jobs or more generous subsidies. At one giddy point in the early 1990s, a candidate promised every Turkish family two keys, one for a home and one for a car.

Less than a year from now, we will be having the tripartite elections. We must guard against hyperbolical promises or implementing them willy-nilly which they could generate hyper-inflations and balloon budgetary deficit as well as the national debts. In economic management as in personal life, prevention is easier and better than cure.

As for Greece, the troubles were started through attempts to try and please rent-seekers, people who want to earn more without producing more. Farmers and teachers demanded and obtained increases in irrespective of the state of the economy and productivity. Tax evasion is rampant there.

When Sharma was checking out of a hotel in Athens he was told to take with him the documents that had been used to clear the bills. The officials at the immigration points do check if the guest paid cash which they say is the method adopted by tax evaders.

Here in Malawi, people who withdraw piles of money from their books and keep them in the house have sinister motives; the law must discourage such practices.