Nairobi Star (Nairobi)
Maina Kiai
24 September 2008
column
This week has been full of news and information about the serious economic downturn in the US that has led to the collapse of some blue-chip companies, as well as the involvement of the Federal government in assisting or taking over other major companies. These events follow a massive crisis in the housing market which has led to tens of thousands of people unable to pay their mortgages resulting in the loss of their homes. In the US this is akin to losing the family farm.
One of the interesting issues for me has been the acknowledgement of the US Government of the need, sometimes, for state “interference” in the markets; this from a government that led efforts to reduce state involvement in other countries economy. This was the blue-print for the Structural Adjustment Programs that while leading to growth in many African countries, also led to massive unemployment, reduced healthcare and declining enrollment in schools as governments were forced to scale back their contributions to social welfare and development.
In simple terms, the current financial crisis has some roots in the de-regulation of corporate America that John McCain favored and supported. Of course now, and in yet another confirmation of Barack Obama’s position, he is calling for more regulation of companies and greater scrutiny. That is as it should be, for government in its proper role needs always to look out for the common citizenry as laissez faire capitalism can hurt as much as communism.
But in the 1980s and 90s, there was a push to de-regulate companies and corporations so that they could “perform to their maximum” and bring growth and profits. A large part of that came from the ideological viewpoint that believes that the market can cure and handle everything. While profits and economic growth soared, America witnessed the meteoric rise of corporate salaries and emoluments for a select few. The performance of the corporation mattered not.
And there was a shift felt across the country as jobs increased, and incomes rose. But without regulation, and amidst this fierce competition for personnel and profits, companies started living beyond their means and assets. So they want to introduce a new product that costs a massive amount that is well above the worth of the company? Well, just borrow and do it. They borrowed from each other and countries such as China and others were happy to invest their money in the companies sure of handsome and safe profits. And greed, massive greed, took over. Now the chickens have come home to roost.
In this environment it is often Democrats who do better than Republicans. While Republicans are seen as good for national security and find it easier to send troops into war, Democrats have presided over the last few economic upturns in the US, most recently under Bill Clinton. This even though conventional wisdom suggests that the Democratic Party is the party of bigger government, and higher taxes. Yet, in a rough study by Michael Kinsley in Slate.com, he argues using figures from the annual Economic Report of the President, that “on average, in the years when the president is a Democrat, the economy grows faster, inflation is lower, fewer people can’t find a job, the federal government spends a smaller share of GDP, whether or not you include defense spending; and the deficit is lower.”
It is now Obama’s task to show Americans that as President these trends will be replicated, especially since the Iraq war has reduced in importance as an issue of concern at the moment, its place taken by economic concerns. And to do this, he needs to get this reality beyond the minds of the American people, and into their hearts and guts, as this is what determines voting patterns, especially when the candidate is as “different” as he is. I don’t know how he will do it, but that is what I am here to learn and observe.
For us in Kenya and indeed in the rest of the world, our economic life is linked to the US economy. We use the dollar as our standard trading currency internationally. We rely on the US contribution to the World Bank, IMF and UN agencies. Even if our trade with the US may not be much, virtually all the countries we trade with rely on the US and its economy: from China to the UK; from UAE to South Africa; from Egypt to Pakistan; from Uganda to Saudi Arabia… So we have stakes in this more than we think.
I am certain that these issues will be critical in Friday’s presidential debate in Oxford, Mississippi, which I will be covering for KISSFM and Nairobi Star from there. It will be interesting to see and note the reactions of people to these issues outside Washington DC so keep posted…
Meeting Miko Sloper:
As I walked the streets of Washington, I encountered a man, in an Uncle Sam outfit, carrying a poster in support of Obama. I finally nailed him and we had a sit down this week, as I was curious why he, from California would dress up as he does and be so enthusiastic in his Obama support.
(I have this new-age tape recorder that Caroline Mutoko has lent me. Maybe it’s me and my technological deficiencies but I was unable to get him on tape even though I was sure I had…I will master this technology by the week’s end…)
Anyway, Miko is a teacher who taught in international schools in Asia. He is now back in the US and between jobs. So rather than look for a job at the moment, he decided to volunteer his support for Obama, on his own volition and independently of the campaign and any of its formal and informal structures.
I asked him why DC which is Obama territory. “DC gets lots of tourists from across America, most of who pay a visit to the White House where I am based. I hope that if they see this strange outfitted white man holding a placard for Obama, and they take pictures of me, we can have a discussion on the elections when they get back. Of course, foreign tourists also find me interesting and they take pictures of me and hope they can spread the word around their countries that despite George Bush, not all Americans are like him,” he said. His hope is that the pictures taken can start debates in the small towns, and big cities that tourists hail from, and whether they end up supporting Obama or not, at least they would discuss that.
I asked him why he supports Obama so deeply. “Well, Obama has said that he will reverse the Bush approach of “shoot first and talk later” in favor of dialogue as a tool in international relations and world peace. That is really important to me. Also, he has said he supports justice and better equality so that the rich can be taxed more, and there is a better spread of incomes in the country. Since Bush, what has happened is that the middle class are taxed almost as much as the wealthy classes, and this flattening of tax rates can’t be just or right.”
An interesting man, indeed and I just wish the tape had not failed me. (Or I had not failed the tape!!)
DC Scenes:
One of the best parts of DC is the forums that it attracts and this week I attended a wonderful session that was looking at the recent deal in Zimbabwe and comparing it with the one in Kenya. There are some similarities—mainly that flawed elections lead to elite consensus without people involvement, begging the question of why vote if all that does is get the opponents to talk and hammer out what seems to be a mutually, and personally, beneficial deal between the players. But there are also major differences in that the talks in Zimbabwe have been going on since March 2007 and had gone a long way till Mugabe gambled that he could outwit MDC and called early elections after only implementing some of the agreements that had been struck.
And then too there are fears that those who have been holding the reins of power may only grudgingly accept the deal and do all manner of things to subvert it—as our own Francis Muthaura, Hussein Ali and Martha Karua have been known to do. I cautioned the group to be careful to try to make this deal a transitional one intended to sort out fundamental reforms, rather than a 5 year plan for players to make money and continue their intrigues, relegating real reforms to the back burners. I was however pleased that in Zimbabwe they agreed to a fixed number of Ministers, unlike us, but warned that much would depend on the quality of the Ministers selected from all sides. We know how many crooks, conmen, known war-lords and other miscreants are in our Cabinet from both sides…
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Obama needs to show the american people that he has the ability to prevent this meltdown in future and he is able to handle it if it happens.