POLITICAL EDITOR: Welcome to our capitalist world

02 Nov, 2014 - 06:11 0 Views

The Sunday Mail

Every day we are assailed by gratuitous messages reminding us glibly that ‘change’ is the only constant in this world. An interesting oxymoron.

Yet the sad reality of life is that if you are a small country, especially in the developing world, particularly the Middle East and Africa, being, or trying to be different, can have costly consequences. This suggests, in a way, that if you happen to live in the two geographical spaces mentioned above, while change is the constant, you cannot be left to determine the direction of that change.

There are bigger forces which have established coordinates within which this constant change must revolve in a deterministic way. Any attempt to influence that change, to make history, to be different, to ‘independently’ determine a destiny beyond set coordinates, invites deadly consequences.

Welcome to our capitalist world and its principles of market fundamentalism in which the fortune of a few billionaires increase exponentially parallel to the widening income gaps and growing poverty worldwide.

Let’s start the change process on a more modest level, in the acceptable realm of capitalist operations. I am referring here to the revolution taking place in the way people access and use their money to purchase goods outside of the formal banking system as we have known it here in Zimbabwe, and its impact.

Smartphones, those little gadgets we all carry on us everywhere, are slowly turning into lethal weapons able to demolish the walls of conventional banks by constantly pushing customers further and further away from banking halls. I don’t know if the introduction of digital cash dispensers by banks at ATMs can in any way rival the convenience offered by cellphone companies such as Econet (EcoCash), TelOne (NetCash), NetOne (OneWallet) and Telecel (TelCash).

Our retail banks and bankers have remained faithful to their traditional business of lending, managing and protecting our deposits. When we want our money, we must get transport to the nearest branch, stand in a winding queue in the sun; no refreshment, no entertainment, and no one talks to you until you reach the already tired, overworked, sullen and glum lady by the counter, who can hardly afford a smile anymore.

As gently as possible in the circumstances, she indicates to you with her red pen that you didn’t fill in the date on your withdrawal or deposit slip, which you must do away from the counter while she attends to the next customer.

While she might recognise you on your return, you must endure the frown on the face of the customer who thought it was his turn to be served. Then again the lady tells you your signature doesn’t correspond to the digital version they captured when you first opened your account.

You might not even have the energy to shout at her. In any case, there are too many impatient customers breathing down your neck who very well remember their signatures!

Talk about change as the only constant in banking. Most are missing the revolution. To say Zimbabwean banks long ago stopped offering interest on deposits is to add salt to injury, before they insult you with service charges. Who wants to go back into the hall of infamy when one can as easily pay one’s bills by merely punching a few keys on the smartphone without leaving their bed?

What sort of advice do you imagine the capitalist would give to these traditional bankers?

Simple: innovate or die. You can’t keep doing things the same old way and hope to survive, or expect different results. Logical, isn’t it?

Not quite in this “best of all possible worlds”, to quote Voltaire’s Pangloss.

Crisis and billionaires

Oxfam is an international charity confederation of 17 organisations fighting extreme poverty in the world. It was founded in 1942 and operates in 94 countries.

My interest is in its latest report on billionaires and poverty released last week. I beg the reader’s indulgence as I wish to quote the report at some length.

Oxfam reports that the number of billionaires has doubled to 1 646 and their wealth grown by 124 percent since the “global” financial crisis triggered by America began in 2009.

In the same period, says Oxfam in the report titled, “Even it Up: Time to End Extreme Inequality”, poverty and inequality have hit new extremes.

“The 85 richest people saw their fortunes increase by around $240 billion over the past year, and own as much as the poorest half of the world’s population – the equivalent of $668 million per day or almost half a million dollars per minute,” reveals Oxfam.

Listen to Oxfam chief executive, Mark Goldring, speak on their shocking findings: “In a world where hundreds of millions of people are living without access to clean drinking water and without enough food to feed their families, a small elite have more money than they could spend in several lifetimes. The consequences of extreme inequality are harmful to everyone – it robs millions of people of better life chances and fuels crime, corruption and even violent conflict.”

Andrew Haldane, the Bank of England’s chief economist, said of Oxfam’s report:

“There is rising evidence that extreme inequality harms, durably and significantly, the stability of the (capitalist) financial system and growth in the economy. It slows development of the human, social and physical capital necessary for raising living standards and improving well-being. That penny is starting to drop among policymakers and politicians.”

Nobel Prize laureate for Economics, Professor Joseph Stiglitz, also comments on the findings of the Oxfam report: “The extreme inequalities in incomes and assets we see in much of the world today harms our economies, our societies, and undermines our politics . . . Oxfam’s report is a timely reminder that any real effort to end poverty has to confront the public policy choices that create and sustain inequality.”

Oxfam estimates that 16 of the billionaires live in sub-Saharan Africa, breathing the same air as 358 million people living in extreme poverty. It says inequality in South Africa is far greater now than when apartheid “ended” in 1994.

I like most the conclusions arrived at by Haldane and Stiglitz in their separate ways. Both emphasise the need for direct public policy intervention, not the traditional “magic” of the private sector or so-called foreign direct investment as the solution to poverty or inequality. That’s voodoo economics, pure and simple.

Each day and every year we are told and advised to follow the development prescriptions of the IMF and the World Bank to pull ourselves out of poverty. For more than 60 years, these Washington institutions have not given the world a single success story in Africa to hold up as a model.

Coming closer to home, the new British ambassador to Zimbabwe, Ms Catriona Laing, in a piece published in a local weekly last week, repeats the same neoliberal theories about foreign investment. She said Zimbabwe was losing out to its neighbours in terms of FDI because investors needed “assurances that their assets are secure and that profits can be repatriated,”

To illustrate her point, she noted that last year Zimbabwe got a measly $400 million in FDI. This was against $1 billion and $5 billion which flowed to Zambia and Mozambique respectively. Cool.

I won’t argue about the accuracy of her figures. My worry is the impact of these investments on people’s lives. Can their efficacy be tested against the findings of Oxfam? So long as governments in poor countries have no control over the priority areas for investment and how much can be repatriated in profits, we are defying this powerful oxymoron: change is the only constant. Most of the FDI has failed to have an impact because it is invested in sectors which make it easy for illicit financial flows, tax evasion, over-invoicing of technology imports and exploitation of local labour.

Through the land reform and indigenisation and black economic empowerment programmes, Zimbabwe has taken a paradigm shift and tried to change the rules of engagement with investors. It has been subjected to ruthless punishment for refusing to behave like banks which won’t change from their traditional ways but expect different results. It is engaging in an experiment too dangerous for capitalism to flourish.

Oxfam called on governments “to follow a plan to restrain inequality by tackling tax evasion, introducing equal pay legislation, shifting taxation from labour and consumption towards capital and wealth and providing adequate safety nets for the poor, including a minimum income guarantee”.

Mild and effete as these recommendations are, they have no snowball’s chance in hell of being adopted.

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