Jobs, Higher Incomes Or Else




It is said that what put Donald Trump in the White House was his promise of jobs. Many were willing to overlook the multiple red flags – his lack of knowledge about current affairs, seeming indifference to long-held democratic ideals and various irresponsible comments – and give him a try.

And if this is the case, then this gives great credence to the claim that people vote with their wallets. Just look at Germany, whose citizens, unlike that of the United States (US), decided to elect a Chancellor for the fourth term by a decidedly comfortable margin. The fact that Germany has historically low unemployment rates, coupled with a trade surplus, may have had something to do with this.

The state of affairs in Ethiopia is a possible indication of this. It has been some time now since the government has been touting exceptional economic growth. Confident enough that this will last a long time, a target was set that would see Ethiopia become a lower-middle income economy by the time very expensive and ambitious developmental plans end in 2025.

And the citizenry was similarly confident. The roads were getting paved, and buildings were being built. Cars were getting fancier, and everyone had a smartphone. The hope was that wealth was being created, and it will slowly get around.

It turns out that wealth was going to get around much slower than that. Take, for instance, income per capita. It surely is growing but at a much slower rate than it ever used on. It was only four years ago that the nation was seeing its income per capita improving by over 14pc year-to-year. By the time the past fiscal year had come to an end, average income of Ethiopians has grown by just half that.

There have been indications that this has of course registered with the authorities, where a 10 billion Br revolving fund was setup to help create jobs. But there is very little indication that it has hit its target. Public discontent has not abated. It has only gotten worse.

This can prove either of two things. One, people still crave better incomes and more job opportunities, or two, that the political unrests have little to do with jobs but the matter of representation and good governance. But the former is very much a function of the latter. Both good governance and better representation could lead to more transparent, thus more apt, means of resource allocation into productive sectors that can then create jobs.

To explain the state of the country, authorities must take a good look at China.

What could possibly explain the lack of a similar public discontent in China, where the citizenry are even barred from watching TV shows that depict time travel? What else except that the primary worries of many Chinese – a better standard of living – have been addressed, and that other concepts such as freedom can wait?

Does this paint a dark picture, where people throw away their principles the second it seems like they will not be able to afford something?

It is actually basic human behavior. People are selfish by nature. For all of the technological and intellectual advancements made over the centuries, the second one’s livelihood is threatened, reason is thrown out of the window to be replaced by-dog-eat-dog mentality. After all, no one can eat peace and understanding.

And when the Greeks first came up with the concept of democracy, they must have had a good handle on this truth. They did not try to change this nature, but preferred to circumvent it. If leaders wanted to continue, with a political atmosphere that is a function of peace and understanding, then they have to make the government efficient enough to create wealth for the populace. It was like a quid pro quo.

The Americans tried this model, and it turns out that it works, but only as long as the populace has an absolute trust in its institutions. In the endeavor against prosperity, failure by an individual should always be considered to be a lack of talent, not the consequence of a rigged system. In the latter instance, what we have are citizens that would rather go out and protest on the streets instead of working hard to produce more and better.

And this is absolutely why Ethiopia cannot afford to be similar to China – a country where institutions are not independent but there is economic growth. It is not only that such a model is undemocratic, but there is nothing to ensure that Ethiopia can emulate China’s initial growth trajectory to be used as a cover for persistent bad governance.

It is right that the authorities believed that the best way out of the current political situation are jobs. But it is wrong that they believe ideologies and policies, that have not been able to bring about a satisfactory amount of job opportunities or higher income levels, could work even if they have not for almost the past three decades.

The nation needs robust institutions that can sift through the right strategies, and punish those without output by ending their terms in office. At some point, through trial and error, we are bound to fall on policies that can use Ethiopia’s resources to maximum effect.



By Christian Tesfaye
Christian Tesfaye (christian.tesfaye@addisfortune.net) is Fortune's Op-Ed Editor whose interests run amok in both directions of print and audiovisual storytelling.

Published on Feb 17,2018 [ Vol 18 ,No 929]


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