“Economic Inequality and Insecurity” by Prof. Osita Ogbu, FNAE, OON

Keynote Address Delivered at the Launch of the Afrinvest 2020 Banking Sector Report-8/12/2020 by Prof. Osita Ogbu, FNAE, OON Director, Institute for Development Studies, University of Nigeria, Nsukka and Former Chief Economic Adviser to the President.

 

I. Preamble

“Where Justice is denied, where poverty is enforced, where ignorance prevails and where any one class is made to feel that society is in organized conspiracy to oppress, rob and degrade them, neither persons nor property will be safe”, – Fredrick Douglas, Washington DC, 1886.

 

In the words of a Nobel Prize winner, Armatya Sen, “Poverty and economic inequality may not instantly breed terrorism or influence the leaders of terrorist organizations, but they can help to create rich recruiting grounds for the foot soldiers of the terrorist camps.”

 

II. Inequality and Insecurity – the Absence of a “Mindful Society”

My thesis- It is not poverty per se that creates insecurity. It is the economic inequality, the widening gap between the rich and poor, that breeds insecurity. It creates an unfair and unjust society, leaving many in a state of hopelessness. Relative deprivation created by an unfair economic system and poor governance that feeds the exploitative class- both business and political- to the detriment of the poor is a significant recipe for insecurity. In other words, when we were all poor, insecurity was not an issue. We were all safer. When commonwealth became increasingly private wealth, captured by a few, insecurity became a natural consequence.

 

With great advances in technology, life is supposed to be more abundant and more meaningful for all. And indeed, the world, and even Nigeria, has generated enormous wealth. With civilization and enlightenment and with our shared history and common humanity we are supposed to be more accommodative and tolerant; more inclusive in the sharing of prosperity, and we are supposed to have conquered our primordial instincts of the survival of the fittest and primitive accumulation. But we have not. Historically, violence and insecurity were associated with struggles for control of scarce resources. While the struggle for control of scarce resources still exists as we, sometimes see in “just and unjust wars”, the more dangerous forms of insecurity, as we experience in Nigeria, have arisen as a result of widening structural or systemic inequality created by unbridled greed, selfishness, poor governance by the ruling elite, poor attitude of the business elite and the absence of a “mindful society”. This is an elegant term introduced to us by Jeffrey Sachs in his book, The Price of Civilization: Economics and Ethics After the Fall. A mindful society resists the lure of mass consumerism; a mindful society cannot be ranked number one in the importation of champagne while ranking number one in under-five malnutrition; a mindful society is concerned about the poverty trap of many of our working poor.   It seems, therefore, that with technology, new knowledge, and creative business ideas, life has become increasingly more abundant for the few, as those who command this social means of production are increasingly appropriating the massive benefits privately. While technology is promoting interconnectedness and “social intercourse between nations and peoples” through the internet, electronic and social media; it is equally polarizing the world as the benefits of the knowledge/technological world are shared unequally. Access and control of knowledge and technology are now devoid of their moral and socializing character.

 

In his book, Life Beyond Measure: Letters to My Great Granddaughter, Sidney Poitier, the great American actor and the first black man to win an Academy Award for the best actor wrote: “Before I came into the World, there were challenges, danger, and hunger. I don’t know if there was as much hope then, Ayele, as there might appear to be now. By the same token, I can’t say that hope now is much more substantive than it was then. I do know that the world as it is today is much more dangerous than it ever was in the past years.” And if I may add, when I was growing up, the children of Oga’s driver were attending the same school as the children of Oga – providing a level playing field and equal opportunity.

 

And indeed, the world is a lot more dangerous now than it has ever been because right now, the children of Oga are all schooling in the very expensive private schools in Nigeria or abroad whereas the children of the driver are left in dilapidated public schooling where there is schooling without learning, breeding an army of unemployables. Injustice is reigning supreme. It is a world where our freedoms as citizens of the world are curtailed by “non-citizen” actions of kidnappers, armed robbers, cultists, Boko haramists, suicide bombers and other fringe groups that are equally destroying the basis of their citizenship. But they don’t care. It is a world where justice and equity deficits are creating hopelessness and misery, forcing young people to see the state as the enemy and every successful person as an oppressor. But many have been misled to wear the garb of violence in the mistaken belief that it is the means to create hope, justice, and equity. What is worse, the garb of violence is increasingly wearing a new religious paint, with the adherents being indoctrinated to see every non-adherent as an enemy and a legitimate target. Violence affects the perpetrator. Insecurity hardly discriminates amongst its victims. Therein lays the greater danger. Suddenly, your friend and neighbour become a target; your fellow traveller chained by the same yoke of injustice becomes a target; ordinary citizens, passengers in an aircraft, a group in a church, mosque or market become victims of weapons of mass destruction in the hands of brain-washed religious zealots and, used and discarded political miscreants.

 

III. Greater Equality, Strong Citizenship and Societies

In their international bestselling book, The Spirit Level: Why Greater Equality Makes Societies Stronger,[1] Richard Wilkinson and Kate Pickett (both distinguished Professors) supplied a rich and robust evidence to confirm our gut feeling, that great inequality cannot be good for any member of the society, including the well-off. In the book, they ask: “Why do Americans mistrust their fellow citizens more than the Japanese do? Why do Americans have higher rates of teenage pregnancy than the French? Why do Americans have more homicides than the Spanish, Australians and Danes put together? And the answer: America has greater inequality!”

 

I can ask the same questions about Nigeria. Why is there a huge trust deficit in Nigeria amongst citizens and between citizens and their governments? Why do we have kidnapping, terrorism, banditry, rising prostitution? Why do we have one of the highest maternal and infant mortality rates in the world? Why are our students in school but are barely learning? Why do we have one of the highest numbers of children out of school? Why is it that domestic violence, rape and gender inequity is rising in our society? Why do we have rising insecurity? Why are our political processes bedevilled by thuggery and mediocrity? Why are we now a nation of endemic corruption? We can have the answers in our widening inequality. The situation is made worse because our growing economy is making a few very very rich and the majority very poor, and this is complicated by inter-regional and intra-regional inequality that leads to the wide disparity in capabilities; undermines our patriotism and sense of oneness; hoisting a new set of wrong values on us; with everyone scheming to undermine our laws and institutions, with poorer segments of the society dialectically challenging the same laws and institutions that are supposed to protect them, unfortunately without necessarily advancing their own agenda or improving their situation.

 

All around the world, from Asia to Europe, from the Arab world to North America to Africa and to Nigeria, inequity and injustice reign, fueling all forms of non-peaceful coexistence and, sometimes, extremist behaviour, often of the violent form. And this is not to excuse violence and extreme behaviour because violence is an unintelligent and incompetent response to social injustice. But it is to recognize how acts of omission or commission that diminishes any one’s or any group’s human dignity: from a rigged election to dictatorship; from corrupt leadership to incompetent /insensitive leadership; from racial to religious bigotry; from economic structures that benefit a few disrupt the tenets of peace. Poverty, according to Mahatma Gandhi, is one of the worst forms of violence. And we have governments that have, over the years, carried on with policies and acts that continually impoverished her people and hope that all the armies and the police of this world would help them maintain peace.

 

Writing the Foreword of the aforementioned book, The Spirit Level, Robert Reich, a Professor of Public Policy at the University of California at Berkley stated that “inequality undermines the trust, solidarity, mutuality on which responsibilities of citizenship depend.” Simply put, inequality breeds lawless and irresponsible citizenship. So how can you have responsible citizens where there is one law for the poor and another for the rich? And the penalty for a small breach of the law by the poor is swift and severe but the rich is allowed to use technicalities to escape the long arm of the law. How can you have mutuality and solidarity when every rich Nigerian man dies in London or Paris and every poor man dies in his forsaken village or urban slum?

 

IV. Inequality and Insecurity – the Need for Holistic Solutions

So if the prevalence of ill-health, capability deprivation, crime and other social problems are related to inequality; why has this problem remained intractable even in advanced economies? In addition to relying on the market that, in many instances created the problem to reverse the problem, Wilkinson and Pickett points out that many of the policy initiatives pursue partial solutions, and attempt to “break the links between socio-economic disadvantage and the problems it produces”. In pursuing partial solutions, policymakers often assume that the circumstances of the poor do not matter for as long as the issues they are confronted with are being dealt one by one. But every problem is related to the other. So what is required is a holistic solution that addresses the circumstances of those that have found themselves at the lower end of the socio-economic rung; with States (not only Federal government) recognizing that they must become centres of shared prosperity.

 

So, it is not about tradermoni or such like schemes and palliatives. It is about giving the poor a stake in the economy now and in its future. To be an active participant in the economy will require improving the assets of the poor, their knowledge and capability. It means access to good public education and health facilities. It is about stimulating inclusive growth by undertaking stable and transparent macroeconomic policies; growth that is induced by an intelligent State providing incentives for domestic and foreign investment in the employment generating sectors; it is about increasing credit to agriculture by encouraging large scale farming to improve agricultural productivity; Using research institutions to support to generate knowledge and technology for the productive sector; increasing the productivity of the poor through access to technology and knowledge; expanding the manufacturing sectors by directing development banks to advance credits to strategic import-substituting manufacturing; taming inflation; and controlling population.

 

When you expand economic opportunities through reform induced growth, how can you spread these new possibilities and make it inclusive? I turn to Amartya Sen and his insights in his book, Development as Freedom[2]. According to him, “many Asian economies – first Japan, and then South Korea, Taiwan, Hong Kong, and Singapore, and later post-reform China and Thailand…have done remarkably well in spreading the economic opportunities through an adequately supportive social background, including high levels of literacy, numeracy, and basic education; good general health care; completed land reforms etc. In other words, raising capabilities of the poor, addressing their “capability poverty” in all its ramifications must be seen as complementary to economic growth if growth must become inclusive. Policies must therefore address the many “unfreedoms” associated with poverty and inequality in other to have any significant impact on insecurity. You need to raise the productivity of the poor by raising their human capital assets; provide a level playing field and incentivize productive engagements in the rural areas. But these solutions must emanate from a developmental state with developmental institutions that extend and tame the market economy – institutions that address the ethical behaviour of the society; that build trust and re-orient values; that are concerned with the redistribution of wealth; that have a fair and progressive tax system that taxes the rich to provide services that the poor enjoy. We need institutions that moderate the incentives for unbridled pursuit of private goals as against social goals; institutions that produce politicians and policymakers that understand and are willing to use their economic and political space to pursue common goods and agenda. We need to support growth with revised developmental ethics, realizing that in the long-run, widening inequality would undermine economic success.

 

V. Insecurity, Youths and Existential Vacuum

As for the youths, the situation we have created have left many in search of meaning and purpose for their lives. In his book, Man’s Search for Meaning, Victor E. Frankel talks about “existential vacuum” as “ a widespread phenomenon of the 20th Century” arising from loss of animal instincts; that paradise of freedom that allows us to label most behaviour as arising from instincts.  This is coupled with another loss arising from the absence of a dominant culture that prescribes the boundaries of behaviour and determines how we ought to behave. So, we are left unguided, not relying on our primitive instincts and not bound or disciplined by culture. This would not have been an issue if this phenomenon was benign.  But we are now forced to make choices, good or bad as knowledge beings and enlightened humans. It is this existential vacuum that leads to aggression, suicide, rape and other off-limit, extreme, often dangerous behaviour. What have we done to contribute to this existential vacuum that now exists especially amongst our youths?   It is not simply that we have lost our instincts and the dominant culture of control but that we are in our actions, policies, activities and personal conduct creating this existential vacuum for our youth. When teachers do not teach; when Governors do not govern; when Ministers do not Minister; when leaders do not lead and when parents do not parent; when preachers preach hate instead of love; what hope is there for the youth for the future? Many of our young people are, therefore, still searching for meaning in their lives leading to poor perception of self and alienation from society that has conspired against them. Unchecked, the search for meaning can make someone, the youth, susceptible to drug abuse and for recruitment into violent-prone brotherhoods and affiliations – cultism and the like.

 

VI. Concluding Remarks

Finally, if we realize like Bono did in the foreword to Jeffrey Sach’s book, The End of Poverty, that “the destinies of the “haves” are intrinsically linked to the fate of “have-nothing at alls”, we must learn to govern differently at all levels and aspire to create a just and less exploitative economic system. We must understand that the war against insecurity should be a comprehensive war against poverty and more importantly, a comprehensive approach to creating a “mindful society” and reducing inequality.  The task is for competent governments to set a clear strategic direction and boundaries, and for the private sector to key in.

 

Thank you.

 

[1] Wilkinson, R. and Pickett, (2010). The Spirit Level: why Greater Equality Makes Societies Stronger, (New York, NY: Bloomsbury Press).

[2] Sen, A. (2000). Development as Freedom. Anchor Books, Random House, New York.