FEE HIKES PROTEST

 

Our students are made the victim of the governments financial mess, and our country will be deprived of a future if we do not get the activism to be so effective government is forced to recede.

Government made a mess of its finances (our tax money!). Its administration is leaking like a basket, and an estimated 30% of our tax money is stolen, because of laxity or worse. Donors were aggrieved their tax payers’ money goes to the rich and corrupt in Malawi, and stopped budget support. Now, instead of getting its house in order, our government is heaping its failures on the population, most lately on the students. Draconian fee hikes are not the solution for the challenges that our education system is facing. Think it through: fee hikes, some in excess of 700%, will be too much for many of the students’ financial muscle. This means our democratically elected government is creating an uneducated generation.  The World Bank recently released a report that shows that we have too few university educated people to serve the country. Now our government is severely limiting the number of people who can access education! That is counterproductive and needs to be stopped. WE need to invest in education, not reap profits from it to finance government corruption and inefficiency. Those vices need to be stopped, not financed by our poor students!

The South African student movement has coordinated their actions efficiently, and they got the president to turn back on his draconian decision within days. We need the same: we need our student movement to coordinate between the different colleges and universities, so the government, if necessary in the person of the President, will be forced to turn back the fee hikes and finance the future of our country, not the corruption that is committed on many government levels and places.

With all students’ unions united, and strong activism, coordinated actions with maximum impact (the stopping of the US 2nd lady was well timed), we can stop this disaster.

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Malawi’s Economics

The editorial comment in the Nation today says: Govt should tread carefully on pay hikes.

It is clearly written by someone who does not understand Keynesian economics. It says increasing the wage bill of government creates problems. And that is correct. On the other hand: the economy is shrinking, and that also creates problems. Now if the consumer in Malawi has more money, they will spend more, and this will create economic activity. This increases wealth in the country as well as the tax revenue: the more economic activity, the more the MRA has to tax.

Because the government has caused run-away inflation of over 20%, our salaries are shrinking by that same percentage each year, giving us less purchasing power. Less purchases translate into less economic activity, which translates into less wealth for the population (or more poverty for the poor) and less tax revenue with which to finance our government system.

After the stock market crash of 1929, the US government did cut its spending (austerity), and this created less economic activity, deepening the crisis. This forced government to cut even more, which again deepened the crisis. This kept on going around in circles until a new President, Roosevelt, followed the economic insights of the great economist Keynes, and spent more for the poor. He started a large program of jobs for the poor. This gave the poor something to spend, which gave suppliers income for their supplies, and they started hiring people to make more. The whole process turned the crisis around and kick started the economy.

Our government should not cut back on spending across the board, it should spend wisely. It should fight the estimated 30% corruption that drains our economy. It should increase wages for the low paid workers: they buy local (cheap) products, which supports our economy. The higher paid buy a lot of imported products which does nothing for our economy, so they should not be pampered.

The problem with the current pay rise is: it is across the board. The original plan was wise: a modest 15% pay rise for the lower paid. This is good for the economy and good for the social coherence of society (lowering inequality). But the higher paid are also more influential people (compare the power of a PS with the power of a street sweeper). So they force government (through their influence in the Civil servants union) to raise their salaries with those of the lower paid. This is not good.

We need a program that will kick start the economy, and that program is not necessarily what the IMF (quoted in the Nations comment today) prescribes: the IMF/World Bank is a right wing anti-Keynesian organization that always pushes for spending cuts, without considering the local economy. They can be ignored. The former head of the Wolrd Bank, Stiglitz, has clearly shown how the IMF/World Bank follow a one-size-fits-all policy that does not take into account how Keynes beat the Great Depression of the 1930s.

We need more efficiency in the government system. We need a strong and effective fight against corruption: remember: this whole crisis came about because the government refuses to stop corruption (ATI bill, IFMIS, bank reconciliations etc) and the donors refuse to pay budget support to a government that allows its members and civil servants to steal the donor money. And we need more nurses and teachers (lower paid workers!) and less paper shufflers on Capital Hill. Those paper shufflers that we keep need to spend more time on fighting corruption and less on perpetrating it.

Malawi’s Government, Malawi’s future

4When the Soviet Union unraveled in 1989 (or around that time) Many in the USA felt they had won the cold war. Francis Fukuyama even wrote a book called the End of History, in which he claimed that there would be no more big developments in world history: the US model of capitalist democracy would rule the world from then on till eternity. This view was obviously shattered with a Big Bang twin-towers-conspiracywhen the Twin Towers came down in the famous Al-Qaeda attack on September 11, 2001. From then on it looked like the major opposition to neo-liberal capitalism in the world came from Islamist terrorism.

Here in Malawi we have been fortunate to not have experienced any of this first hand. Here the battle seems to be on a more conservative plain: the government system here still largely lives in the Kamuzu Banda days of the cold war. This does not work in a neo-liberal international environment and the consequences are a collapsing economy and wide spread hunger.

feb122There is some resistance to this government policy: the media (most explicitly the newspapers) and some of the business world are promoting a more modern type of government, with rule of law, and a favorable investment climate. This would mean that the ruling elite needs to give in some of their personal power, and in the short term some money. Rule of law means no-one is above the law, not even the President. It means the ATI bill, limits to the Presidential powers, it means a lawsuit against the State has just as good a chance to be won as against anybody else. It means the judicial system adheres to jurisprudence. It means the legislative is not pushingescom-malawi-load-shedding1 for more perks (allowances, subsidized loans, Community Development Funds etc) but making laws that facilitate development. They are advocating for a more USA style economy. The same are the US doing themselves: they subsidize Escom, on the condition that it privatizes: more capitalism, less State influence. International Tobacco Buyers are also pushing for more freedom: they have gotten the opportunity to practice contract farming and the Para-Statal auctions are strongly limited in their influence. Again more freedom for capitalist companies and less direct State intervention. Hopefully it will also limit corruption, which eats into the growers’ income in a big way.

But then the question is: what will be consequences of a more liberal political economy? It may very well grow the economy, or it may not. But liberal policies definitely increase inequality, and lessen State power to support people in need. Look at the extremely neo-liberal US administration of George W Bush: he did very little to support the victims of the hurricane Katrina. In fact he had removed much of the opportunities of the government system to do so.

jeremy-corbyn__3406649bAn alternative way to liberalism that is getting more in vogue over the past few years is the European model of social democracy. It had been overruled by the Thatcher-Reagan approach of the 1980s. Even Blair had removed it from the (social democrat) UK Labour Party. But currently they have an explicitly social democrat leader: Jeremy Corbine. And in the US the social democrat (or democratic socialist,150706_pol_sanders-crop-promo-xlarge2 as he calls himself) Bernie Sanders has come much further than any social democrat before him, with a serious bid for the Democratic Nomination. And he is pushing candidate Hillary Clinton in a social democrat direction, for him to endorse her as democratic candidate (which means he will advise his supporters to vote for Hillary Clinton only if she adopts a number of his policies).malawi20school

We could look at ways to introduce social democrat policies in Malawi. Thing is that these are usually centralized policies to redistribute Knowledge/Power/Income from the ruling class to the general population. Knowledge through subsidized education, a system which is being dismantled by government now: university fees go up and the quality of public schools is going down because of systemic under-funding. The ATI bill would help, too. Power would spread with income, as well as improvements in the quality of the democracy and rule of law. Income should be spread with higher minimum wage, lower perks for the top of civil service and politics and strongly progressive taxes, administered in an impartial and incorruptible way.fisp-f

The FISP could be a good social program if it were not undermined by corruption and inefficiency. And here is another problem: our government is severely limited in its implementing power because of these: corruption and inefficiency. As Minister Kumpalume recently said: When Government is involved in a project, costs texas-cancer-centre_view-2multiply. He spoke of the new state-of-the-art cancer treatment center, where cost overruns were in the range of 400%. This shows that our government is crippled in implementation: this way It can only do 20% of what its money is worth because of the inefficiencies and corruption. This makes a successful social democrat State a long shot.

Who has a better idea?

CRISIS!

Organisation of society

In Malawi we see an urgent situation: widespread hunger, poverty worsening all the time, climate change affecting all, combined with an ever lower (worldwide) demand for its primary export: tobacco. One would think this would be experienced as urgent by the people responsible for steering the country into more conducive waters. However, this does not appear to be the case.stock-photo-a-metal-toggle-switch-with-plate-reading-action-and-inaction-with-the-switch-in-the-active-124104559

There is only one organisation with both the power and the authority to do this and that is government. But our government organisation is totally conservative, which means it conserves what is there, even if this is not what the country needs. The government machine is slow, slow, slow in reacting to anything happening in the world. So slow it is decades behind.

When the cold war ended around 1990, the whole world changed. The western world had, 130408083028-05-thatcher-reagan-horizontal-large-galleryanticipating the collapse of the communist bloc under the Soviet Union and seeing capitalist changes in China, already converted to neo-liberalism, mainly promoted by Thatcher in the UK and Reagan in the USA. These two countries controlled (and control) most of the financial world, so they have the power to implement worldwide.

As a consequence of the end of the cold war, Kamuzu Banda lost the support from the capitalist bloc and he needed to go. Kamuzu Banda was replaced by a (nominally) democratic system, but the whole government machinery remained the same. So the obstfeldfig2conservative approach stayed and the current democratic government still functions largely the same as under Kamuzu Banda, even though the international situation has changed drastically. Because of the prevailing neo-liberal economic climate, the price of primary commodities like tobacco has gone down a lot since the 1970s. It is impossible these days to base an economy on that type of exports. Our economy has been supported with heavy donor support until about four years ago. But now donors are sick and tired of the same inefficient and corrupt practices that they have shored up for so long since 1964. Under the cold war they were willing to look the other way for geo-strategic reasons. But since the cold war ended they are less and less willing to finance a corrupt elite, that does not facilitate their neo liberal economics.

jhncvv0What we see is a democracy lacking in democracy: the separation of powers is non-existent, and civil society is weak. The judiciary is dependent on the head of the executive: the president for appointing is leader, and the quality of the education of judges and magistrates leaves room for improvement. Jurisprudence is not kept. This makes the judiciary very weak compared to the executive.

The legislative is weak and corrupt; MPs are mostly concerned with their own individual well being in the  form of allowances, loans, the CDF, and such. The quality of their insights is weak and many tend to be absent from the meetings anyway. They do not provide the counter balance needed to check the executive.9781137320605

This combination results in a very weak rule of law. The rule of law is there to protect weaker institutions and people from the powerful in our case the executive. This means the citizens have a hard time exercising their rights. But it also means that companies have a hard time exercising their rights. This scares off the much needed Direct Foreign Investment, and even Malawian investors often opt for investing abroad. This stops the private sector from developing and creating a vibrant private economy. At the same time it also stops the private sector from becoming big, rich and powerful. This plays into the hands of the current ruling class, which keeps everything (wealth as well as power) into its own hands, and away from others (private sector, judiciary, legislative, population).

Who are this ruling class?

This is not so easy to pin down on persons, but broadly speaking the power in Malawi is concentrated in the executive branch of government. But here, like in the legislative, the expertise of the politicians is not always optimal. ON the other hand the top civil servants are all highly educated, experienced and intelligent people who have been at their posts much longer than the politicians. They know their field and their organisations very thoroughly. For a civil servant, a politician is a passing incident. A politician needs to be very strong to overrule his subordinates, and we see that this does not happen often.

Of course a few politicians have succeeded but by and large the balance of power leans towards the people with experience in the job: the civil service.

Conserving rights means doing things the way they have been done for a long time, and keeping at defending these rights and options. WE see a huge slow down in the pace of the Civil Service Reforms that are headed by the Vice President Saulos Chilima. He started out as hyper active, but he has had to adjust to the speed of government, which can successfully be compared to that of a moderately fast snail. The vested interests in the Civil Service and related institutions are powerful, and without the full backing of a strong President, the reforms are going to be cosmetic rather than effective.