What Mthuli Ncube lied under Transitional Stabilization Program
AUSTERITY VS STIMULUS
By : Chairman Goodman Tamuona Musariri:
|”Sometime in May 2010 ,the US Secretary of the Treasury Timothy Geithner was talking to German Finance Minister Dr. Wolfgang Schauble .They were debating on how to manage the raging financial crisis in Europe particularly in Portugal , Ireland, Italy , Greece and Spain , otherwise referred to as [ fleMnanga
BORROWING MINISTER MTHULI NCUBE’S IMAGERY :
•|” Dr. Schauble wanted to stamp out “profligacy and mendacity”: PIIGS had to live within their means and while doing so, payback whatever they owed”.|
•|” Secretary Geithner then remarked to Dr. Schauble , a German politician: ” You know , you sound a bit like Herbert Hoover in the 1930s .You need need to be thinking about growth”|
- Get their difference right ?. Yes, the American also wanted Greece to pay back her debts but instead of a Shylock-like “pound of fleMnan approach , he preferred letting the PIIGS have a bit of money in their wallets , just to pull themselves out of the mud. AUSTERITY VS STIMULUS DEBATE OUTLINED
- |”You noticed clearly from my above example that Dr. Schauble and Secretary Geithner wanted the same outcome but differed on how it was to be achieved?”|
- |”Secretary Geithner confessed later that he and Dr. Schauble we’re “often far apart” on matters of substance .Theirs is a classic example of the AUSTERITY VS STIMULUS DEBATE”.| How Minister Mthuli had lied to Zimbabwe !
• Minister Mthuli Ncube initially prescribed austerity for Zimbabwe, a policy framework that never suited Zimbabwe in the first place which confused the unsuspecting Dr. Mnangagwa’s Administration which had been persuaded by former white colonizers to turn back WEST to the former masters Britain and it’s former allies and shun the Mugabe “Look East Policy”.
• Austerity is a policy framework usually prescribed by the World Bank to similar economies as the PIIGS.
• Arguably , ” austerity is the modern ” *Washington Consensus” , a term widely used in the 1980s and 1990s , the era of ECONOMIC STRUCTURAL ADJUSTMENT PROGRAMMES (ESAPS /SAPS
How Minister Mthuli misled Dr. Mnangagwa’s administration?
• SAPS back then we’re consistently falling short on delivering hope – for recoveries and in response Washington would add more prescriptions for the sick client nation.
• The prescriptions list kept growing eventually getting a nickname “the laundry list ” .
• Minister Mthuli repeated the Washington confusion which Professor Dani Rodrick described in a paper titled : ” Goodbye Washington Consensus , Hello Washington Confusion”.
• To prove the confusion , a review of the World Bank’s Economic Growth in the 1990s is a particularly interesting read in this regard .
- In the paper , he lists the ten original prescriptions along with another ten that were later additions.
• The “laundry list” reads like President Mna administration economic recovery policies.It includes fiscal discipline , reorientation of public expenditures , tax reform , anti corruption, independent Central banks/ inflation targeting , openess to FDI, secure property rights and so on.
SO DID AUSTERITY WORK IN ZIMBABWE ?
Probity Questions to appraise Dr. Mnangagwa’s administration:
(1) Did Zimbabwe win the race to outdo other countries in the rankings of Ease of Doing Businesses?
(2) Did the country receive real positive INWARD FDIs in the all-in-countries race to attract FDI , the race against everyone else?
(3) Can Zimbabwe win it and what would victory look like ?
• In the early 2000s , the World Bank released a publication titled “The World Bank’s Economic Growth in the 1990s : Learning from a Decade of Reform” which is considered by many an admission of the institution’s misdiagnosis of patients in the preceding decades.
• So cynicism by some on the appointment of Minister Mthuli Ncube and the TSP policy on ZIMBABWE’S economic recovery policies is therefore quite understandable given this background.
MINISTER MTHULI REALIZED THAT ESAPS / AUSTERITY DO NOT WORK BUT PRODUCE THE SAID LAUNDRY LIST TOO LATE TO MEND ?
• Economic policies that rescuscitated the US in the 1930s are what stimulus is all about .President Obama also adopted similar policies in 2008 .
• They injected a lot of money into the economy so that people could buy more things, so that industry could make more things and thus keep the economy going until such a point when business and households had enough strength to stand on their own.
• That is what Secretary Geithner seemed to have in mind for the PIIGS.
• But where would the money come from?. It would come from a reduction in taxes which would mean that households and Businesses have more to spend.
• Of course , some of the money would be printed (euphemized in recent times in Europe as quantitative easing ) to fund infrastructure projects and provide safety nets for the most vulnerable in society.
- In stimulus policies , the national treasury deliberately runs fiscal deficit and in so doing , implicitly bets that the collective citizenry can and will out-work economic challenges in hand.
• It can be argued that before Dr.Mnangagwa , R.G Mugabe had been dabbling with stimulus policies and the famous “Look East” Policy.
• Unfortunately for Mugabe , all that went up was inflation and Mthuli came in to mislead Dr. Mnangagwa the more who is probably clueless about the AUSTERITY VS STIMULUS debate?
• What Mthuli and Dr. Mnangagwa must know is however that: “Money pumped into the economy must be deployed to the most competent hands in the land , hands that would relentlessly improve production processes and productivity not to cartels around the Presidential Immunity Clause around which the First Family businesses, round tables , strategic partnerships , strategic alliances , joint ventures, trusts and elicit are anchored??
• Only highly skilled hands must be funded – and it is widely believed that Zimbabwe has such hands in abundance here and definitely elsewhere.
• The policy fails dismally when funds are deployed to opportunists or rent-seeking prote
• Stimulus has worked in the do called Free world as seen in the US in various times. It has also worked in the not-so-free world.
|” Take for instance the energy sector policies of the sanctioned regimes of Rhodesia and apartheid South Africa – the ethanol plants and the technology of extracting oil from coal all driven by the need to reduce the cost of imported fuel.
• Amazing things happen when Capital is entrusted to competent scientists.
• Dr. Mnangagwa and his Minister Mthuli can be argued to only adopted austerity policies because austerity resonates with international community and the Mnangagwa misconstrued or undermined the negative effects of the US WAR SANCTIONS when they snubbed the LOOK EAST to look WEST to appease the international community as an indispensable partner.
• But back home here in Zimbabwe , the economy needs stimulation.
- At the end of the day , the battlefield is here not out there . Victory or failure will always be here !!
• If a Government cannot bet on its own citizens , who will?
|”Can the Stimulus or even Austerity succeed in the declining performance in governance of our society at the door of ASSASSINS OF THE CITIZEN AS SOVEREIGN?”|
• Who Are The Assassins?
- |”They are those who have captured the state. Capture of the polity especially MDCs and ZANU P.F which is characterised by a patronage-driven system in which a small ruling elite , political associates , legislators , and public servants are provided with jobs in return for loyalty , regardless of their performance. Capture of key sectors of the economy under Dr. Mnangagwa’s administration follows from the extension of these clientelistic practices into the private sector domain, including state-owned enterprises for the benefit of a minority at the expense of the majority.
• The Stimulus policies can’t work around s culture of impunity which has taken root at every level of government.
• It is this KLEPTOCRACY that is at the heart of the growing cynicism against President Mnangagwa and the Minister of Finance who he appointed?
• If MPs are quiet and failing to discharge their Parliamentary Oversight role effectively in order to keep the President and his Ministers he appoints at his pleasure and mercy : Will either Austerity or Stimulus ever work??
• Have Zimbabweans ever been able to align the correlation between the Non Perfoming Loans [ NPLs] in the failed Barbican Bank and the appointment of Minister Mthuli Ncube by President Mnangagwa.Wasn’t Minister Mthuli Ncube’s some form of payback for what his Appointer borrowed in the failed Barbican Bank now being paid in special kind ???
- Food For Thought ?
By: Chairman: Goodman Tamuona Musariri