Archive for April, 2008


April 18, 2008

It gets pretty bad when a 1963 applied sociology study focusing on labour migrancy mentions that the dancing skills and fashion sense of the Brazzaville migrant workers causes tensions and fights in Gabon.

Also, the study suggests that clear contracts with clear and well-understood terms reduce turn-out among migrant workers. No shit. Did the colonists really need a sociologist to tell them that ? (actually not only they did, but they still do).

Here’s the paper (in French).

Assorted Nigerian Stories

April 9, 2008
  • Ibrahim Sheme posts a Kano State Censorship Board press briefing on the film industry which includes gems like:

    It is professionally a tradition and globally accepted; sensitivities are never compromised in filming projects. Currently, China is a clear testimony where a prominent production company was duly punished and suspended from further filming.

    Gentlemen of the press, I want make it categorically clear that religion, culture and public dignity cannot be compromised by any good Government in the name of economic interest persuaded by certain segment of the society, taking into cognizance the social responsibility being entrusted by our people to this administration which operates within the tenets of Shari’a legal system.

    The official guidelines for registration as a film operative are:

    A film operative must observed and respect religion, Culture and public interest.
    Female artiste, musician and lyricist must be under the care of her husband, parent or guardian (Not independent as the case may be)

    Singing and dancing has been cancelled in Hausa films.

    Producer must discourage free mingling of opposite sexes for the whole night during production

  • Not to be outdone by crazy Muslims, Anambra State outlaws encouraging the use of condoms and bans the advocacy and distribution of “un-natural” birth control to please crazy Christians. The state commissioner for health declares:

    “Instead of teaching children how to use condoms to enjoy sex they should be taught total abstinence”

    “The use of condoms has greatly encouraged immorality.”

  • This BBC story about a jailed rebel leader killing snakes in his cell and accusing the military of attempted murder sounds may be funny but anyone who has read “Bound To Violence” or who is vaguely familiar with semi-mythical historic events that inspired it would think that some traditions never die.
  • In Nigeria too, the far-left continue its tradition of vicious factionalism as the Democratic Socialist Movement-dominated branch of the Lagos State chapter of the National Conscience Party (a leftist coalition) quits to “join and actively participate in a political platform called Campaign for the Formation of a Genuine Mass Working Peoples’ Party. The “anti-masses, right-wing orientation and strangulating bureaucratic conducts of the NCP” and the historical failures of “every attempt to build a mass working peoples party on the basis of reforming capitalism, instead of a conscious strive to overthrow this unjust system” are cited as reasons for the split.
  • Via Loomnie, I learn that the minister of Commerce and Industry announced, at a meeting with the local automotive manufacturers that the ban on importing cars past a certain age will be extended to buses and trucks, to the satisfaction of the Port of Cotonou, the smugglers and the guys who know how to keep this bus on the road:

    Photo by Flickr user zouzouwizman used under a Creative Commons license

  • Perhaps out of boredom, Nigeria’s Foreign Minister advocates appealing the Bakassi judgement. His argument is weak but I guess the goal is to make Nigerians believe that he tries.
  • A deadly clash in Ota over traditional title claims and a weird quid pro quo proves that there’s nothing inherently non-violent about chieftancy politics.
  • Nigeria recently went through one of its recurrent oil shortages. An Irin report from Kano makes it seem like only the North is affected, with local officials as always blaming speculation:

    “the real problem is that IPMAN, which provides fuel to about 90 percent of filling stations in Nigeria, is hoarding fuel in anticipation of fuel price increases.”

    The head of the north-west division of the Independent Petroleum Marketers Association of Nigeria (IPMAN) blaming geography:

    “When it arrives at the ports [in the southern cities of Lagos and Port Harcourt] most of it is distributed nearby and very little makes it this far north.”

    While The Vanguard reports that IPMAN officially blames a N17 billion debt owe to it by the government and Aijustwannawrite explains that it’s a complicated story involving unions and ethanol content limits in cargo. And of course, the effect of price controls is ignored.

  • Land Reform is an emotional issue.

    April 8, 2008

    It is a topic in which the diverging concerns about fairness, rights, order, justice, merit, efficiency, solidarity and yes, history of the distribution of productive resources have been colliding openly. Because for the majority of human history, agriculture has been the most important economic activity, land has been the most important means of production (one could argue that it’s even older but hunter-gatherers invested less in their territory and therefore had less attachment to it). One just has to look at how long the debates about the French, Russian and Cuban revolutions lasted to grasp the emotional importance of it. Or the heated discussion everyone has about what should be done in South Africa, Zimbabwe, Bolivia or Brazil. However, because in those places racial and ideological divides collide with a simplistic colonial narrative and very little has been actually done, the debate tends to be incredibly uninteresting. The case of Ethiopia, however, doesn’t give a big role to racial and colonial narrative and therefore doesn’t generate as much passion, outside of Ethiopia that is.

    Ethiopia, an old, isolated and diverse country that hasn’t been colonised, started its modern history with a complex, diverse and arguably archaic land tenure system. When after WWII Haile Selassie started rapidly modernising the country, land could be either communal, owned by clans with unalienable and inviolable plots assigned to members, owned by the powerful church, state-owned and assigned to state employees as a form of payment and pension, directly state-owned, feudal and owned by the provincial rulers of recently conquered regions, formally owned by feudal rulers but granted to their employees as payment or pensions, complex arrangements among nomadic pastoralists and even some commercial concessions. The complexity of the claims, the limits to the ability to buy and sell, the insecurity of tenure, the existence of quasi-servitude and tenant farmers barred from buying land, tragedy of the commons-caused conservation issue were all reasons why some land reform became supported be it for justice, equality or efficiency reasons. The Emperor’s attempts to simplify tenure and modernise agriculture by introducing co-operatives and freehold (along with fertiliser and equipment subsidies) were argued down by the aristocrats, tribal leaders and other interested players on the grounds it was communism. The backwardness of agriculture was viewed as one of the major causes of the famines of the early 70’s that led to the 1974 Ethiopian Revolution.

    One of the most dramatic moves of the DERG, the Marxist junta that took over, was the March 1975 Land Reform. All land and cattle were nationalised, tenancy and wage labour abolished, and both collectivisation and redistribution experimented with nationwide. While the hunger for justice and equality was more or less satisfied (the satisfaction varied depending on which part of the old system people lived under), the new system only failed to resolve many issues but may have made productivity worse. For instance, the desire for equality led to fragmented holdings; co-operatives had even poorer incentive structures, access to inputs was made harder as in a planned economy the regime gave priority to state-operated cash-crop farms and tenure security was worsened by constant redistribution and several (forced) resettlement experiments. Those problems once again were made evident in the worse possible way: the 1984-1986 famine(s) that killed one million people, affected 8 million, associated Ethiopia with starvation in the world’s imagination and gave us “We Are The World”, Live Aid and humanitarian pornography. While factors like locusts, short rainy seasons, insurgencies and counter-insurgency measures were mentioned as causes, land was a major factor. While opponents and western critics of the government argued for privatisation of land, the government responded with villagisation (even more radical collectivisation and resettlement) and some measures regarding the prices of goods. However the damage was done and the insurgencies intensified and the DERG was overthrown.

    The odd part about the new guys in charge was that it was a coalition of ethnic-based Marxist movements. Before Mengistu’s defeat, they were often described as radical groups, to the left of the DERG, who viewed the regime as a degenerated worker’s state and fought for a deeper, decentralised, democratic, “true” revolution. Surprisingly, the Ethiopian People’s Revolutionary Democratic Front and its leader, Meles Zenawi, quickly installed de jure democratic institutions in a country (I do not wish to discuss the reality of Ethiopia’s democratisation) that only ever experienced feudalism, monarchy and military rule. They worked with the IMF and the World Bank to modernise the economy through privatisation and orthodox macro-economic policies, gave more power and the right of cession (which led to Eritrea’s independence, another emotional issue) to provinces (this one is not surprising coming from a coalition of ethnic based parties) and generally behaved like a social-democratic leadership (once again, generally and in context, I do not wish to discuss the reality or the completeness of Zenawi’s achievements). But on the land issue, the government hasn’t departed from its socialist roots.

    Officially, the land is still nationalised. But perhaps because of that same pragmatic approach, some details have been changed. Farmers get long-term (from 25 to 99 years) leases that are unalienable but inheritable within the nuclear family and the state is supposed to act as a custodian. A registration process, supported by the World Bank, formal land titles and the length of the term were supposed to increase the security of tenure. The clear inheritance rules are an obvious social improvement to most have seen extended families fights over succession or the dispossession of widows all too common in Africa. The state “custody” aims to prevent loss of land by desperate farmers or through debt. Yet, chronic food insecurity, heavy dependence on food aid and the poverty of the rural areas are still there. Yes, I think the fact that the UN-organisations’ food aid is enough to avoid famine while an incredible worldwide humanitarian effort couldn’t sort of implies that there has been an improvement. Still, it wasn’t enough and the debate over land has far from died out.

    At current, there are few people arguing in favour of the old order. The most sane of them argue that while undesirable it was superior to the current one or they use Burke-an arguments about organic reforms. The loonies fantasise about an imaginary perfect tribal order or return to religion by arguing that the Emperor’s, and therefore their right to be tyrants, was god-given (I’m discussing “rights” here, not the actual behaviour of anybody’s ancestors). I, therefore, believe that for all intents and purposes, the possible choices and the debate is limited to capitalist private ownership or something similar to the current system (variations on the amount of privatisation or the authority granted the custodian role are possible).

    This long introduction leads me to explain why the topic is emotional.

    Proponents of privatisation are basically the opposition. They include (those categories do not always coincide) urban Ethiopians, a big part of the Diaspora, Amharic nationalists often linked to the former aristocracy, liberals, free-marketers, and, yes, Western Agribusiness corporations (which, as an aside, adds up to my belief that US alliances with foreign regimes are more often based on weird grand foreign policy ideas and intelligent manipulation of those by said regimes than the economic interest of US corporations). This post by Samuel Gebru could be an overview but I’ll strongly recommend Ethiopundit’s “The Creation of a Nation of Serfs” which is lot better once you get past the recurrent Mises, Hayek, Trotsky, Stalin quotes, the libertarian slogans, and annoying repetition of the word “communist religion” (which is ironic considering he mentions how the use of the Red Bogeyman shut down reform attempts in imperial times and wonders if it hasn’t caused the eventual communist take-over).

    Moral and efficiency concerns are behind the arguments made. To them, the current system is a tool of oppression by which the current regime punishes its opponents, a scheme allowing the regime to consolidate their support among the peasantry by creating patron-client relationships (through subsidies, stores etc..), an anti-democratic idea imposed on poor helpless peasants by feudal communist lords, a collective punishment by jealous and paranoid losers, a serious limitation of freedom but also an efficient system that limits productivity gains by reducing security of tenure, by preventing access to inputs by cancelling access to credit (since land cannot be a collateral), by not resolving the fragmentation problems, by making economies of scale impossible, by discouraging innovation or hard work, by failing to prevent the tragedy of the commons behind erosion and the lack of preservation.. etc.. Other points those two don’t make (I think) but that I’m pretty sure others do (or should) raise are the unfairness of the urban population paying to support rural folks through taxes or higher food prices (since the government views the system as a way to provide a safety net in rural areas while urban areas develop) and the fact the artificial inflation of both rural and urban wages (if all the peasants have land titles, you’d have to pay them more to work your land or in your factory) retards the eventual of industrialisation and meaningful improvement of living conditions.

    The most eloquent support for the current system comes from the government (which I think does command a lot of support among leftist and rural populations), particularly the very talkative Prime Minister. He doesn’t shy away from debating his position with journalists or academics. This quite frank and open Q&A is, I think, a good example. Here too you have moral and efficiency arguments, with what seems to be an acknowledgement that there may be trade-offs and a differentiation between short-term and long-term benefits. To him, the current system provides a fair and equitable distribution of land and through the long-term inheritable lease provides tremendous tenure security, prevents an undesirable “differentiation” between peasants, stabilises the country by slowing down the rural exodus thus making land speculation impossible and the peasants happy, maximises the use of labour, prevents social unrest (I guess being a former guerilla fighter makes one very aware of rural insurgencies) and absentee landlord-ism etc.. The whole view is a bit confusing but the most important point is that Zenawi disagrees on the effect of the current system on tenure security and access to credit and states at length why the State must retain the option of future land distribution.

    Meanwhile the international organisations involved, mainly the World Bank and FAO, have somehow mixed views. As far as I know, most reports suggest that the biggest impediment to growth are tenure insecurity and lack of access to inputs (through credit). On how to achieve those, the recommendations seem agnostic. As I mentioned before, the World Bank supported Land Registration as a way to improve security of tenure and regularly pressures the government to repel the Redistribution Provision for the same reason. Government-sponsored distribution of fertiliser and other inputs through co-operatives and the mortgaging of future harvest also had their support. I guess they decided privatisation is a political mine-bomb and concentrated on ways to strengthen the incentives within the current structure. Similarly this FAO study concludes that farmers are less concerned about the form of ownership than about the actual security of tenure.

    It is that weird mix of moral, political and efficiency arguments on both sides that make me think the debate is emotional. An impression only reinforced by the use of straw-men to describe the alternative and myriad paranoiac views on the other side’s hidden intentions. A non-emotional debate would somehow entail discussing incentives, trade-offs with a healthy dose of realism (about the past) and pragmatism (about the present and the future).

    On moral/political issues for instance, one could easily think that it’s impossible to get a reasonable balance between the concerns freehold supporters have about the state’s abuse and the benevolent role of the state defenders of the current system advocate in matters of “exploitation” (private abuse). To make it clear, freehold in and by itself, particularly in a weak country would not protect peasants, successfully or not from being dispossessed. Rent-seeking wouldn’t disappear but only change in nature. The allocation wouldn’t necessarily be perfect and the equality of opportunity may be reduced. And the existence of absentee landlord-ism and the resentment it generates, has motivated most leftist rural uprisings. On the other hand, banning private ownership and farmers’ ability to lease, sell and buy land is a bit of an extreme solution to prevent non-farmers from acquiring land (here I loosely define farmers as agricultural companies or individuals with big exploited estates and only those who don’t do anything but own and rent the land are non-farmers) just like the enforcement of equality of outcome is not the greatest way to guarantee equality of opportunity. And the land redistribution provision, by empowering the government to reallocate land as it sees fit has a serious potential for politically or financially motivated abuse (the keyword is potential, whether they use it or not is irrelevant). So what can be done to find a compromise between two absolutist solutions ?

    Well, it just happens that during the post-WWII occupation of Japan, a little-known and interesting land reform was enacted. In short, land was distributed to farmers and only farmers as private property. They were free to sell, buy and I think use it as collateral (I could be wrong about the last one as, not surprisingly, very little info can be found on this unemotional solution). While strict equality wasn’t maintained, the initial allocation was almost equal and an upward limit to the possible size of one’s land holdings was defined. The government’s custody role was limited to a buying obligation is some precise cases: when a farmer reached the size limit or when the owner wasn’t or stopped being a farmer (a status defined by primary residence, sources of income of individuals and legal status of companies). And the obligation existed only when said land couldn’t be sold to another farmer. In practical terms, the government had to buy land from someone who inherited a farm and had no interest in farming and couldn’t sell it to another farmer. I assume that both the size and the sources of income limitations have been modified to reflect Japan’s industrialisation and the diversification of farmers’ activities.

    Few believe the Japanese land reform had any impact on agricultural productivity. Instead the gains that came from technological progress and a very active agricultural policy had to offset the losses caused by the relative land fragmentation. However, the intent was social and political and it is in that light that it was clearly a success. The stated aim was to weaken the last remnants of a feudal and militaristic class that the Americans blamed for Japan’s belligerence while empowering the peasants and possibly counter the communist threat. Oddly enough, just like Ethiopia, the pre-land reform situation wasn’t nearly as universally exploitative as described. Both land-less peasants and absentee landlords were a minority and most farmers both rented and leased land in an environment where holdings were extremely fragmented and selling land frowned upon. For the majority of the peasantry, the reform was merely a re-organisation of their holdings. All of a sudden their plots were compact and they didn’t have to lease distant plots or rent closer ones. In general, Japanese rural areas became both increasingly modern and economically conservative in their views, overwhelmingly voting for the ruling Liberal-Democratic Party and been driven away from the communist or (fascist) neo-traditionalist movements that had been very popular in the past.

    On the efficiency side, there is more agreement than it seems, at least, on the diagnostic. There is also a certain amount of bad faith in how the solutions are judged. For instance it would be nice if the freehold proponents were more forthcoming on acknowledging the problems of the pre-land reform archaic situation instead of insisting so much on putting all the blame on reform. It is indeed confusing to see how quickly the widespread support for a land reform (not necessarily a communist one) is swept to the side or how factors like a demographic boom are not considered when thinking about the increased frequency of famine and famine alerts. In the same light, it should be evident, beyond political and ideological biases that the land registration effort has been one of the strongest attempts at improving the security and freedom of peasants. Whether its a lease or an ownership title, having a registered and formal document proving a claim (and rules about how it could be transferred) protects one more from state, local, familial, private dispossession than the stated intentions of a politician. And it is naïve to believe that private ownership alone, by opening the possibility of using land as a collateral would resolve all the problems related to the availability of credit and access to inputs. While Zenawi does make an interesting point about long-term leases providing security, his defence of the land redistribution provision actually provides serious disincentives to productivity. Even the simple possibility of a reasonable government having the option to redistribute land to “correct unfair and inefficient allocation” probably does not encourage farmers to invest their sweat and their savings into improving their plots. Especially when the Prime Minister seems to say having to hire a labourer, even let’s say during harvest by a family that saved seed and money and invested it or more labour in improving their production, is in essence private ownership and proof of misallocation of land (I have to say that this story suggests informal exchange of labour and rights to land actually exist. It describes the case of a widow who by breaking taboos on how to plough her land improved her productivity and not only hired help during harvest but also used or taught how to use her technique in exchange for part of the usufruct of land). Furthermore that long term scenario he describes, in which the decision to consolidate (or not) land allocation depending on the availability of non-farm employment, contradicts the historical economic evidence that land consolidation and the effect it has on food prices or rural exodus is as much a cause as a result of industrialisation. By choosing to wait for that “event” to happen before allowing some of the cause to happen, Ethiopia may be killing its chances to develop.

    The lack of sincerity and pragmatism and the excess of ideological hang-ups of both sides are the main obstacle to overcome in order to eventually have a real debate on incentives, allocation and efficiency and the design of a “more perfect” land tenure system that would finally allow Ethiopian agriculture to fulfil its potential. It would probably involve strengthening private gains and risks in the current system or mitigating the excesses of a freehold system. But, for a such a compromise to happen, the debate would really have to do without the strong emotions responses humans have about systems of ownership.

    Note to readers: Not being Ethiopian, not having visited Ethiopia, not even having Ethiopia friends currently, I don’t claim any first-hand knowledge of the actual situation on the ground. Everything I know was learned from reading about it. Furthermore, aside from a taste for Ethiopian coffee and food, my initial curiosity comes from a wonky interest in land issues in general and the way Ethiopia synthesises many of problems. So it is the political and economic abstractions that really interest me. And of course, the hidden agenda of EPLF, CUD, DERG or the Imperials is an non-issue. So yeah, I only consider what people actually say or do and nothing more.

    This is a bit longer.

    April 4, 2008

    I wish I could wrap up posts about really interesting topics like the non-existent Brazzaville-Kinshasa bridge or the real meaning of King Alfonso’s letters to the King of Portugal or the reality of atavistic ethnic voting but they’re in limbo due to constant re-writing propelled by incomplete proof-reads. So instead I’ll just keep wondering about how CATO Institute recruits its African fellows, associates and sponsored writers.

    So today’s topic is Andrew Mwenda wrong argument in this Cato foreign policy brief.

    The World Bank argued that Uganda “deserved” debt relief because government had created a “good policy environment” through macro-economic policy reforms that led to impressive and sustained economic growth rates for over a decade. On the flip side, the World Bank argued that Uganda “needed” debt relief because its debt burden was unsustainable and not only was going to undermine future economic growth but also was going to put economic reforms in jeopardy.

    If Uganda “deserved” debt relief, then it should not have “needed” it. When a government implements good reforms leading to high growth rates, those growth rates should then enable the government to meet its obligations to its creditors. Conversely, countries that need debt relief often don’t deserve it because they have pursued wrong-headed economic policies. In such cases, debt relief could encourage them to continue down the wrong path.

    And later

    From independence in 1962 to 1998, Uganda’s debt grew to US$3.2 billion. In the five years following the HIPC debt relief of US$2 billion, the debt rose to US$4.9 billion. Uganda did not accumulate that debt burden because of “mismanagement” under the brutal regime of Idi Amin. On the contrary, over 90 percent of Uganda’s debt was incurred during the implementation of World Bank– and IMF-sponsored economic reform policies of stabilisation and structural adjustment, beginning in 1981. If those policies had worked as their advocates argued, Uganda should have been able to pay its way out of debt.

    I should start by making clear that this is not his core argument against foreign aid. His main complain is that the share of foreign aid in Uganda’s budget makes the government less accountable to its people and in a way I do agree with that. So this is a side argument set up to explain the unintended consequences debt forgiveness and foreign aid had on Uganda.

    Yet, it’s still wrong. It is true that colonial governments and early independence ones managed to have somehow balanced budgets. And it is true it seems illogical that a country that has implemented reforms that has generated growth shouldn’t need more aid (or debt forgiveness) to sustain itself. But that’s only if you don’t think about how government revenue and some aspects of spending are actually handled.

    To start with spending, at least in the beginning, colonial administrations didn’t face much pressure. Force and patronage were used to extract revenue while spending was either limited to the needs of colonists and their businesses (in infrastructure mostly) or mostly done by religious organisations with their own financial sources (education and to a lesser extend health). That surely makes balancing a budget easy. But as nationalistic political pressure mounted, spending followed. In a the late years most colonies in Africa ran deficits as schools, hospitals were built and civil servants hired in a late attempt to buy off support and coercion was harder to use to generate revenue. The newly independent governments inherited those demands, only exacerbated by the expectations they generated while making their nationalist case. But even beyond that, Uganda’s population went from 5 millions in the early 50’s to almost 30 millions nowadays. So not only the percentage of the population benefiting from government services increase but the total population doubled every twenty years.

    Yet, one could expect the Ugandan economy to have grown and therefore generated more revenue in the same period. Well, that is where the revenue collection side start to matter.
    The Uganda Economy did in fact grow before the Structural Adjustment program but quite slowly (and with downturns like during the second Obote rule). As a result, at best the GDP per inhabitant stayed constant. Not exactly the best way to face ever increasing spending demands (the per capital GDP went from 8% of that of the United States in 1950 to 3% nowadays, compare that to Korea going from 10% to almost 50%).

    And that’s where the main idea insight behind Structural Adjustment Programs comes in. Basically the argument was that low-performing economies were low performing because of policies that distorted economic activity. Such distortions could be labour laws, macro-economic imbalances but also and perhaps most importantly how governments generated revenue.

    Africa, still hasn’t reached the levels of standardisation and bureaucratisation most western economies had when income taxes became the main source of revenue. Because of that, other means have been used. Using forced labour or establishing export monopolies for key products or putting high tariffs in place or selling licences to operate or privatising some social expenses were the ways used to finance colonial states. Independent governments continued to use those instruments, only even more bluntly. “Marketing Boards” notoriously bought exportable products at prices much lower than the market rates, legislation obligated companies to provide housing, healthcare, pay for infrastructure, companies had to purchase a plethora of licences, merchants could only work in official state-owned markets with high rents, firms were nationalised to put more money in the state coffers. As a result, farmers didn’t have as many incentives to produce more exportables, companies concentrated on high-revenue sectors in which high operation costs weren’t that much of an issue, prices of goods in markets stayed high, entrepreneurship was limited to the well-connected, the rich or the very patient, investors were scared off etc.. All those very efficient way to collect taxes were indeed limiting economic growth (the share of government in Uganda’s GDP was the highest during the late 70’s recession).

    The Washington Consensus proposed to remove all of those distortions. Governments were supposed to generate revenue through a simplified tariff system and the two modern forms of taxation: Value Added Tax and Income/Corporate Tax which all grow as fast as the economy without slowing it down (as far as the rates are reasonable) But may be because the people are the IMF are actually a bit realistic, they did realise that there would be an imbalance in government budgets in the short run. After all, it would take time for the growth to happen, it would take even more time for the economy to formalise and the relevant services to modernise. Furthermore while public service wages were frozen and some expenses cut, it would have been politically impossible to cut spending enough. Making the transition too hard is the best way to nurture nostalgia for the inefficient good old days, just look at Russia. That’s why budget support and more loans and aid were a crucial part of the package even if the new policies are designed to eventually generate the necessary growth.

    I’m not sure I emphasised enough on how much modernisation is necessary for an African state to rely exclusively on VAT, income and corporate taxes. Only people and companies in the formal economy pay those. You’ll need your petty merchants and your small farmers to actually keep accounting books and have an incentive to declare high profits or an incentive not to lie. You’ll need every worker to declare most of his income and yes that include the money one makes from import 5 phones during a vacation to London or the wages of your cook/cousin/baby sitter/gardener. You also need your civil servants to be trained to analyse and understand the paperwork and probably pay them well enough to make bribes less tempting. You also need them to actually be present outside of Kampala. In this context, tax evasion may even happen involuntarily. That’s why simply reducing the highest marginal rate is not really the solution, especially when one says that “the rich and politically well connected don’t pay taxes”. If one can get away with not paying thanks to political connections, one wont pay no matter what the marginal rate is. And improving spending will require as much effort and investment since someone would have to be paid to properly clear an update those military payrolls.

    Andrew Mwenda however does make some interesting point like when he mentions total military spending or prestige expenses. However I strongly doubt that someone who believes basic health or primary education are a waste of money and who is capable of making as dogmatic and uninformed arguments as the one I discussed really wants to discuss government efficiency, accountability, growth and modernisation and is not just trying to please the crowd and advance his own political status. And CATO still looks desperate by publishing any pro-market anti-government African argument no matter how wrong it is.

    a quick graph..

    April 4, 2008

    I usually tend to think that the benefits of the mobile revolution are a bit overblown but this is just too striking.

    kerala fishing prices
    (click on it for bigger picture)

    That’s the variation of weekly fish prices in three different costal regions of India where fish is a staple and fishing a major economic activity. Not only a neat graph, this is considerable improvement for the lives of both fishermen and fish consumers. And did I mention that those regions are in Kerala of all places ?

    Oh yeah, taken from this paper (pdf).