CLARITY AND SIMPLICITY WINS THE DAY FOR NDOUM

>>>> IN A COMPETITIVE DEBATE Many people around the world world see Ghana as a ripe democracy despite its many flaws and shortcomings. this was shown when a debate was organized by the Institute of Economic Affairs for four of the 8 presidential candidates who have filed to contest the upcoming elections Even though most commentators have dismissed it as something less than a "Debate" The stage was all set for the four presidential candidates to do verbal battle. A lot was expected from them , particularly , the assumed front runners Akuffo Addo and Atta Mills. However the debate was set up in a way that some had everything to lose and others have everything to gain. Paa Kwesi Ndoum was in a special position

WHY THE CENTRAL BANK WILL NOT LOWER INETEREST RATE

Even in the face of Impending Crisis I can bet my last Ghana Pesewa on it that the outcome of the ongoing Monetary policy will not lead to the lowering of of the Prime rate.

WHY NOT LET THEM FAIL

THE MORAL OF THE MIGHTY BAIL-OUT

As we goggle at the fluttering financial figures, a different set of numbers passes us by. On Friday, Pavan Sukhdev, the Deutsche Bank economist leading a European study on ecosystems, reported that we are losing natural capital worth between $2 trillion and $5 trillion every year, as a result of deforestation alone(1). The losses incurred so far by the financial sector amount to between $1 trillion and $1.5 trillion. Sukhdev arrived at his figure by estimating the value of the services - such as locking up carbon and providing freshwater - that forests perform, and calculating the cost of either replacing them or living without them. The credit crunch is petty when compared to the nature crunch.

The two crises have the same cause. In both cases, those who exploit the resource have demanded impossible rates of return and invoked debts that can never be repaid. In both cases we denied the likely consequences. I used to believe that collective denial was peculiar to climate change. Now I know that it’s the first response to every impending dislocation.

Gordon Brown, for example, was as much in denial about financial realities as any toxic debt trader. In June last year, during his Mansion House speech, he boasted that 40 per cent of the world’s foreign equities are now traded here. “I congratulate you Lord Mayor and the City of London on these remarkable achievements, an era that history will record as the beginning of a new golden age for the City of London.”(2) The financial sector’s success had come about, he said, partly because the government had taken “a risk-based regulatory approach”. In the same hall three years before, he pledged that “in budget after budget I want us to do even more to encourage the risk takers”(3). Can anyone, surveying this mess, now doubt the value of the precautionary principle?

Ecology and economy are both derived from the Greek word oikos - a house or dwelling. Our survival depends upon the rational management of this home: the space in which life can be sustained. The rules are the same in both cases. If you extract resources at a rate beyond the level of replenishment, your stock will collapse. That’s another noun which reminds us of the connection. The OED gives 69 definitions of stock. When it means a fund or store, the word evokes the trunk - or stock - of a tree, “from which the gains are an outgrowth”(4). Collapse occurs when you prune the tree so heavily that it dies. Ecology is the stock from which all wealth grows.

The two crises feed each other. As a result of Iceland’s financial collapse, it is now contemplating joining the European Union, which means surrendering its fishing grounds to the Common Fisheries Policy. Already the prime minister Geir Haarde has suggested that his countrymen concentrate on exploiting the ocean(5). The economic disaster will cause an ecological disaster.

Normally it’s the other way around. In his book Collapse, Jared Diamond shows how ecological crisis is often the prelude to social catatrosphe(6). The obvious example is Easter Island, where society disintegrated soon after the population reached its highest historical numbers, the last trees were cut down and the construction of stone monuments peaked. The island chiefs had competed to erect ever bigger statues. These required wood and rope (made from bark) for transport and extra food for the labourers. As the trees and soils on which the islanders depended disappeared, the population crashed and the survivors turned to cannibalism. (Let’s hope Iceland doesn’t go the same way.) Diamond wonders what the Easter islander who cut down the last palm tree might have thought. “Like modern loggers, did he shout ‘Jobs, not trees!’? Or: ‘Technology will solve our problems, never fear, we’ll find a substitute for wood.’? Or: ‘We don’t have proof that there aren’t palms somewhere else on Easter … your proposed ban on logging is premature and driven by fear-mongering’?”(7).

Ecological collapse, Diamond shows, is as likely to be the result of economic success as of economic failure. The Maya of Central America, for example, were among the most advanced and successful people of their time. But a combination of population growth, extravagant construction projects and poor land management wiped out between 90 and 99% of the population. The Mayan collapse was accelerated by “the competition among kings and nobles that led to a chronic emphasis on war and erecting monuments rather than on solving underlying problems”(8). Does any of this sound familiar?

Again, the largest monuments were erected just before the ecosystem crashed. Again, this extravagance was partly responsible for the collapse: trees were used for making plaster with which to decorate their temples. The plaster became thicker and thicker as the kings sought to outdo each other’s conspicuous consumption.

Here are some of the reasons why people fail to prevent ecological collapse. Their resources appear at first to be inexhaustible; a long-term trend of depletion is concealed by short-term fluctuations; small numbers of powerful people advance their interests by damaging those of everyone else; short-term profits trump long-term survival. The same, in all cases, can be said of the collapse of financial systems. Is this how human beings are destined to behave? If we cannot act until stocks - of either kind - start sliding towards oblivion, we’re knackered.

But one of the benefits of modernity is our ability to spot trends and predict results. If fish in a depleted ecosystem grow by 5% a year and the catch expands by 10% a year, the fishery will collapse. If the global economy keeps growing at 3% a year (or 1700% a century) it too will hit the wall.

I’m not going to suggest, as some scoundrel who shares a name with me did on these pages last year(9), that we should welcome a recession. But the financial crisis provides us with an opportunity to rethink this trajectory; an opportunity which is not available during periods of economic success. Governments restructuring their economies should read Herman Daly’s book Steady-State Economics(10).

As usual I haven’t left enough space to discuss this, so the details will have to wait for another column. Or you can read the summary published by the Sustainable Development Commission(11). But what Daly suggests is that nations which are already rich should replace growth (”more of the same stuff”) with development (”the same amount of better stuff”). A steady state economy has a constant stock of capital maintained by a rate of throughput no higher than the ecosystem can absorb. The use of resources is capped and the right to exploit them is auctioned. Poverty is addressed through the redistribution of wealth. The banks can lend only as much money as they possess.

Alternatively, we can persist in the magical thinking whose results have just come crashing home. The financial crisis shows what happens when we try to make the facts fit our desires. Now we must learn to live in the real world.

ECONOMICS DEDATE DROWNED OUT

In the current era of global financial crisis , its amazing how petty politicking has overshadowed the crucial concerns of ordinary people in the electioneering campaign. Instead of the the "clean and issue based" campaign we were promised what we have is the traditional mudslinging and dirty politicking by the 2 major parties. fanned by the media the whole nation is engrossed in the lowest common denominator game of who is doing most of the insulting and whose insult is worst.

Technology and the credit cruch

Will the credit crunch and the impending Recession affect Technology Innovation? Here in Ghana we have benefited in a limited degree from the gilded age in terms of technology We have seen enormous expenditure on research and development over the last decade after the Correction of the Dot Com Bubble that yielded some exciting and pretty useful technologies. Computing power has increased and more can now be done thanks to the availability of easy,cheap tech With the expected downturn in the economy most corporations will cut their R&D budgets

THE GULF IS WIDENING

Inequality in the Ghanaian Economy is Getting Worse ...... and it Poses a lot of danger The 2008 edition of the Human Development Report gave some interesting illuminations on the direction Ghana is heading in its socio-economic development. One of the most critical concerns thrown up by the Index was the level of income inequality that characteristic the Ghanaian Economy. The non-redistributive growth we have had over the last 8 years have continued and even worsen. The HDI only confirms in scintific terms what we experince and notice arround us everyday in the streets and in the sqaulid villages and impoverished communities around the country.

THE COALITION OF WINNERS

The Great and the Good of the Current Ghanaian Society Tightly Sympathetic to The elitist Sections of the Country In tune with the general trend of our society, a new culture of elitist patronage by the people in power. This presidency and their Strategist have done very well in drawing some very key people in society into its fold. When the president announced the nominees for National Awards this year, one could not help but notice the conscious efforts of the Government to reward and also tap into the popularity some particular individuals.This Government realizes how important it is to appeal to the masses through the patronage of the people the masses adore. They are acute aware of how quickly governments becomes popular through their actions or inaction. So they cultivate the popular figures in society who have a dedicated fan base and influence. The national awards nominees was virtually a roster of who is popular in Ghana. it did not in practice have anything to do with achievement or excellence.

GHANA BREAKS RANKS WITH ECOWAS OVER EPA

... Further Sign of the Excessive Western Orientations of Kuffour's administration