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Economy broken when citizens risk lives to loot petrol

NATIONAL
By Patrick Muinde | July 24th 2021

The wreckage of a fuel tanker that killed 13 people on the spot who were siphoning fuel before it exploded at Malanga Gem constituency Siaya county on July 18, 2021.[Collins Oduor,standard]

The events of Sunday, July 18, at Yala in Siaya County, are enough to send any rational leader in this country recoiling in shame. We sincerely condole with the families, friends, neighbours and the people of Siaya. It is indeed a national shame to witness such a horror again when the memories of Sachang’wan on January 31, 2009, have refused to fade away.

These tragedies are a manifestation of a broader socio-economic problem that our political leaders have knowingly failed to admit nor bothered to address conclusively. Economic naturalist Robert H. Frank opines that every puzzle in our ordinary human life has an economic logic, explanation or reasoning behind it. But the challenge for many students and/or graduates of economics is that they never master the skills to be able to relate the concepts they learned in class with ordinary life realities around them.

Hansen, Salemi and Siegfried (2002) in a study titled “Use it or Lose it: Teaching Literacy in the Economic Principles Course”, found that there was no demonstrable difference in understanding basic economic principles months after students left the course in America. Their ability to answer simple economic questions was not measurably different from that of people who never took the principles course. This is a most surprising finding if we take into account the fact that America has not only one of the best education system in the world, but also is home to majority of the top institutions of higher learning.

Basic principles

While the conceptual economic thought process and modelling can be complex and nerve-wracking, the basic principles are few, simple, easy to understand and universal. In his experiments through course assignments over several years, Robert Frank isolates these basic principles to include: scarcity, cost-benefit analysis, not-all-costs matter in decision making, comparative advantage, increasing opportunity costs, equilibrium and efficiency.

Arguably, these basic principles would not be exhaustive and diverse opinions are bound to exist from different economist. However, Robert class assignment experiments have generated plausible economic explanations to diverse and sometimes bizarre real life observations by his students. For example, some of the issues discussed include:

One, why do women still wear high heels despite overwhelming evidence of the health risks? Two, why are intelligent people also good looking on average? Three, why do brides spend a fortune to buy wedding gowns that they can only wear once while the bridegroom can simply rent the tuxedo cheaply and wear it several times after? Or four, why is it mandatory in many countries to strap babies in cars while the same rule is not strictly applicable in planes.

Going by the same trail of thoughts, one would be allowed to legitimately wonder why people of sound mind, and presumably with basic education, would rush to siphon such a highly flammable liquid from a scene of accident. Is it that they are not aware of the risks? For what purpose would they be siphoning the fuel for, and is it worth dying for? Is it that they had no knowledge of prior incidents on similar circumstances?

The list of questions is endless, but by understanding some of these basic economic principles we could find plausible economic reasons for such irrational behaviour. I hypothesise that: one, these recurring tragedies are a reflection and indicators of deep-seated economic problems; and two, political leaders and the elite have contributed significantly to this behaviour directly or indirectly through their errors of commission or omission.

Appreciating the operational context of the basic economic principles, we could find meaning for the two hypotheses. First is the scarcity principle premised on the logic that having more of one good thing usually means less of another. Expanded, this would speak of the time-tested concept of delayed gratification and/or sacrifice of comforts of today in order to enjoy the benefits of economic growth and wealth creation tomorrow. Psychologists could see it in the prism of a problem of scarcity mentality.

Given, we live in a country where everybody, including the government, wants instant prosperity without making any sacrifices. It would explain why the public budget deficit and the public debt load are growing at astronomical rates. Majority of our current generation desire the finer things in life without paying the price for them. That would explain the wanton corruption whether in private or public sector. This scarcity mentality robs us of faith in our own abilities to earn more than enough from the plenty that nature has deposited all around us.

We are never patient on the roads and switch lanes at will, drive on pavements and even railway lines at the slightest sign of slow traffic. We jump queues in hospitals, in banking halls and even during wedding receptions for food. This bad culture has permeated deep into the fabric of our way of doing things as a society. Those in positions of authority have set the tone with their aura of self-entitlement. It would explain why the hoi polloi will rush to scoop this liquid of death completely oblivious of the danger lurking therein. It would pass like something normal until tragedy has struck.

The second principle with practical relevance is the cost-benefit principle. Economic choices are first and foremost informed by demonstrable evidence that the benefits are worth more than the costs. Presumably, human beings will make rational choices before engaging in any venture. At a higher conceptual level, it is arguably true that while nature is abundant in design, the economic systems created by men do not give free lunches. Everything has a cost or a sacrifice to be made.

Yet, at national and devolved levels of government, at policy, regional levels and even in our households we seem to have this false belief that there are free things around. For instance, it baffles me how even senior politicians would think aid is a solution to our economic woes many years into independence. Often, official policy would lean to somebody else to take the tap at the slightest sound of external economic shocks and others of our own making.

Plunder public coffers

The joke has been extended further into our private endeavours and household levels. Young couples want others to fund their humongous wedding shows, including their honeymoon. We fundraise for final rights of our loved ones despite the existence of fairly affordable insurance covers in the market. WhatsApp groups are formed for birthday parties, ruracios, house-warming parties and anything and everything. We expect and demand peanuts in bribes from politicians in exchange for our votes and expect them not to plunder public coffers.

The simple and bitter truth is that, that’s not just how economic systems work. Every good thing has a price and there is no way an economic system can assign a value on a valueless item. The final principles I will highlight here are increasing opportunity cost and efficiency. Efficient economic systems are designed to utilise resources with low opportunity costs first before turning to those with higher opportunity costs, and in the most efficient way.

These two concepts seem alien to our policy-makers and political leaders. We are living in an age where leaders define development in terms of amounts allocated and spent instead of the attributes of effectiveness, cost efficiency, quantity, quality and equity. This would explain why every simple project costs millions and billions of shillings at national and devolved levels.

Ultimately, these actions deprive a majority of citizens access to basic services and opportunities while appropriating public resources to those with access to State power. Unfortunately, to realise sustainable development, a country’s economic model must not only have the right physical infrastructure but must also be supported by the right attitude and culture.

We will never develop this country with a freebies mindset at the official and private levels.

The writer is an economist. [email protected]

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