By Oduor Ong’wen
Last week the Kenya National Bureau of Statistics (KNBS) and the Society for International Development (SID) released a report that should make us really angry. To my amazement, nobody is talking about it. Not even crocodile tears are being shed. The report is titled Exploring Kenyaâ€™s Inequality: Pulling Apart or Pooling Together?
The report says what everybody knows that 45 per cent of Kenyans live below poverty line. It also affirms that poverty levels in the counties of Kiambu and Turkana respectively are 88 per cent and 24 per cent respectively. No big deal. Everyone sees this. This is the bane of statistics. It reduces everything to numbers, and figures donâ€™t mean much to us in our daily struggles to survive.
But wait a minute. What this report tells us is that for every two Kenyans you know or meet on the street, one is likely to have had no breakfast and will probably sleep on an empty stomach. That out of every ten people in Turkana, nine have no food, no access to drinking water, no access to health services when they fall sick, not gone to school and answers call of nature in the next thicket.
In the report, we learn that out of more than 500,000 people that live in Wajir, only 2,242 people can afford to spend Sh 7,200 and above in a month. But the report also exposes the degree of inequality within counties. For instance, in Kilifi County, Magarini Constituency has 84.5 percent of its population living in poverty compared with Rabai Constituency in the same county where only 39 percent of the population lives in poverty.
This is not the result of chance. The rise in the fortunes of the super-rich is the direct result of economic and social policies we have pursued since independence. Here are a few: the privatisation of public assets and the creation of a toll-booth economy; wage liberalisation and the destruction of the workersâ€™ collective bargaining; tax exemptions for the rich; governmentsâ€™ refusal to recoup a decent share of revenues from minerals, land and other natural resources.
The policies that made the monarchs and feudal lords so rich are the policies squeezing everyone else. This flies right in the face of predictions of economic theorists. Milton Friedman, Friedrich Hayek and their disciples â€“ in Ivy League business schools, the IMF, the World Bank and just about every government â€“ have argued that the less governments tax the rich, defend workers and redistribute wealth, the more prosperous everyone will be.
They aver that any attempt to reduce inequality would damage the efficiency of the market, impeding the rising tide that lifts all boats. The apostles have conducted a 30-year global experiment in our country through structural adjustment programmes and their successors in various guises and the results are total failure.
Before proceeding, I hasten to point out that I am not converted to the conventional belief that perpetual economic growth is either sustainable or desirable. But if growth is your aim â€“ an aim to which our government and its predecessors claim to subscribe â€“ you couldn’t make a bigger mess of it than by releasing the super-rich from the constraints of democracy.
Contrary to the sermons we have repeatedly received since the imposition of the Washington Consensus in early 1980s, the remarkable growth in this country in the 1960s and 1970s was made possible by the destruction of the wealth and power of the colonial elite; implementation of Import Substitution Strategy; and massive investment in human resource development. This gave the impoverished 99% an unprecedented chance to demand redistribution, state spending and social security, all of which stimulated demand.
Neoliberalism was an attempt to turn back these reforms. Lavishly funded by millionaires, its advocates were amazingly successful: politically. Economically they flopped. As taxes on the rich and on business diminished, the spending power of both the state and poorer fell, and demand contracted. The result was that investment rates declined, in step with companiesâ€™ expectations of growth.
The neoliberals also insisted that unrestrained inequality in incomes and flexible wages would reduce unemployment. Just look at your role models in industrialised countries.
Throughout the rich world, both inequality and unemployment have soared. The recent jump in unemployment in most developed countries was preceded by the lowest level of wages as a share of GDP since the second world war. This failure was for obvious reason: low wages suppress demand, which in turn suppresses employment.
As wages stagnate, people supplement their incomes with debt. Rising debt feed the deregulated banks, which extract usurious interest on their loans, with consequences of which we are all aware. The greater inequality becomes, the less stable the economy and the lower its rates of growth. The policies with which governments betrothed to neoliberal policies such as ours seek to reduce their deficits and stimulate their economies are simply counter-productive.
Staring dumbfounded at the lessons unlearned in the near-collapse of the financial system in the United States and Europe, it strikes me that the entire structure of neoliberal thought is a fraud. The greed of the ultra-rich have been dressed up as sophisticated economic theory and applied regardless of the outcome.
The complete failure of this world-scale experiment is no impediment to its repetition. This has nothing to do with economics. It has everything to do with power relations. So we may celebrate because we are now a middle income country.
Mr Ong’wen is special advisor to ODM leader Raila Odinga.