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No Surrender

No Retreat

Amen Teferi

12-17-15

 

As Speaker of the House,AbadulaGemeda, has recently said, after a short period of absence, anti peace elements have come back in the swing of things.They woke up from the political slumber that languishingly enmeshed them for a while andsuddenly rushed into their usual business, this time around, taking the draft “Integrated Master Plan” as an opportunity target. Now, they rebounded from their deathbed and started to gulp down the leftover agendas of the draft “Integrated Master Plan.” To reinforce their misleading claim they have taken issues with another ratified legislation the Chieffie promulgated a couple of month ago.

 

These political vultures prey on the ignorance of naïve citizens who can easily buy slogans formulated by anti-peace forces. They coach irrational interests to misinform and instigatebabes in the wood who are innocent of what is going on around them. They mainly focus on schoolchildren who often become involved in something they lack the experience to handle. They also manipulate disoriented individual who lack knowledge to understand their insidious political motives.

 

As Speaker Abadula has said the failure on the part of the regional government to organize platformswhere people get chance to appease curiosity and air concerns on the draft “Integrated Master Plan” before the issue takes awrong turn. In fact, officials of the OromiaRegional State have admitted their failure to organize discussion forums where the public deliberate on any controversial issues of related with the “Master Plan.” This utter failure has made it possible for the criminal spin-doctors who are engaged in fabricating wicked propaganda that has helped them to incite havoc.

Anti-peace elements have tried to sail under false colors and managed to create havoc. They have been working hard to subvert our constitutional order. Chauvinists, narrow nationalists and rent seekers joined hands to create confluenceand promote their respective contradictory interests. Thus, they come out with their defunct slogans.

To destabilize the democratic system that has reduced their political agendas into ashes, those who wave the old banner of “One Ethiopia” have conjoined with those who cry slogan of an “Independent Oromia.” As the case stands now, these same but differentgroups ironically collaborate with one another as the chauvinists have opted to “naturalize” the agenda of their archenemy that they strongly abhor to the marrow of their bone.

However much their spirit might be willing, definitely, their flesh would be so weak. They may have the good intention to work together for the same cause that would set them diametrically.

The agenda may appear to be more attractive to challenge the incumbent, butit is worthyless to forge a sustainable solidarity among them. These forces run shoulder to shoulder to extinguish the flickering hope that began burning two decades ago when we establish our federal system. Now, the glamorous light of the “federal candle” is glistening all over Ethiopia building up frustration in the heart of its enemies.

The doomsday announcers who lack the intelligence to realize the doom and gloom of their action are sponsoring the unholy marriage of these groups.They are facilitating their anti-peace plans and failed to see the pervading misery their action will unavoidably attract, asthey are blinded with the irrational intereststhey are advocating. They are pounding dooms day tambourine using all media who are willing to carry their massages. 

The People

The people have constitutional right to express freely their opinion on every issue, not even excepting matters that the ruling party held with a kind of “over my dead body!” resolve.  All officials of the federal and regional governments have thus admitted their obligation to drill down every concerns of the public. They never hesitate to accept the legitimacy of the questions raised by the crowd. However, they have strongly denounced the excess involved.

They never tend to lose balance and brush away the concerns the crowed tried to reflect, by particularly focusing on the uncivilized means, i.e. riot, to get their message across. To my surprise, they have even gone an extra mile to “appreciate” the excessive vigilance shown by the crowd in defending the cause they presume to be affecting their alleged rational interest.

Despite the excess in the process, the officials were happy about the effort being shown by the crowed to influence the alleged decision of the government, as this would reflect the characteristics of an active citizenry. Notwithstanding to the unacceptable course they follow, the crowed were trying to stand in defense of the federal arrangement, which is established by the prescription of the constitution drafted and ratified by the full consent and participation of the Ethiopian people.

The Ruling Party

At any rate, I would like to stress the fact thatEPRDF isa democratic party that does not wish to govern its people by decree. Looking to its past records of accomplishment, onecan establish the fact that the ruling party customarily exercises its authority after thorough deliberation with the relevant public bodies. It has never tried to rule by simply issuing orders without first having the issues debated. It usually sought to implement its programs and plans, only after it is votedandget the full consent of the public. The public choice has precedence over every other political or developmental goal it may wish to fulfill. 

 

However, the anti peace elements got chance to rub off the dust and resurrect from their grave by cannibalizingboth the “Integrated Master Plan” andthe urban legislation promulgated bythe Cheffe. There is also anther issue that perhaps has added fuel to the fire ignited.

 

As you might well remember, the ruling party has vowed to fight rent-seeking elements and publicly waged war against rent-seekers. It seems to me that the havoc or riot is the result of the confluence of the three forces who are threatened by the consolidation of our democratic system.  Here comes the need to understand what really do we mean by rent seeking?

 

Rent seeking –Basic Concept

Apart from some technical meanings, rent has a simple meaning in normal manner of speaking.Here, rent is the price paid per unit of time for the use of something durable, especially land and the buildings upon it.

 

However, in economics, rent has a technical term that is defined as the factor price received minus the lowest factor price, which would have induced the factor unit in question to remain in its current employment. For instance,if a journalist is earning 15.000 Birr, while he would stay in his job even at 10.000 Birr (though not less) has a ‘rent’ of 5000 Birr. In economics, this hypothetical surplus is often called ‘economic rent’.

 

On the other hand, the economic advantage attached to a position, regardless of what is done by the person who occupies it, is also be defined as ‘economic rent’. Thus an officer in a factory whose job it is to inspect goods for defects of a kind that no longeroccur, has a rent on the productive process equivalent to his salary. The pursuit of rents, in this sense, is an important motive in modern societies and, according to the theory of public choice, explains much political behavior.

 

Public choice is an economic theory associated with the US economists James Buchanan, Gordon Tullock and others. It is an economic theory, which tries to apply themethods of economic analysis to the political process. Essentially, the political process in a democracy should beseen as a free or partly free market, in which parties offer public policies in exchange for votes and seek to maximize the votes that are cast in their favor.

 

Members of political institutions should also be seen as maximizingthe benefit and minimizing the cost of their positions. As against this trend, the bureaucracies expand partly because those withinthe bureaucracy acquire a rent on the socialproduct – a permanent and guaranteedincome from the state, to which noreal risk is attached.

 

Bureaucratic tasksare proposed in order to raise thisincome and to expand the positionsavailable, but have no necessaryconnection to any social or politicalneed. Public choices should be seen asthe private choices of the individualswho propose them and carry themout. However, one of the most important developmentsin modern politics is thereforethe growth ofrent seeking in thepublic sector. To obtain a rent on thesocial product, groups form in order topress for government funding or inorder to find some safe niche withinthe existing system of benefits.Ideological fashions within statefundedindustries can be explained interms of this goal.

 

Thus, the stateeducational system will tend to becolonized by groups with socialistideas, advocating egalitarian policies.For these ideas will (a) rationalize theconstant expansion of the state systemand make state funding of educationpermanent; (b) inhibit competitionfrom the private sector; (c) ensure thatminimum labor is required of thosewithin the system, since the goal ofeducation, according to the egalitarianpremise, is not quality but uniformity.

 

Therefore, the politicization of state bureaucraciescan be explained in similar terms.By adopting an ideology, which favors the needy, the minorities, andthe powerless, the bureaucrat may legitimizesthe transfer of funds to his ownprofession, and makes available tohimself and his colleagues the meansto live comfortably at public expense while enjoying enhanced social status as the provider of official charity.

 

Rent Seeking in Action

Anne O. Krueger was the first to use the term “rent seeking.” In his article published in 1976 (in the American Economic Review) Krueger for the first time employed the term and then Gordon Tullockhas taken it up as part of a general theory in an article titled: “The Economics of Special Privilege and Rent Seeking”(1989).

Generally speaking, rent-seeking is the efforts made by businesses, individuals or groups to obtain either some kind of monopoly status or an increase in their incomes beyond what a competitive market might deliver, through law or administrative regulation. For example, an effort made by a certain firm to introduce ‘health and safety’ regulations thatit can easily comply with (for some historical reasons)but which impose serious costs on its competitors, can be rendered as a rent seeking activity.

 

In this sense, tariffs are a source of rents afforded by law to domestic producers. The salaries achieved by the directors of state monopolies are legally enforced rents on national income. The term may be used more widely to refer to any activity in which one person achieves, through law or the administrative process, a share in the profits of an activity undertaken by someone else.

 

Rent seeking is the attempt to gain access to or control over advantages for receiving rents. "In economics, rent-seeking is an attempt to obtain economic rent by manipulating the social or political environment in which economic activities occur, rather than by creating new wealth." Thus, rent seeking is destructiveness stemming from the fact that it diverges and wastes the necessary resources which otherwise could be used to fuel the economy.

 

As scholars argued, the two most important rent-seeking behaviors in the developing countries are as bureaucratic corruption and political violence. Bureaucratic corruption involves several kinds of activities, in addition to accepting bribes from individuals and groups seeking government favors.Moreover, bureaucratic corruption also includes theft or the illegal appropriation of public resources by the civil servant, nepotism, illegal taxation by the bureaucrat, and other types of activity that illegally increase the bureaucrat’s compensation package. Some of these activities, however, do not qualify as rent seeking.

 

Rent seeking poses threat to the credibility of government itself and can decays government structures and capacity. It is a threat to the legitimacy of government itself and has unmitigated negative effect on the hard work of any nation to achieve political and economic development.

 

For instance, multinational corporations maybe drawn in some infamous cases of corruption in developing countries. Some multinationals may bribe government officials to win contracts and other patronage, while some othersconspire with government officials to overcharge governments for the supply of goods and services; still others induce government officials with money to give them undue favorable operating conditions over competition such as in the interpretation of tax laws, licenses and fees.

 

When there is an intervention of government in the economy, like in the case of the developmental state,it would open up a wide door for misuse of state power and embezzlement of public assets by government officials.  According to the Federal Ethics & Anti-Corruption Commission of Corruption Prevention & Research Department of Ethiopia (FEACC), "Fraud, trickery, embezzlement, extortion, nepotism and theft are believed to be the principal features by which corruption has manifested in Ethiopia."

 

According to the commission "...expert analysis of the civil service reform program and some other sources, poor governance, lack of accountability and transparency, low level of democratic culture and tradition, lack of citizen participation, lack of clear regulations and authorization, low level of institutional control, extreme poverty and inequity, harmful cultural practices and the centralization of authority and resources are the major causes of corruption in Ethiopia."Despite well-crafted and sound policies, which are intended to reform the inefficient and opaque civil service system, real improvement has been elusive and acceptable moral and ethical values are violated without juridical repercussion.

 

Crusade on rent seeking must be seen, as part of the socio economic development strategy, which Ethiopia sought to implement that aimed to build a cultural infrastructure for the fast expanding in volume and complexity of economy. This strategy also needs to include inculcating a spiritual dimension value system, which counters the existing materialistic and individualistic sentiment of human success.

 

The success of a campaign against rent seeking will be measured not by how many cases of corruption and rent-seeking crimes are foiled, but by the extent how far the public awareness and participation is changing during the course.

 

Rent seeking repulses investment and discourages foreign aid. Investors see corruption as needless additional cost of doing business. Corruption can negatively affect the quality of goods and services produced in a given economy. "Companies that are burdened with under-the-table payments’’ will try to contain their costs by cutting corners and also by avoiding useful and necessary improvements on their products as they opt to relieve themselves of from additional investment.

 

Developmental State

Developmental State refers to a state, which makes its primary goal to enhance economical growth and transformation. To achieve these goals developmental state, contrary to neo liberal paradigm, intervenes and plays a leading role in guiding the direction and pace of economic development. Thus, some scholars argue that developmental state is described as neither socialist nor free-market but something of unusual combination, which is characterized by the "plan-rational capitalist developmental state" with its intervention and rapid economic growth. 

 

Development is a process of discovery and since every country has uniquely different circumstances, there is no one-size-fit-all model of developmental state and policy to all countries. However, there are general characterizations of developmental state, which are basic to all and in all circumstances. First, developmental state actively intervenes in the economic process to facilitate growth and transformation. Secondly, intervention of developmental state is oriented toward less public ownership and usage of set of economical leverage of incentives. These instrumental leverages include such as subsidies, tax breaks, tax credits, import-export control and promotions, targeted financial and credit policies etc. Another common feature for developmental states is that the existence of professional and effective bureaucratic apparatus which is exclusively adhered to developmental state ideas and goals.

 

Developmental state encourages and primarily relies on private sector investment not on public funds. Extensive dialog and cooperative engagements with private sector are prerequisite for developmental state. The establishment of developmental state of Ethiopia happened to be a reaction to a failed ideology of neo-liberalism, which is vigorously promoted by western countries and their extensions -international organizations- to instill in African countries.

 

After the collapse of socialist camp in late nineties and failure of socialist planned economy paradigm, neo-liberalism was seen as a triumphant ideology and a remedy to African problem. However, the structural adjustment program (SAP), which developing nation has been subjected to follow by international financial institutions(like the IMF and WB) and their donor western countries has failed to bring expected development and success. Hence, developmental state of Ethiopia is a result of a long journey in searching alternative path of growth, which suits the countries immediate and strategic interests.

 

The Commitment

Ethiopian government did not want to spend much time in reaffirming its commitment in fighting rent reeking political economy. But it has resolved to defuse any political and economic climatesthat isinfested with rent seeking practice and ideology. If rent seeking practice and ideology continue to hold an upper hand without being challenged and radically changed, the dream to see a middle-income country will remain to be just nightmares.

Fully cognizant of this fact, it has launched public mobilization to promote good governance. On a forum planned to kick off the national public mobilization, PM HailemariamDesalegn has shown his commitment to fight against every stripe of rent seekers, while at the same time he publicized how clear he is about his mission. You can see his determination in his eyes and his resolve in his voice.He also has acknowledged the importance of an organized intervention and engagement.

He also stressed the need to foster and sustain the public-government forum, as it would enrich the leadership quality of the officials.Hailemariamfurther highlighted that the primary focus of the government is not an evil doer working at the middle or lower levelcivil service structure. Rather, officials assigned atthe higher echelon whose performance would only be evaluated by the satisfaction of the public. If any government appointee fail to ensure satisfaction,then he will be held accountable, even though he is not found to be guilty of any elicit actions. He may not be involved in any criminal actions what so ever, but he will be accountable for failing to ensure public satisfaction.

As ever, rent seekers are leeches sucking excessive profits from an illegal partnership with public officials. The PM has demonstrated the challenge by recounting an anecdote that clearly indicates the depth and breadth of the problem. In this regard, he mentioned an illicit action happened in the last quarter of the previous years, where bankers who held important position had engaged in illicit action by offering foreign currency to buyers in under counter dealing. Some bank officials were selling dollar by charging buyers 3 Birr for every one dollar. The PM might have found this under counter dealing of the top bank officials very stunning, as one could tell from the gesticulation of his hands when we watch him on television. No surrender, no retreat.


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