THE RACE FOR CAPITAL

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THE RACE FOR CAPITAL: AND OTHER OUT-OF-THE BOX ECONOMIC ARGUMENTS

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THE RACE FOR CAPITAL

…. And other out-of-the box Economic Arguments

CHAPTER 1

THE RACE FOR CAPITAL

Maybe at the end of the day, the reason why we have the word RACE in the dictionary, especially the one that refers to groups of people, is that there is a constant race for capital. For cash. For money. I’d meant to write a book on this topic, but now, I have an even better idea. It will form part of an upcoming book. Sometimes I think that will be doing injustice to the subject, but also I don’t wish to overflog the issue.

There is a RACE FOR CAPITAL. A race for who gets what. And the discerning are invited to sit back and notice how cash flows in society, and in the world at large.  For me, ever since I became aware of the subject matter, all I have done is to take notice. This also informs how and when, and for what reason I part with my hard-earned cash.  Sometimes I pity myself for not being born into the race that gets the most, or for not being among those who (most of the time illegally), get access to capital, to cash, in my own country. But then I remind myself that we were probably born for different purposes. Still, I intend to make a decent living, to not be the perennial victim, but not necessarily to be one of those saddled with the custody of capital.

                                                                                                                                                                                THE CUSTODY OF CAPITAL

Indeed the upshot of my analysis and research, is that some people are saddled with the custody of capital. In places like Nigeria that is largely unclear. Custody for whom? On whose behalf? But when we take a look at what is playing out globally, it seems clearer. It’s about race. The human race. The race for capital.

When we see, as we shall shortly, how money flows from one unit to another, and how much a productive venture attracts as against another, it shall be clear that some are getting much more than others.  And that huge amounts of money has been stockpiled like dry gunpowder over the years. The question is ‘with whom’?  Imagine that some families, some businesses, some races have had a long run of profit-making – in whatever venture they are involved with – for centuries. And some races have also had just grief and deprivation in that time.  These ‘lucky’ races or families have merely been sitting on more and more of liquidity, or assets, or capital. The monies and assets are legitimately theirs, given the extant laws that govern the affairs of men. Nothing can take what they have away from them.  This is a once-in-a-lifetime phenomenon. Never in history have some acquired so much while others have been totally deprived, wondering what hit them.

The way our world is arranged today allows this to happen. But the observant will notice that financial arsenal is being concentrated in the hands of a few, chosen people. A smart person who is not among the chosen, will do well to keep head above water. Barely. The rest of the hoi polloi – the world over – wallows in want, in debt, in anger and bitterness.

CAPITAL IN THE 21ST CENTURY

Thomas Pickety, the French Professor, wrote about this recently.  His book Capital In The 21st Century seeks to shed light on the increasing disparity of income over the years – the widening gap between the haves and have-nots.  He collected a lot of data that showed how this gap has increased with time and that it’s never been this bad.

What are we to do? Pity the poor? Stop those who know how to make money from making some more? Slow down the growth of the global economy?

Not many valid ways out have been offered. Some – like Kenneth Rogoff at Harvard – have even questioned Pickety’s basis of arriving at the conclusion that inequality is increasing. Others have wondered if increasing inequality is a bad thing in the first place.  Pickety and a few others have recommended some huge taxes on the rich, which I think is a bit counterproductive.  The rich will merely conclude that the rest of us are envious of what they have and just want to wrest money from them.  Also, which government will be bold enough to exact these taxes on the rich?  The rich, as observed by Pickety, and also by people like Robert Reich, Clinton’s Secretary of Labour (also a professor at UC Berkeley), have been so wise as to start deploying their wealth for the purchase of politicians.

My humble recommendation for slowing down the inequality so that it will not end up ripping off humanity from 90% of the global population, is that the people, who still have the population and therefore – hopefully – the power of the vote, should gradually but rapidly, redefine what government is about.  Consistent spending on public goods, reengagement with some hard, out-of-the-box issues, as we shall try to do here, will lead to a situation where very few people feel under pressure to acquire money. It is the pressure to acquire money that creates problems. If people weren’t in debt, if people weren’t facing hunger, disease, joblessness, the prospects and consequences of illiteracy, perhaps the problem will reduce.

The real alarming thing for me, is that in all these analysis and debate, little, if any thought, was given to Africa, the ground zero of inequality, and all the terrible afflictions associated with it.

AFRICA AS GROUND ZERO

Nigeria in particular. Highest population in Africa. Most boisterous of the lot. Loud and intimidating. A people that are quick to rush out in celebration of the most mundane of achievements. This is where it’s at.

How has the race for capital panned out in Africa? In Nigeria?

On one hand, the country has forever been a consumer of processed goods and manufactures. It sells crude oil, gas and agricultural products. As has been noticed in the analyses referred to above, there is a limit you can aspire to when you exchange farm products for others upon which so much intelligence has been deployed. A yam tuber takes like 9 months to germinate and make it to the market. An i-Phone on the other hand, could be manufactured in a day. Thousands of them.  One costs 1,000 times of the other. One is needed and used all over the world. The other is restricted. The farmer who produces the Yam needs an i-Phone (or so he thinks), but to get one, he needs 1,000 of his products. And he has other needs. For him it is a losing game.

Yet, more and more sophisticated manufactured goods are dumped on Africa, or fervently sought by Africans themselves. Nigerians are known to be avid consumers of these products, oftentimes led on by the mirage of booming crude oil prices.  When that dries up, as it threatens to currently, pandemonium sets in on the land.  How come no one sees the trends before now beats the imagination.  So Nigerians emerged the highest consumers in the world, of Champagne, SUVs, Private Jets, Yachts, luxury hotels, jewelry etc. Nothing wrong in that, but it is important to ask “what are we selling in return?”.

For if we aren’t selling anything of substance or sustainable value, then we are merely aiding the transfer back of capital, with interest and profit, to those who own capital and those who understand what it means to have capital under the extant global norms and rules – the custodians of capital.

In Nigeria, because of the big problem with corruption, those who could be regarded as the custodians of capital – those who should hold capital for the eventual deployment for everyone’s benefit are very few. But not only are they few, they owe no one any obligations. Or so they think. Because they don’t see this big picture I’m trying hard to paint.  If the powerful banking and manufacturing families of the USA have a reason beyond their immediate families, to keep acquiring capital for strategic reasons – by engaging in global commerce, collecting profit from poor people far and wide, influencing government policies, or creating the rules themselves, those here have no such overarching reasons or ideas. In fact, they would readily transfer the capital creamed off from this land, to banks and properties in the lands of the wise.  At the end of the day, we have 65% of our population under water, in serious poverty, at the risk of starvation and illiterate or succumbing to disease, another 34.9% in various stages of vulnerability (don’t be deceived), and less than 0.1%, or 170,000 (which includes father, mother, children, grandfather, grandmother), truly sitting on the resources and being really comfortable in every sense of the world. The custodians of capital.

Recently, the Central Bank Governor, lamented that 35% of total bank lending in Nigeria is being held by a mere 50 individuals and their companies. Those are meant to be the custodians of capital. They are the 50 ‘stinkingly rich’ Nigerians whom banks will fall over themselves to lend to, who would hardly pay back, and who would usually be bailed out with tax payers’ money at the end of the day. Needless to mention, that the monies they borrowed also belonged to the common man, the humble depositor.

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