Last week, we saw how Deng Xiaoping’s tempestuous socialist market economic voyage drove China to a three-decade unending two-digit phenomenal economic growth, resulting in not only an unheard-of 300 million jobs but also an unheard-of half a billion Chinese lifted out of poverty.
We also discovered that because the Chinese government subjects both fiscal and monetary policies to a full socialist coordination, the lack of independence to the People’s Bank of China (the equivalent of central bank) and the state control of the core banking sector enabled the central government to always channel investments not to where immediate highest short-term profit could be maximised, but where investment is needed for long-term robust and sustainable job-driven growth could be expected.
Not seeking short-term highest return on shareholder or equity investment, but longer-term state monitored economic growth approach is what separates socialist Sinonomics from capitalist Americanomics driven purely by excessive short-term shareholder profit maximisation with the state merely a spectacular that rigs the system in favour of monopolist capitalists who sponsored and financed their elections.
Little wonder while socialist “Sinonomics” never allows funds redundancy, since should for any reason the private sector try to withhold investment, the state sector and the nationalised core banking system it controls quickly step up investment in ways that keep the economy growth mode; since capitalist Americanomics only pursues shareholder short-term profit maximisation, it withholds investment as soon as Return on Investment is lower than the market cost of money.
That explains why because of the 2008 financial crisis, between 2008 and 2012 while the US and the EU economies continued to experience difficulty recovering to the extent that the former grew only by 0.5 per cent and the latter shrank by 0.3 per cent, as a result of “Sinonomics”, China grew at unheard-of 42.2 per cent.
Let us not also forget that “Sinonomics” endless phenomenal double-digit growth happens because the central government keeps non-party members far away from the corridors of power for fear of potential foreign interest infiltration, and also because vital economic policy decisions are domicilled within the party machinery. This is why the Communist Party of China’s Chairman is more powerful than the President of the People’s Republic of China since it is the Chairman’s office that is the custodian of “Sinonomics”— not only the executive’s fiscal and monetary policy making, but party card holders who run the core banking sector, party members who manage major industrial and manufacturing businesses, tested party members who oversee China’s strategic foreign investments, to mention a few.
The first lesson from China should, as a matter of fact, start with the full understanding of how “Sinonomics” works so as to see those gray areas in our system and what to borrow from the Chinese to fully address such deficits in our own system. That is why the first point of departure is retooling our fiscal and monetary policy regime for sustainable economic growth. This will require the repealing of the CBN Act of 2007 by removing the excess independence that makes the CBN anti-real sector, anti-growth and anti-jobs. Like the Chinese, our fiscal policy should be growth-based and long term planning as well as ensuring that it is politicians, the PDP’s front-line members who have a lot to lose should the party’s fiscal policy fail to grow the economy with high jobs. In other words, rather than celebrate technocrats and bloated expertise, it dedicated and patriotic politicians who have the party’s and nation’s interests at heart.
The Chinese system so far warns us that business barons with an eye to using their closeness to government to deliberately manipulate the economy in their own narrow business interests against creating a healthy competitive environment should be recognised as more dangerous than a foreign army invading our country. That’s why care must be taken in ensuring that members of the private sector that must be working hand-in-hand with the state sector are not only the PDP card carriers, but also patriots who are pursuing private interests alongside national interests, which the party and the ‘’Presidential Economic Council,’’ the Economic Intelligence wing of the National Intelligence Agency and State Security Service, will be watching closely.
Or else, we end up having the US kind of oligarchic private sector, a tiny group of monopolistic capitalists, led by the Rockefellers, who having seized Corporate America since 1900, fiercely opposed free enterprise by pressing small and medium-sized businesses to the wall in ways that allowed them to swallow these potential rivals. That’s why the oligarchic Corporate America has cynically corrupted and co-opted state legislatures, governors, Congressmen and women, judges, newspaper editors, and presidents in ways that virtually all government economic decisions only promote the monopolistic agenda of the oligarchs.
Should monopolist capitalists be allowed to take over our economy as they are dangerously sitting side-by-side our so-called technocrats shading the direction of our economy, surely sooner than later a dangerous oligarchic group should take over the entire national economy in ways that retrieving it from them would be difficult to the extent of requiring bringing down the entire economic house. Or should we be so naive to believe that barons who rose out of sharp practices, including defrauding both the people and the country during the 2008 and 2009 financial crisis have become born again, to now be patriots promoting national interest?
No business mogul joined the economic management team simply to promote national economic interest. Or how can government build refineries when some monopolists sitting as members of the economic management team are doing everything to frustrate government efforts so that they can take full advantage of government’s inaction to build refineries that will guarantee them maximum monopoly as they now ensure in cement manufacturing? The huge damage to President Goodluck Jonathan’s transformation agenda caused by the presence of these business barons in the economic management team remains incalculable, especially in the false name of private sector and state sector partnership.
Overhauling Nigeria’s banking system requires the restructuring of the banking sector in such a way as to bring to an end the present Ponzi scheme banking in the country, which not only makes banks focus on short-term profit maximisation but also involves sharp practices in ways that turn the entire Nigerians into victims of 419 banking. Following the Chinese example requires overhauling our banking sector in ways that channel most of banks’ investments into the real sector, particularly into promoting and growing local small businesses.
But for that to happen, the anomaly called the CBN, which obviously is at the very core of our representative democracy, which goes on undermining the very economy it is set up to grow, should be democratised. In other words, the CBN has literally become a republic in the Nigerian Republic. While conventional excuses are that the apex bank needs independence to reduce vulnerability to political pressures, the reality is that its actions remain an obstruction to the economy. But why should a government agency whose notes have legal tender status in the country enter into foreign policy agreements with powers and foreign banking institutions without full legislative oversight?