Category Archives: technology

about that free market

I wish I was more of an economist so that i could write convincingly about the effect that IMF and World Bank Loans and their attendant Structural Adjustment Programmes had on the economy . Wikipedia tells me that these are the conditions that come with loans from the Bretton Woods institutions whose ostensible goal is to stabilise the economy of developing countries. What they insisted on was a complete free market policy with privatisation and reduction of trade barriers.

Applying basic economic theory as well as experience with the government it’s easy to come to the conclusion that this is the way to go. After all when there is no longer a monopoly what happens is that market forces will automatically adjust the situation so that what prevails is the best goods and services for the best prices. This though is crap, this almost never happens. Why? Well the truth is that nobody starts on equal footing. I once went to a poker game late and by the time I was there the oligarchs had emerged as well as the small businessmen who knew how to thrive and survive. I came late and if I was a better poker player I would have gone much further but if I had the same hands and made the same bets as the oligarch I would still have been wiped out. The truth is that having capital backing you up means that you can wipe out the competition by completely blanketing the market or by making sure that you are absolutely essential. At the point of trying to achieve your monopoly you don’t even need to make a profit, your bank account back there is deep and this means that for years and even decades you can play the long game and kick everybody out.

Safaricom is a prime example. Hands down though with m-pesa they have the best possible service at the best possible price in the economy (as well as all the proof we will ever need that only local solutions can adequately address local problems). However there is something else coming along. A conductor told me about the reason the new cashless fare system will be rolled out with minimum fuss. It’s basically a one two that I would never have seen coming but maybe that’s why I’m never the oligarch. The only way this could be properly rolled out is the ubiquity of matatu Saccos. A law or regulation was passed requiring all public service providers to become part of a Sacco and without such membership be unable to ply any particular route. The matatu owners joined because a Sacco gives you low interest loans and because they enforce the loans by social mechanisms so they will not sell your family home and of course with a Sacco there is a sense of ownership.

The Saccos wield a lot of power over matatus and in some routes people will complain directly to a Sacco because of bad service which includes but is not limited to being kicked off the matatu before the stage is reached. Safaricom has a huge stake in making sure that we don’t use fare anymore because just like with surveillance equipment they are again the major suppliers of the means by which we will pay for fare. Either you get a card or you can use your phone. Most people will prefer the phone option because you immediately know how much you paid and how much you have left. The Saccos have a prize for complete successful installation of the cashless system on their route given by Safaricom. This is what an oligarch can do that their competitors cannot, they can spend billions on infrastructure and make a loss if need be because the long game tells them they will win any new entrant into the system and that’s how free market goes. To he with the deepest pockets, the most spoils.

This is not a difficult concept to believe however western economists have sworn by the sanctity of the free market system believing dogmatically in the creed of capitalism for a ridiculously long time. Maybe the reason is that until only very recently the west saw astonishing levels of development in a few short decades they had seen the standards of living of their people grow almost exponentially. The crippling poverty that is now only associated with Africa, South America and parts of Asia was not uncommon in Europe and America in the century that has left us. Of course there were a lot of other reasons why this happened and these seem not to be taken into account . Perhaps building an economy on slaves really does pay off even if it’s a long time later. Maybe raping your colonies and then saddling them with unworkable trade agreements that are enforced by bribing their leaders is the way to gain wealth. A lot can also be said for war industries, kill off millions and there are less people to take care of plus you create all those war lords who are instant billionaires. Then rebuild and create a new aristocracy with all these construction moguls. Have the taste of a real war a devastating-all-encompassing war just at the back of your tongue so that there is a need for social equality because this is the real reason behind wars: disenfranchisement and things will get better for your population.

Or maybe we should listen to people who know more about economics than I do. The thing is though we have and we have failed. And failed and failed again. When I grew up there was a sneering superiority that many of us and as much as I don’t want to admit it I too felt over black Americans. Had we been given the opportunities that they have over there in that land we won’t fuck up, we won’t just sell drugs, we will make something of ourselves. We are not niggers! I remember this well and I feel bad about it. I chalk it up to the problems with youth, not having read enough to understand what really goes on in the world, not having suffered enough to really empathise with the suffering of others, not having failed enough to know that failure is not always a choice sometimes it is just destiny. I read this article about reparations recently that I try my hardest to pawn off on anyone who doesn’t understand why it’s hard for black Americans to break out of the cycle of crime and poverty that they seem mired in. Its amazingly eye-opening and anyone who feels like they want to comfortably comment on the problems over there should read it. Here’s another reason why an African should never feel superior to those guys over there: they don’t control the institutions that put them down. They have to live in a system that is rigged against them because of the colour of their skin and they can’t simply change it because they are not in charge of their institutions. We on the other hand are in charge of ours. Kenya is in Kenyan hands and has been in Kenyan hands for over 50 years. While blacks in America fought for their right to vote we had universal suffrage. Then we went and fucked it up hugely.

How did we fuck up? Massive grand corruption of a scale that puts Jupiter to shame. Goldenberg cost Kenya quite easily over six hundred million dollars . Anglo leasing over 700 million . The things that happened when Kenyatta was president are not spoken about at all but you can trust that there are children who will be born 100 years hence still living off money stolen in the 60s and 70s. This fucked us up. There is no question.

Remember those matatus though that showed up earlier in the post? The most commonly used misnomer in Kenya is public transport. There is no way that a matatu or a bus or any other form of communal transportation in Kenya can be called public transport. They are self-regulating private enterprises now working under the umbrella of Saccos. They will not operate past the time when it makes economic sense to do so because this is how private business is run. A profit must be made; efficiency is gained but public service is lost. I don’t know if this was forced down our throats by Structural Adjustment Programs but it sounds just like the free market deregularisation that the west used to swear by. We followed them off the cliff and now we suffer the consequences. A real public transport system that was not driven by profit would have made Kenya such a different place.

People knowing that it was reliable and safe and that it would go on until the wee hours of the morning would have meant that less people bought cars in this country. We wouldn’t be sending our hard earned money to Japan and Dubai and Germany. This means that we would spend less on fuel another place a lot of money goes. The fact that there were less cars on the road would cure traffic jams so roads would need less maintenance. The less the jam the less time people waste sitting in a car doing nothing. A more productive society is instantly born; a better rested people because they didn’t need to wake up so early. A happier people because they are not frustrated by gridlock.

This could have been an alternative version of the city of Nairobi. Forever awake because it was safer because we did not privatise our public transport. Maybe not though. But from the experiences of the past I would hope that we had learned not to blindly follow the precepts of those who gave us “aid.” There’s going to be a vat on fuel next year . I’m not sure this is the greatest thing for a country struggling to industrialise; it seems keeping fuel prices low and thus allowing electricity to cost less so that the cost of production falls is the way to go. However we got another IMF loan and it tells us that this is what we should do so we shall.

China helped us out a lot and now they have our airwaves. The major TV stations have taken a stand against this. They, quite rightly, believe that we cannot sell our airwaves to the Chinese for any price. What drives them (the tv stations) is economics but the reason I believe this is true is because one day we may piss off china. We were never so beholden to the west that they could cripple an industry of ours with what seems to me the flick of a switch. The CCK can tell us they will regain control of the airwaves but if they sold them to companies owing no allegiance to the Kenyan way of life and culture could we not be punished like an errant child by the Chinese government for an hour, a day, a week. Enough time that it would hurt.

I don’t know why we never properly digested the fact that we can’t keep offering up our asshole to whoever bought us a meal most recently. The bruising experienced there will every time mean that you forget your full stomach while the indignity remains forever . Why though is our government more concerned with protecting the rights of foreigners and busy issuing threats against our home-grown businesses making it harder for us to develop properly? And here i should give credence to the tender system and the supposedly shoddy job that our people did when trying to apply for these tenders. That though is a free-market argument. Sure its great and all that but even America the bastion of free trade heavily subsidises its farmers to the tune of 20 billion dollars a year . The point here is simple free trade is good and its great but if we can find a way to keep control over what may be an essential industry we will do it. That’s free-trade die-by-capitalism America’s way of thinking but we won’t do that because…. i don’t know why but those new roads are great.

This is one of the problems of Kenya. We control the institutions: we are in charge but we forget and kowtow before anyone who can flash us a cheque. I wish we never accepted aid again. Trade can pull us out of the rut we are in. That and solutions made for Kenyan markets. That and a government that turns off grand corruption. That and a government that does its best to support its people especially if it means providing essential services or at the very least allowing our own citizens to do this. That and a lot more but all the economics I actually believe is true is the theory that in a perfect situation supply and demand are the only things that determine price. So what do I know?


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Filed under airwaves, chinese, corruption, economics, insitutional failure, kenya, matatus, saccos, safaricom, technology, the west