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Opinions of Tuesday, 18 August 2009

Columnist: Oteng, Maxwell

A National Conversation About Unconventional Ideas For Development

– PART 1

By Maxwell Oteng,

The debate about competency and loyalty that is gaining currency in the political landscape is a timely one. While I find the debate as dwelling on the faux dichotomy between those two important ingredients for organizational success (as if competency and loyalty are necessarily mutually exclusive), the very fact that it has been raised by, and it’s being discussed about, in the very upper echelons of our political structure, is very comforting. Very comforting in the sense that at least there is some recognition that our country cannot succeed in making transformational changes by putting incompetent people in high-level decision-making positions in the name of loyalty to party. It has taken us too long to realize that incompetence breeds mediocrity, and mediocrity, as we all are painfully aware, has been too costly to our country. I have no doubt that Ghana’s development endeavors over the years lost some significant progress because of mediocrity. It is still not clear that we have competent people to lead our most important institutions.

There are numerous reasons for the percolation of mediocrity in our national polity, including the low expectations Ghanaians have for their political leaders and the low burden of requirements that prospective politicians have to demonstrate in our communities to capture the imaginations of the citizenry. Usually all that it is required of one to be considered qualified for a national political leadership position is some academic degree (the more advanced the academic degree, the easier it tends to be) and ability to raise one’s decibel a notch higher than others in the “oligarchic marketplace of noise-making” otherwise known as the Ghanaian marketplace of political punditry and social commentary. Apparently no significant considerations are given to the intangibles that would make a person a good public servant and for that matter an effective political leader – visionary ideas, strategic thinking, intellectual curiosity, good temperament, ability to motivate, a high degree of integrity, transparency, incorruptibility, inclusiveness, good and effective communication skills and few others. That is why it is unsurprising that if you have some portfolio of academic credentials you’re likely to receive a nudge or two from people of all persuasions to make yourself available for a political office.

But beyond competency, loyalty and a portfolio of high fulatin academic credentials and titles, I think we should have a national conversation about ideas or propositions for accelerating and sustaining economic development (in addition to the laundry list of conventional recommendations that we have been pursuing). To start the ball rolling I offer some personal thoughts below.

Thought #1. Shedding the Pavlov dog’s mentality When it comes to the management of our economy and public policy in general, everything has a Pavlov’s Dogs mentality to it. In other words, instead of taking proactive, futuristic approaches to addressing our challenges and harnessing our opportunities, we seem to revere in reactionary approaches of adhockery and mediocrity. To shed this Pavlov’s dog mentality, let us, through parliamentary act, establish a non-partisan Development Intelligence Unit (DIU), and ideas unit made up great minds of diverse experiences and backgrounds. The primary charge of the DUI will be (1) to provide nonpartisan, scientific, unbiased and timely analyses for economic and budgetary decisions (2) provide both quantitative and qualitative information, forecasts and estimates required for medium- and long-term development planning process and (3) developing a forums for generating and discussing new ideas, and mechanism for civic engagement. My model for this ideas unit will be a combination of the US Congressional Budget Office and Brookings Institution in the US. I am aware of the existence of the National Development Planning Commission (NDPC), but as it is currently constituted, the NDPC does not seem to have the capacity to perform such a function. We may choose to strengthen and expand the capacity and capability of the NDC and give it new mandates instead of establishing another government unit.

As country, we should not be interested in the services of people who can just spew out the country’s development afflictions and recite a laundry list of conventional recommendations to address them. In fact any Ghanaian with average intelligence knows our development afflictions: poor institutions; ill-developed economic and social infrastructure; poor human and social capital endowments; unsustainable fiscal and monetary policies; ineffective use of our capital resources; inadequate, ill-developed and sometimes perverse incentive structure for private investment and appropriate technology adoption; inadequate household savings and inaccessibility to credit; lack of diversity in production portfolio, and so on. The challenge therefore is not to design policies that will address all the aforementioned afflictions in order to develop. This would be tantamount to condemning the country to what Dani Rodrik of Harvard University called a “spray-gun approach” – shooting reform gun on as many potential targets as possible in the hope that some will turn out to be the real live ones. Instead as Rodrik rightly advices, the trick is to identify the most important constraints blocking economic growth and target policies at those areas where reform will yield the greatest return.

Since politicians may have different objectives, they may not necessarily value the benefic of economic and scientific reasoning. So we should not leave important national policies to the imaginations of politicians, no matter how imaginative they are. Rather I want members of my proposed ideas unit to have the capability of undertaking a diagnostic analysis to figure out where the most significant constraints on economic growth are; provide creative and imaginative policy design to target the identified constraints appropriately; and suggest a mechanism to institutionalize the process of diagnosis and policy response to ensure that the economy remains dynamic and growth sustainable.

Thought #2: Appoint A Macroeconomist to Deal with the Macroeconomy For a country like ours, it would be helpful if once in a while we put people in charge of the ministries where their expertise would match the job demands of those ministries. Let us take the Ministry of Finance and Economic Planning for example. It is somewhat of a mystery to me why almost none of the people who have held this important position had significant training and high-level expertise in macroeconomics. While we must appreciate the experiences and backgrounds of all those (and their deputies) who have held this important position, we undervalue the benefits of people who are solidly grounded in macroeconomics by not calling on them to deal with the challenges of our macroeconomy. Let me illustrate how useful it would be if we put an expert macroeconomist in charge of the Ministry of Finance and Economic Planning. Let me use Rodrik’s example, Chile. Like Ghana, Chile has been taunted as an economic success story in South America. Its Minister of Finance is Andres Velasco, a distinguished macroeconomist. Like most high-performance developing country, Chile has a market system with proactive industrial policy (Chile's main copper company is state-owned). Until the current global financial crisis with its attendant economic meltdown occurred, the Chilean economy boomed (partly due to high copper prices), and the government's coffers were filled with cash. With this came a plethora of demands: Students demanded more money for education, civil servants higher salaries, and politicians clamored for more spending on all kinds of social programs. Sounds familiar? But being a good macroeconomist and fully cognizant of boom-and-bust-cycles of commodity prices, Velasco did not give in to these demands and did what any good macroeconomist would do: smooth intertemporal consumption (a big macroeconomic concept which simply means to make sure that there is no disruption in future consumption) by saving most of the surplus. He ran up the largest fiscal surpluses Chile has seen in modern times. This did not make Velasco very popular, and in fact public sector workers marched in Chile’s capital, burning his effigy. By the time the financial crisis hit Chile, the price of copper plummeted, but the surpluses accumulated during the good years gave the Chilean government enviable latitude in responding to the crisis. As a result of the surplus, the government was able to unveil a $4 billion package of tax cuts, subsidies and stimulus spending, which $68.41 handouts to 1.7 million poor families. As Bloomberg reported, "the country’s economy is expected to grow 0.1 percent in 2009, as the region contracts 1.5 percent, according to the International Monetary Fund." Velasco has become the most popular Minister in the Chilean government. The morale of this illustration is that it pays to put people with the right expertise in the right positions in order to reap “progress dividends” from their endeavors.

So what are your unconventional ideas or thoughts for moving Ghana forward? Share them. Let the national conversation about ideas begin!

TO BE CONTINUED