Economic Policy Management As aA Big Picture By Nasiru Suwaid
This week, if I am to be perfectly honest, my written piece was inspired by what I observed on the Cable News Network (CNN) or if I am to be most specific, it was motivated by what I watched on the Fareed Zakaria’s Global Public Square (GPS), a well researched and deeply interactive television show and what I read, on the accompanying topic that features as a weekly opinion-editorial on the Washington Post.
The issue this week, sought to explore the reasons for the rise and rise of Mr. Donald Trump, as a presumptive GOP presidential nominee of the Republican Party, why despite the acclaim by the United States of America (USA) and the global acknowledgement of having successfully breached the racial barrier, with the election of African American President Barack Obama as the number one public official, that same nation is now bringing out and presenting a racist bigot as its number one standard bearer.
The highly intellectual and deeply engaging show, tried to comprehend and understand the rise of the celebrated political bully, as a consequent result of him having created the image of being a successful Chief Executive Officer (CEO) and the public tiredness with the shenanigans of a typical American politician.
After years of deeply polarizing partisan atmosphere in Washington, where every action or concomitant inaction of the government is as a result of bipartisan differences, the population are bound to be tired with atypical politicians and would most gladly embrace, any individual that projected the image of a business executive, who are known to excel in making profit, getting things done with dispatch but most especially, private sector governance is basically premised on results, not compromises that would seem lethargic, unproductive and counterproductive, but rather, the ability to produce figures and data which must be presented to a highly skeptical shareholders to convince and satisfy them.
It is within this threshold of a public discourse, where Americans are exploring who is to be a more effective, efficient and capable politician, Nigerians began a discussion on the instrumentality of a market environment, what are the boundaries of adhering to its fundamentals, what constitutes an interference in its internal mechanism, what constitutes a distortion to its freedom to set its determinants, what is the placement and position of the regulation to the internal workings of a market.
Could a market solely driven by profit motive, have internal discipline to moderate itself from the profit angle, what should be the position of a politician enabled regulator in moderating the market environment to prevent implosion from within, besides, does a politician have any role in the market environment, at the very least, to protect the general population from exploitation, monopolization and bad market practices.
Generally, markets do not exist in a vacuum, rather, they exist on the grace of the institutional state, which must set mechanisms and standard for the operation of the market, under certain fundamentals which the market creates by itself, though, in some instances or circumstances, a market set a different parameter that endangers the interest of the institutional state.
Take the example of the global free trade, where an industrialist is given every incentive to set up a factory in United States of America, however, because of labour issues and the fact, it is cheaper to produce in China, the industrialist would rather import from abroad than manufacture at home, as the fundamental indices for such market is that it is not better to add value by processing from within or internally, because, profit takes supremacy in market operational terms.
Mind you, the mere fact that company A has moved from point B to point C or it has moved from United States of America (USA) to Peoples Republic of China (PRC), automatically deprives the former, the right to collect revenue and confers on the latter the ability to collect taxes. While it is right to respect the boundaries of the fundamentals of the market environment, politicians do exist to preserve and protect the interest of the institutional state, as such, for a politician like President Barack Obama, what is required is punitive tariffs that seeks to reset the market fundamentals, which ordinarily should be in form of legislations as passed by the United States Congress (USC).
However, presiding in a period of highly partisan environment, it had to take the form of executive measures, as it happened recently, with the introduction of Presidential Directive Against The Corporate Inversion Tax Loophole. The presidential ordinance would slap punitive tariffs against companies that move their headquarters from America, thus, depriving the government taxes, yet, the companies are still operating in the United States market to exploit the local environment.
Ideally, markets or market should be disciplined enough to regulate itself from within, with the established fundamentals acting to guide the market, however, since the instrumentality of the market environment, could be a threat to the interest of the people, who must be protected by the institutional state, politicians must always act to guide and guard the market, through the instrumentality of operating regulations, even though, it can distort a perfect market environment.
Now, let us bring the discussion down to the Nigerian domestic environment, many have argued that it is the distortion of the price fixing in crude oil refining market, which serves as a disincentive for the building and operation of private refineries in Nigeria, that in fact, the day government fully deregulates the sector, allowing marketers the right to fix prices, the scarcity would automatically fizzle out, without any regulatory incentivized government prompting.
I disagree, because, the fact that it is marketers who are to fix prices, does not meant they have to build refineries, as they could still import and make profit, as it is they who fix the prices and it could be as high as it is profitable, more so, trade practices matters in the operation of a market and Nigerian refined oil marketers have an established business behavioral pattern, which is proven that they are only driven by profit motives, not adding value through refining, thus, why should they be like Aliko Dangote, who is building a refinery, despite not having the power to fix prices.
Of course, that does not preclude an upward movement in the price of the refined product, where a government which is borrowing heavily to fund the budget, would feel unable to subsidize the utility of importing the product into the country and transporting it into fuel stations, in an inefficient market environment that is distorted with corruption, where the Petroleum Motor Spirit (PMS) is hardly accessed on the official price by the majority of the general populace.
In such an instance, upward movement in price is desirable, even necessary, as the Nigerian state of today, cannot simply afford to pay hundreds of billions of naira as subsidy payment, but, the government must never cede the right to effectively regulate, not to fix an unsustainable government price, rather, a price regime and market price that is not driven by the greedy manipulations of the fundamentals of the price mechanisms of demand and supply.
And this other thing:
TRIUMPH OF THE MARKET OVER REGULATION FEARS
Since the Economic and Financial Crimes Commission (EFCC), as an interdiction behavioral regulator agency, began the recent investigations into the banking sector of the economy, many have expressed fear over what it would do to Nigerian banks, in terms of affecting and impacting on depositors confidence. In fact, perhaps, it is because of this worry, the Central Bank of Nigeria (CBN) as the primary financial regulation agency, after examining their books for professional misconduct and operational infractions, have had to issue statement regarding the financial health of the depositor money banks, affirming their liquidity status as sound and strong.
However, even before the confidence boosting actions of the apex bank, although banking shares have fallen down ab initio, dragging down the Nigerian Stock Exchange (NSE) All share index (Alsi), by week ending last week and for most of this week, the market sentiment is sounding bullish, as the banking shares surges northwards, eclipsing any fear that Nigerians are doubting the state of the Nigerian banks, in fact, many a financial analyst are of the firm belief, that rather than the regulatory instruments of the institutional state, frightening the marketers into divesting, it merely emboldened them to feel safe, that their investments are being monitored and protected.
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