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Notes on Leviathan, the Invisible Hand and Moral Sentiment in the Time of Coronavirus

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The government does not understand the magnitude of the response that is required. There is no appreciation that the key challenge of responding to the COVID-19 economic shock is policy instruments, not funding. And that is a problem.

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Notes on Leviathan, the Invisible Hand and Moral Sentiment in the Time of Coronavirus
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In the great chess-board of human society, every single piece has a principle of motion of its own

I had an insightful, if disconcerting, engagement a couple of days ago on some of the thinking behind the COVID-19 resource mobilisation that is going on in the government. This was in connection with some proposals on how to tap into unconventional sources of private money, some of them admittedly quite innovative. It is not the substance of the proposals that is cause for alarm—in fact some of them are quite sensible and practical. It is the preoccupation with private money. My disquiet was reinforced by a source close to some of the captains of industry that have been appointed to a COVID-19 response task force. According to the source, it was intimated to them that the government was counting on substantial contributions from their respective companies.

I learned from Prof. Terry Ryan, a veteran treasury mandarin, and have taught public policy students over the years that policy priorities are understood, not from what is written, but by how three resources—political power, managerial time, and money, in that order—are allocated. That the government, at the top level, is preoccupied with private sector financing suggests two things. First, the government does not understand the magnitude of the response that is required. Second, there is no appreciation that the key challenge of responding to the COVID-19 economic shock is policy instruments, not funding. And that is a problem.

The US government’s $2.2 trillion rescue package is over 10 per cent of GDP and close to half of the annual federal government budget. Canada’s $75 billion relief package is 4.4 per cent of GDP and a third of the budget. The two quantums are not directly comparable because they have different public financial management (PFM) systems. If we benchmark with Canada whose PFM system is closer to ours, we are talking Sh440 billion if we go with the GDP ratio, and Sh750 billion going with the budget ratio. The most that private sector mobilisation can raise is a few billion shillings, if that; Sh2 billion at most by my reckoning, less than 0.5 per cent of the lower figure. The government is barking up the wrong tree.

In my open letter to President Uhuru Kenyatta, I proposed a lifeline fund in the order of one per cent of GDP, about Sh100 billion. Clearly, even this falls far short of the Canadian initiative. But as I make clear in the letter, the figure was not based on need but on what is financeable from a macroeconomic sustainability standpoint. Canada’s budget deficit before the COVID-19 relief package was 1.2 per cent of GDP. The relief package will push it up to 5.6 per cent. Our budget deficit right now is about 7.5 per cent of GDP, and we were already in the early stages of a fiscal crisis before the COVID-19 crisis, with businesses crying out over pending bills and VAT refunds. A relief package like Canada’s would push the deficit to 17 per cent of GDP. That, ordinarily, would be flirting with hyperinflation.

In macroeconomics parlance, we say that Canada had plenty of fiscal space. We have none. Hence my contention that the prudent thing to do is to switch rather than increase the borrowing we have already budgeted. The revised national government development budget for the year is Sh436 billion. The Exchequer had released Sh220 billion as at end of February, that is, with four months to go to the end of the financial year. This means that if we can freeze every national government development project, we can switch Sh200 billion to the COVID-19 response within the existing budget. My Sh100 billion Lifeline Fund proposal requires switching half of the budgeted amount, which I think is very realistic. As it is, the current spending rate projects an absorption of Sh330 billion by the end of the fiscal year, that is, Sh106 billion less than budgeted. The COVID-19 disruption is bound to slow budget absorption.

In macroeconomics parlance, we say that Canada had plenty of fiscal space. We have none.

It is important to point out that budget is not money in the bank as some people seem to think. It is the approved expenditure, that is, what ministries, departments and agencies (MDAs) are authorised to commit. Right now, all our development budget is deficit-financed, that is, funded by debt. As at end of February, the government had borrowed Sh378 billion against a budget target of Sh514 billion for the year, leaving a borrowing headroom of Sh136 billion. What I mean when I say that the government does not have a funding problem is that, once the spending decision is made and approved by parliament through a supplementary budget, the government will continue to borrow as normal and channel the money to the COVID-19 response instead of development projects.

It should be readily apparent that given the urgency and enormity of the challenge, running around scrapping for private sector charity is a misplaced diversionary preoccupation and a waste of valuable time. The orders of magnitude we should be talking about help to put into perspective the much ado about donor money, Sh10 billion or thereabouts so far. It is useful but nowhere near significant enough to warrant all the attention it is getting. By now, a serious government would have pushed a Sh150 billion-plus COVID-19 response supplementary budget through parliament.

We can now turn to my contention that it is policy instruments, not funding, that are the key challenge of responding to the COVID-19 economic shock.

Economics Nobel Laureate Paul Krugman delights in deploying the simplest models for penetrating insights into the most complex problems. In a blogpost titled Notes on coronacoma economics, Krugman posits that, “What we’re experiencing is not a conventional recession brought on by a slump in aggregate demand”. Instead, he postulates, “We’re going into the economic equivalent of a medically induced coma, in which some brain functions are deliberately shut down to give the patient time to heal”.

Running around scrapping for private sector charity is a misplaced diversionary preoccupation and a waste of valuable time

To fix ideas, as we say in economics, Krugman deploys a stylised two-sector economy, consisting of a non-essentials (N) sector and an essentials (E) sector. Unlike a regular recession where policy intervention seeks to stimulate the whole economy, the coronavirus pandemic requires shutting down the N sector, while keeping the E sector working. But even after shutting it down, we need to replace incomes lost in the N sector, for two reasons. First, to keep the people alive. Second, to support the E sector with demand, so as to minimize the multiplier effect of the job losses in the N sector on the E sector, and spillovers into the financial sector that could bring the whole system tumbling down. Krugman posits that the correct policy instrument is a hybrid instrument he calls “disaster relief with a dash of stimulus”. Readers of this column may recognise that this is akin to the Lifeline Fund proposed in my open letter to the president.

How to finance it? Krugman posits that the slowdown of the N sector will leave plenty of money on the table that would have been invested— think about all the approved and financed projects that have been put on hold. This money is available for the government to borrow to finance the COVID-19 response. Let me reiterate: funding is not the problem.

The US, like many other advanced countries, has public social security and other public social safety nets that can, and are, being deployed to achieve this. We don’t. Another cautionary note is that the N and E sectors should not be taken literary. They don’t exist as such in reality.

Two weeks ago, this columnist mused that “depending on how long this goes on, governments should start thinking in terms of wartime economic management”. The IMF and others have since echoed the same call, prompting some people to compliment or be awed by this columnist’s prescience.

As flattering as that might be, exceptional prescience was not required. John Maynard Keynes concludes his magnus opus, The General Theory of Employment Interest and Money, on the note that,

[T]he ideas of economists and political philosophers, both when they are right and when they are wrong are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.

And so it is. Adam Smith famously remarked that the market economy functions “as if by an invisible hand”:

Every individual . . . neither intends to promote the public interest, nor knows how much he is promoting it . . . he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention

But for all its virtues, there are occasions, times such as this, when the invisible hand is not fit for purpose. The market system is not wired to recognise essential and non-essential activities, only price signals. The market also does not respond to need, only to effective demand, that is, want backed by ability to pay.

At the onset of this crisis, a small supermarket chain caused uproar and moral outrage when one of its branches increased the price of hand sanitiser after observing a spike in demand (Krugman also talks of an “epidemic of price-gouging”). Even after the supermarket chain apologised profusely for “individual error” the authorities came down hard, and in an unprecedented consumer protection action, ordered the shop to trace and refund all buyers the difference between the normal and the inflated price. I am not certain that this directive is lawful, as there appears to have been no due process, but that is a matter for another day.

Market fundamentalists here and elsewhere have come out in support of price hikes of this nature as the proper working of the invisible hand, asserting that what the uninitiated see as price gouging is precisely the circuit breaker needed to prevent panicky and greedy people buying all the supply, the former to hoard, and the latter to resell at a profit. In this view, the branch store manager who hiked the price of sanitiser is cast as the unwitting agent of the invisible hand, compelled by his nose for a quick kill to do the greater good.

Adam Smith did not have such religious faith in the invisible hand, and in fact, much of his contribution to economic thought turns on trying to square markets and morality (unsurprisingly, seeing as he was professor of moral philosophy). His benevolent view of the invisible hand is not predicated on an angelic view of man, but on temperance of greed by “moral sentiment”, that impulse which leads people to cultivate virtue. He had a dim view of businesspeople, maintaining that whenever and for whatever reason people in the same trade met, it would end up “in a conspiracy against the public, or in some other contrivance to raise prices”.

Adam Smith’s moral being was a person who cultivated justice, prudence and beneficence. Such a person would have asked themselves whether raising prices was morally upright, considering that the higher price would compel poor people desperate to protect themselves from harm to sacrifice food or another necessity. Thus Smith’s moral being might have concluded that in the circumstances, rationing was a better allocation mechanism than price, seeing as no ordinarily person would buy ten sanitisers at a go, or three bales of toilet paper for that matter. Limiting each customer to two or three sanitisers was warranted.

An even more fundamental challenge is the propensity of the invisible hand to work as it is meant to, resulting in perverse, morally repugnant outcomes. We know that export horticulture has been completely disrupted. Floriculture employs more than 30,000 people, mostly low wage earners in Naivasha. The flower farms themselves are staring at business failure. Naivasha’s second industry is tourism. In fact, both floriculture and the hotel establishments are on the same stretch of Moi South Road along the shores of Lake Naivasha. These two industries are the engine of the rest of the Naivasha economy. Once these paychecks stop coming, every other business, from the grocery shops, to boda bodas, petrol stations and supermarkets, will be affected. Naivasha may be looking at a socio-economic implosion in a matter of weeks. Once the flower farm and hotel paychecks stop, without income replacement, the invisible hand will signal a fall in demand and supply will adjust downward to the quantity commensurate with Naivasha’s much diminished purchasing power, as opposed to the number of mouths Naivasha has to feed. Survival will turn on moral sentiment. Left to the invisible hand, they will starve.

Naivasha is not an island. Hospitality establishments are closing down—the Serena Group has closed ten lodges, Pride Inn has closed its Mombasa hotels, and in Nairobi, DusitD2 has closed, to name but that one. Given the trajectory of the pandemic we are observing, the best-case scenario is four to six months before the pandemic curve flattens globally. We do not know when the people from our COVID-19-devastated source markets will venture into leisure travel in large numbers again. The tourism-dependent economies—Mombasa, Diani, Malindi and elsewhere—are no islands either. In addition to sustaining livelihoods, they are a market for supplies of fresh foods from upcountry. If the big hotels are not in the market, it may not be worth their while for some traders to transport food there.

Given the trajectory of the pandemic we are observing, the best-case scenario is four to six months before the pandemic curve flattens globally

Scarcity will drive up prices, which should elicit supply. Middle-men will be called out for price gouging. The government will be called upon to protect consumers. In as much as government intervention may become imperative, humility is required. We recall the spectacular failure of the dirigiste economic regimes of a few decades back. One week candles would be out of stock, but the market would be oversupplied with brown shoe polish. The following week, candles would be back, but only blue ones, and sugar could only be bought with tea leaves, salt, or a can of brown shoe polish. But people forget, and other generations who take twenty brands of toothpaste for granted are born. Governments will do well to proceed with an abundance of caution, and take heed of Adam Smith’s much less remarked observation about homo leviathansis, government man:

The man of system is often so enamoured with the supposed beauty of his own ideal plan of government, he seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that in the great chess-board of human society, every single piece has a principle of motion of its own.

There is a view that we can disrupt the virus with a one-off lockdown of a few weeks—go into hibernation so to speak— and once we emerge, the curve will have flattened, and we will then go back to business as usual. This “silver bullet” view of lockdowns is little more than wishful, lazy thinking. As Stanford economics professor John Cochrane opines, the more likely scenario is “whack-a-mole”—as soon as we think it has subsided, it flares up in another corner of the world, triggering another containment cycle around the world. Epidemiologist Nelly Yatich offers a similar prognosis. She argues that an effective lockdown would have to be in place until a vaccine is found and administered on 60 per cent of the population, and that is still six months away at best. Alternatively, countries can adopt on and off lockdowns but that requires meticulous surveillance systems capable of picking up an increase in infections very quickly.

This “silver bullet” view of lockdowns is little more than wishful, lazy thinking

These predictions may already be playing out. Singapore, one the first countries to bring infections under control, has announced another lockdown after registering an upsurge of cases whose source could not be traced, suggesting that there are people without symptoms within the community who are unknowingly passing the virus on to others who then develop symptoms. Put differently, it is now endemic. It is telling that only a week ago, the Singaporean government had said that a “nuclear option lockdown” was not on the cards, on the grounds that it would be too costly economically. Singapore’s economy is built on international trade. As Gillion Koh of the Institute of Policy Studies, a think tank at the Singapore National University’s Lee Kwan Yew School of Public Policy, observes, “Singapore’s survival and sustainability depends on borders being open and receiving goods as well as people. So the cost of locking down Singapore is very high, both for the economy and for sustaining daily life itself”.

Proponents of the “nuclear option” posit it as a moral imperative—lives above money. It’s a false dichotomy, and for three reasons. First, healthcare provision is an economic activity. It is not an island. It requires supplies and logistical services—medical and non-medical supplies, maintenance and financial services—and health workers need to meet their daily needs and social obligations. As the economy is disrupted so too will healthcare provision. Other diseases have not gone away. Already, patients with chronic illnesses are expressing fears about being crowded out of the healthcare system by social distancing and curfew. Preventive disruption of the economy must be weighed against how many existing patients’ lives will be put at risk, and whether the degraded economy will be able to service healthcare provision if the coronarivus epidemic does materialise. It is in anticipation of this unhappy trade-off that this column suggested weeks ago that African governments earmark coronavirus isolation hospitals and make contingency plans to evacuate them as and when needed. This advice, and much else, is clearly falling on deaf ears.

Already, patients with chronic illnesses are expressing fears about being crowded out of the healthcare system by social distancing and curfew

Second, it has been pointed out ad infinitum that the vast majority of low-income people, particularly the urban poor, live day to day. Many have lost their incomes already. They are surviving on social support from family, friends and charity. It is not at all evident that the government is capable of mounting a safety net that would sustain half of Nairobi’s 4.5 million people for two weeks. Mounting a total lockdown has to be weighted against the risk of breakdown. Should the government be overwhelmed, it will be downhill from there. Self-preservation will become the government’s primary preoccupation. The coronavirus will have a field day.

Third, the economic dynamics of the pandemic are now, for all intents and purpose, delinked from the epidemiological. The coronavirus has become an economic terrorist. Such is its contagiousness that the only way to be sure not to get it is to be in complete isolation. Even a trip to replenish food supplies, face mask and all, is not risk-free. As long as the virus is lurking in our midst, self-preservation demands that people minimise social interaction and mobility to the extent that they are able.

And therein lies the rub. We do not need a lockdown for the economy to seize up. The instinct of self-preservation is sufficient, and this is already evident. With every day that goes by, there is less and less on the supermarket shelves. Many county governments have closed fresh produce markets. The fresh produce that is rotting in the farms means shortages for the remainder of the year because many farmers who are losing money simply won’t have the working capital to invest in another crop. The prudent thing for them to do is to hold on to the money they have to tide their families over the hard times ahead.

It is not at all evident that the government is capable of mounting a safety net that would sustain half of Nairobi’s 4.5 million people for two weeks

All said, the lockdown question is not one of lives versus money. It is how many lives are at risk in each scenario. But above all, it is about getting it into our heads that complex problems do not have simple solutions. Simple solutions—especially ones that need to be propelled by manufactured consent through opinion polls and social media acclamation—can be relied upon to backfire. We need not trawl through the Jubilee administration’s record in this regard at this time. Politicians who are raring to go back to their 2022 slugfests may want to consider looking for online side-hustles. Coronavirus is not a passing cloud.

“In the great chess-board of human society, every single piece has a principle of motion of its own”. Men and women of the state realm, take heed.

David Ndii
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David Ndii is a leading Kenyan economist and public intellectual.

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Africa’s Pandemic Response Calls for Reclaiming Economic and Monetary Sovereignty

More than 600 economists and academics from around the world call for Africa to acquire monetary sovereignty in order to revive its development after Covid-19.

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Africa’s Pandemic Response Calls for Reclaiming Economic and Monetary Sovereignty
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While Africa has, so far, been spared from the worst public health effects of the COVID-19 pandemic, the subsequent economic shutdown has brought Africa’s economic deficiencies and structural vulnerabilities into sharp focus.

As a resource-rich continent, Africa has the capacity to provide a decent quality of life for all of its inhabitants. Africa is capable of offering universal public services, such as healthcare and education, and guaranteeing employment for people who want to work, while ensuring a decent income support system for those who cannot work. However, decades of colonial and postcolonial socio-economic dislocation exacerbated by market liberalization have forced African countries into a vicious cycle involving several structural deficiencies, characterized by:

  • A lack of food sovereignty;
  • A lack of energy sovereignty;
  • Low value-added manufacturing and extractive industries.

This unholy trinity produces a very painful downward pressure on African exchange rates, which means higher prices for imports of vital necessities such as food, fuel, and life-saving medical products. In order to protect people from this type of imported inflation, African governments borrow foreign currencies in order to artificially keep African currencies “strong” relative to the US dollar and the euro.

This artificial “band-aid” solution forces African economies into a frantic mode of economic activity focused exclusively on earning dollars or euros to service this external debt. As a result, Africa’s economies have been trapped into an austerity model, often enforced via conditions set by the International Monetary Fund (IMF), as well as the constant pressure from other creditors to protect their political and economic interests, which further encroaches on the economic, monetary, and political sovereignty of African countries. Conditions imposed by the IMF and international creditors usually focus on five problematic and unfruitful policy strategies:

  • Export-oriented growth;
  • Liberalisation of foreign direct investment (FDI);
  • Over-promotion of tourism;
  • Privatisation of state-owned enterprises (SOEs);
  • Liberalisation of financial markets.

Each one of these strategies is a trap disguised as an economic solution. Export-led growth increases imports of energy, high value-added capital equipment and industrial components, and encourages the grabbing of land and resources, but only increases the exports of low value-added products. And, of course, not all developing countries can simultaneously follow such a model. If some countries want to achieve a trade surplus, there must be others willing to run a trade deficit. FDI-led growth increases energy imports, and forces African countries into an endless race to the bottom in order to attract investors via tax breaks, subsidies, and weaker labor and environmental regulations. It also leads to financial volatility and significant net resource transfers to rich countries, with some taking the form of illicit financial flows. Tourism increases both energy and food imports, while adding substantial environmental costs in terms of its carbon footprint and water use.

Most SOEs were privatised in the 1990s (e.g. telecoms, electric companies, airlines, airports, etc.). Further privatisation will devastate whatever little social safety nets remain under public control. Financial market liberalisation typically requires deregulating finance, lowering capital gains taxes, removing capital controls, and artificially raising interest rates and exchange rates – all of which guarantee an attractive environment for the largest financial speculators in the world. They will flock in with a rush of “hot money”, only to “buy low and sell high,” then flee, leaving behind a depressed economy.

Finally, all free trade and investment agreements aim at accelerating and deepening these five strategies, pushing African economies deeper into this quagmire. This flawed economic development model further exacerbates Africa’s “brain drain”, which tragically, in some cases, takes the form of death boats and death roads for economic, health, and climate migrants.

These five band-aid policy solutions tend to be attractive because they provide temporary relief in the form of job creation, and give the illusion of modernisation and industrialisation. However, in reality, these jobs are increasingly more precarious and susceptible to external shocks to the global supply chain, global demand, and global commodity prices. In other words, Africa’s economic destiny continues to be steered from abroad.

The COVID-19 pandemic has exposed the roots of Africa’s economic problems. Therefore, the post-pandemic recovery will not be sustainable unless it addresses pre-existing structural deficiencies. To that end, given the impending climate crisis and the need for socio-ecological adaptation, economic policy must be based on alternative principles and proposals.

We call on all African states to develop a strategic plan focused on reclaiming their monetary and economic sovereignty, which must include food sovereignty, (renewable) energy sovereignty, and an industrial policy centered on higher value-added content of manufacturing. Africa must put an end to its race-to-the-bottom approach to economic development in the name of competition and efficiency. Regional trade partnerships within the continent must be based on coordinated investments aimed at forming horizontal industrial linkages in strategic areas such as public health, transportation, telecommunications, research and development, and education.

We also call on Africa’s trading partners to acknowledge the failure of the extractive economic model and to embrace a new cooperation model that includes the transfer of technology, real partnerships in research and development, and sovereign insolvency structures — including sovereign debt cancellation — that preserve output and employment.

African states must develop a clear and independent long-term vision to build resilience to external shocks. Economic and monetary sovereignty do not require isolation, but they do require a commitment to economic, social, and ecological priorities, which means mobilizing domestic and regional resources to improve the quality of life on the continent.

This means becoming more selective when it comes to FDI, and export-oriented, extractive industries. It also means prioritising eco-tourism, cultural heritage, and indigenous industries.

Mobilising Africa’s resources begins with a commitment to full-employment policies (a Job Guarantee program), public health infrastructure, public education, sustainable agriculture, renewable energy, sustainable stewardship of natural resources, and an uncompromising dedication to empowering youth and women via participatory democracy, transparency, and accountability. It’s time for Africa to forge ahead and aspire to a better future in which all of its people can thrive and realize their full potential. This future is within reach, and it starts with Africa reclaiming its economic and monetary sovereignty.

Signed:

Fadhel Kaboub, Denison University, Ohio, USA
Ndongo Samba Sylla, Dakar, Senegal
Kai Koddenbrock, Goethe-Universität, Frankfurt
Ines Mahmoud, Tunis, Tunisia
Maha Ben Gadha, Tunis, Tunisia

See the full list of signatories here, and add your name here.

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The Fate of the Human Experiment Depends on the Outcome of This Struggle

Noam Chomsky’s keynote speech at the Progressive International’s inaugural summit.

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The Fate of the Human Experiment Depends on the Outcome of This Struggle
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Returning to the major crises we face at this historic moment, all are international, and two internationals are forming to confront them. One is opening today: the Progressive International. The other has been taking shape under the leadership of Trump’s White House, a Reactionary International comprising the world’s most reactionary states.

We are meeting at a remarkable moment, a moment that is, in fact, unique in human history, a moment both ominous in portent and bright with hopes for a better future. The Progressive International has a crucial role to play in determining which course history will follow.

We are meeting at a moment of confluence of crises of extraordinary severity, with the fate of the human experiment quite literally at stake. The issues are coming to a head in the next few weeks in the two great imperial powers of the modern era.

Fading Britain, having publicly declared that it rejects international law, is on the verge of a sharp break from Europe, on the path to becoming even more of a US satellite that it already is. But of course what is of the greatest significance for the future is what happens in the global hegemon, diminished by Trump’s wrecking ball, but still with overwhelming power and incomparable advantages. Its fate, and with it the fate of the world, may well be determined in November.

We are meeting at a remarkable moment, a moment that is, in fact, unique in human history, a moment both ominous in portent and bright with hopes for a better future.

Not surprisingly, the rest of the world is concerned, if not appalled. It would be difficult to find a more sober and respected commentator than Martin Wolf of the London Financial Times. He writes that the West is facing a serious crisis, and if Trump is re-elected, “this will be terminal.” Strong words, and he is not even referring to the major crises humanity faces.

Wolf is referring to the global order, a critical matter though not on the scale of the crises that threaten vastly more serious consequences, the crises that are driving the hands of the famous Doomsday Clock towards midnight – towards termination.

Wolf’s concept “terminal” is not a new entry into public discourse. We have been living under its shadow for 75 years, ever since we learned, on an unforgettable August day, that human intelligence had devised the means that would soon yield the capacity for terminal destruction. That was shattering enough, but there was more. It was not then understood that humanity was entering a new geological epoch, the Anthropocene, in which human activities are despoiling the environment in a manner that is now also approaching terminal destruction.

The hands of the Doomsday Clock were first set shortly after atomic bombs were used in a paroxysm of needless slaughter. The hands have oscillated since, as global circumstances have evolved. Every year that Trump has been in office, the hands have been moved closer to midnight. Two years ago they reached the closest they had ever been. Last January, the analysts abandoned minutes, turning to seconds: 100 seconds to midnight. They cited the same crises as before: the growing threats of nuclear war and of environmental catastrophe, and the deterioration of democracy.

The last might at first seem out of place, but it is not. Declining democracy is a fitting member of the grim trio. The only hope of escaping the two threats of termination is vibrant democracy in which concerned and informed citizens are fully engaged in deliberation, policy formation, and direct action.

That was last January. Since then, President Trump has amplified all three threats, not a mean accomplishment. He has continued his demolition of the arms control regime that has offered some protection against the threat of nuclear war, while also pursuing development of new and even more dangerous weapons, much to the delight of military industry. In his dedicated commitment to destroy the environment that sustains life, Trump has opened up vast new areas for drilling, including the last great nature reserve. Meanwhile, his minions are systematically dismantling the regulatory system that somewhat mitigates the destructive impact of fossil fuel use, and that protects the population from toxic chemicals and from pollution, a curse that is now doubly murderous in the course of a severe respiratory epidemic.

Trump has also carried forward his campaign to undermine democracy. By law, presidential appointments are subject to Senate confirmation. Trump avoids this inconvenience by leaving the positions open and filling the offices with “temporary appointments” who answer to his will – and if they do not do so with sufficient fealty to the lord, are fired. He has purged the executive of any independent voice. Only sycophants remain. Congress had long ago established Inspectors General to monitor the performance of the executive branch. They began to look into the swamp of corruption that Trump has created in Washington. He took care of that quickly by firing them. There was scarcely a peep from the Republican Senate, firmly in Trump’s pocket, with hardly a flicker of integrity remaining, terrified by the popular base Trump has mobilized.

This onslaught against democracy is only the bare beginning. Trump’s latest step is to warn that he may not leave office if he is not satisfied with the outcome of the November election. The threat is taken very seriously in high places. To mention just a few examples, two highly respected retired senior military commanders released an open letter to the chairman of the Joint Chiefs of Staff, General Milley, reviewing his constitutional responsibility to send the army to remove by force a “lawless president” who refuses to leave office after electoral defeat, summoning in his defense the kinds of paramilitary units he dispatched to Portland Oregon to terrorize the population over the strong objection of elected officials.

Many establishment figures regard the warning as realistic, among them the high-level Transition Integrity Project, which has just reported the results of the “war gaming” it has been conducting on possible outcomes of the November election. The project members are “some of the most accomplished Republicans, Democrats, civil servants, media experts, pollsters and strategists around,” the Project co-director explains, including prominent figures in both Parties. Under any plausible scenario apart from a clear Trump victory, the games led to something like civil war, with Trump choosing to end “the American experiment.”

Again, strong words, never before heard from sober mainstream voices. The very fact that such thoughts arise is ominous enough. They are not alone. And given incomparable US power, far more than the “American experiment” is at risk.

Nothing like this has happened in the often troubled history of parliamentary democracy. Keeping to recent years, Richard Nixon – not the most delightful person in presidential history – had good reason to believe that he had lost the 1960 election only because of criminal manipulation by Democratic operatives. He did not contest the results, putting the welfare of the country ahead of personal ambition. Albert Gore did the same in 2000. Not today.

Forging new paths in contempt for the welfare of the country does not suffice for the megalomaniac who dominates the world. Trump has also announced once again that he may disregard the Constitution and “negotiate” for a third term if he decides he is entitled to it.

Some choose to laugh all this off as the playfulness of a buffoon. To their peril, as history shows.

The survival of liberty is not guaranteed by “parchment barriers,” James Madison warned. Words on paper are not enough. It is founded on the expectation of good faith and common decency. That has been torn to shreds by Trump along with his co-conspirator Senate Majority Leader Mitch McConnell, who has turned the “world’s greatest deliberative body,” as it calls itself, into a pathetic joke. McConnell’s Senate refuses even to consider legislative proposals. Its concern is largesse to the rich and stacking the judiciary, top to bottom with far right young lawyers who should be able to safeguard the reactionary Trump-McConnell agenda for a generation, whatever the public wants, whatever the world needs for survival.

The hands of the Doomsday Clock were first set shortly after atomic bombs were used in a paroxysm of needless slaughter. The hands have oscillated since, as global circumstances have evolved

The abject service to the rich of the Trump-McConnell Republican party is quite remarkable, even by the neoliberal standards of exaltation of greed. One illustration is provided by the leading specialists on tax policy, economists Emmanuel Saez and Gabriel Zucman. They show that in 2018, following the tax scam that was the one legislative Trump-McConnell achievement, “for the first time in the last hundred years, billionaires have paid less [in taxes] than steel workers, school teachers, and retirees,” erasing “a century of fiscal history.” “In 2018, for the first time in the modern history of the United States, capital has been taxed less than labor” – a truly impressive victory of class war, called “liberty” in hegemonic doctrine.

The Doomsday Clock was set last January before the scale of the pandemic was understood. Humanity will sooner or later recover from the pandemic, at terrible cost. It is needless cost. We see that clearly from the experience of countries that took decisive action when China provided the world with the relevant information about the virus on January 10. Primary among them were East-Southeast Asia and Oceania, with others trailing along, and bringing up the rear a few utter disasters, notably the US, followed by Bolsonaro’s Brazil and Modi’s India.

Despite the malfeasance or indifference of some political leaders, there will ultimately be some kind of recovery from the pandemic. We will not, however, recover from the melting of the polar icecaps, or the exploding rate of arctic fires that are releasing enormous amounts of greenhouses gasses into the atmosphere, or other steps on our march to catastrophe.

When the most prominent climate scientists warn us to “Panic Now,” they are not being alarmist. There is no time to waste. Few are doing enough, and even worse, the world is cursed by leaders who are not only refusing to take sufficient action but are deliberately accelerating the race to disaster. The malignancy in the White House is far in the lead in this monstrous criminality.

It is not only governments. The same is true of fossil fuel industries, the big banks that finance them, and other industries that profit from actions that put the “survival of humanity” at serious risk, in the words of a leaked internal memo of America’s largest bank.

Humanity will not long survive this institutional malignancy. The means to manage the crisis are available. But not for long. One primary task of the Progressive International is to ensure that we all panic now – and act accordingly.

The crises we face in this unique moment of human history are of course international. Environmental catastrophe, nuclear war, and the pandemic have no borders. And in a less transparent way, the same is true of the third of the demons that stalk the earth and drive the second hand of the Doomsday clock towards midnight: the deterioration of democracy. The international character of this plague becomes evident when we examine its origins.

Circumstances vary, but there are some common roots. Much of the malignancy traces back to the neoliberal assault on the world’s population launched in force 40 years ago.

The basic character of the assault was captured in the opening pronouncements of its most prominent figures. Ronald Reagan declared in his inaugural address that government is the problem, not the solution – meaning that decisions should be removed from governments, which are at least partially under public control, to private power, which is completely unaccountable to the public, and whose sole responsibility is self-enrichment, as chief economist Milton Friedman proclaimed. The other was Margaret Thatcher, who instructed us that there is no society, only a market in which people are cast to survive as best they can, with no organizations that enable them to defend themselves against its ravages.

Unwittingly no doubt, Thatcher was paraphrasing Marx, who condemned the autocratic rulers of his day for turning the population into a “sack of potatoes,” defenseless against concentrated power.

With admirable consistency, the Reagan and Thatcher administrations moved at once to destroy the labour movement, the primary impediment to harsh class rule by the masters of the economy. In doing so, they were adopting the leading principles of neoliberalism from its early days in interwar Vienna, where the founder and patron saint of the movement, Ludwig von Mises, could scarcely control his joy when the proto-fascist government violently destroyed Austria’s vibrant social democracy and the despicable trade unions that were interfering with sound economics by defending the rights of working people. As von Mises explained in his 1927 neoliberal classic Liberalism, five years after Mussolini initiated his brutal rule, “It cannot be denied that Fascism and similar movements aimed at the establishment of dictatorships are full of the best intentions and that their intervention has for the moment saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history” – though it will be only temporary, he assured us. The Blackshirts will go home after having accomplished their good work.

The same principles inspired enthusiastic neoliberal support for the hideous Pinochet dictatorship. A few years later, they were put into operation in a different form in the global arena under the leadership of the US and UK.

The consequences were predictable. One was sharp concentration of wealth alongside of stagnation for much of the population, reflected in the political realm by undermining of democracy. The impact in the United States brings out very clearly what one would expect when business rule is virtually uncontested. After 40 years, 0.1% of the population have 20% of the wealth, twice what they had when Reagan was elected. CEO remuneration has skyrocketed, drawing general management wealth along with it. Real wages for non-supervisory male workers have declined. A majority of the population survives from paycheck to paycheck, with almost no reserves. Financial institutions, largely predatory, have exploded in scale. There have been repeated crashes, increasing in severity, the perpetrators bailed out by the friendly taxpayer, though that is the least of the implicit state subsidy they receive. “Free markets” led to monopolization, with reduced competition and innovation, as the strong swallowed the weak. Neoliberal globalization has deindustrialized the country within the framework of the investor rights agreements mislabeled as “free trade pacts. ”Adopting the neoliberal doctrine that “taxation is robbery,” Reagan opened the door to tax havens and shell companies – previously banned and barred by effective enforcement. That led at once to a huge tax evasion industry to expedite massive robbery of the general population by the very rich and the corporate sector. No small change. The scale is estimated in tens of trillions of dollars.

And so it continues as neoliberal doctrine took hold.

As the assault was just beginning to take shape, in 1978, the president of the United Auto Workers, Doug Fraser, resigned from a labor-management committee that was set up by the Carter Administration, expressing his shock that business leaders had “chosen to wage a one-sided class war in this country – a war against working people, the unemployed, the poor, the minorities, the very young and the very old, and even many in the middle class of our society,” and had “broken and discarded the fragile, unwritten compact previously existing during a period of growth and progress” – during the period of class collaboration under regimented capitalism.

His recognition of how the world works was somewhat belated, in fact too late to fend off the bitter class war launched by business leaders who were soon granted free rein by compliant governments. The consequences over much of the world come as little surprise: widespread anger, resentment, contempt for political institutions while the primary economic ones are hidden from view by effective propaganda. All of this provides fertile territory for demagogues who can pretend to be your savior while stabbing you in the back, meanwhile deflecting the blame for your conditions to scapegoats: immigrants, blacks, China, whoever fits long-standing prejudices.

Returning to the major crises we face at this historic moment, all are international, and two internationals are forming to confront them. One is opening today: the Progressive International. The other has been taking shape under the leadership of Trump’s White House, a Reactionary International comprising the world’s most reactionary states.

In the Western Hemisphere, the International includes Bolsonaro’s Brazil and a few others. In the Middle East, prime members are the family dictatorships of the Gulf; al-Sisi’s Egyptian dictatorship, perhaps the harshest in Egypt’s bitter history; and Israel, which long ago discarded its social democratic origins and shifted far to the right, the predicted effect of the prolonged and brutal occupation. The current agreements between Israel and Arab dictatorships, formalising long-standing tacit relations, are a significant step towards solidifying the Middle East base of the Reactionary International. The Palestinians are kicked in the face, the proper fate of those who lack power and do not grovel properly at the feet of the natural masters.

To the East, a natural candidate is India, where Prime Minister Modi is destroying India’s secular democracy and turning the country into a racist Hindu nationalist state, while crushing Kashmir. The European contingent includes Orban’s “illiberal democracy” in Hungary and similar elements elsewhere. The International also has powerful backing in the dominant global economic institutions.

The two internationals comprise a good part of the world, one at the level of states, the other popular movements. Each is a prominent representative of much broader social forces, which have sharply contending images of the world that should emerge from the current pandemic. One force is working relentlessly to construct a harsher version of the neoliberal global system from which they have greatly benefited, with more intensive surveillance and control. The other looks forward to a world of justice and peace, with energies and resources directed to serving human needs rather than the demands of a tiny minority. It is a kind of class struggle on a global scale, with many complex facets and interactions.

It is no exaggeration to say that the fate of the human experiment depends on the outcome of this struggle.

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The Violence in Ethiopia

The imminent and existential danger to Ethiopia is not Abiy Ahmed and an oppressive government. It is violent ethno-nationalism.

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The Violence in Ethiopia
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The deadly violence that rocked Ethiopia this summer following the death of artist Hachalu Hundessa has been a subject of much speculation and contention. The facts as we know them are that immediately following the assassination close to 250 people died and thousands were jailed, mostly in the regional state of Oromia and Addis Ababa.

What is contested, and less clear, is the nature of the violence, its perpetrators, and victims. Two prominent narratives have emerged following the crisis to explain what unfolded. One holds that the violence was a brutal government crackdown on Oromo protesters grieving Hundessa’s death. The other describes the events as targeted attacks by armed Oromo youth against ethnic and religious minorities. While both narratives contain elements of truth, ignoring one or the other is either ignorant or intentionally misleading.

recent Africa Is a Country article highlighting the poor coverage by Western media of the situation in Ethiopia, for example, makes no mention of ethnic and religious violence, aside from denouncing media outlets that reported it. Rather, the author’s objective is to “set the record straight” by showing that the underlying cause of violence and instability in Ethiopia is the consequence of a political struggle between an oppressive government and Oromos who have been and continue to be marginalised.

Such a viewpoint is erroneous and polarising in the current political climate. To advance a narrow agenda, it glosses over human rights violations and the brutal killing of innocent bystanders by non-state actors.

To provide more context, the agenda I speak of is tied to the Oromo struggle for greater autonomy and recognition. That struggle, which paved the way for Abiy Ahmed to assume power as the first Oromo Prime Minister two years earlier, now seeks his departure. At the heart of this reversal is the Prime Minister’s consolidation (rather than actual dismantling) of the ruling ethnic-based EPRDF coalition into the Prosperity Party, which has, nonetheless, left intact Ethiopia’s unique system of federalism based on ethnic majoritarianism.

The night of Hachalu Hundessa’s murder, the Ethiopian government quickly shut down the internet, while a social media whirlwind erupted abroad as Oromo activists insinuated that Hundessa was killed because of his support for the Oromo cause.

Leaving that aside, the EPRDF had always been a highly centralized institution in practice, and the mere symbolism of this move, in addition to the Prime Minister’s rhetoric about unity, have left some Oromos feeling betrayed. Furthermore, fractionalisation among Oromo elites, including within the former Oromo Democratic Party (ODP) faction of the EPRDF (now Prosperity Party), which recently ousted key leader and Defense Minister, Lemma Megersa, has divided and weakened the movement.

Within this broad movement, one vocal part led by diaspora-based Oromo elites and recent returnees has galvanised the energy and anger of many Oromo youth behind a perspective of anti-Ethiopiawinet (anti-Ethiopian-ness). The “us versus them” mentality pits Oromo nationalists against an enemy that has been described manifestly and repeatedly by the terms Abyssinian and Neftegna (“rifle bearer”). Though prominent Oromo activists stand behind their use of these terms, those who are familiar with the context know that these labels are loaded with ethnic connotations.

The night of Hachalu Hundessa’s murder, the Ethiopian government quickly shut down the internet, while a social media whirlwind erupted abroad as Oromo activists insinuated that Hundessa was killed because of his support for the Oromo cause. Accusations that “they killed him” were recklessly thrown around and left open for interpretation. Within hours of the assassination, allegedly at the behest of Oromo leaders like Bekele Gerba, targeted attacks against non-Oromos unfolded.

In towns like Shashamene and Dera in the Oromia region, several accounts of killings and looting targeting Amharas and other minorities by Oromo youth have been independently verified, in addition to accounts of police and federal forces injuring and killing civilians. Witnesses describe how perpetrators relied on lists detailing the residences and properties of non-Oromos and circulated flyers warning bystanders to not help those being targeted (or risk reprisal), indicating a significant level of organization.

Minority Rights Group International, accordingly, sounded the alarm, warning that these actions bear the hallmarks of ethnic cleansing. Despite this and concerns from Ethiopians throughout the world, Oromo activists and other prominent human rights groups, such as Amnesty International, have remained largely silent about these attacks while condemning the government’s violent response to Oromo protestors.

Government figures provide an ethnic breakdown of the July causalities with the majority of those killed being Oromos within the Oromia region, followed by Amharas and other smaller ethnic groups.  Yet, rather than disproving, as some claim, that targeted attacks by Oromo mobs occurred, this highlights what scholar Terje Ostebo describes as the complexity and inherent interconnectedness between ethnicity and religion within Ethiopia.

According to Ostebo, “the term Amhara, which is inherently elastic, has over the last few years gradually moved from being a designation for Ethiopianess to gaining a more explicit ethnic connotation. It has, however, always had a distinct religious dimension, representing a Christian.” Hence, in parts of Oromia some Orthodox Oromos were referred to and referred to themselves as Amhara. For example, one Oromo farmer interviewed by local journalists reportedly said, “we thought Hachalu was Oromo” after watching the singer’s televised funeral rites that followed the traditions of the Ethiopian Orthodox Tewahedo church.

The “us versus them” mentality pits Oromo nationalists against an enemy that has been described manifestly and repeatedly by the terms Abyssinian and Neftegna (“rifle bearer”).

According to investigations undertaken by the church, a large number of its parishioners (at least 67 confirmed cases) were among the July causalities—a troubling trend, which also includes a spate of church burnings and attacks on Christians that brought large numbers of Orthodox followers out into the streets in protests last year.

To be clear, the violence that occurred was not only ethnic and religious violence. Growing state violence in Oromia and SNNPR has been and continues to be of great concern. As Oromo activists have made clear, it is necessary to end the abuse of force and ensure accountability for these crimes. Yet, when concerns and demands for accountability for non-state violence are raised, these same advocates deny, ignore or dismiss them as part of a propaganda campaign to discredit the Oromo movement. In effect, this dishonesty, itself, has discredited the movement and lost it support by many Ethiopians—both non-Oromo and Oromo.

The recent political turmoil lays bare that the future of an Ethiopian state is hanging by a delicate thread. The polarization that exists today goes beyond disagreements on institutions and policies to the very question of whether we can continue to co-exist as a multi-ethnic nation. Regional elections in Tigray, slated for this week despite the disapproval of the national House of Federation (HoF), and its aftermath may bring these tensions to a boil, again.

As unrest, violence and grievances continue to mount, it is clear that Ethiopia is far from consolidating its transition to a stable democracy. The government continues to curb freedom of speech, jail political opponents and is responsible for violence against civilians. But, if history teaches us anything, it is this: the imminent and existential danger to Ethiopia is not Abiy Ahmed and an oppressive government. It is violent ethno-nationalism.

This post is from a new partnership between Africa Is a Country and The Elephant. We will be publishing a series of posts from their site once a week.

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