We are all wise after the event
“I believed that I would win kudos for my contrarian view when the (internet) bubble burst. But people who had not wished to be told they were talking nonsense before the bubble burst did not wish to be told they had been talking nonsense after the bubble burst either. Indeed they did not recall that they had been talking nonsense. Either they had known that it was a bubble all the time or they had been victims of events that could not have been predicted. Frequently the same individual would make both claims. And the same people would make the same false assertions when the credit bubble burst.”
John Kay, Financial Times (29 December 2008)
John Kay is one of the few economic commentators who can bring biting wit to his writing. Thought Leadership was thoroughly tickled by the excerpt above, taken from a recent FT column.
What he says is absolutely true: pretty much everyone in the world is usually caught flat-footed when a bubble bursts; pretty much no-one in the world then accepts that he didn’t see it coming. Everyone is sagacious after the event, even if they were intensely stupid before.
And so it is with the current credit crunch, as its impact on the Kenyan economy gradually rolls out. In 2007, you would have been termed an idiot if you questioned the soundness of the Kenyan economy. We were on a roll since 2003, recording higher and higher growth every year. The sky was the limit. We would become an African tiger in just a few short years, the Singapore of the region.
We forgot Africa doesn’t have tigers.
We forgot that you can’t boom for a sustained period unless some very ‘fundamental fundamentals’ are in place. These fundamental fundamentals go beyond just looking at incomes and geographic positioning and resource bases. They involve answers to some basic questions: Can people in this economy co-exist in an atmosphere of mutual trust? Are institutions strong enough to check impunity and rampant corruption? Are the benefits of economic growth widespread? Is high-quality education creating a large base of knowledgeable workers and discerning voters for the next generation? Is the country founded on a sound ethical base?
The answer to all those questions was a resounding ‘No’. But from 2003 to 2007, no one wanted to hear it. We wanted only positive talk about the economic wonder that was Kenya. Corruption had been tamed, and the country would be the centre of a regional economic boom. Well, that was all nonsense. As in John Kay’s description of the internet and credit boom, most people were talking out of their hats. Now, no one recalls that they were talking nonsense. They all talk about unforeseeable events derailing us, or about knowing all along that we had serious underlying problems.
For the record, let me put down the following. Let no one in Kenya talk about prolonged economic growth ever again until we have addressed the ‘fundamental fundamentals’. These include: a new constitution that once and for all takes away the unbridled power of individuals and returns it to the people through robust, independent institutions; land reform that actually puts the land of the country to productive use; a neutron-bomb approach to corruption that vaporises the infestation of rotten souls in the country; widespread infrastructural development that opens up the country to economic participation; and nation-building that creates a national, rather than tribal, primary identity for all Kenyans.
The things that we have to get right in this country are very basic: empowerment, education and ethics. Without those very difficult things being done, we will remain in cloud-cuckoo land, going from bubble to rubble, from boom to bust, from hope to anger. There will be no Vision 2030 or even 2060. It is time we became wise BEFORE the event.
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