Life isn’t fair

Originally published in the Informanté newspaper on Thursday, 30 August, 2018.

Children are often heard complaining to their parents that “It’s not fair!” Parents, naturally, impart those words of wisdom we’ve all heard, “Life’s not fair. Get used to it.” Quite true, yet somehow we never quite end up believing it. Part of us still wants to believe it, wants the world to reward the fair and punish the wicked, and subconsciously live as though the world is like that. Yet such a simple belief causes the greatest cruelty, and has held back much needed progress.

Back in 1966, Mervin Lerner conducted a series of experiments, whereby a young woman was taking a test, with wrong answers resulting in electric shocks. This was, of course, fake shocks, but he let the real subjects of his experiment observe this. To them, a young woman was being tortured. Some had the option of stopping the torture, while others were told they could not. Some were told she was paid to undergo this experiment, while other were told she received no compensation.

At the beginning, most observers were quite upset – but as those who were unable to stop the torture continued watch, they started to denigrate the woman’s character, casting her as someone who probably did something to deserve the torture. When observers were able to stop the torture, or were told she would be compensated, this did not happen. 

Lerner’s research, which has been replicated since them, revealed a dark truth – most people subscribe to the Just World hypothesis, as he called it. We want to believe that our actions will have predictable consequences, that justice will prevail. That good deeds are rewarded, while bad deeds are punished. That is not the world we live in, but the need for it to be fair can be so strong we will warp and distort the facts so that in our minds, it can be. And we destroy what little chance we have of making the world just by doing so.

We start blaming the victims, since we think bad things only happen to bad people. Instead of punishing the rapist, we ask what someone did to be raped. Instead of helping a battered woman, we accuse her of provoking her husband. Instead of chasing a murderer, we ask what someone did to deserve being murdered! 

The most terrifying fact about the universe is not that it is hostile, but that it is indifferent. The world cannot ever be just, but the people can. Yet this will not happen if we do not act ourselves to make it so! By believing the world is just, that victims deserve their fate, we try to assuage ourselves that their fate will never befall us – we are good, after all. We do not empathize with those who need it most, and bestow cruelty on those who need the very justice we so crave. And yet by doing so, we ironically make ourselves more vulnerable to the world, as it leaves us unprepared for the worst life can throw at us.

By believing in a just and fair world, people stop trying to change the world at all – after all, if the world is just, why would you need to change society to help those in need? Why help the poor, when they must have done something to deserve being poor? We here in Namibia should be particularly sensitive to it, as we face economic uncertainty, while trying to resolve the conundrum of our far reaching economic inequality. We struggle with gender-based violence, yet like all our social ills, we seem to accomplish little.

Then again, a belief in a just world correlates strongly with religiosity, conservatism, and authoritarianism, three attributes Namibia scores high on. We can see the just world hypothesis in action on our social media, and yet we wonder why we as a nation cannot move forward. The answer is obvious – believing you live in a just world won’t make it so. If you want to live in a fair world, you need to take action.

While the world may be indifferent, we, as people, are not. By simply distorting our opinions to reinforce a belief that the world is already fair, we act in bad faith. Instead of choosing to create a better world, we turn ourselves into objects at its mercy. Our actions define us, after all. By being cruel and blaming victims, your actions define you as cruel, no matter your thoughts. By excusing intolerable actions, you become a perpetrator and apologist for them – you are implicitly an accomplice. We are responsible for our inaction.  We as a nation need to choose the kind of people we want to be – and start acting like it! Only through strong positive actions towards changes we want to see, will we have the consequences of those changes.

By choosing to act, as a just people in service to our nation, to our community, we can ignite the bright light of human virtue that has been sustaining civilization since the dawn of time. By creating the justice in the world we so desperately seek, we can make the universe a little less indifferent, as least in our sphere of influence. By not simply wishing, but by working, we can make the world be as it should be, and show it what it can be. 

After all, as Marcus Cole so memorably put it, “You know, I used to think it was awful that life was so unfair. Then I thought, wouldn't it be much worse if life were fair, and all the terrible things that happen to us come because we actually deserve them? So, now I take great comfort in the general hostility and unfairness of the universe.”

Trading Nations

Originally published in the Informanté newspaper on Thursday, 23 August, 2018.

Over the last century, a web of trade has developed between countries, and it is largely responsible for the economic development we’ve seen globally since the mid twentieth century, due to the economic theory of comparative advantage. In short, it postulates that certain economic actors can produce certain goods or services at a lower opportunity cost than others. To maximize economic output, then, it makes sense to produce that which a certain country can produce at lower cost than anyone else and export it, and then import those goods which can be produced by other countries at a lower cost.

To maximize economic benefit, then, every nations imports some goods and services and exports others. These two do not always match, however, and this mismatch is called the balance of trade. The balance of trade is a large part of a country’s current account – which not only includes trade, but also capital flows in and out of an economy. Usually, countries produce a trade surplus during economic boom times, and then records a deficit during tougher times.

Namibia is no exception, with government’s trade policy aimed at developing, promoting and diversifying the country’s exports while reducing our reliance on imports. It is therefore quite important that we monitor our trade to see if government is, in fact, successful in its stated endeavours. Let’s then examine the Trade Statistics Bulletin compiled by Statistician General Alex Shimuafeni’s Namibia Statistics Agency to see what trade occurred during the first quarter of the year.

During first quarter of 2018, Namibia’s exported N$ 18.8 billion worth of goods, while importing N$ 27.1 billion, leaving us with a total trade deficit of N$ 8.3 billion. As such, we’ve effectively exports locally created wealth abroad. This is a deterioration from both the first quarter of last year (N$ 4.8 billion) and the previous quarter (N$ 5.5 billion). It thus remains worrying that Namibia now consistently has a trade deficit, instead of a trade surplus, every year since 2008.

Let’s take a look at exports and imports individually. Namibia’s largest export market has changed in the first quarter, with the European Union taking the top spot, with N$ 6.2 billion exported to that group of countries, or 35% of our exports. In second place now is the Southern African Customs Union, with N$ 5.2 billion in exports (30%), with BRIC (Brazil, Russia, India, China) rising to third place with N$3.6 billion (20%), followed by non-SACU SADC with N$ 1.3 billion (8%) in exports, and finally, the Common Market for Eastern and Southern Africa (COMESA) contributing N$ 1.2 billion (7%) in exports.

When we take a look at the individual countries we export to, China took the lead for the first time with N$ 3.4 billion exported, or 18.3% of our exports, with South Africa second at N$ 3.3 billion (17.8%), Belgium another N$ 2.4 billion (13%), Botswana with N$ 1.9 billion (10%) and Italy with N$ 1.4 billion (7.5%). Together, these 5 account for 67% of our exports.

However, 82% of our exports were from only 5 categories – Copper cathodes (N$ 5.2 billion), Diamonds, jewellery and precious metals (N$ 4.2 billion), Fish (N$ 2.4 billion), Ores (N$ 2.2 billion), and Zinc (N$ 1.2 billion). The increase in copper coincided with higher foreign demand from China and Belgium, while diamonds were more in demand in Botswana. Ores saw an increase in exports also to China, but France contributed as well, with Zinc in demand from South Africa and Italy. Fish declined a bit, with the DRC no longer importing as much from us, but the slack was reduced due to demand from Spain and South Africa.

In terms of imports, the SACU, in contrast to our exports, remains by far the largest source of imports, with N$ 12.2 billion imported, or 50% of our imports. Non-SACU SADC is second with N$ 3.9 billion (16%) imported, then COMESA with N$ 3.6 billion (26%) imported, and the BRIC countries with N$ 2.4 billion imported (10%). Taking a look at the individual countries we import from, South Africa stands at N$ 40 billion, accounting for 40% of our imports, with a surprise of the Bahamas at N$ 3.6 billion (13%), Zambia at N$ 3.5 billion (13%), China at N$ 1.7 billion (6.5%), and Botswana at N$ 1.2 billion (4.7%)

Notably, 53.5% of our imports came from just 5 categories – Vessels (N$ 3.7 billion), Copper cathodes (N$ 3.5 billion), Mineral fuels & oils (N$ 3 billion), boilers (N$ 21.2 billion) and vehicles (N$ 1.9 billion). Technically, the vessels category is a bit misleading – it was one vessel, and it instantly catapulted the Bahamas to our second biggest import market. Copper cathodes are imported from Zambia for smelting and export, as can be seen in the export statistics. Mineral fuels are imported from South Africa and India, following a greater domestic demand for it, but vehicle imports have dropped from South Africa and Germany. Strangely, between South Africa and China, we’re importing a lot of boilers…

When we take a look at this data, that one vessel clearly sticks out as an outlier in the data. If we were to exclude it from the calculation of our trade deficit, we’d find our trade deficit down to about N$ 4.8 billion – the same as last year, and an improvement from the previous quarter. Even so, that single import represented a vast transfer of wealth from Namibia. It would be quite interesting to find out what vessel this was, and if this asset will generate at least a comparable return for the Namibian economy. Either way, we need to start developing our own manufacturing industries, so we can export more to cover our imports. Until we do, we’ll simply keep exporting our natural wealth – and when that runs out, our current economic climate will look quite rosy by comparison.

Shining Light On The World

Originally published in the Informanté newspaper on Thursday, 2 August, 2018.

Every few months, the World Economic Studies Division of the Research Department at the International Monetary Fund in Washington DC takes a look at the world economy, and provides us with a projection going forward. During July, they released an update to their World Economic Outlook to give us a glimpse into what might lie ahead. So what does the July 2018 report reveal?

Well, global economic activity seems to have become less synchronized, as economic expansion has become uneven. Although the growth forecast for 2018 and 2019 has remained unchanged 3.9%, risks have significantly increased, as a result of tariff increases by the United States, and the resulting retaliatory measures are raising uncertainty and will impact investment. So while financial market conditions remain in line with future growth projections, these actions could trigger tighter conditions, potentially signalling portfolio adjustments and sharp exchange rate movements that could reduce capital inflows to emerging markets.

Let’s start digging into the details, starting with the so-termed ‘Advanced Economies.’ In the United States, economic momentum will carry forward, with growth projected at 2.9% in 2018 and 2.7% in 2019. However, with significant financial stimulus reducing unemployment, inflation will be stimulated, along with domestic demand, exacerbating global trade imbalances. In the Euro area, growth is projected to slow gradually from 2.2% in 2018 to 1.9% in 2019, with France and Germany having slowed more than expected, and Italy experiencing tighter financial conditions due to political uncertainty.  Japan, however, has seen its 2018 growth downgraded to 1.0% and that of 2019 to 0.9%, due to weak private consumption and investment, as the country’s shrinking labour force continues to curtail growth. 

Now let’s have a look at the Emerging Market Economies. First amongst these is of course China, with growth of 6.6% expected in 2018, and slowing to 6.4% in 2019, as external demand reduces and regulations in its financial sector takes hold. In the rest of Asia, the economies are doing quite well too, with India in particular picking up, with growth for 2018 expected to be 7.3% before increasing to 7.5% in 2019, as the country recovers from its currency exchange initiative and the impact of its goods and services tax gets internalised. However, the effects of higher oil prices are already curtailing growth in the region as it anticipates inflationary pressures, resulting in a tighter monetary policy. 

In developing Europe, growth has been moderating to 4.3% in 2018, and further down to 3.6% in 2019, as financial conditions tighten for countries with a large deficit. In particular, Turkey is set to see its growth face from 7.4% in 2017 to only 4.2% in 2018. In Latin America and the Caribbean, GDP growth increasing, with growth expected to be 1.6% in 2018, and increasing to 2.6% in 2019.  Mexico continues to face trade tensions with the US in the NAFTA trade renegotiations, while Brazil is still in recovery from strikes and political uncertainty. Venezuela is the region’s Achilles heel, as it continues to experience a rather significant collapse in economic activity, and faces a humanitarian crisis, despite the increase in oil prices, as it cannot sustain even its current oil production.

In the Middle-East and North African region, oil producing countries have benefited from the increase in oil prices, but oil importing countries still remain delicate, as geopolitical conflict still embroils the region. Nevertheless, growth is expected to strengthen to 3.5% in 2018, and continue upwards to 3.9% in 2019. In the Commonwealth of Independent States (or Russia and the former USSR countries) conditions have stabilized, with growth in 2018 projected to be 2.3%, and forecasted to drop to 2.2% during 2019. This coincides with Russia emerging from its recession, with expected growth of 1.7% in 2018, and 1.5% in 2019, with the rise in oil prices counteracting the effect of sanctions. 

 

Finally, our own neck of the woods – sub-Saharan Africa. By now we have good comparisons with the rest of the world to show just how we’re doing. Well, the region as a whole is expected to continue to recover, with growth for 2018 forecasted at 3.4%, and increasing to 3.8% in 2019. Nigeria’s recovery due to the increase in oil prices is quite strong, with 2018 expected to be 2.1%, and increasing to 2.3% in 2019. South Africa, the region’s other large economy, was expected to recover somewhat during 2018 despite a weak first quarter due to new leadership inspiring private investment. Unfortunately, the news of land expropriation without compensation set to be included in the country’s constitution is unlikely to be met with much applause from foreign investors. 

So what does this mean for us? When we take a step back to see the whole world economy at a glance, we can see that no region is without its challenges. We are still struggling to recover from our own economic recession, but if these countries show us anything, it is that there is a way forward. There is a light in the darkness. There is but one trick to it, however – we must supply our own light.