Saturday, 14 January 2012

Professor Collier's 'Sound Argument'

Professor Paul Collier has said that the protests in Nigeria against the removal of the fuel subsidies are 'nonsense’ - a group of poor people urging tax cuts for the rich. He has explained that the Nigerian poor have been tricked into lobbying for greedy elites, perhaps the same elites he asks to 'speak out' against 'populist rhetoric'.

Professor Collier is a brilliant man with an interesting thesis. On the one hand, the  theory for the removal of subsidies is sound, this IMF paper for example, is helpful. The benefits of subsides of petroleum products are unequal and they are an inefficient way to spur development. In addition, subsidies to consumption encourage increased energy use, and reduce incentives for efficient use of a limited resource.  There is more information here. On the other hand, strategic use of energy subsidies can be helpful in reducing poverty, allow for security of energy supply, and provide a quasi-industrial revolution that can help less affluent economies grow. In Nigeria, energy subsides have not been strategic. Yet, it appears to be the only way the Nigerian people perceive their government as meeting its social contract obligations. PMS at an affordable rate is used to power individual generating sets that provide electricity in houses, huts, and hospitals,  borehole pumps for water, and transport. PMS does this because these services do not exist. Dr Jeremy Weate has explained the protests. Please read it here

This is not a theoretical issue for the removal of subsidies but a decision that will affect the lives of 180 million people, who do not trust their leaders. Professor Collier understood this in 2009. Reviewing Dambisa Moyo’s Dead Aid, he explained that ‘African societies face problems deeper than their dependence on aid [and] that public goods of security and accountability cannot adequately be provided [so that] the valuable natural assets that many countries possess become liabilities instead of opportunities for prosperity.’

Those sweeping statements perhaps show why his recent piece is self selective, ignoring the political economy of the society in which he forms his opinion. Why is it important to rebut his position? Professor Paul Collier advises the Strategy and Policy Department of the IMF, as well as the Africa Region of the World Bank. Therefore, people listen to him and take his expert opinion as truth. That is what makes his opinion dangerous.
Edited 15/01/2012 23:53

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