Most of Kenya’s economic problems are a product of Big Government mentality

While many are correct in demanding rationalisation of the public wage bill to reduce government expenditure, this is just part of a bigger problem that has resulted from a big government ideology that has informed our political economy since independence.

As Kenya transitioned from colonial- to self-rule, the independence generation latched onto what they called African socialism whose objective was to sever intellectual ties with the West, and most importantly, to provide an ideology that would be consistent with African traditional values.

As an economic model, African socialism was characterised by central planning, with the government being the main agent of development.

While it proved quite successful in developing a culture of planned and coordinated development, its primary weakness was the replacement of the invisible hand of the market with the very visible hand of government functionaries.

By spurning the invisible hand of the market, the decisions of who gets what was taken up by a predatory political class with the power to reward itself, tribe and cronies.

This led to a zero-sum brand of politics that has polarised society along tribal and generational lines as people jockey for positions on the high table.

The fact that economic rewards could be traced to the visible hand of the ruling class created a dependent mentality that consolidated the idea that individual and community success depends on the whims of outsiders.

One of the driving forces of our politics and economic justice is demand for fair distribution of resources and correction of supposed historical marginalisation.

From a political perspective, the call to correct this marginalisation has created demand for government-driven affirmative action, tribal balancing, devolution, equitable distribution of taxes, transfer payments to senior citizens, youth fund, women’s fund and equalisation fund for marginalised regions.

REAGANOMICS REVOLUTION

Our Constitution has even gone further to define shelter and employment as basic rights and therefore put an even greater burden on government expenditure.

From an economic perspective, putting all these demands in place has proved expensive and created opportunities for corruption and inefficient allocation of resources.

The resulting budget deficits has also put Kenya in the same position that the American government found itself in the 1970s where a combination of years of increasing the size of government to support New Deal welfare systems and financing the war in Vietnam, led to high budget deficits that were undermining the ability to address high unemployment, high inflation, and dismal economic growth statistics.

The late 1970s became a period of soul-searching and a national debate on the economy that led to the rise of supply-side economics and the coming of the Reagan revolution that advocated reducing the size of government to jump-start the economy.

If conservative forces are to be believed, the Reaganomics revolution resulted in one of the greatest economic turnarounds in American history. Twenty million jobs were created, the unemployment rate fell from 10.8 per cent to 5.3 per cent, and poverty rates declined.

During Kenya’s last elections, part of the appeal of the Jubilee coalition was its promise to change the way things were done in the past. A year later, it is becoming clear that the Jubilee revolution was not an ideological paradigm shift but a replacement of the old eaters with a younger generation.

Thus, the big government syndrome with its attendant culture of profligate spending is still intact.

Going forward, the new administration needs an ideology shift to replace the ubiquitous hand of the government with the invisible hand of the market.

Instead of trying to buy laptops for every child entering Standard One, the government should put money into family pockets by creating jobs so that parents can afford computers for their children.

A way must be found to reduce the size of government and unleash the power of the private sector through appropriate fiscal and monetary policies.

Mr Kimari is a consultant in financial services. ([email protected])