Radar | Mar 16,2024
Jul 17 , 2022
By Christian Tesfaye
This opinion piece may age poorly. But trying to predict the future, a favourite pastime of economists, is too fun not to engage in when we are living in the troughs of history.
The Journal of Corporate Economics recently published a paper on the relationship between budget cuts and social unrest. Using evidence from 24 European countries over a nearly nine-decade period until 2008, it found a positive correlation between “authority” and “anarchy.” Expenditure cuts, more than tax cuts, lead to protests and social unrest.
Given what transpired in Sri Lanka, an economic crisis that forced cuts to basic services, it is hard not to agree. It is common sense. When the government takes away something people used to get for free, or at a lower price, they are bound to get angry. Taken to the extreme, they could march in the streets demanding better economic conditions.
The study is timely, including for Ethiopia. The country is currently phasing out fuel subsidies, a crucial reform that is overdue. It also amounts to a budget cut, as the government eases artificially pulling down prices at the gas pump. Eventually, consumers will begin paying the full price, a painful burden for many.
Will people be angry? Will it transform into a sustained political and social movement as Ethiopians come together against the skyrocketing cost of living? Or will people be merely frustrated, and the economic conditions of the country never take on a political life?
I am of the latter view. It is unlikely to transform into any sustained socio-political unrest. The worst that will happen from the ensuing climb in the cost of living will be a few jibes on TikTok and other social media sites. There will be an indirect socio-political pressure, no doubt, but no meaningful and direct pushback to policymakers and authorities on the phasing out of fuel subsidies or even the overall rise in the cost of living.
How come this is the case? Do people not care? It is understandable that there are deeply concerning political issues leading to conflict and war, but do economic conditions not at all concern the political elite as a cause to look into?
Perhaps, it has to do with the systemic elimination of class politics in Ethiopia. There are no longer parties or political movements that care about the struggles of the working class. More specifically, there is no relevant movement that serves the class interests of the urban middle- and low-income class. This is such a departure for a country that went so much to the left in its politics beginning in the 1970s.
I concede that the matter would be much different if lifting fuel subsidies was an issue that affected rural areas. Consider, for instance, a comprehensive land reform. If it is perceived to affect settlement patterns, there will be trouble. But even here, it is not economic conditions that will inspire mobilisation and pushback but matters that have to do with history, identity and the weight communities attach to land. Few will care to delve deeper into any economic consequences, good or bad, of such a policy leap.
It is rarely a good thing that economic issues that affect people at the individual level have little political significance. Ironically, it also gives governments unprecedented leeway to carry out essential reforms that are painful in the short-term but necessary over time. It is a golden opportunity to fix major structural issues in Ethiopia's economy while the political elite could not care less about the economic circumstances of their constituencies.
PUBLISHED ON
Jul 17,2022 [ VOL
23 , NO
1159]
Radar | Mar 16,2024
Commentaries | Apr 10,2023
Viewpoints | Jun 01,2019
Commentaries | Sep 03,2022
Viewpoints | Apr 15,2023
Agenda | Jan 07,2024
Featured | Sep 10,2023
Radar | Sep 04,2022
Fortune News | Dec 24,2022
Radar | Aug 21,2023
Photo Gallery | 94158 Views | May 06,2019
Photo Gallery | 86433 Views | Apr 26,2019
My Opinion | 66229 Views | Aug 14,2021
Commentaries | 65553 Views | Oct 02,2021
Feb 24 , 2024 . By MUNIR SHEMSU
Abel Yeshitila, a real estate developer with a 12-year track record, finds himself unable to sell homes in his latest venture. Despite slash...
Feb 10 , 2024 . By MUNIR SHEMSU
In his last week's address to Parliament, Prime Minister Abiy Ahmed (PhD) painted a picture of an economy...
Jan 7 , 2024
In the realm of international finance and diplomacy, few cities hold the distinction that Addis Abeba doe...
Sep 30 , 2023 . By AKSAH ITALO
On a chilly morning outside Ke'Geberew Market, Yeshi Chane, a 35-year-old mother cradling her seven-month-old baby, stands amidst the throng...
Mar 23 , 2024
Addis Abeba has been experiencing rapid expansion over the past two decades. While se...
Mar 16 , 2024
In a striking move that has rattled the corridors of Ethiopia's export sector, the Mi...
Mar 9 , 2024
Mamo Mehiretu's tenure at the central bank's helm is marked by a distinct shift in fo...
Mar 1 , 2024
In the corridors of the Ministry of Finance, on King George IV St., a recent visit by...
Mar 23 , 2024
A microcosm of Addis Abeba's vibrant yet convulsive changeover unfolds in the jammed corridors of the Arada District Land Management & A...
Ethiopia's decades-old energy policy is evolving rapidly, opening doors for private sector involvement in...
Mar 23 , 2024 . By AKSAH ITALO
Minister of Finance Ahmed Shide has intensified efforts to enforce mandatory domestic procurements across...
Mar 23 , 2024 . By AKSAH ITALO
A policy measure that favoured steel importers over manufacturers was laid out as the major issue for the...