By J. Yanqui Zaza
A high unemployment rate is one of the key economic factors that is increasing income inequality in countries such as Kenya. So, nowadays, everyone is espousing a cure to reduce the rate of unemployment, and subsequently narrow income inequality.
And, yes, two prominent world leaders, President Barack Obama and Pope Francis are adding their voices to the plight of the unemployed. For Pope Francis, he believes that greedy entrepreneurs, in search of high profits, do create income inequality by downsizing and price gouging. He added that the economic system of entrepreneurs “…is not only bad, but it also condemns and enslaves men and women…”
While President Obama wants to reduce unemployment, he does not share Pope Francis’ criticism of capitalism. As America’s salesman, and of course, unlike Pope Francis, whose comments do not affect the financial markets, neither irritate lawmakers and, or investors, the President continues to promote entrepreneurship (capitalism). For example, President Obama, against the views of other Americans with different views, did propose to privatize the Tennessee Valley Authority in 2013. Tennesseans argued that privatization will not only increase the price of electricity, but would increase unemployment. The T.V.A, which generates $11 billion in revenue from nine million customers, and employs 11,260 employees, is one of the 2000 publicly owned electric utilities that supply more than 25 percent of the United States ’ electricity. (Gar Alperovitz and Thomas M. Hanna, NY Times, 7/23/15.)
The fear of the high rate of unemployment due to privatizing state-owned entities came through, not in Tennessee , but in Kenya, Africa . The unemployment rate has jumped from 12.6 in 2006 to 43.3% in 2014, primarily due to Kenya privatizing 26 of its state-owned entities, critics argued. http://www.tradingeconomics.com/kenya/unemployment-rate ). Kenya , adhering to the policy of entrepreneurship, sold 26 state-owned entities in 2003. As propagated in Tennessee , entrepreneurs promised Africans, including Liberians and Kenyans that privatization would spur productivity and increase employment. Ironically, instead of increase in employment, fair income distribution, etc., privatization has increased unemployment, etc. according to critics of privatization.
Nonetheless, the flaws of capitalism have not discouraged President Obama to spur entrepreneurship throughout poor countries. I guess he hopes the good hearts of capitalists will reduce profits in order to increase employment. So, in Nairobi, Kenya, at the first sub-Saharan African Global Entrepreneurship Summit, President Obama, serving as co-host stated, “… Africa is one of the fastest-growing regions of the world. People are being lifted out of poverty. Incomes are up. The middle class is growing. And young people like you are harnessing technology …which creates incredible opportunities for Africans and for the world. It means more growth and trade that creates jobs… It's good for all of us. This continent needs to be a future hub of global growth, not just African growth. And the country that's hosting us today is setting an important example -- Kenya is leading the way.”
Is President’s Obama observation about Africa’s prosperity true? Will entrepreneurship reduce unemployment or will entrepreneurship assist investors to maximize their profits by controlling the significant economic sectors such as natural resources, utility entities, lending industry, real estate sectors, etc.?
Maximizing profits at the expense of society is not new to Kenya. In fact it is because of capitalism that more than 65 percent of this productive land in Kenya is in the hands of only 20 percent of the 45 million people. Additionally, it is capitalism that made Kenya, with limited natural resources, to become the fifth country in Africa with the highest number of millionaires. http://tuko.co.ke/26792-kenya-among-top-african-countries-dollar-millionaires-report.html. At the same time it is capitalism that made Kenya to be the home of the fifth worst slum-city in the world.
Without oil, diamond, gold, etc. the usual subjects of thievery, corruption continues to pose challenges to Kenya. Transparency International ranked Kenya number 154 of 183 countries. More so, government’s public debt of about $22 billion is another challenge to Kenya. In February of 2014, Kenya was forced to reschedule the payment of $600 million syndicated loan taken in 2012, according to B.C. Patel & Co. (Kenya Budget Analysis of 2014). Worst, “…public spending has seen Kenya’s budget balloon year-on year to SH$1.8 trillion”… (US $17.8 billion) in 2014/15 fiscal year, “…while its revenue is estimated at SH 800 million, meaning the country will have to borrow the remaining SH 1.1 trillion” (US dollars of $10.8 billion), B.C. Patel. & Co. wrote. http://kenyaflowercouncil.org/pdf/Budget_2014_Analysis_BCPatel.pdf
So, with such a borrowing, would President’s entrepreneurship spur productivity in Kenya? Remember, capitalism didn’t only fail, but it also made a privileged few, including President Kenyatta family, former President Daniel Moi, etc. millionaires at the expense of society. Interestingly, Liberia’s current President, Ellen Johnson Sirleaf, also an alumni of Harvard University, has an advice for President Obama, if the quote from wrote Neil Hahn, PhD (US covert and Overt Operation in Liberia from 1970 to 2003) is correct. Mr. Hahn quoted President Sirleaf as saying that countries such as Liberia, Kenya, etc. should “…not accept the free-market approach to development as promoted by " institutions such as the World Bank…"countries should not be bound by the free market concept to limit its own ability to…advance its development goals…” President Sirleaf's advice might be based on the increase in exploitation of Liberia’s resources under her leadership.
Surely, proponents of capitalism are aware of the flaws of entrepreneurship. Nonetheless, they have limited choice in the search of profits. This is because entrepreneurship is the “…basic architecture of a new global financial system in which economic calculus, not military and political power… would determine where money flows” or would determine who gets rich, says Adam Davidson of the New Time Magazine. The pain felt in Greece, Europe; Detroit, Michigan; Puerto Rico; Kenya; Liberia; etc., is a product of entrepreneurship. Or if profiteerism can save Africa, why hasn’t it prevented Greece and U.S. communities such as Detroit, Michigan or Puerto Rico from bankruptcy, since entrepreneurs control the economies within these communities?