ESSAY FRIDAY | Betting on the random: being ‘normal’ won’t be enough for Africa’s people

(pic: Blue Planet)

Astrophysics is the branch of science that studies stars, planets, galaxies, and other objects in the universe. Really smart people do this kind of thing.

There are only about 70,000 of them today. In the mid-1990s, I probably wouldn’t have felt good being an astrophysicist. Maybe in that era I would be apprehensive about how society used the profession’s theories and ideas. Granted, owing to the global spread of cinema, urban cultures worldwide were growing a fascination with intergalactic prospects. Fanatic cults were forming around themes of Star Wars, and on TV, Star Trek was a huge hit, enthralling minds and picking up so many dedicated fans.

But this was the light-hearted side of astrophysics’ contribution to popular culture. These productions, at least, extolled protagonists of space voyage; good guys who formed friendships and battled side-by-side with other life creatures assumed to live further off than where our eyes can see through night time skies. A subtle, yet potent theme was the appeal of humanitarian benevolence. Humane virtues were worthy enough to export to other planets; even planets far more advanced technologically and intellectually than ours. This exceptionalism based on our humanity made us feel good about ourselves.     

My apprehension, therefore, would be inherited from the cynical Sci-Fi genre of simple-minded action heroes. Apocalyptic themes made earth seem fated to become an inhabitable wasteland; a dystopia of environmental filth, socio-economic squalor, and inhumane cruelty. Theories of astrophysicists flourished as contingency to this impending miserable state. They provided imagination on how to check out from earth, hurriedly. It was Malthusian capitalism, whereby there aren’t enough resources to sustain population growth, that informed prominent scriptwriters of the genre. So astrophysics was somewhat attached to Malthusianism.

Severe shortages of life essential resources such as water, arable land, and breathable air set off violent conflicts that spared no woman and child. Only the most brute men dared to fight for a stake, lest they be subjected to sadistic torture and enslavement. Plagues and disease had no vaccines, except for the rich, or armed pirates who forcefully intercepted supplies. Withearth’s straining decadence, escape and quarantine became a necessity.

For the rich, leaving earth was an affordable privilege. But, for the less fortunate, finding camaraderie with a gunslinger was the only chance of hijacking a way out. In the rare instances where an attachment to the planet gave some consideration to stay within hostilities, aristocrats strived to become synthetic forms of humans, like cyborgs, a superior being able to fend on earth.

Hollywood dystopia

This was a proven box office formula. It really worked, and like spaceships, it sky-rocketed a lot of actors into global superstardom. Harrison Ford, Jean-Claude Van Damme, Arnold Schwarzenegger, and even Mel Gibson as “Mad Max” all acquired fame as leads in the genre. They owe a lot of their fame to the astrophysical theories towards galactic havens, or human engineer through alchemy with newer elements on the periodic table.    

The current decade ends in the next 50 days, or less. There is an inauspicious link between present earthly outlook and that of the Sci-Fi thrillers of the 1980s and early 1990s.  Blade Runner was set in the year 2019, in a dystopian California. Cyborg, Mad Max, and Total Recall all predicated the Malthusian scourge to grip between 2020 and 2035; the next 15 years. Would it be reaching to draw parallels that as we enter this age, cries for a radical remodeling of capitalism are getting more audible? Larger numbers and diverse demographics are agitating for more benign environmental and socio-economic systems worldwide. The data and physical realities seem supportive of present resentment, if not affirming.

Apocalyptic enough for you?

As real estate assets are at all-time high valuations, homelessness and destitution at nearly 140,000 people are at generational peaks in California. For millennials nationwide, homeownership across the United States is the lowest in generations as they cannot afford mortgages, let alone rentals.

This demographic between 22 and 38 years old, is likely to be the first generation in modern economic history to be poorer than its parents. Due to weak accumulation of earnings and savings, people under the age of 35 are at their least representation ever since capital markets became broadly traceable to household wealth in the early 20th century. Today they currently represent only 37%, from 55% a generation earlier.

The Dow Jones recently hit its highest closing record at 28,038.65 on November 18 2019. (demographics become really relevant later in this essay). A study by the Unite Way ALICE Project reports that 43% of Americans cannot afford a budget that includes housing, food, childcare, healthcare, transportation and a cellphone.

By western standards of living, this makes them poor. ALICE is an acronym to describe most Americans as “Asset limited, Income Constrained, Employees”. Unceremoniously, this is at a time that unemployment is at its lowest since the 1969, just dipping to 3.5% in September 2019.

More embattled from a macro-economic data standpoint, over in Europe, Eurostat claims that 22.4% of people are at risk of poverty, and with fiscal conservatism winning political and intellectual ground this number is likely to rise. In the UK, the poverty rate is already at 23.2%. Events and utterances around NHS reforms suggest leanings towards a more Americanized socio-economic system; striving for the kind of success that delivers growing disparity?   

The data is scary

Africa’s outlook should probably be more nuanced. One cannot so much be critical of capitalism, of any intentional form, as in advanced economies. Africans would more so lament on gross incompetence and yearn for governance that at least gives any socio-economic system a respectable try. The data is expectedly scary. Consecutive IMF Sub-Saharan Regional Outlooks have identified population growth to be well ahead of economic growth rates, a statistic that would tickle Malthusian adherents.

The World Bank forecasts that by 2030, nine out of ten of the extremely poor on earth will live in Sub-Saharan Africa. Wealth distribution patterns in the region are opaque for various reasons, such as weak data compilation systems. To keep with the dark cynicism theme, I would add that the very wealthy are often not so proud of the ventures in which they exercise their diligence.

But certain indicators can give some colour to the extent of socio-economic disparity. For instance, domestic arrears suggest substantive trouble. Domestic arrears occur when central governments – currently 24 out of 30 in the region – are behind servicing payments to local creditors and economic agents. This means that eight out of ten national budgets today are strained as governments cannot settle obligations to local lenders such as banks, financiers, private sector suppliers, and even settling entitlements for government employees.

These are transacted in varied forms; Treasury Bills, tender procurement, and worker benefits to the civil service. So while fiscal debts were traditionally versed in fear of foreign multilateral creditors, Sub-Saharan African governments should now be concerned that the prescriptions of fiscal consolidation and austerity which painfully cut public services and welfare needed by the most dependent and vulnerable, are increasingly being forced by the priority to settle payments to relatively well-off countrymen.

“…the data and reality across the planet right now is overwhelming; akin to Sci-Fi thrillers…”

What may have once been globally rooted inequality has become internal. A common cause of bulging domestic arrears, of which estimates suggest official numbers to be understated, is the frequency and scale of corruption administered under kleptocratic governance. Not only do these systems breed inequality and socio-economic exclusion, they easily provoke civil unrest.

It is appropriate to sigh! A responsible writer would be careful not to be alarmist. One would refrain from suggesting that these are conditions likely to instigate impulses within humans to fester anarchy. Nevertheless, the data and material reality across most of the planet right now is overwhelming; akin to Sci-Fi thrillers.

Perhaps, as a reader, you could imagine worse? If so, a responsible writer would encourage you to personalise the data and material reality of the majority. The strife and agony of stunted socio-economic advancement, not to mention the evidently increasing strain of environmental changes, sure feels apocalyptic. Without a radical adjustment, the odds of civic disbandment within the next 15 years as per Sci-Fi predictions seem fairly competitive.

A professional approach to radical change

I have recently taken a very casual interest in astrophysicists; the professionals, not the profession, because frankly I would hardly understand even its basics.

A key trait of revered astrophysicists is the ability to find randomness in explaining larger conventions that define our daily existence. The best astrophysicists identify random sequence of events that eventually caused a radical inflection, making way for what are normal conventions of today.

In a recent interview with Quanta Magazine, acclaimed astrophysicist, Martin Rees, shares that he is at a stage in his career where he spends most of his time pondering on “high-consequence, low probability events”. A second aspect of note is his professional conduct, more so when he is studying cosmology.

Martin Rees says he retains the independence of not having a stake in any particular idea, thus, he can approach his research open-mindedly with no vested bias for potential outcomes. These two traits are fundamentally divergent to the way that the main stockholders culpable for the current socio-economic inadequacies of capitalism operate.   

Under the influence of entrenchment, there are prescriptions of how socio-economic governance should be carried out. Admittedly, many of them are correct. John Maynard Keynes, however, once warned that “difficulty lays not so much in developing new ideas, as in escaping from old ones”. The politicians, industrialists, academics, and elite professionals who currently retain the greatest discretion to global socio-economic systems may not truly have incentive to conceive new outlooks. For instance, they are beneficiaries of the better end of capital markets, real estate, and the growth that shortfalls population growth.

They are elected, lobby, model, or are employed to keep the trajectory upward. In his book published last year, “Unelected Power: the Quest for Legitimacy” , former Deputy Governor of the Bank of England , Paul Tucker, bemoans the growing divergence between democratically elected desires and the actual outcomes of decisions made by policy makers, like central bankers.

He would know; quantitative easing and zero interest rate policies have been the conventions of economic modernity.  Indeed this is where astrophysicists can find greater public reverence. Unlike the intellectual purity that guides astrophysicists’ practice, the most influential stockholders in the global economy do not have real independence in the conventions that perpetuate the simmering resentment; definitely not materially, and increasingly not technically. Well, have they ever? What does history say?  

Success often occurs randomly, and not so sustainably

Put your finger on an atlas. Go around looking for places that experienced a boom in economic growth or prosperity in the last century; the kind of boom to leap significantly into higher standards of living. For the greater part, a mere decade before, growth was not in sight, maybe even inconceivable. Success was not prescribed, at least not by influential stockholders of the time. Prosperity came about due to a random sequence of events.

China’s impressive decades of near 10% GDP growth occurred after Tiananmen Square. The Middle Eastern boom experienced by the Emiratis and Qataris occurred after discovery of oil deposits. And America’s last real inflection of socio-economic growth up to this day remains the innovations, demographic shifts, and civic consciousness born during World War 2.

Granted, all these cases had people transition into the models of socio-economic modernity that we are still aware of today. And yet, capitalism has not proven itself as sustainable beyond a few decades beyond these inflection points. Much like spontaneous events – the Big Bang theory or asteroids striking earth – capitalism has behaved in random patterns of astronomy and cosmology.

And maybe due to the contesting nature of it, it cannot sustain itself; is that what we can learn from Japan’s Plaza Accord with the U.S. and perhaps the likely outcome of China’s impending trade war with the United States? Or it is this underlying force of energies to so often collide that will cause its sustainability? The intention is not to be arcane, but simply suggest that socio-economic modernity has only been propelled by random sequence of events, underlined by uncertain energies that collide. Sounds like astrophysics to me!  

Here is something hardly acknowledged; whilst current forms of socio-economic modernity may have inadequacies – much so to have compelled this very essay – there has not been alternative socio-economic systems to yield economic growth that supersedes that which was derived from deliberately repressive systems such as slavery and colonialism.

“…much of the wealth still enjoyed today traces back to slavery and colonialism…”

Think about it. Educated people often feel that their civilization is at the highest end of the intellectual curve. But though sentimentally discomforting, much of the material welfare still enjoyed under today’s socio-economic modernity, traces back to systems of slavery and colonialism.

Materially, to date, there have been no benign socio-economic systems of modernity that have contributed more than the deplorable slavery and colonial systems that ran well into the 20th century.

Academics, think tanks, and professional institutions overtly extoll capitalist forms for their contribution to human progress, but they are less enthusiastic and almost inaudible to acknowledge the fact, that capitalism in whatever form, has yet to offer dividends distinct to slavery and colonialism. Yes, even as the digital age has offered impressive material advancement such as the smaller, compact, and supremely powerful memory chips in your mobile device or laptop, you are likely reading this essay either riding a subway or in a building constructed by subsidized colonial mines and slave hands, just as an example.       

Whatever form of capitalism practiced in the last century, it cannot be the pinnacle of professional or intellectual exhaustion, can it? Well, unless human beings entangle themselves from the grip of current entrenchment, I would place Africa’s hopes on an unknown random sequence of events, yet to take place, as being the only means to supersede its current socio-economic stall.      

Capital needs high consequence, low probability events

Capital is scarce. But it will become scarcer. This may sound illiterate when US$1.4 trillion dollars are currently invested in negative yield bonds. But, for how long can this keep up? A majority of capital in the world today belongs to beneficiaries of economic booms, particularly in the western world after World War 2. Most notably, a generation called Babyboomers, born in an era of unprecedented growth, has the largest share of contributions to global capital. This is closely followed by Europeans who enjoyed prosperity through colonialism and post-World War 2 reforms, and the Japanese in the East.

But net capital providers after a certain age become net capital consumers as they leave the work force, age, and enter retirement. The same demographics with greatest contributions to global capital are hitting this stage. Consider that entitlements and social security due to Babyboomers have peaked to near US$64 trillion. Japan is trudging along trying to stimulate growth to provide entitlements worth US$1.5 trillion.

Both economies have to worry about where economic growth can be found to provide settlements. European pensions and entitlements are more nuanced and diluted since the European Union, but demographic trends still concern about whether or not current productivity can provide due settlements. All this implies that capital has to find real yields to meet these due obligations; this is assuming policy innovations such as Modern Monetary Theory aren’t yet in play where governments can just print money.

There is Chinese and Middle Eastern capital, but it is still growing. While China saves up to 46% annually of its GDP, way above the global average of 25%, savings per capita is still inadequate to ensure long term comfort. There is the structural challenge that Chinese authorities require households to save less if it is to transition to consumption led economy.

Hence, like their Middle Eastern counterparts, Chinese authorities have been aggressive to access high yields. China and Saudi Arabia for instance, are the greatest investors in high risk high reward American private equity. This has been trend for many sovereign wealth funds betting on “unicorns” that would give them above average returns.

‘Where will growth come from?’

It is important to understand demographic trends of all these capital providers, and the stunted economic growth of current global capitalism. The IMF has been revising down its global growth forecasts for several years now, and in 2020 it revised downward to 3.4%. This trend must be analyzed cognizant of aging populations in capital providing nations, and the entrenched weak earning opportunity for the young populations in western economies.

Where will the growth to satisfy capital come from? Inevitably, growth has to be found somewhere to pay capital consuming retirees, and subsidize welfare for advanced economy millennials. Just maybe growth will come from Africa, but if it does, it cannot be normal. It has to be from high consequence low probability events.    

Fertility: African households average 3 more kids than in wealthy regions

Assume Africa grows at the generically impressive rates of 7% GDP growth per year, abides to convention fiscal budgeting, and liberalizing private sector space.

This may be marginally enough to sustain fertility rates, but will it uplift the majority from poverty? Africa’s population, to supersede its current standard of living, would require much more economic growth; outlandish rates of over 20% over more than a decade.

Think of this growth in material terms; perhaps doubling our present infrastructure outlook, off the charts competitive productivity, and real gainful employment to near less than 5% unemployment rates. What are the chances? This growth would likely only occur after a random sequence of events, hence it seems outlandish to imagine.

But interestingly, this may also be the only growth enough to settle capital consumer entitlements under current socio-economic modernity. I do not know what sequence of events should transpire in Africa. But, forgive me as nobody could have predicted Japan’s, China’s, United States’ and Europe’s exponential growth spurts before random events took place in any of these countries.  

What could Africa’s random sequence of events be?

Take your guess. I have hammered my old man with this theory for a while now. He thinks that growing hyper nationalism will force African Americans and blacks around the world to resettle in Africa. They will bring back a lot of capital and a firm insistence on reformed governance systems. Maybe that will incite potent socio-economic growth to elevate the continent’s standard of life?

All I’m putting my name on is that Africa’s chances are best bet on the random. Only random sequence of events will attract the adequate levels of capital that will earn yield to settle aging capital providers. This would be the perfect confluence of events and interests. If it happens, maybe it will be the next great astrophysicist theory. But most importantly, somewhere in there will be a great effervescence of humane virtues!

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