Monday, October 31, 2016

What Is That In Your Hand?

And the Lord said unto Moses, “what is that in thine hand?” And he said a rod.
And He said, “Cast it on the ground”. And he cast it on the ground, and it became a serpent;
Exodus 4:2-3

When Pharaoh heard of the killing of an Egyptian by Moses, he sought to kill Moses; fearing for his life, Moses ran off to Midian where he made acquaintances at the local well with the daughters of Reuel, the priest of Midian, who took him in and gave Moses one of his daughters, Zipporah, in marriage. The bible said: and Moses was content to dwell with the man (Exodus 2:21).

This contentment lasted long enough until Moses’ encounter with God in the burning bush in Horeb; one that will change his life forever, even against his will. As the bible tells us, though Moses had fled Egypt, his kinsmen were still there suffering under Pharaoh; they were still groaning and calling on God for deliverance daily, but to no avail – at least, in their own thinking. In Moses, God saw an instrument with which to use to deliver His people from Egypt. However, as far as he was concerned, Moses did not see himself as a good or the right instrument for the job God had in mind, and he did his possible best to extricate himself from the assignment. Listen to his many excuses:

1.       “Who am I that I should go unto Pharaoh, and that I should bring forth the children of Israel out of Egypt” (Exodus 3:11)

Here, Moses must have inspected himself from head to toe; inspected his hands, legs, chest, biceps and triceps, gluteal muscles, and even stood next to a tree to measure his height, and realized that he was not quite the right build; looked around the area to see if there was someone else standing nearby also named Moses that God may be talking to; and even wondered if he was listening to a false god. Convinced in himself that he lacked the height, strength, and the courage – all the outward qualities that humans consider - to qualify to lead Israel out of Egypt, he wondered if God had his head screwed on straight that He even thought of him for such assignment. “Why in God’s green earth will you choose me of all people for such a difficult task?” he must have wondered in exasperation. “I am here minding my own business, raising my father in-law’s flock of livestock, taking care of my family, and tending to other needs of the community as they present themselves, and you want me to go back to a land where I am a wanted man to save the people that betrayed me in the first place. God, this time, you got it really wrong”. Clearly, Moses was not expecting to be called by God, or any other person of authority, for any assignment either in Egypt or anywhere else; he was very comfortable with his job as a shepherd. Even if something was to develop in the pipeline, he did not expect it to be back in Egypt; an assignment hundreds of miles further from Egypt would have been acceptable to him.

2.       And Moses said unto God, behold, when I come unto the children of Israel, and shall say unto them, The God of your fathers hath sent me unto you; and they shall say unto me, what is his name? What shall I say unto them? (verse 13)

From Moses’ second excuse we could deduct that he had lost with the first one. Also the word “when”, as used by him confirms that he may have realized that arguing with God might be a lost cause. Since the first attempt had failed, Moses tried a second time. This time, it was not about his physical attributes, or lack thereof; instead, it was how to convince the Israelites to believe that God, their real God, sent him. “God, let’s say that I agree to go, you know these people are stubborn and very hard-headed; if I go there all by myself and just tell them to believe me that you sent me, they will laugh their heads off and even attempt to commit me to a nut house. I need something to show them as proof that you sent me, because they will not believe a simple shepherd like me who still lives and works for his father in-law”, Moses must have said to God; anything to make Him decide that Moses may not be the right person for the job after all. Moses may have either been expecting a sign – some kind of magic he can perform before the gathering of the people, or an angel to accompany him on this journey; some kind of support mechanism that will make his task easier – if he could not wiggle his way out of it.

3.       And Moses said unto the Lord, O my Lord, I am not eloquent, neither heretofore, nor since thou hast spoken unto thy servant: but I am slow of speech, and of a slow tongue. (Exodus 4:10)

If at first you don’t succeed, keep trying. Since God dismissed his first excuse and gave him a “sign” in the second one, Moses decided to try a third one: his stammering problem. “God, you know very well that before our meeting at this burning bush, and since afterwards, I was, and still remain, slow of speech; how do you expect me to appear before Pharaoh in this condition and convince him to set your people free? He may not have the patience to sit there and wait for me to blabber all day just to make one sentence. This is not going to work, Lord, it just won’t. Just imagine the fun the people will make of me; even the children will fall over themselves in jest of me. Please, Lord, just send someone who is not just eloquent in speech but very commanding of the spoken word. Someone that Pharaoh will respect”. Who knows, there may even be a law against stammering in Egypt after Moses had left.

4.       And he said, O my Lord, send, I pray thee, by the hand of him whom thou will send (verse 13)

Even at some point, we get tired of giving excuses. Moses had given every excuse or reason that could have convinced God that he was not the right person to go to Egypt, and God had countered every one of those excuses; so, the only option left was to come out and just say it: “please, Lord, just send someone who is physically, mentally, and oratorically qualified to confront Pharaoh, I am not that person. Just leave me let me tend to my in-law’s livestock and, in due course, he will set me up as an independent man. I am not cut out for all of this bravado and drama, just find someone else from another tribe, if you wish”.

All these sound familiar to you? They should. We all have a bit of Moses in all of us, whether in answering the call to spread the gospel: “oh, I am not spiritually equipped enough yet”, or “I am too shy”; lead a project team at our jobs: “there are others who have been here longer and more experienced, or better educated than me”; represent our community in public office: “Ah, those people?. Will they even bother to listen to my message let alone vote for me”, or “nope! I am not the political type”; or venture into a new business: “the money is not quite enough for that at this time”, or “I have not actually decided on what kind of business to invest in”. We also look for excuses to refrain from being in a relationship: “I am not old enough or ready yet”; “I do not enough experience”; “I don’t have the right job yet”; “I am not making enough money at my current job”; “I am not psychologically prepared”; “I just cannot handle all that nagging”; “I love my peace”; or “I want to be a graduate first”. The list goes on forever.

However, just like God dismissed all the many excuses Moses proffered for not being the right person for the task at hand, we can, and are well equipped to look beyond our physique, our age, intelligence and academic level, our financial readiness, spiritual maturity, and social status in our community before taking up a task. Many times, all that stands between us and our life goals and assignments is fear of the unknown. Yes, the task may be daunting when looking at it from the outside, and we may feel, like Moses, that we are not equipped or cut out for it; but, upon further review, we might discover that, just like God provided Moses with all the tools he needed for the assignment in Egypt, He will also do the same for us; He will provide our needs according to “His riches in heaven”. All that he requires of us is a little faith and trust in His ability to equip us for any task He assigns to us.

To be successful in life, we must not let our fears and concerns impede our attempt at trying our hands on God’s assignment for us. Our height, weight, speech impediment, preference for an obscure life, or fear of what is along the way, or at the end of the tunnel, must not stop us. Where those concerns exist, either from the beginning or along the way, we must always remember that God is with us; His promise of never leaving us unattended or forsaken is not a bogus one. What is it that you hold in your hand? A staff? A faith as small as a mustard seed? A love for community service? Desire to spread the word of God? A friendly smile? The gift of gab? Whatever it is, think of how best you can use it to do God’s work when the call comes. No more excuses!

Felix Oti
Arlington, Texas

(All Rights Reserved)

Monday, October 17, 2016

Economic Recession: Causes, Effects, and Possible Solutions

Economists generally believe that recessions occur due to a more than normal drop in spending by both the private and public sectors; some of the causes this drop include financial crises, as was the case in 2008 when the world suffered the consequences of a global financial meltdown due, in part, to the burst of the US housing bubble; an external trade or adverse supply shock – for example, some OPEC member countries like Nigeria and Venezuela who were heavily impacted by the drop in crude prices, which led to about 50% drop in revenue and, consequently, resulting in a drop in importation of some critical consumer goods, seem to be sliding into economic recession. The situation is further exacerbated where a nation could not produce enough of these consumer goods locally to offset the shortfall in importation. Some of the consequences of a recessed economy include the following:

Effects on Employment
One of the consequences of recession is unemployment which tends to increase, especially among the low-skilled workers, due to companies and even government agencies laying off staff in order to curtail expense. Unfortunately, this results in further restriction in overall spending which is needed to pull the economy out of recession. Where family or individual income is drastically reduced due to loss of employment or underemployment, discretionary spending, or disposable income, is mostly eliminated in the budget. This reduction in income, in turn, results in non-payment, or delayed payment of debt obligations – especially credit cards - which further reduces the funds available for financial institutions to lend out to businesses for expansion/investment to increase production. Investments which could have resulted in increased employment, income, and discretionary spending that could help pull the nation out of recession.

Effects on Businesses
Another consequence of recession is fall in output or productivity and business closures. The fall in output may to last until weaker companies close shop; eventually, output picks up again among the surviving firms. During recessions, stronger companies tend to swallow up weaker and smaller ones, and this negatively affects the competitive environment; some level of product scarcity, artificial or real – begins to emerge, and prices of goods creep up in response. These mergers or outright acquisitions also result in job losses; thereby, further depressing family incomes, and reducing discretionary spending that is needed to combat recession. A combination of job losses, scarcity of goods, and increased prices, help drives families further into economic difficulties.

Effects on Society
With more people out of work, and families increasingly unable to make ends meet, the pressure on demands for government-funded social services increases. Since governments experience drops in revenue collection during recession (something that, in some cases, lead to the recession in the first place), it becomes difficult to meet the increased demands on social services. Worst hit are those who are either on fixed income – social security checks –, or on Medicaid, and Medicare services (the elderly and disabled). Unlike those on wages and salaries who experience little or no reductions in salaries, the fixed income earners usually see experience cuts in their benefits and services provided by the government, and these cuts increase the level of hardship these families are already feeling. Another, and probably the most devastating, social effect of economic recession is destabilization of families. With the loss of a job, every plan for the future – college education, home purchase, vehicle replacement, and other family-enhancing plans are all suspended, and may never be reactivated or achieved.

All of the above enumerated effects of an economic recession father exacerbates the situation the longer it lasts. It is more of a vicious cycle – a cause-and-effect; effect-and-cause situation. Now, how does a nation get itself out of an economic recession?

Tax cuts & Government Spending
The most popular, or most recommended, policy for any country to dig itself out of recession is expansionary fiscal policy, or fiscal stimulus. This is usually a two-pronged approach – tax cuts and increased government spending. Let us address these two approaches separately:
1.      Tax cuts: the idea of tax cuts in times of recession is to increase family disposable income, in the hope that these families will go out and spend the extra money which, it return, will spur increased production in companies; the increased production is expected to result in increased hiring, and so on, and so forth. Sounds all too simple and wonderful. But, is it that simple? We must remember that in periods of recession, families borrow money, either from financial institutions or their credit cards, to stay afloat. Now, suppose they elect to use the extra disposable income from tax cuts to pay off these accrued debts, how does that help achieve the government’s expected goals increasing consumer spending? While one could argue that the financial institutions will lend the extra revenue (paid loans and credits) to businesses for investment; the question is: how many financial institutions make loans in recession?
2.      Increased government spending: this is more advocated than tax cuts; however, since most of government revenue is generated through taxes, levies, and duties on imports and exports, the receipts from these sources usually diminish in recessive economic periods, because many companies are closing shop and the few that remain open are cutting cost by decreasing staff and output. So, where is government expected to get the money it is supposed to invest in these capital projects? Yes, it is true that government capital investments injects money directly into the economy through creation of massive employment and its attendant multiplier effect, and construction of infrastructure, like roads, rail, ports, etc., which have direct impact on economic growth; but the money has to be available in the first place. Since tax cuts result in reduced government revenue, the only other recourse is external borrowing. This only works, or makes sense, if the money is directed at the right capital investment for the purpose of creating employment and causing a multiplier effect in the economy. For example, the Nigerian government believes that massive investment in agriculture will make the country less dependent on oil revenue; so, it might make sense to invest any external borrowing on agriculture. However, if you invest on cultivation and harvesting of raw products without any investment on the secondary, and more prosperous, segment of agriculture (processed goods for export), then the revenue generated may not be adequate for use in repayment of the loan, and reinvestment in other segments of other sectors of the economy. So, it is not so much about where you invest the loan, but how you do so.

Currency Devaluation
Apart from the two above, devaluation of the local currency is another suggestion usually put forward by economists. A currency devaluation is expected to cause a boost in aggregate demand of goods and services; that is, if the nation produces what other nations need. For industrialized nations with diversified economies and multiple products, a currency devaluation in periods of recession will be beneficial to export products; for nations with mono-product economies, like some African nations, currency devaluation will not have much positive impact in times of international supply glut. So, even though the product will be cheaper to export, the market may not be available. Now, the other effect of devaluation is to increase demand for domestic goods. Where such goods are produced domestically, this plan will work; but, where the absence is the case, then the purpose of currency devaluation is roundly defeated. It is very difficult for most Third World economies to get out of recession through currency devaluation, because they are mostly mono-product economies with devastating international competition, and little diversified domestic production. One thing to keep in mind with devaluation in mono-product economies is that the likelihood of competitive devaluation – in an attempt to gain competitive edge – does exist. For example, suppose that in a global recession Nigeria decides to devalue its currency to boost oil export, the expectation that Angola, Venezuela, and many other oil-dependent economies will follow suit is very real. In the end the market is flooded with cheap oil that no one want; so, everyone suffers from this policy decision, instead of benefiting.

Quantitative Easing
This is a policy applied by central banks to increase/decrease money supply when interest rates are already at, or near, zero. When all other options are exhausted, or in addition to the option earlier enumerated, central banks can manipulate the money supply by buying government bonds to increase the volume money in circulation. This increases bank reserves which will, in theory, encourage banking lending to businesses. The other effect of this central bank action is a reduction in bond interest rates, which is expected to help increase investment spending. Some of the drawbacks, or dangers, of quantitative easing are possibilities of financial losses by the central bank, difficulty in gauging exactly how much money in needed for injection into the economy, likelihood of loss of confidence in the economy -especially by external investors-, and the danger of the plan not working out as intended.

Conclusion

What tool(s) or option(s) a government elects to use to get its economy out of recession depends on what caused the recession in the first place, and which one will have the most minimal adverse impact on the people, or drive the economy deeper into recession or outright depression; but, it must choose something. In choosing, it must also consider the areas or regions of the nation, or section of the economy where the option will work best, especially in terms of fiscal stimulus policy. Which regions of the nation, or segments of the economy, will a fiscal stimulus generate the most multiplier effect? Also, which policy will have the most immediate impact on the economy, tax cuts, fiscal stimulus, credit relaxation, or quantitative easing? It is important to consider all of these before choosing an option, or a combination of options.

Economic Recession: Causes, Effects, and Possible Solutions

Economists generally believe that recessions occur due to a more than normal drop in spending by both the private and public sectors; some of the causes this drop include financial crises, as was the case in 2008 when the world suffered the consequences of a global financial meltdown due, in part, to the burst of the US housing bubble; an external trade or adverse supply shock – for example, some OPEC member countries like Nigeria and Venezuela who were heavily impacted by the drop in crude prices, which led to about 50% drop in revenue and, consequently, resulting in a drop in importation of some critical consumer goods, seem to be sliding into economic recession. The situation is further exacerbated where a nation could not produce enough of these consumer goods locally to offset the shortfall in importation. Some of the consequences of a recessed economy include the following:

Effects on Employment
One of the consequences of recession is unemployment which tends to increase, especially among the low-skilled workers, due to companies and even government agencies laying off staff in order to curtail expense. Unfortunately, this results in further restriction in overall spending which is needed to pull the economy out of recession. Where family or individual income is drastically reduced due to loss of employment or underemployment, discretionary spending, or disposable income, is mostly eliminated in the budget. This reduction in income, in turn, results in non-payment, or delayed payment of debt obligations – especially credit cards - which further reduces the funds available for financial institutions to lend out to businesses for expansion/investment to increase production. Investments which could have resulted in increased employment, income, and discretionary spending that could help pull the nation out of recession.

Effects on Businesses
Another consequence of recession is fall in output or productivity and business closures. The fall in output may to last until weaker companies close shop; eventually, output picks up again among the surviving firms. During recessions, stronger companies tend to swallow up weaker and smaller ones, and this negatively affects the competitive environment; some level of product scarcity, artificial or real – begins to emerge, and prices of goods creep up in response. These mergers or outright acquisitions also result in job losses; thereby, further depressing family incomes, and reducing discretionary spending that is needed to combat recession. A combination of job losses, scarcity of goods, and increased prices, help drives families further into economic difficulties.

Effects on Society
With more people out of work, and families increasingly unable to make ends meet, the pressure on demands for government-funded social services increases. Since governments experience drops in revenue collection during recession (something that, in some cases, lead to the recession in the first place), it becomes difficult to meet the increased demands on social services. Worst hit are those who are either on fixed income – social security checks –, or on Medicaid, and Medicare services (the elderly and disabled). Unlike those on wages and salaries who experience little or no reductions in salaries, the fixed income earners usually see experience cuts in their benefits and services provided by the government, and these cuts increase the level of hardship these families are already feeling. Another, and probably the most devastating, social effect of economic recession is destabilization of families. With the loss of a job, every plan for the future – college education, home purchase, vehicle replacement, and other family-enhancing plans are all suspended, and may never be reactivated or achieved.

All of the above enumerated effects of an economic recession father exacerbates the situation the longer it lasts. It is more of a vicious cycle – a cause-and-effect; effect-and-cause situation. Now, how does a nation get itself out of an economic recession?

Tax cuts & Government Spending
The most popular, or most recommended, policy for any country to dig itself out of recession is expansionary fiscal policy, or fiscal stimulus. This is usually a two-pronged approach – tax cuts and increased government spending. Let us address these two approaches separately:
1.      Tax cuts: the idea of tax cuts in times of recession is to increase family disposable income, in the hope that these families will go out and spend the extra money which, it return, will spur increased production in companies; the increased production is expected to result in increased hiring, and so on, and so forth. Sounds all too simple and wonderful. But, is it that simple? We must remember that in periods of recession, families borrow money, either from financial institutions or their credit cards, to stay afloat. Now, suppose they elect to use the extra disposable income from tax cuts to pay off these accrued debts, how does that help achieve the government’s expected goals increasing consumer spending? While one could argue that the financial institutions will lend the extra revenue (paid loans and credits) to businesses for investment; the question is: how many financial institutions make loans in recession?
2.      Increased government spending: this is more advocated than tax cuts; however, since most of government revenue is generated through taxes, levies, and duties on imports and exports, the receipts from these sources usually diminish in recessive economic periods, because many companies are closing shop and the few that remain open are cutting cost by decreasing staff and output. So, where is government expected to get the money it is supposed to invest in these capital projects? Yes, it is true that government capital investments injects money directly into the economy through creation of massive employment and its attendant multiplier effect, and construction of infrastructure, like roads, rail, ports, etc., which have direct impact on economic growth; but the money has to be available in the first place. Since tax cuts result in reduced government revenue, the only other recourse is external borrowing. This only works, or makes sense, if the money is directed at the right capital investment for the purpose of creating employment and causing a multiplier effect in the economy. For example, the Nigerian government believes that massive investment in agriculture will make the country less dependent on oil revenue; so, it might make sense to invest any external borrowing on agriculture. However, if you invest on cultivation and harvesting of raw products without any investment on the secondary, and more prosperous, segment of agriculture (processed goods for export), then the revenue generated may not be adequate for use in repayment of the loan, and reinvestment in other segments of other sectors of the economy. So, it is not so much about where you invest the loan, but how you do so.

Currency Devaluation
Apart from the two above, devaluation of the local currency is another suggestion usually put forward by economists. A currency devaluation is expected to cause a boost in aggregate demand of goods and services; that is, if the nation produces what other nations need. For industrialized nations with diversified economies and multiple products, a currency devaluation in periods of recession will be beneficial to export products; for nations with mono-product economies, like some African nations, currency devaluation will not have much positive impact in times of international supply glut. So, even though the product will be cheaper to export, the market may not be available. Now, the other effect of devaluation is to increase demand for domestic goods. Where such goods are produced domestically, this plan will work; but, where the absence is the case, then the purpose of currency devaluation is roundly defeated. It is very difficult for most Third World economies to get out of recession through currency devaluation, because they are mostly mono-product economies with devastating international competition, and little diversified domestic production. One thing to keep in mind with devaluation in mono-product economies is that the likelihood of competitive devaluation – in an attempt to gain competitive edge – does exist. For example, suppose that in a global recession Nigeria decides to devalue its currency to boost oil export, the expectation that Angola, Venezuela, and many other oil-dependent economies will follow suit is very real. In the end the market is flooded with cheap oil that no one want; so, everyone suffers from this policy decision, instead of benefiting.

Quantitative Easing
This is a policy applied by central banks to increase/decrease money supply when interest rates are already at, or near, zero. When all other options are exhausted, or in addition to the option earlier enumerated, central banks can manipulate the money supply by buying government bonds to increase the volume money in circulation. This increases bank reserves which will, in theory, encourage banking lending to businesses. The other effect of this central bank action is a reduction in bond interest rates, which is expected to help increase investment spending. Some of the drawbacks, or dangers, of quantitative easing are possibilities of financial losses by the central bank, difficulty in gauging exactly how much money in needed for injection into the economy, likelihood of loss of confidence in the economy -especially by external investors-, and the danger of the plan not working out as intended.

Conclusion

What tool(s) or option(s) a government elects to use to get its economy out of recession depends on what caused the recession in the first place, and which one will have the most minimal adverse impact on the people, or drive the economy deeper into recession or outright depression; but, it must choose something. In choosing, it must also consider the areas or regions of the nation, or section of the economy where the option will work best, especially in terms of fiscal stimulus policy. Which regions of the nation, or segments of the economy, will a fiscal stimulus generate the most multiplier effect? Also, which policy will have the most immediate impact on the economy, tax cuts, fiscal stimulus, credit relaxation, or quantitative easing? It is important to consider all of these before choosing an option, or a combination of options.