Ethiopian Economics 101

 

Mr. Tyler Cowen, an American economist and the author of a much followed blog, Marginal Revolution, recently visited Ethiopia.

I am a reader of Tyler Cowen’s blog.  I also enjoy his podcast, which covers many subjects (literature, ideas) with gusto, and great clarity.

So I was intrigued when I learnt that Mr. Cowen was visiting Ethiopia. I looked forward to a fresh angle on Ethiopian economics.

Tyler Cowen is what they call a foodie (he has an ethnic dining guide on his website). His visit to Ethiopia was one of personal curiosity (he finds the injera to be similar to the one he has consumed abroad).

He did give a talk on the Ethiopian economy at the US embassy, and also an interview, to a local paper, The Ethiopian Reporter.

I emailed Mr. Cowen, to attract his attention to Ethiopia through writers eyes, and was delighted when he  purchased it.

He was  kind enough to link to my blog in one of his posts.

 

Unorthodox Economics

 

 

Like so many visitors, Tyler Cowen was much taken by the uniqueness of Ethiopia, by its Orthodox religion and its homegrown foods and beverages.

This is Ethiopia is all its idiosyncrasies—unorthodox in every manner, even in its Orthodoxy.

Mr. Cowen was much impressed by the feeling of safety on the capital’s streets, and by the easy demeanor of the people he encountered.

He remarked on their unanimous enthusiasm for the changes afoot, and their unity in professing a hope that the morrow would be better—that Ethiopia’s day in the sun was  just round the corner.

You can read the article here.

 

The Mexican Fisherman Parable

 

I’m sure you all know this story. Here is a summary:

 

“An American banker goes sailing with a Mexican fisherman who is more than happy with his lot. They relax in the bay, and admire the sunset. The banker advises that the fisherman should take out a loan, get a bigger boat, invest in a refrigerated unit, then get some trucks…etc. etc. The fisherman asks the banker what he will then do, after 30 years of hard work, to which the latter responds “well—then you can sit back, relax, and take in the sunset…”

 

In Ethiopia, Mr. Cowen was reprising the role of the American banker giving his advice to the Mexican fisherman—to develop in order to get what he already had (in the case of Ethiopia, low crime, unique customs, a certain social cohesion—the ingredients of what we can call the Dolce Vitae Aethiopica).

Ethiopia,  a land of barter and subsistence farming, a land where very little money changed hands until recently,  now depends on world oil prices,  wheat imports and  the dollar rate—just as much as on the next rainy season. (in other words, Ethiopia’s unorthodox economics must now worship in the global church)

The country is undergoing a seismic change—the likes of which it has never seen in such a short time span. (nothing marginal about this revolution)

This is not to criticize the accomplishments of Ethiopia’s model of development.

It has improved manifold factors of life in the country (life expectancy, school attendance rates, maternal care…etc. etc.).

 

The cultural sunken cost fallacy

 

Countries rely on a sort of cultural sunken cost fallacy for their very continued existence:

The population has to continue to feel in their bones that theirs is the same country as before. The country their forefathers laboured to build, so they would continue to live inside the same cultural parameters.

A slightly modified version, yes, and preferably an  improved one as well, but, fundamentally, a country that is one and the same. (give me better roads, but don’t touch my injera.)

When  change is this accelerated, our (Ethio)-Mexican  sails back to port to find that not only have a few decades been spent in backbreaking toil, but that the port he called home has changed beyond recognition—it is now a foreign country, in all but name.

When change speeds up to the point that nothing at all is left of old customs in less than a generation, this necessary pretence of still being one and the same country becomes difficult to sustain.