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[French Version]
The Challenges of Democracy and Natural Resource Management for Sustainable Development
Director, Africa Centre for Geoclassical Economics, Nigeria
In presenting this humble paper of mine, I shall reserve no apologies for Africa's ruling class, whether military or civilian. My experience with life, as with over 80% of the world's population is with the poverty end of the equation.
We live in an age when the accumulation of wealth is greatest, and by a few people while majority of the world's population is mired in abject poverty. And in course of the struggle to earn a living, the worst cynical form of hard-heartedness- 'every man for himself' has become the watchword, thus throwing to the winds the age-long African tradition of being 'your brother's keeper'.
Neo-classical economists and philosophers, in their attempts to proffer solutions to the gross imbalance in wealth distribution have tended to deal with the effect rather than the cause.
The Brundtlund Commission set up by the United Nations in 1987 defined sustainable development as follows "A sustainable society is that one that persists over generations, one that is far-seeing enough, flexible enough, and wise enough not to undermine either its physical or its social systems of support". But current mainstream development methods and strategies have achieved anything but sustainable development, resulting in the present annoying maldistribution of wealth.
One of such erroneous theories is Malthus' assertion that "poverty appears as increase in population necessitates the more minute division of subsistence that population naturally tends to increase faster than subsistence".
But the infallible reality is that the Almighty Creator has endowed the earth with abundant resources to support all life comfortably. So the problem is not about scarcity of natural resources but its distribution.
One of the world's most cogent and audacious thinkers, Henry George in his classic book "Progress and Poverty" clearly disproved the Mathusian theory. He wrote; "The great cause of the triumph of this (Malthusian) theory is that instead of menacing any vested right or antagonising any powerful interest, it is eminently soothing and reassuring to the classes who, wielding the power of wealth, largely dominate thought. "You may wish to visit the website - www.henrygeorge.org for more of his philosophy.
"At a time when old supports were falling, George further wrote, "it came to the rescue of the special privileges by which a few monopolise so, much of the good things of this world, proclaiming a natural cause for the want and misery which, if attributed to political institutions, must condemn every government under which they exist".
Henry George in his advocacy of socio-economic justice did not seek to abolish democracy or establish a dictatorship of the proletariat. He simply viewed the ugly social imbalances of the machine or industrial age and saw that they could be reasonably rectified within the bound of existing economic and political systems.
The world has tried various ideologies without success. Communism with its emphasis on labour has crumbled. Capitalism has only succeeded in creating the rich north and the poor south. The third factor of production which is land is the bedrock of the Georgist philosophy.
It may at this point be pertinent to briefly analyse the various ideological isms to get a clear picture. We have the "left wing" proposals which call for the taking by society of most of the wealth, making no distinction between rent, interest and wages, and leaving to individuals only a small proportion.
This entails a large measure of control by society over individuals, a 'planned economy' and the curtailment of the freedom of the individual.
There is also the "right-wing" proposals which hold that more wealth should remain in private hands, also making no distinction between the three returns, and that society or government should only get the minimum needs for necessary services. This implies leaving the running of the economy to private interest.
And then, we have the "middle-of-the-road" proposals which seek a "balanced system" in the distribution of wealth and power between individuals and society, but make insufficient distinction between earned and unearned incomes, and do not carefully define the proper spheres of society and the individual. The result is usually a hodgepodge. In Nigeria we call it the 'mixed economy' system which we practice.
The Georgist philosophy is different from all these ideologies in that it makes a distinction between the unearned income of land (rent) and the earned incomes of labour and capital (wages and interest). Rent to society, wages and interest to the individuals who earned them. The spheres of society and the individual are clearly defined.
The Georgist proposal therefore achieves the goal of the left wingers for security and social action, but without restrictions on liberty. It achieves the goal of right wingers to attain freedom but without privilege and monopoly. And it achieves a balanced system sought by "middle-of-the-roaders"; but in a just rather than arbitrary way.
Land value taxation therefore emphasises a shift of the public finance revenue base from work and wages to land and natural resources thereby securing common heritage benefits for all while furthering incentive for basic needs production.
Some of the huge benefits of this policy is the curtailment of urban sprawl and land speculation, encourages economic development in necessary areas, makes efficient use of transportation and other infrastructure and promotes affordable land access for housing, business and farming.
There are various places around the world where land value taxation is partially applied and improvements partially or fully exempt. Partial applications indicate results commensurate with degree of application. Some of these places where LVT is implemented in varying degrees include Denmark, Australia (Canberra, Queensland, New South Wales, Western Australia, Tasmania), Alberta (Canada), Pennsylvania, California, Delaware, Alaska and Fairhope, Alabama (USA).
Of late, terms like "conflict diamonds" and "blood in the oil pipelines" have become platitudinous when describing conflict situations. And that all conflicts in the world whether religious or ethnic, have their roots in the wealth distribution problem bedeviling us can not be over-emphasized.
These are problems surrounding the exploitation and control of natural resources ranging from fishery, oil extraction, sold minerals mining and even use of grazing, farming and allocation of surface lands in choice locations in the cities.
Nigeria at the moment has a Land Use Act that authorizes the public collection of land rent which exempts the improvements on the land from taxation. In practice, instead of the revenues including oil incomes generated from land going to the people, mostly ended up lining the pockets of corrupt government officials and their cohorts, eventually finding their way into private foreign banks. This has been the history of natural resource management in Nigeria, particularly her oil resource revenues.
And the oil bearing states of the Niger Delta region, rightly feeling so cheated of the resources around them are now agitating for full control out of which they intend to simply pay taxes to the federal government.
Expressing its displeasure over such agitation, the Federal Government recently set up a 24-man Security Committee on Oil Producing Areas with logistics provided by the American government to ensure the oil keeps flowing. The committee is made up of the armed forces.
Nigeria's President Olusegun Obasanjo bluntly told Delta State indigenes while on a state visit; "I am not a resource controller. I am a resource manager. I don't want to argue with you over your resource control, but I will fight you about resource management and if you try to damage what I am managing, I will quarrel with you".
Youths in the Niger Delta region, in their bid to enforce Memoranda of Understanding (MOU) signed between the oil companies and their local communities have been mowed down by bullets from security agents manning the oil installations. The destruction of Odi in Bayelsa State has come to represent a symbol of the oppressed people of the Niger Delta region.
I recall a few years ago in Jesse Town, in Nigeria's Delta State where over 4000 perished in an inferno while scooping up fuel from burst pipes to sell for a living. The were quite oblivious of the explosive dander that surrounded them in their desperation to make a living.
The reaction of the then military rulers was most infuriating. Instead of rushing relief materials to aid the victims, the head of state publicly called them thieves and that no compensation would be paid their families as a result. Many therefore died later for lack of medical attention by staying away from hospitals for fear that government authorities would get them arrested and jailed for 'stealing fuel'.
Talk about leadership, it is not uncommon to hear political office holders announce with glee; "This is our turn to make it. We may never get another chance". What this means is that, it is their opportunity to amass wealth corruptly and this they do with such intensity to the extent of assassinating anyone who dares to stand in their way.
Nigeria is currently engulfed in political violence. So democracy in this context has become a game of personal interests.
Why such disposition? Henry George identified the reason to be; the fear of poverty. According to George, in a society in which no one need fear poverty or worry about where the next meal will come from, no one would desire great wealth - at least no one would take the trouble to strive and strain and even kill for it.
The ignorance and vice, the recklessness and immorality endangered by the inequality in the madness and corruption of government and waste of public revenues, and the still greater waste involved in the ignorant and corrupt abuse of public powers and functions are their legitimate consequences.
With the absence of social and economic justice, African leaders have redefined democratic governance as "democracy for the elected, by the elected and for the elected". What else; as they alone reap the democracy dividends.
Another disturbing reality is that the rich or the ruling class have psychologically drawn a line between them and the poor, doing all in their power to stop the poor from scratching their way over.
Writes David Roodman in "The Natural Wealth of Nations"; "Economists since, Adam Smith have understood the special virtues of taxing windfalls generated by natural resources. Historically, though most economists have skirted around questions that make powerful people uncomfortable such as whether land speculators and monopolists deserve the fortunes they have won".
What is to be done?
Earth Rights Institute's founder, Alanna Hartzok wrote in a recent article; "The Alaska Permanent Fund is a case study in a new concept of the role of government that of agent to equitable distribute resource rents to the people, thereby securing democratic common heritage rights to land and natural resources. In the year 2000, each citizen of Alaska received a dividend cheque for nearly $2000".
By legislative consensus, 50% of all mineral lease, rentals, royalties, royalty sale proceeds, federal mineral revenue-sharing payments and bonuses received by the state were placed in a permanent fund, the principal being used only for those income-producing investments specifically designated by law as eligible for permanent fund investments.
After Alaska became the 49th state of America in 1959, development of the vast Prudhoe Bay oil field on state-owned land allowed the state government to collect more than $12 billion in petroleum taxes and royalties in the decade from 1972-1982, with the expectation of an additional $140 billion or more by the year 2000.
Exploding revenues produced exploding budgets. By 1982, Alaska was number one among the states in per capita expenditures ($88,500 per person), and was spending almost three times as much per Alaskan as the US government was spending per American.
It was these waves of the rising sea of oil money that prompted Alaskans to create the Permanent Fund by a 1976 Constitutional Amendment. The operation of the Fund has been very professional and transparent and citizens who have been resident in Alaska for at least a year are sure of a cash dividend.
The objectives proposed for the Permanent Fund were many; some were very broad while others were very specific. The possibilities were described categorically as social, economic and fiscal. Examples of social objectives were to use the Fund to promote programmes with an emphasis on changing social conditions such as the redistribution of wealth through the negative income tax, to subsidize low-income families, to correct regional economic differences, or to support educational programmes.
Economic objectives were described as those which would promote economic diversification and development. Proposals for subsidised loan programmes, large infrastructure programmes to build hydroelectric dams, railroads, and ports, or the development of industrial ports can be categorized under economic objectives.
The fiscal objective centred upon the idea of the fund as a "savings account" which would be managed very conservatively, primarily investments in high-grade low-risk securities, would be used to reduce state debt.
The Alaska Permanent Fund is therefore a well-managed, transparent and democratic institution. It is a remarkable pioneering model of a fair and effective way to secure common heritage wealth benefits for the people as a whole. Details of the Alaska Permanent Fund can be downloaded from its website (www.apfc.org).
In Nigeria, oil resources do not belong to the individual states but the Federal Government which has initiated a revenue sharing formula based on the principle of revenue derivation. It states that 13% of total revenue from on-shore oil extraction in each state belong to it.
This 13% would be more result oriented and help ensure at least regional equity if the Alaska Permanent Fund model were replicated. Not only that, we can go a step further to structure an institution that would provide a source of no or low interest loan funds in addition to the direct citizens dividend.
Apparently concerned about incessant conflicts in several nations, the United Nations recently expressed its desire to expand its "Peace-keeping missions" in a bid to resolve such conflicts.
Also seeing the fact that these conflicts have their roots in competition over natural resources, Prof. Heather Remoff of the Henry George Institute, New York has suggested that the UN take a step further.
Prof. Remoff wrote in a recent conference paper, "Resource-keeping missions would guarantee that the natural resource royalties that accrue to oil, clean water, pure air, land, virgin timber, minerals, the airways etc belong by right to the public, not the private sector. Such payments must not be so high as to discourage the productive use of natural resources but must be high enough to justly compensate those whose access to the natural bounty of the earth is limited by monopoly holdings.
"Resource-keeping missions" could defuse ethnic conflict before it reaches the point of combustion. How would such resource-keeping missions be structured? The Alaska Permanent Fund may be a good model".
Note: Contents are drawn from the following:
| Henry George | Progress & Poverty |
| Alanna Hartzok | Pennsylvania's Success Story with Local Property Tax Reform The Alaska Permanent Fund: A Model of Resource Rents for Public Investment and Citizen Dividends |
| Prof. Heather Remoff | Into Africa: Progress, Poverty & Oil. (Iowa Conference Paper) |
| Early History of the Alaska Permanent Fund | The Trustee Papers Vol. N/o. 5 |
| James Howard Kunstler | A Mercifully Brief Chapter on a Frightening, Tedious, But Important Subject |
| David Roodman | The Natural Wealth of Nations |
This paper was presented at the Confederation of Green Parties Conference held in Dakar, Senegal from March 7th - 12th 2002.
NEXT: Environmental Justice, Sustainable Development and the Politics of Public Finance by Dr. Papa Meissa Dieng
http://www.earthrights.net/docs/abiama.html