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Stories: crisis of confidence and constricted credit

June 13, 2009

“The confidence of a nation…tends to revolve around stories.” “The role of stories…of the search for self-respect, and of fairness in the lives of the poor is absent from the standard economic analysis of poverty.”

“The two most significant depressions in U.S. history were characterized by fundamental changes in confidence…and the willingness to press pursuit of profit to antisocial limits.”

“To understand the functioning of the economy, and its animal spirits, we must also understand the economy’s sinister side – the tendencies toward antisocial behaviour.”[1]

Do stories of corruption (419[2], unprosecuted law breakers, dallying on FoI bill, foot-dragging persecutions, EFCC’s lack of bite et al), government’s non-transparency – asymmetry of information ie, politicians, bureaucrats and their cronies know something that we don’t and we’ve entered into an exchange – our votes for a term in office for the next four years, put us at a disadvantage we can do nothing about? Or rather they are not in the least interested in doing something because there isn’t trust among the opposition?  And thus makes us a fissiparous and feeble lot? A situation politicians and cronies prefer.

Why this? Money Struggles and City Life: Devaluation in Ibadan and Other Urban Centres in Southern Nigeria 1986-1996, got me thinking. It’s a collection of essays by University of  Ibadan professors in the department of economics and anthropology. Nigerians in the face of hardship show relentless resilience. Innovative ways tided us through the SAP crisis: naira devaluation et al. How we survived during the period is captured in case studies; observing how people ‘manage’ their income though many admit that “My take home pay can’t take me home”. So what were the stories at the time? Have these spurred corruption?

419 stories: fraudulent in origin and end, exploit an anomaly of the market system: the assumption that counterparties will fulfil their duties – founded on social norms, embedded in contracts and enforced by law. Without trust, people won’t be willing to trade, constricting enterprises to buying and selling (kara kata). The norm: sole proprietorships limited by capital ie, financial and intellectual. Rather public limited companies that enable growth, beyond the owner’s lifetime are a rarity. (Though there are stories of successful companies in Nigeria).

[1] George A. Akerlof, winner of the 2001 Nobel Prize in economics, is a professor at the University of California Berkeley. Robert J. Shiller, best-selling author of Irrational Exuberance and The Subprime Solution, teaches economics at Yale University.

[2] The number “419” refers to the article of the Nigerian Criminal Code (part of Chapter 38: “Obtaining Property by false pretences; Cheating”) dealing with fraud. Advance-fee fraud, Wikipedia

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