About teaching economics and current economic affairs

Any copy of The Economist that I receive from London, courtesy of my British friends contains news or discussions concerning the aftermath of the 2007 to 2009 financial meltdown in North America and Europe.

The desperate efforts that the European Union and the International Monetary Fund have take to rescue Greece from its economic inferno, the apparent successes the technocrats are making in Italy, the not quite satisfactory situations in Ireland, Portugal and Spain. These and other matters make reading The Economist most engrossing.

At the height of the financial meltdown, Queen Elizabeth II of Britain visited the famous London School of Economics and asked economists there why they had not foreseen the advent of the meltdown. I am not sure what unanimous explanation they gave Her Majesty, but the Newsletter of the Royal Economic Society regularly contains articles which propose modifying the teaching of economics. It is being admitted that economics has become too mathematical and abstract, and that students are not assisted to see what the real situation is.

The teaching of economic history is strongly advocated. This has surprised me because during my undergraduate days for the London University Bsc (Economics) degree, one of the six compulsory subjects was economic history.

What we call economic history today is the economic affair of yesterday. The current economic situation of Malawi that includes forex and fuel shortages, the role of tobacco in the Malawi economy, the Kayelekera Uranium Mine, what is happening to the sugar and tea industry, as well as a measure of food security will constitute the economic history of the years to come.

Both economic history and current economic affairs must be part of the curriculum for undergraduate students of economics. Is this being done in all our universities? I used to assume that this was the case until a third year student of economics called upon me one day to seek my advice on something. When I said he could find the answer in the latest issue of The Economist, he looked puzzled. He had never heard of a magazine of that name. When I pulled a copy from my drawer and showed him a copy, he gazed at it in a manner that confirmed he had never seen The Economist before.

I asked him if he and his classmates were learning economic history, he said they were studying the history of economic thought which of course is not the same thing.

Whether as people of public affairs, students or university dons, we must keep ourselves abreast of what is happening about economic matters both here and abroad. That which happens there may happen here and so I have a word about the demands that may be made upon our President.

The sudden and sad departure of President Bingu wa Mutharika means that issues like civil servants pay are still to be concluded. I would appeal to those who were holding such discussions not to try to stampede Her Excellency the President into making premature concessions. The Malawi economy is very sick. Salary hikes should be made only when an economy is experiencing sound economic growth rates. If you kill a goose that lays golden eggs, you may find one or two eggs in its stomach, but you will have no more thereafter.

During my childhood days, I remember what wise parents used to do during the rainy season. When there was enough food for just one meal a day, the father and mother would give breakfast to the children only and go to work. They would then have their meals in the evening. Their reasoning was that children needed the breakfast more than the grown-ups who would endure until the evening.

We know that all civil servants deserve better pay; I have never come across someone who admits that he earns too big a salary. Nevertheless in the present recession, we should consider first the needs of those at the bottom of the salary ladders. It is these people who can suffer diseases of malnutrition as a result of the current price spirals.

There is a ray of hope that the Bretton Woods twins and the donors will sooner than later give us what they have withheld largely because of our own faults. Let us not at this time do things which may once more cost us their confidence by introducing unnecessary instabilities. One of these would be about our Minister of Finance whatever the outcome about investigations concerning falsifications of MRA tax collections, let the Minister conclude his budget speech take the country to the point where financial assistance once flows in.

It is most unlikely that officials at the Ministry of Finance and the MRA were negotiating with the commercial banks about loans without the knowledge of the President. He was to be the most embarrassed if it turned out that the zero-deficit budget was heading for a collapse.

By falsifying MRA tax collections the government foolishly put itself into difficulties when negotiating with the civil servants union. The union could reasonably argue that since the MRA had achieved the targets, the government has enough money to share with its employees. But let us believe that civil servants are mature enough to capitalise on someone’s myopia.