Renowned author and erudite scholar Sebastine Hon (SAN) suggests ways out of recession through law.
Continued from last week
“Distress selling,” as shown above, progressed the world economy negatively from recession to depression. This was exactly what the Federal Government of Nigeria, through its organs, including the National Economic Council, NEC, wanted to plunge Nigeria into, before the sudden u-turn, many thanks to the uproar that greeted the infamous idea!
Franklyn Donovan Roosevelt ruled the USA as President for a record four terms, from March, 1933 to April 2, 1945, due mainly to his dexterous handling of the Great Depression. Adopting largely the Keynesian economic theory, Roosevelt, through his “New Deal” programmes, tripled fiscal spending and federal expenditure; and this worked to pull America out of that Depression.
The New Deal was a series of social and legal regimes enacted in the United States between 1933 and 1938. The measures encompassed both laws passed by Congress as well as presidential executive orders during Roosevelt’s first term, 1933-1937. The programmes were based on what economic historians refer to as the “3 Rs” of Relief, Recovery, and Reform. The “Relief” was for the poor and the unemployed; the “Recovery” was to bring the economy to normal levels; while the “Reform” concerned a restructuring of the financial system – to prevent a repeat of the depression.
Economic historians have segmented “The New Deal” into two. The “First New Deal” (1933–34) dealt with the pressing banking crisis; and this was achieved through the Emergency Banking Act; the Federal Emergency Relief Administration (FERA) and the Civil Works Administration (CWA). While the FERA provided hundreds of millions of US Dollars to the various States and major cities’ administrations, the CWA provided quick funding for localities to undertake projects in the 1933-1934 period.
The “Second New Deal” covered the period 1935-1938; and during this time, the “Works Progress Administration” (WPA) programme consolidated on the gains of the First New Deal, by deliberately providing massive capital to ensure the US Federal Government was by far the biggest employer of labour. And to prevent labour being mindlessly exploited, the Fair Labour Standards Act, 1938 was enacted.
There were also the Farm Security Administration of 1937 and the Social Security Act, which were protective legislations that targeted the rural and poor/challenged segments of the population.
As stated above, President Roosevelt, with the backing of the US Congress, pulled the US economy out of the Great Depression, a feat that contributed in earning him a historical four terms in office!
Clearly, therefore, Nigeria which is only in recession and is not yet in depression will quickly opt out of this quagmire if just half of what President Roosevelt did is implemented. And for a reminder, President Roosevelt massively cooperated with the US Congress to achieve that feat. Our dear President Muhammadu Buhari should, with respect, do no less.
Enters President Barak Obama
It is too soon to forget that President Barak Obama assumed office of the USA when that country was on the roller coaster to economic recession. What instruments of government and governance did he deploy in trying to pull back his country from that journey to the dark? We shall examine the efforts, highlighted in the following bullet points.
• Less than one month upon assumption of office, President Obama pushed for the promulgation by Congress of the American Recovery and Reinstatement Act, which enabled the provision of $800billion in government spending and tax cuts – to jumpstart the economy. Out of this amount, a princely $54billion a year as provided for, to expand unemployment insurance. These legal and fiscal measures alone rolled back unemployment by over 3 million jobs.
• In early 2008, the Government lowered interest rates; and later that year, it completely erased interest rates – by adopting a zero-interest rate regime.
• To be continued