Be careful with Gregory Smith-the World Bank ‘Voodoo’ Economist…

I was attracted by the Post Newspaper Headline on Tuesday 12th April that read: “Kwacha gain a sign of weak economy-World Bank.” I thought this was foolish economic logic-if ever economists know anything about quantitative logic at all.

I’ve always said, I’m not an economist-but an engineer—research process engineer with 40 years industrial experience to be exact. So as an engineer, anyone who says an improvement in the performance of something is a sign of a weaker link in the entire body of the same thing—is to say the least madness.

In this instance- if your house hold purchasing power improves by 10 percent even for a short period like one millisecond, if in that millisecond the price inflation rate has remained the same but you’re able to lock in all the food items whose price had gone up by say 10 percent due to this inflation, and your purchases are able to last your house hold another day or week, even if your fortunes lost the same 10 percent and reverted to the old  rate, you surely would have been better off from that millisecond gain in your household purchasing power. And only a foolish economist will try to argue with this line of reasoning. And the fact that the gain is not sustainable does not eliminate that temporary small millisecond gain. So, unfortunately and I’m sorry to say, Mr Gregory Smith, the World Bank senior country economist, is either illiterate-mad-or was stone drunk on some home brewed stuff when he uttered those few meaningless words to try and belittle the kwacha appreciation and the Zambians economic managers behind the fact.

It’s true, headwinds in the Zambian economy continue- but so is every other country on earth facing the same headwinds if not – worse in some European developed economies-especially if the downgrading of the World GDP (GWP) this year so far by the IMF is anything to get cue from.

Zambia is not an isolated economic case scenario for this half-baked young World Bank economist to start making economic political capital from. And I would personally want to have a face to face chat on live TV with this Mr Gregory Smith next time I’m in Zambia so that I can learn from him what ‘material’ constitutes his brain because most of everything else he said about the Zambian economy is voodoo (guess work) economics because not even Nobel Prize economists were able to predict what has befallen the Zambian, let alone, the world economy today especially so that what has been happening in China has for the first time in world economic history become a new economic force and big factor in dictating world economic trends- a point this young World Bank economist didn’t even bother to take into consideration.

For example this young World Bank country economist, this particular Mr Gregory Smith, has no clue what constitutes world commodity prices and yet he quickly wants to put blame and talk about things he isn’t an expert on. This boy thinks because he works for the World Bank so he is an expert and custodian of economic knowledge, logic and expertise. For some reason, he believes what he says is truth when in fact it’s not even equivalent to a seventh grade thinkers logic.  I can tell him for free right now, if the demand for copper should remain subdued for any longer than the next six months which should bring this continued low demand in copper to a full 24 months downward cycle, then he should expect to experience the most spectacular dominoes effect that’ll knock out the entire world economic system and he can kiss bye-bye to all western economies as  know it, there’ll be nothing like “a likely recovery in global markets and economy,” for unless a substitute for copper is in place, which there isn’t, then the demand cycle for copper is going nowhere but up and so will prices follow.

Already there are US$1.5 trillion new clean energy projects being planned that will translate into new electricity grids some projects may even opt to transmit in D.C current directly up to substation common invertor installations where they’ll be converted to AC while many others may transmit directly in DC format to new completed office, factory and home construction sites. Several permutations exist within the engineering community for the next generation clean electrical energy power generation and transmission grids. And all these new forms and formats in clean energy generation and transmission will translate into massive demand for copper in solar panels, wind turbines and new transmission lines in addition to new low energy DC refrigeration, air conditioning and water heating technologies and equipment that will need to be installed. The numerous new “cleaner” fossil energy electrical power generation projects in China and India and the rest of the poor developing world alone will also require massive amounts of copper as these nations close their electrical energy gap and deficits to stimulate economic growth and uplift the living standards of their citizens in the various countries.

I’m sorry, but Mr Gregory Smith is either dull or an illiterate economist. There is absolutely no economic logic to lump the Zambian kwacha’s performance with any other currency in Africa. To imply a similarity in the performance of the Zambian kwacha to any other African country’s currency exists when in fact they exist in different economic environments—is silly. Therefore, to say that “the Zambian kwacha, South African Rand, Kenya shilling, Ugandan shilling and Ghanaian cedi are some of the emerging currencies expected to benefit from improving global view” is to say the least, a lazy  and meaningless expression full of foolish economic logic– for lack of a better term. The conditions that existed when these economies were grouped together amongst the top ten best performing economies in the world to the conditions in existence today and assume the same to reoccur once again is what we’d call voodoo (witchcraft) economics. Because if by some misfortune Mr Malema became the new President of South Africa today, or if the infighting within the ANC veterans and the pro-Zuma factions should continue and Mr Zuma does not yield to public and insider pressure within the ANC and step down, I personally don’t think the South African Rand would rebound as quickly as the Zambian kwacha will under Edgar Lungu by end of the year. Similarly the Ugandan shilling will keep experiencing downward pressure due to the continued low oil prices, and Mr Museveni’s decision to change the constitution and become life president of Uganda until such time oil prices will rebound and he reaps the proceeds. There are also different economic intervention scenarios that will determine the movements in the Kenyan shilling as well as the Ghana cedi. No-Mr Smith, I beg to differ violently-previous economic coincidences about the kwacha and these other currencies cannot-for God’s sake- become economic fact.

If you’re thinking I’m angry, rude and vulgar, you’re probably right. These World Bank chaps think they’re smart when in fact not.

Perhaps they are used to addressing and not discussing with our civil servants and politicians who most likely wiggle and cow down before them. What this Mr Smith was trying to do is to paint a doom picture about the Zambian kwacha and economy giving the impression that if only this kwacha appreciation had been predicted by him (Smith) or announced by him first and not any other person especially a black Zambian, then this appreciation would have been acceptable.

Mr Smith also says many stupid things such as Zambians should not borrow in foreign currency, yet he’s the first on the scene to offer Zambia import support loans when it suits his masters. For some reason he also wishes Zambia bad luck when he says he doesn’t think the country will find it easy to borrow this year or next year. But he forgets the U.S. owes its citizens and the world US$20 trillion-a debt it’ll never be able to pay back this century. He says we should not “jump up and down” when the kwacha shows signs of a slight appreciation because it’s not sustainable. I’m sure he’d be happy to see Zambians to sit down and mourn. C’mon! The US dollar alone has lost 100 percent of its value since 1971, so what is Smith talking about- when he says the kwacha appreciation is “not sustainable?” The so called Quantitative Easing when trillions of dollars were poured into the US economy from thin air—or did those trillions of dollars come from productive ventures and overall exports from the U.S. economy?  How about the Greece bailout recently-the country was a failed state- why didn’t the Eurozone say Greece must grow its economy from production –exports-instead of pouring in those free billions of euros and dollars? Have you seen any new factories come up in Greece recently that’ll be able to make new things for exports to enable them come and pay back those bailout funds?  This makes the case for some Zambians, the so called economic experts who agree with Smith and write articles in favour arguing Zambians to appreciate their currency from productivity. We don’t refuse this fact but supposing a friendly country miraculously gave Zambia a no strings attached gift of US$1 billion, does this mean these dollars should not be put in circulation because they’re not from our own production?  Supposing the Chinese contractors suddenly stopped remitting road and infrastructure dollars they’re paid to Panama and the country was suddenly faced with surplus dollars, should these dollars be left out of the economic equation because they are not part of the current production and exports cycle process which these people say should only cause the kwacha to appreciate?  What nonsense!

What comes out clearly though is that Gregory Smith’s statement stinks of racial undertones. He does not believe black Zambian economists are able to do exactly the same voodoo tricks that his bosses in D.C did to reverse adverse economic trends facing the USA.

And he admitted, the whole process caught him by surprise but we think he was embarrassed because he thought he was the only one- as the so called World Bank “Muzungu Wanga” country representative- who should have known how to appreciate the kwacha and he should have been the only one to tell us how to appreciate  our own currency.

I’m sorry, but as a country representative for the World Bank in Zambia, Gregory Smith has failed big time. He thinks he knows it all when in fact not and he’s unwilling to learn from black Zambians difficulties for him to be able to give them his supposedly learned advice. The Zambian government must request the World Bank to take back this fellow to whichever little brick hole he came from. Zambia deserves better well-articulated and learned balanced economic advisors and not these perpetual international civil servants who have never worked in industry.

Just a thought,

Sincerely,

 

Categorized | Analysis

One Response to “Be careful with Gregory Smith-the World Bank ‘Voodoo’ Economist…”

  1. paulo says:

    excellent analysis. poor muzungu!

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