The Seductive Power of Victimhood
and the dangerous path forward that it charts
The real-life socio-economic and political events that the people of Mauritius have embarked upon in recent months, and will hopefully continue to apply themselves to in the next ten years or so, is an experience to which different narratives can, and will be, made to fit. That experience is itself simple enough to describe.
It is also the aspiration to reduce the GINI coefficient of income inequality from (let’s say) 0.55 currently, equivalent to that of Honduras (or the right figure may be 0.45, like that of Jamaica and the Philippines, I have not been able to verify the exact official figure) to 0.40, equivalent to that of Trinidad and Singapore. Or, to goal may be more ambitious: reduce the Gini coefficient to 0.35, equivalent to that of Jordan and India (the higher the Gini coefficient, the more unequal is income distribution). It is the noble endeavour to use the serendipitous windfalls of the Integrated Resorts Scheme to transform our heretofore labour-surplus, low-wage, high-monopoly profit, lower-middle-income group economy into a high-skill, decent-wage, normal-market-determined-profit, upper-middle-income economy.
But, herein lies the seed of the searing acrimony about which narrative fits the facts. The seed of discord is the perception that wealth will be taken from some to give to others. Abstraction is made of the fact that the “wealth” – in fact what economists call “rent”, this being value being created ab nihilo (from nothing) as a result of diverting resources (in this case, land) from its current use where it earns a normal profit to new uses (the IRS schemes) where they will earn profits far in excess of normal levels. This sense of victimhood has a great seductive power. It casts the narrator in the role of a hero about to be brought low by the forces of evil. But it is a very dangerous path that this kind of narrative craves out.
Of several possible narratives, an extreme one
One extreme narrative was made to fit the experience exploded about two years ago when some extremists charged that the leaders of the country were planning to take land away from one section to give it away to another section of the population. This extremist, hyper-capitalist narrative casts the current large-plantation owners as victims of a bigoted government. In a recent comment on a blog, I made reference to Jared Diamond’s scientific study, in his best-selling book “Guns, Germs and Steel”, about Yali’s question and, without discussing the details, the rather convincing but incomplete answers that Jared Diamond’s book provides. Warped minds, however, twisted the argument that I had made to suit the illusionary mental picture that they construe the world to be. They spoke of “the 1960’s situation”, most likely alluding to the emigration of certain Mauritians who may have felt that urge to leave the scene of their crimes by their inner sense of guilt. But, of course, the warped minds meant their comment as a threat.
That self-delusionary picture is entirely congruous with the one painted by Jean-Pierre Lenoir when he wrote, many months ago now, that “blacks would never have achieved the economic and civilizational progress that they have achieved, were it not for the white man’s colonization of their country”. I replied very constructively to Jean-Pierre Lenoir, in an article titled “Ebony and Ivory: You Are the Beneficiary, Not the Target”. But succumbing to seduction is the mark of the greedy, the predator, the compradore and — why should I shy way from saying it? I have seen far too many of them in South Africa – the Uncle Tom.
When Jean-Pierre Lenoir was voicing his insult, Robert Mugabe was quite weak and looked almost certain to lose presidential elections that were then imminent. Morgan Tsivangirai allowed himself to be seduced by the misguided narrative of his sponsors. But, as I never cease to remind everyone, there is always a blowback for less-than-fully-honest manoeuvres. Mugabe reacted, Tsivangirai found himself caught in a snare he had set up for himself, and he tragically refused to go back from South Africa to Zimbabwe to contest an election that he said was rigged. Ironically, he was thereafter forced to share power with Mugabe to save his fast disappearing popularity, thereby bolstering Mugabe’s credibility. And now, Mugabe, at age 86 and having wielded absolute power for 30 years, is looking forward to having yet another term in office after elections due in 2012!
The would-be arsonists in Mauritius who don’t have the moral courage to resist the seduction of the narrative of victimhood would be well advised to think again. They have been talking of a repeat of February 1999 and were stared down to silence for a while. But now they are singing the same siren song of self-delusionary seduction on a different tune. They are completely free to do so. But, as a well-meaning compatriot, I consider it my duty to remind them of the experience of Tsangvirai only a couple of years ago, and of the more general lesson that the narrative of victimhood has a great power of seduction, but it charts a very dangerous path forward along which only fools rush.
Another opposite-extreme narrative
Another extreme narrative had been formulated, in the early period of his career, by even such a conservative economist as John Bates Clark, the early 20th century Professor of Economics at Columbia University in New York, famous as being the modern revivalist crusader of classical economics now known as neoclassical economics. Clark’s early position was that such windfall gains, or economic rent, should be taxed away in toto. The rationale was that the proceeds would be used to produce public goods that increase social welfare far more than if they were allowed to accrue, untaxed, to already wealthy land-owners who, anyway, make normal profits on their existing considerable capital stock. He wrote “it is a dangerous mistake to extol competition as such too highly, and regard all attacks upon it as revolutionary… We do not eat men… but we do it by such indirect and refined methods that it does not generally occur to us that we are cannibals.”
John Bates Clark later revised his unrefined formulation for the distribution of income, including economic rent, to take account of the marginal productivity of the various factors of production (Land, Labour, the various forms of Capital – physical. Human, and in modern days, social and spiritual). The later formulation led to the controversy, famous to economists, between Cambridge, England and Cambridge, Massachussets scholars in the nature of capital and appropriate computation of its rate of return. The neoclassical version is what the international financial institutions have adopted and is alternatively known as The Washington Consensus. The nuanced version, correcting for internal inconsistencies and circular reasoning, is what economists such as Hyman Minsky, Joseph Stiglitz, and Paul Krugman promulgate, and is known as neo-Keynesian.
The neoclassical formula for distribution of economic rent factors in heavily the incentive necessary to encourage entrepreneurship and innovation. It proposes the taxation of economic rent at a rather significant rate, but not at a rate much higher than the rate imposable on normal profit levels. The neo-Keynesian formula proposes a rate higher than that on normal profit levels to fund public goods in the form of public works to make up for the deficit in infrastructure, to finance skills-formation programmes that will help to enhance future profits to physical and human capital and to boost growth through higher production and consumption.
The reasonable narrative
There is yet another, more reasonable narrative that fits both the ex ante, unsatisfactory, unequal income distribution situation and the modestly ambitious, disadvantaged-empowering, less-unequal income distribution goal that the government has assigned itself to put in place. That more reasonable narrative lies midway between extremist hyper-capitalist formulation and the Bates early-career formulation. Its policy prescription relates to the choice between the neoclassical proposal and the neo-Keynesain proposal.
Any controversy outside these parameters are not only sterile argumentation, but dangerous surrender to the seduction of victimhood.
S.M. Malleck Amode