BKAM Monthly Review: February

I was thinking: Bank Al Maghrib issues a monthly digest on economic conjecture, A good reading I enjoy. Unfortunately, I don’t get the opportunity to share my own thoughts of their findings. Plus it’s going to be more up-to-date than other posts I like to write on economics.

The report is undeniably optimistic about an array of indicators, mainly economic growth (all things considered, it is quite understandable, given the main thrust is simply to produce more and more goods and services to lift us up from poverty) but also the current account and balance of commerce deficits. Growth at Q4 2010 was about 3% (at annual rate). If the Moroccan economy managed an annual 3% over just one-quarter, then forecasts for the remaining quarters, ceteris paribus, are likely to yield some good numbers too. However, when one takes a look at the February 2010 issue, numbers are not so good:  There was a growth of 5.2% at that time (compared to 2009) so this is hardly a feat. Worse, the actual growth is 0.5 basis point short. Tiny numbers, but when averages are computed, it amounts to almost one GDP basis point. For an economy that boasted its resilience in times of global crisis and recession, these numbers are not encouraging at all.

The jump in Exports is due to the price increase in Phosphates and derivatives (BKAM Charts)

There are however, others things one can cheer: current account deficit abated, and –Ô Joy, Ô rapture unforeseen– exports increased more rapidly that imports. In a sense, I begin to understand why the Office des Changes relaxed some of its legislation on hard currency dealings. Indeed, exports increased by 30.8%, while imports expanded only 13.3% (which means Q1 2011 terms of trade are improving, especially when compared on a year-on-year basis) as reported: “Au terme de l’année 2010, le déficit commercial s’est élevé à 151,3 milliards de dirhams, en stabilité par rapport à la même période de l’année précédente, contre une diminution de 11,4% une année auparavant.” But that is mainly due to the jump in price commodities like Phosphates (l’augmentation des exportations résulte notamment de l’accroissement de 96,6% des ventes de phosphates et dérivés.) [p.18] Besides, for the first quarter, the flow of FDIs was higher compared to 2009 the low-ebb, but it actually decreased in 2010 (about a 11.8% decrease).

All in all, the appreciation of terms of trades is not due to volume, but rather to the sky-rocketing commodity prices, especially Phosphates. Other indicators are either stable or in the red. The good news is that the terms of trades (as well as the Exports/Imports ratio) are closing in to the last decade’s average. Again, Phosphate industry was the main item sustaining the 3% GDP growth.

But apart from that, numbers are not really encouraging. Though one should refrain from painting the situation black, it must be pointed out besides that public finances are haemorrhaging compensation expenses (the now-famous government decision to subsidize further strategic commodities), at times of scarce liquidity. On a different issue, the Moroccan government is frantically raising cash to keep itself afloat. Consider the regular communiques published every time the finance ministry raises cash: in the first two months of 2011, 28 interventions were needed (by comparison, 13 adjudications were settled in Q1 2010) It is obvious that on top of difficult financial situation, a further strain of 15 billion can only damage the state of public finances. It is worth mentioning that government GDP growth was almost in line with GDP growth, which means that even this scheduled intervention will not be of great use. Indeed, if government expenditure was to sustain growth, and even though it increased by 3.4%, its net contribution was merely 0.4 basis point, a low figure that proves how inefficient economic stimulus policies are in pushing for higher growth (it is worth mentioning that a 3% growth is well below the decade average, or the potential output).

The digest reports a budget deficit of MAD 30.1 Billion, i.e. about 4% of GDP. As pointed out, the main reason for such deficit is: “Ce résultat reflète une quasi-stabilité des recettes ordinaires, avec une légère reprise des recettes fiscales et une baisse des recettes non fiscales, ainsi que l’accroissement des dépenses, tiré notamment par l’augmentation des charges au titre de la subvention des prix.” It is quite strange that, in times of economic stringency (not necessarily crisis, but quite difficult times) fiscal receipts remained stable. And what is usually referred to as non-fiscal revenues designates to peripheral and accessory receipts (about MAD 12.6 Billion ) a marginal amount compared to the fiscal revenues.

Contradiction in terms: VAT increase while money is poured on subsidizing food and other commodities. (BKAM Charts)

It is also strange to not that, while income tax (corporates and individuals) remained stable or decreased (in terms of income tax, there was a drop of 4.4%, thanks to the tax breaks minister Mezouar introduced for the upper bracket of income-earners) revenues from VAT increased as consumption increased too.

Bearing in mind that domestic consumption saved the day in 2009 in terms of economic growth, it is a rather harsh punishment on households (especially those with higher propensity to consumption, i.e. the less well-off ones), at a time the government is boating about ‘supporting purchasing power’ (basically, taking away what has been given with subsidies). It is even more alarming to note that while current expenditure increased by 12.6% over the last quarter, public investment increased only by a modest 1.6%, which leaves investment with a lower percentage in expenditure budget.

The figures displayed on the report are worrying, not for their levels (although some will sooner or later develop into insoluble problems if not dealt with) but because of their volatility, especially on indicators like inflation.

There is at least on commendable thing about the adjustment program (not necessarily offsetting the painful social and economic downsides of it) and it is the durable taming of inflation in Morocco. And as pointed out: ‘La poursuite de la modération des pressions émanant de la demande […] interne […] et la lenteur de la transmission du renchérissement […] vers les prix domestiques, continuent de maintenir l’inflation globale à un niveau relativement modéré.‘ And core inflation is even lower (an order of magnitude of 0.9% compared to total inflation of 2.2%).

What authorities (monetary or government) failed to tame -or at least contain- is mainly the volatility of a range of products: consumption goods, essentially. one might argue that authorities cannot tame total inflation. And yet, for all the efforts in subsidizing the very products whose volatility is large, it just proves how ineffective this policy proves to be.

Relatively low inflation, but high volatility (BKAM Charts)

On the other hand, volatility is not that important; as the graph shows, it remains well below unstable levels (at best,a maximum of 4%). But again, the levels themselves do not matter, their volatility, the deviation from the annual average is quite disturbing. Under the assumption that the very goods the government subsidizes are the ones with the highest levels of inflation as well as the highest levels of volatility, the deduced outcome can only point out  to the inefficiency of such policy. It is also worth mentioning that since the Caisse de Compensation dries up at August, the true indicators of inflation show up for a month or two (the real level of total inflation in august is about 3%) and whatever gains from lower inflation, these are not enough to justify billions paid in subsidy.

This however is not Bank Al Maghrib’s opinion (they hardly venture one on such indicators) but as far as I am concerned, the price paid with a chronic CdC deficit for subsidizing food and fuel is not worth paying, in view of the insufficient results in inflation, purchasing power or simply in income and consumption distribution.

Advertisements

Wandering Thoughts Vol.8

When I read or listen to the official -and not so official- stuff pouring out of media and web outlets, I feel lucky. Lucky to be born and raised in the circumstances that made me what I am. Before the 20/02 row (over the pro-democracy demonstrations in Morocco) I always felt I had no right to take the moral high ground; After all, a middle class, cosmopolitan, (a bit, just a bit) clannish or cliquish, left-wing-y schoolboy is certainly not fit to claim moral superiority over those who happen to disagree with my opinions.

Markus Brigstocke. I now feel his rage (but I lack his wit to take on the stupid, the prejudiced and the wilful ignorant)

Whatever my academic achievements (including those pertaining to political history and sociology) I have no right to impose on my opponents my ideas. On the other hand, logic, buttressed with documented argument, should, in my Cartesian mind, make the difference in a high-brow debate.

But This February 20th came along. To be honest, I didn’t think much of the expected demonstration (but then again, that was more out of laziness, especially with bad weather forecast) but the cardinal item of their grievances, a constitutional reform, was very close to my mind and to my heart. But then again, I spoke to, and chatted with acquaintances of mine about this. I noticed many changed their profile picture on Facebook to that of His Majesty’s picture. I was a little bemused, but then I thought ‘These guys are into weird fetishism. But hey, that’s their life‘. Not long afterwards, I received emails (spam, really) and messages urging Moroccans to ‘Rally behind our beloved King Mohammed VI Allah Y Nessrou‘. I keep receiving invitations to events I can’t even stand reading. The cup was bare. And this was not entirely on internet; even off-line conversations with some Moroccan classmates on campus were puzzling. I knew they had no interest and no knowledge of Moroccan politics, but surely stupidity can’t reach these proportions?

I also think I have proven record of enthusiasm for debate. But there are two thing I can’t stand in a debate on Moroccan politics, the first is when people start faking post-1956 history: Green March, fine. King Mohammed VI is a nice monarch, yeah, why not. But Moroccan history of 1.200 years, or fairy-tales about how Hassan II was a good man, or claims we remain insular to all changes in the region, that I can’t stand. It drives me ape. The second thing is about the economic argument: ‘we are improving’. And the worse thing is that such statements are coming from people with little or no knowledge of economics. And even if they did have some knowledge of economics, the numbers they’re so keen on posting and summoning are meaningless when not put together with other figures thy don’t know about, or don’t want to. And whenever I go ballistic on these things, I almost immediately feel contrite afterwards, I should be open to debate. But then, I remember the days of my former high school Geography teacher used to say: “a debate cannot happen if one side is not up to it“.

So yes. I am sorry, but many people are not packing up enough to keep up with sensible debate, like that pokerface soon-to-be ex-minister for sports, Moncef Belkhayat (and that just gives an alarming glimpse to the kind of politicians supposedly leading our country, and worse, supposedly voted for democratically). This kind of people, the ones that flock to read and take for granted Big Brother’s, Robin Des Blogs‘ and Hmida’s half-witted posts, are the very people who can feel quite content with Manichean, simplistic ersatz thinking.

F**k politics. That's what the people want: glamour, frivolity and burlesque.

I have to admit my anger. And it’s out of disappointment really, because in my everyday life, especially with Moroccans I’d meet for the first time, I’d either try to hide or tone down my political opinions, or try -or to be seen to try- to have some understanding to opposite or divergent views, all of this just to keep social contacts I can usually dispense with. I am angry with young Moroccans that had the opportunity to get good education, to follow up their baccalaureate with higher education in the best schools, in Morocco and abroad; And yet, for all their academic records, they utterly fail to put two logical arguments together in order to make the case for ‘Al Maghrib Ya3mal‘ or some similar gobeshit. I understand that Civic Education can have everlasting damages, but come on!

I am also angry because it is most likely that my reader would agree with me, or share my angst (alternatively, they might be looking for entries about Dita Von Teese, as my blog statistics show…). Not that I hold anything against fellow nihilists (salt of the earth, these people) but because I genuinely try to hear the other side’s argument, and so do a lot of fellow nihilists. I’d even try to reach out and be less polarizing on many issues, including constitutional changes. Nothing. Zilch. I don’t think they would reciprocate. I’d love to receive a comment, or an email saying: ‘Sorry, I don’t agree with the following points you made on such or such post, and here’s why’. I’d truly respect that. Is it out of intellectual laziness? Or is it rather because of an intellectual inability to think complex issues as they are? If it turns out to be true, that proves my point: Reality can be distorted to please their half-backed weltanschauung. I try my best to be faithful to Edgar Morin‘s quote: ‘always apprehend things in their complexity’. It seems would-be thinkers cannot.

I can also provide a counter-argument to the expected reply: ‘You don’t abide by the democratic rules. Those very rules you claim to be defending’. Yes and No. Yes, because I surprise myself into considering the technicalities of a random sterilisation, just so as to control ‘la connerie‘ genes (the French word carries my anger more emphatically, I think).

No, because contrary to what one might think, democracy is actually the dictatorship of the well-informed. The underlying assumption of democratic institutions and practises, just like all other positivist inventions, requires citizens to be fully aware of all past elements and compute them in their decision-making process, before they take a stand on a particular issue.

'I'm a nice guy. See, even the younger generations think so too'.

The wet pants I knew from secondary, high, prep schools and university (and many of them are still very average) that rise up and claim that ‘demonstrations are bad’ or ‘constitutional reforms? parliamentary monarchy? Vade Retro, soulless republican !’ When asked about the constitution, 9 times out of 10, they didn’t go beyond the preamble.

It’s high time I took up a hobby, because it is unbearable to stand Moroccan politics, squeezed between childish pseudo-patriotism from ignorant intellectual toddlers, and the frustrating debate on policy-making issues.

I should apologize. screaming words of abuse, justified or not, and these are better kept locked away. I should apologize for the burst of anger and ranting, but, as a friend dubbed it: ‘it’s worse than Stockholm syndrome, it’s Hassan II syndrome’. I’d agree; I didn’t know individuals can go to such length in masochism.

One word: grow up. [and don’t take this seriously. I have gone off the rails, nothing to worry about]

Proposal For Financing Strategy, PSU Case Study

The label is not bound to come off as yet: I should perhaps put in a word about my political affiliation: it started out of a blindly commitment; Not out of ignorance, you understand, but for more emotional motives. Then, it morphed into something more documented, less attached to doctrinaire, almost philosophical matters. And now, out of more reasoned stand, I would like to contribute one time or two for the Moroccan Radical Left.

I think I referred to that ambivalent state of mind in a raging –or supposed to be so- about Ben Barka’s legacy. Well, it’s more or less the same thing: still passionate about principles, but utterly realistic, almost disillusioned about any likelihood of change from the radical left, and they taking power (democratically, let us be absolutely clear). And you know, the whole nostalgic motley of Red Flags, Che Guevara portraits, even Lenin flags are fine. I mean, the Moroccan public –already severely lacking culture, as the recent internet-based exchanged have proved- is not bound to react to the reddish symbolic. They are more prone to react to the secularist, almost atheistic stance, as well as the vanguard stand on homosexuality, and, quite expected, on de-penalizing soft drugs, legalizing prostitution, alcohol and many other taboo issues.

On the other hand, there is definitely a shortage of able operatives in these parties. I should restrain my demonstration to the Parti Socialiste Unifié (PSU) ‘Que Bene Amat, Bene Castigat’ one might say. Perhaps this should be salutary. This shortage is positively dangerous, in the sense that intermediate activists with specialist skills are much needed when a political party, out in wilderness for many years –of not always in opposition- was suddenly in charge, or part of a ruling coalition (most likely with other ill-staffed left-wing parties) How can they man things then? Rely on the civil service? I should certainly hope not. What might happen was admirably caricatured in ‘Yes Minister’ (and its sequel ‘Yes Prime Minister’) where political power was merely struggling to second-guess the civil service into implementing their policy, instead of actually carrying it out.

Despite all these misgivings, there remains the question of finance. Party finance at the PSU (and from now on, it applies indiscriminately to the PADS the CNI, and Annahj too) is abysmal for a number of reasons: debts, mismanagement of resources during campaigns, reliance on old-style communication, and of course the status of ‘small party in opposition’ that prevent it from the many perks larger and more docile parties enjoy.

Still and all, there’s a need to shake up the finance policy and start looking for the money. The nexus of political action, in Morocco and elsewhere, is money.

”]

I have almost finished ‘Race of a Lifetime’ (courteously recommended by Anas Aloui, bless him) on the backdrops of Democratic nomination, and ultimately the US Presidential Elections in 2008. I was particularly amazed at how important fundraising was to Hillary Clinton (and later on to soon-to-be US President Barack Obama). I caught a glimpse of it in a more dramatized way when I caught on to the West Wing, but this documented account was mind-boggling. What is public in the US about political and party finance is more covert in France, and opaque, almost mafia-like here in Morocco..

I also remembered what I read in ‘Blog!’ about the Dean campaign (Democratic candidate for nomination in 2004, before he dropped out of the race) I also remembered reading about John Kerry’s commitment to drop federal money and rely solely on activist support and individual donations. I know it is a bit of a long shot, but we really should listen and learn. Benchmarking France -as we always do, whether we like it or not- is out of the question: it has a detestable public funding for political parties, who rely heavily on that, even the largest parties are ready to cheat to get the maximum out of the public purse to fund their activities. Let us not forget that Moroccan officials, some decades ago, dully copied the “caisse noire” methods shadowy activists like Charles Pasqua liked to use.

Systems that allow political parties to fund themselves (by adopting for instance legislation allowing individuals to deduce some of their income tax when donating, whether to charities or political parties) are better suited for Morocco, where the State has a dark story of money-laundering, illegal financing and acrobatic financial dealings that allowed for parties to rise from dust and, ex nihilo, be large parties (Union Constitutionnelle, Rassemblement National des Indépendants, even Parti Authenticité Modernité) with quasi-majority in the house.

So, the PSU, with an official batch of 10.000 activists, spread out across 131 or so groups (numbers date back to the 2007 Convention). At best, 5670 militants are already contributing one way or the other in financing the party. If one was to take out about 31% of young activists (and as such deemed unable to contribute financially) one is left with at best 3200 activists. If an average annual contribution was, say 100 Dirhams (which many activists cannot afford, truth be told) then the immediate war chest is 320.000 Dirhams, plus about 25.000 Dirhams from leadership and members of parliament, a total of a little less than 350.000 Dirhams. This might seem a lot, but it barely covers debts the party accumulated from failed electoral campaign to the other, as well as the unfortunate incident in 1996 after an OADP splinter group (A. Ouardighi group) absconded the Newspaper ‘Anoual’ from its assets and left the OADP party with debts.

USFP Imposing HQ at Hay Ryad. Not very left-wingy...

And even if arrangements were found to reschedule the debt, this modest amount of money could barely pay for  new equipment in some branches, or for a year’s salary on staff and regular expenses, certainly not for a full committed campaign, let alone the re-opening of a newspaper, an idea dear to many party activists and leaders, at a time newspaper circulation in Morocco is at its lowest.

Could a PSU newspaper compete with Rachid Nini? Because the only way to do so is to play to the hand of demagoguery, and then I’d seriously consider my commitment… So, to cut the story short, activist self-financing is not going to make up for much expenses. There is a need for a plan. For a while, I thought it was presumptuous of me to start devising recommendations to some leaders and activists old enough to be my father. But then again I found the 2007 convention booklet. I rushed to read the Finance committee’s findings, and let me tell you: I was expecting figures, charts. I found only laconic comments; Resources were down from at least 50% to non-existent. The new legislation on political parties completely closed down any hopes for public funding (the party did not succeeded in securing the necessary 5% in many elections) while donations and contributions from members of parliament and local councils dropped by half. Contributions from the Youth organization was a meagre 2.500 dirhams (meagre, in the sense that there was potential for more) and no contributions from the Women’s organization. Funding, and by ricochet, party finance are in disarray.

First, let us be optimistic (can we? sorry, let me put the noose down here… thank you) because, by Moroccan standards, finance at the PSU is a transparent matter, and far more transparent than any other party on the political spectrum. That is why they look so in disarray. Other parties are certainly in the same situation, but they either cover up for it, and/or receive money -bribes- from the regime. How do you account for the Union Socialiste des Forces Populaires to build a lavish party headquarters in the Hay Ryad cozy suburb? Or for Al Bayane, newspaper spokesperson for Parti du Progrès et du Socialisme to have a brand new printing equipment?

But that weakness can, I hope, be turned into a strength: the party can make a pledge never to take legal public funding (it has already outlawed any brown-envelope payments-style from the authorities) and rely solely on individual, collective and corporate donations. While it is still represented in government, their members of parliament could introduce a private members’ bill allowing tax deduction for donation to charities and political organization (including trade-unions). Then, with the help of grass root activists and party leadership, there can be hope to levy money from the affluent as well as the middle and working classes. I am quite sure that there are many sympathizers that would gladly contribute if they are given a chance, and a clear framework to donate and be allowed to follow closely party activities. And precisely because of this traditional transparency, there are little risks of mismanagement, abscond and the like. One might even dream of more and more professionals joining in and reshaping the party into a fighting electoral force.

'Die Partei Hat Immer Recht'. If only...

Let us first determine the costs of such policy. The changes would deal with the following issues: operational assets, past debts, current expenses and human resources

a/ Operational assets: Since the newspaper option is out of the question, the party needs to focus on internet communication. Far from being the dada of political geeks, it is an pre-emptive policy as more and more Moroccans are on the look out for news on the internet. As a matter of evidence, a website like Mamfakinch is turning into an alternative agency news with many internet-users logging on the lookout for news unavailable on traditional media outlet. Lakome, Goud, Youtube, even Big Brother are turning into popular news-hubs. While internet contents are usually quasi-free, hardware costs money. And for every branch to have at least one decent computer might cost dearly. Supposing the party secured a good deal of 130 computers at a reasonable price of 2.500 Dirhams, the total cost of such investment is about 400.000 Dirhams. That could be partly financed with party activists chipping in, but other means of financing are needed.

Computers alone are not enough. There’s also a need for electricity and, above all, internet connection. There’s an additional 400.000 Dirhams too (assuming a minimum internet consumption of MAD150 a month, same for computer electricity consumption). All in total, capital cost is about half a million Dirhams (not to mention the annual expenses of similar amounts). I remember a discussion with an ‘old-style’ activist, two years ago. He told me, with a straight face, that the branches faced high levels of expenditure because they could not systematically send a deputation when meetings were organized, say in Rabat or Casablanca. So, he said, they had to communicate via Fax. I was taken aback, because when such a problem was presented to me, I thought of an obvious choice: ‘Skype‘! Ok, the answer seems ludicrous, but at least it does cut down the fax cost to considerable levels. That was, among others, a clash of generations: I, practical, looking for rapid solutions, and his generation, clinging on to useless decorum (his reply was: ‘well, we need a proof of meeting‘).

There is also a need for cameras. As February 20th events unfolded, and police repression has been recorded against human rights activist (and not, strangely enough, against the hooligans) videos flourished on the internet. I am certainly not advocating for ‘a video camera recorder for every branch’ (for the mere reason that its cost is an unnecessary overkill) However, it seems to me the party adopted the administrative regional boundaries to list its branches. I’d advocate to purchase two camera recorders for populous regions (typically with more than 500 activists) and one per region. I really have no idea what type of camera recorder is suited for demonstrations (or local podcasts and interviews) but a nominal unit price of MAD 2.000 would bring their total cost to MAD 50.000. With microphones, cables, spare batteries, total cost can be priced to MAD 60.000.

Then, there’s transportation: for whatever reason, there is a need for vehicles (large and medium-size vans) as a mobile unit for communications, or to bring activists from neighbouring regions to help their comrades when there’s a campaign, or an election. It can also be part of a caravan touring regions for communications and PR purposes. Let us be modest in our estimates and assume there is a need for only 2 vans. If bought at second-hand price, they would cost, say MAD 150.000.

Finally, and in order to avoid further humiliation from public authorities, party leadership should, in my opinion, buy headquarters (the ground floor of a former Finance Ministry building in Casablanca). A deal can be worked out with the authorities either by paying back all the debt plus a stipend, or by simply writing-off the debt and buying the ground floor at a discounted market value. That would mean about  one million dirhams to say the least (it seems price per square meter at Rue d’Agadir is at least MAD 2.000).

Over all, physical assets investment can be estimated to around 2 million Dirhams (650.000 for tangible assets, and 1 million for party headquarters)

b/ Past Debts: I really have no idea how much money was borrowed in the party’s name. However, I know from past information that rent for party headquarters was about MAD 54.000 had to be paid, and a debt of 900.000 Dirhams from the Anoual incident. With more extrapolation, because the last 3 years of rent were not paid , one can account for another MAD 54.000 as a debt burden. All in all, the party needs to pay for at least 1 Million. very steep.

c/ Current expenses: While this remains a fundamentally local matter, grass-roots activists need to be involved with the basic principles of accounting, i.e. books have to be balanced. expenses need to be accounted for. Bills and receipts need to be kept and stored for future reference. This dangerously bureaucratic streak has at least one upside, it guarantees that local finance is well-managed, and when it fails to do so, it is relatively easier to find out the culprit. So, coming back on the estimate, apart from local headquarters rent -which varies from one region to the other- there’s the expenses for the operational assets, as well as the unexpected rush when unscheduled demonstrations take place, or unforeseen events force local activists to take to the street.

b/ Human Resources: At least at central level, the need for typists, or technicians can be partially alleviated by proposing paid internships for young graduate from typing and IT schools. It is true turnover is likely to be high, and candidates might not be the best choice, but instead of employing full-time staff, MAD 100.000 can be a reasonable budget for human resources (Apparently, Attijari Wafabank pays its interns MAD 2.000, we settle for 1.000, which is still a good deal, considering that internships in Morocco are not paid…)

Collecting donations: Red Cross-style

This is all very well, but were to find the money? What we are talking about here is 2 to 3 Millions in capital cost, and at least 600.000 in annual expenditure. Where can the PSU levy all this money? The first choice is: to go directly to the public and ask for money to support the party. Does it sound like begging? Well… Yes and No. Yes, because the party is in dire financial situation and desperately needs the cash. and No, because if someone agrees to chip in, they are also asked whether they want to keep in touch with their local branch, and by means of a newsletter, kept updated on the party’s activities. Apparently, it is quite feasible, especially when one keeps in mind that there is a need to raise everyday cash of about 1.600dhs all over Morocco. In fact, there’s a need to raise twice as much to cover for central as well as local expenditure. Online donations, party fund-raising, contact and email listings for regular calls for contributions and volunteers, there’s a lot to be done, and the best part of it is that it costs almost nothing (volunteers and activists are soliciting donations for free, and internet communication costs are shared with other operations)  As the Chicago guy once said: ‘Yes, We Can Do It’ (As long as grass-roots activists and volunteers are motivated for, then yes, it is possible)

For more heavy-weight finance, the party will resort to ask big donors, like Karim Tazy, or Miloud Châabi (or even Anas Sefrioui, Mounir Majidi, Othmane Benjelloun, what the hell, we shoot for the starts, right?). The trouble is that it’s a political minefield, for both the donor and the recipient. But then again, donations are not supposed to influence the party’s stand, but merely a helpful hand from wealthy citizens eager to see a political agenda pushed closer to power. Personally, I wouldn’t mind showing up at BMCE headquarters with my tin-cup asking for a big fat check of 1.000.000 dhs 😀 [alternatively, I could be thrown out of the building by security…]

There is big money out there. Whether as an aggregate of small donations (5dhs to 150dhs) or more sizeable (a thousands and more) if not higher figures, in case the system does work.

Now, I’ve written the piece in English, and I don’t think party leaders will read it. I mean I don’t seriously consider these measures because I know they cannot be implemented. I should also stop reading about politics in the Western hemisphere. Why would I be writing about it then, one might ask? Well… I was desperate to avoid a post about February 20th and the ensuing Kafkaesque debates with some ill-educated, sub-cultivated bullock-heads on the need for constitutional reforms…

The Divided Kingdom Of Morocco

Under the veneer of unity, there are deep divisions running through our society; While population on social networks is not fully representative of the whole body, it gives insights of how different, and ultimately defiant the pro and anti demonstrations are.

Before I start elaborating on that, I should confess something: as an expatriate, I am somewhat disconnected. As a matter of principle, I advocate the February 20th, and yet, on Sunday, I will not take to the streets. Does it sound contradictory? It does indeed, up to a point. Demonstrations as a way of voicing frustrations or grievances is not always effective. In fact it is hardly true. But in Moroccan setting, it emerges as the only way to be heard from the power-holders. it’s not exactly the famous ‘ce n’est pas la rue qui gouverne‘ but it is a way to provide for a signal that a sizeable group of citizens want to voice their concerns.

Now, let us not veil ourselves from the fact that revolutions in Tunisia and Egypt, the current upheavals in Libya, Algeria, Bahrain, Yemen and others yet to come, prompted our leaders to have second looks at the current state of things in Morocco. Why would they pour some MAD 15 Billion in subsidizing strategic commodities? Why do they process rapidly the recruitment of unemployed graduates in the civil service? These instances are a blatant evidence that first the policy makers are cautious not to stir trouble and in effect are afraid of any public anger, and second,these last-minute changes are the counter-argument that ‘in Morocco, everything is well’.
I mentioned above that Morocco is divided. Now, internet is the unfettered space were every citizen can voice their opinion whatever its substance and would expect another one to reply. The numerous facebook threads, the posts and tweets are part of a giant cyber-agora, but not necessarily evidence of democracy.

Why so? The main assumption behind a democracy is that every citizen is a fully informed, rational and policy-committed individual, fully aware of all past and present events, which no one can claim to be. So there is little surprise when two sides who disagree quickly reach a fail-safe point beyond which misinformation, derogatory comments and canards fly around. Pro 20/02 are labelled traitors, anarchists, anti-monarchists and mercenaries, while Anti 20/02 are ‘Cyber-makhzenians’ and conservative reactionaries. I honestly cannot claim to be fair in my assessment. And frankly, very few fellow Moroccans can do so.

Where would we be without our ol'faithful? (the one on the right of course...)

The divisive line is one about a dilemma: should one commit to the ideal of democracy and the perspective of change with a random outcome? Or should one stick with a motley consensus and settle for the existing compromise? For anyone in Morocco, the status-quo, however incomplete, unfair and detestable, there are a few perks that go along with it: certainly the upper class has everything to lose if there are changes of the scale of Egypt or Tunisia (and to some extent, so do even middle classes like me). Lower classes, on the other hand, have some sort of trade-off: to the taxi-driver, if the grima-holder loses their rent, so goes down their living. To the low-grade functionary, there are risks to lose a comfortable stipend if anti-corruption rules were enforced vigorously. Even to the unemployed, a fair and democratic government would never put up with the claim to be automatically recruited in public services.

Incidentally, an acquaintance of mine, whom I hold to be politically conservative (close ties to the Union Constitutionnelle, just to give you the gist), told me he was in favour of the 20/02 demonstration, because he felt the King has too much economic power. ‘what about political reforms ?’ I gleefully asked, sensing a premature flip-flops. ‘no, I’m fine with it. What matters is to dilute economic concentration’. I disappointedly abandoned any effort to prove him that both policies go hand in hand. But his reflection on the present debate is eloquent, in the sense that even among each side, motivations are too heterogeneous for the other side to group them under one single banner. Yet it is hard to try to reason when things are so confused, when the state apparatus plays dirty in circulating false rumours on the demonstration. I mean, if it was really a democratic debate, why would official channels try to discredit 20/02? Stands to reason, that.

One would argue that because such demonstration is planned that we found ourselves in such divided setting. That would be quite extraordinary: if Moroccans were so united, such a (relatively) marginal project would have little impact on our unity. No, this is the tip of an iceberg that has been hidden with smokescreens, like our Sahara struggle, the need for economic development at the expenses of political development, and the house-training of the political field as well as the press corps. Whatever the freedom of expression one enjoys in Morocco, the lack of institutional check and balances to the almighty monarchical power makes it difficult to even consider policy to be applicable if they are not run through the royal cabinet et/or consultancy firms. What good is democracy and freedom of expression if the institutions tasked with implement them are dysfunctional? And here lies the nexus of the current problem: while pro 20/02 are confident and optimistic about the changes a constitutional reform would have on the political powers (hopefully the whole political spectrum), anti 20/02 are more comfortable with the current state of things, because they got used to it, or because of attached perks.

There’s an anecdote that proves my point: a friend from childhood vehemently put the case to me that His Majesty is doing His best in changing things in Morocco. Now, I am sure he does, but the fact my friend volunteered that statement proves one thing: that she lost confidence in the current institutions -as I do- but reaches another conclusion: instead of renewing them, why not rely on the one considered to be functional, and efficient too?

What about the silent majority? Those that do not have access to facebook, twitter or blogoma? What about those that rely solely on newspapers, TV news and rumours to update themselves on the Moroccan news? Are they fundamentally for or against such project? In the absence of reliable statistics, there’s little to be said about their mood, and any comments on their opinions would be idle speculation, and anyone claiming to capture their mood is at best a charlatan, whatever side they might be in. Plus even those on the internet were misinformed about the aim of such demonstration (constitutional reforms? really? is it that serious to be charged with treason for advocating more powers to the representative institutions?), portrayed as a plot to circulate republican slogans, to stir trouble in the Sahara, and God knows what else.

Playing dirty: the young lady on the video is not the one hugging El-Marrackchi (how can we account for the 5 years differences?), and, well, has anyone ever visited Notre Dame of Rabat? It's a beautiful site really.

Whatever efforts put into informing internet-users and even the wider public, misinformation, intoxication -as the intelligence boffins would say- is running high. Plus in troubled times, the less politically committed usually wait by and look on as events unfold. Who would blame them? Plus numbers in absolute terms are not relevant. What matters is how people actually take to the street, how they behaved, and how widespread the protest is going to be.

I don’t know, but if Casablanca and other large Moroccan cities less than dozens of thousands demonstrators took to the street, that would be a storm in a teacup. A rule of thumb I don’t claim to be representative, reliable or normative, though.
On a less conciliatory tone, there are alarming news that pro 20/02 figureheads are being harassed and abused by the police. And I am not referring to children, but to party activists, known for their stand on constitutional reform. The regime seems to be preparing for pre-emptive measures, a scare/intimidation campaign in order to deflate the number of potential demonstrators, and in effect, putting the halt on a basic constitutional right.

I have to say, when the shit hits the fan, I am glad to revert to moderate. Or rather, I am glad to look moderate when compared to others 🙂 But on the other hand, I am sadden by the fact that because the regime has been deaf to grievances of moderates like me on economic and constitutional reforms.
In any case, we need this demonstration: the timing is right, because it puts pressure on our government (the official and the actual) to seriously  consider reforms. At the moment the top brass are messing about with subsidies to calm things down, but this does not help in the long run (for one, I foresee even greater troubles ahead, when all this borrowed money is due to be paid back). The timing is good because in all North Africa, and in the Middle East, leaders are finally aware that the cup is bare, and that economic growth alone is utterly inefficient in stifling dissent, or keeping the rabble under control.

Governments should be afraid of their people, not the reverse.

Best of luck to the demonstrators, may they enjoy a festive and peaceful Sunday (including the security forces)

NB: on a different note, I shall drop political matters for the time being, on this blog and elsewhere (mainly because my views are usually very clannish and divisive) and concentrate on economics and history.

Do We Need Unemployment Benefits?

What a bold question! Well, I assume it is. Because the following will sound pretty strange from a self-confessed left-wing radical, who belongs to a political side that is known to be keen on supporting the unemployed, and in the Moroccan case, very close to the unemployed graduate movement. Therefore, do allow me to put in a disclaimer: I absolutely feel sympathy towards the unemployed movement, but I disagree with their almost fetishist obsession with jobs in the civil service. Indeed, constitutional rights allow for any citizen to apply for a job in the public sector. However, this right is narrowed down by the law, then by administrative regulations. It seems that even the idea of an entrance exam is too much for the most extreme of them to bear.

Now that this matter is settled, let us turn to the idea itself; Why would Morocco need an unemployed benefits program? First, because the bulk of our unemployed population is not voluntary on the dole. They are genuinely looking for a job, and for many of them, the underground economy is providing for their living. Benefits, when properly designed and applied would allow them to live in dignity, and look for proper jobs. The way I see it, the benefits are there not to disturb some market mechanisms that are yet to be defined and enforced, but to set the standards for better labour-management relationship, and for the public authorities to encourage individuals to move from underground to legal, ‘official’ economy.

Let us first consider the figures on unemployment and inflation. The relationship is considered to be cardinal in mainstream academia. The well-known NAIRU (non accelerating inflation rate of unemployment) is a good start for us to estimate how deep involuntary unemployment is, and thus provide the public authorities with the financial means to deal with it.

Anti-inflationary policies have been more successful. Unemployment however, not so much. Or is it because of anti-inflationary policies? (World Bank & RDH Figures)

When one considers the relatively recent historical series on inflation and unemployment, one is surprised to notice that there was a surprisingly effective effort put into taming inflation (and Morocco can pride itself to be in a full deflation mode without much damage to growth) while policies, when carried out, look despairingly ineffective in view of the near stable level of unemployment. The question remains: why does unemployment remain that high? In a precedent post, I mentioned data that ruled out any serious effect minimum wage might have. There is also little, if no evidence pointing to relationship between labour legislation and unemployment. If anything, it is favourable to the management, especially in the important economic sectors like textile, Telecom services and other outsourced services. I should elaborate on that later on.

When simple econometric computations are run on unemployment and inflation, results look a bit inconclusive. Indeed, the Moroccan Philips Curve does not look like the theoretical one, and if anything, any correlation is too low and too insignificant to be of use. Though it might be too early to tell, there seems to be no direct link between anti-inflationary policies and unemployment. It does however deny policy makers from such argument.

They failed in addressing the problem because they did not devise the proper policies, not because of the so-called necessary trade-off between inflation and unemployment. To their credit, it must be pointed out that a particular sub-population was not fully cooperative; in fact, it was adamant in its claim for public service recruitment.

Moving on. The current level of unemployment can be reduced. Why so? Because even with sketchy econometric models, there is a way to compute the level of unemployed people that can be put to jobs. If I may direct the reader’s attention to a post I wrote on estimating the output gap for the Moroccan economy, the computations reached the conclusion that, as late as 2009, the Moroccan factory is producing below its productive capacity. The terms of the equation are simple: because output gap is negative, the economy can take on more labour so as to lift-up real GDP until the potential GDP is reached. We know the existing level of labour stock, we know exactly (well, with a confidence interval of 95%) how much labour adds to GDP, there remains only to compute how much is needed from the unemployed to bridge that gap in labour force. Estimates are such that an additional 5 basis points to the workforce  –ceteris paribus, mainly the capital stock- are needed to bridge the output gap, and certainly much more if capital stock was expanded too. 5% looks a lot (that is, after all, about 53% of the unemployment rate) but then again, because convergence process (the so-called catching-up) with potential output takes time, it remains quite a reasonable target. In absolute terms, that means some 482.000 people would find new jobs. Before I go any further, I must apologize for the sketchy figures, which is mainly due to the data (and my own limited knowledge on the particular field of labour economics)

No particular correlation can be observed from the graph

Now that we know the current level of unemployment can be cured up to 5%, why bother about introducing benefits for those on the dole? First because, just like other vulnerable populations, the public authorities rely on family and tribal solidarity to look after the special needs, the divorcées, the underdogs and the misfits. The large-scale shift in values, the rising individualism (whatever has been said on the matter, RDH surveys can testify) all these changes that are breaking -or already did so- the traditional mould so many people long for (and you know what they are called? reactionaries, that right) and so there’s a need to implement nation-wide programs, like the employment or support benefits. The targeted  population, following the HCP figures, would be as follows: about 700.000 unemployed with little or no qualification, not so much a burden on the nation, considering benefits are usually lower than the minimum wage;

Now, I don’t have much time, nor data to elaborate on how these benefits should be defined (and I think legislation here plays a critical role) but under the assumption of average benefits of MAD 1100 per month per individual is not only workable, but provides invaluable teachings in order to expand the program and protect the left-behind, while encouraging them to fight back and return to work. Incidentally, the whole annual cost for such a scheme is approximately MAD 7 Billion, that is 13% of a wealth tax levy on the millionaires in Morocco (at the low rate of 40%). So in essence, a benefit scheme is perfectly workable, so long as it works as it serves a two-fold objective: first, as a temporary stipend for those unemployed (that would include training costs, job lookout, etc…) and as the nation’s solidarity with those definitely unable to contribute to society.

I should like to devote a piece on how these benefits should be designed so as to encourage rather than subdue work, but there it is: it is high time we grabbed the bull by the horn and start a debate on how efficient benefits schemes should be. Their introduction is now beyond debate, it is a necessity.