What’s Left in Morocco? The Case For Progressive, Ambitious and Assertive Economic Policies
Call me pretentious, effete intellectual, but I deplore the absence of a comparable figure with a narrative close to that of Ed Ball‘s in the Moroccan political discourse: the bare-knuckled, assertive, even aggressive economic message pounded away at the media, the established government and those who tend to disparage the left-wingers as either bleeding-heart liberal unable to go beyond the nice but vague rethoric and principles, or corrupt career politicians driven with an insatiable hunger for power and wealth.
The late 1950s were about gaining economic independence: big government was needed to monitor and smooth the transition from a French-controlled economy to a more ‘national’, domestic economy. Abderrahim Bouabid, during his tenure as Finances Minister and then Vice-Head of Cabinet (with Premiers M’barek Bekkaï, Ahmed Balafrej and Abdellah Ibrahim) produced what could well be the most prolific executive legislation, ranging from creation of Dirham Currency to that of the future Bank Al Maghrib Central Bank, and various institutions, among others the modern Office des Changes to monitor flows of foreign capital, and make sure the financial instruments needed to carry out monetary policy are mastered and under domestic control. That gilded age of the Left of sorts needs to be restored, not with the same means, but with the same spirit, in resolution and assertiveness.
Big government, strangely enough, is favoured both by the Left (extending as far as Annahj far-left) and Makhzen traditionalists: a strong centre is needed to insure one or the other’s political and economic agenda is well executed. The core difference in their economics matters very little at the end: whether concentrated with a small nucleus of wealthy individuals (the Right and the ongoing pursued policy higher up are keen on supply-side economics) or a core of activists-bureaucrats (The left) there is very little difference but in the quality of the oligarchy.
Half a century of centralized decision-making and, even worse, centralized way of thinking has made public services in Morocco accountable to no one, with ordinary, median/average citizens at the receiving end of both administrative carelessness and more concentrated income distribution (in 1985, Gini Income Index was 0.36; in 2010, it was 0.46) So the justification by the Left of big government and burdensome regulations is void: it did not prevent private monopolies and special interests from taking a slice of the national cake, an increasing slice on top of it, guaranteed and protected by regulations and legislation.
Perhaps the Moroccan Left and Liberals need to accommodate burdensome and embarrassing allies: the corrupt and shady Unions, the powerful corporatist interests they support and count on (Lawyers, for one) and finally the once-loyal support of lower echelon in the Civil Service. The problem with such coalition is that it lacks the actual strength -never mind the consistency- to impose its supposedly progressive agenda; Regarding unions, their massive and disruptive potential has waned and they can no longer muster enough resources to stage demonstrations, let alone force deals for everyone to benefit from. The same goes for the special interest groups, strong enough to block attempts to force the status-quo, but too weak and divided to formulate and impose clear a coherent set of policies.
A coalition needs to be built around the ideals of progress, economic advancement and social justice – in that order. I cannot claim to produce reliable surveys on that topic, but it seems to me that fellow Moroccans I happen to engage with in discussions still view Socialism (that word really has gone out of fashion, hasn’t it?) and its economic policies as mainly Social, i.e. subsidizing the poor and soothing social resentment from inequalities; In other words, my non-representative sample does not believe Socialism can deliver on the economy: high growth, good jobs and high standards of living. I argue it can, but with unorthodox means. That coalition – Unions, Corporatist Interests and the weakened Middle Classes– is the key to the new progressive economic policies.
Food And Balance Of Trade: Imports of Wheat in Morocco amounted in 2010 to MAD 11.85Bn i.e. about 7.5% of Trade Balance deficit. The value per Imported Tone for Wheat is MAD 2.15 per Kg. More importantly, it has also imported MAD 93.6 Mln in various types of flour, We do import some fish flour; around 3 Tons – For all Morocco. And we export 4kgs (filed under FARINE,POUDRE EN PELLETS DE POISSON PR ALIMENTATION HUMAINE). That’s both laughable and symptomatic of a misguided choice of resources allocations.
As per FAO documents, Fish Flour provides superior nutrition value, because it can, if efficiently implemented, make up for a chronically low meat/protein consumption among Moroccan households, thus providing a cheaper and more popular alternative to traditional sources of meat consumption:
Why is FPC a good protein source?
First, of course, because it is concentrated; untreated and unprocessed foods do not generally contain more than about 20 percent protein, whereas FPC contains about 80 per cent. Secondly, the quality of the protein is high; by this is meant that the amino acids which make up the protein are present in just the right balance for human nutrition. Other foods such as cereals may contain useful amounts of protein but are frequently deficient in one or more of the amino acids that are essential for growth.
And there goes a policy that can win favour with a lot of people: all consumers will welcome a new class of flour that would enhance their consumption and increase their standard of living, producers and fisheries would expand their business to meet the demand, and prices of poultry, beef and lamb would decrease too. The one question remains: does Morocco have enough resources to meet the demand of 32 Mln hungry Moroccans?
According to the Russian Soy-Bean Company “Russoya” , The ratio for production is around 1/6, meaning there is a need for 6 Tons of raw fish to produce 1 Ton of pure fish flour. Morocco exports 222,000 Tons of Fishery at a unitary price value of MAD 29 per exported kilogram. If it switches to integral fish flour, it can produce 37,000 Tons at a unitary price of MAD 75 per exported kilogram, or even match up to 126 kg per imported kilogram. This is a win-win policy: in trade, Morocco saves up on differential traded value (on terms of trade) in domestic consumption, it increases protein consumption to higher levels, and in business, it allows for thriving companies to fish, condition and sell the product.
The 2001 HCP survey on household consumption points out that flour makes up for 55% of all wheat household consumption – and that percentage goes higher with the lower-income deciles: the poorer a household, the higher its consumption of flour – 70% for the bottom 20%. By the same findings, poorer households have a lower meat/protein consumption: there is a 1:64 ratio between the bottom and top 20% in terms of protein consumption. Perhaps the wisest and most straightforward policy to increase protein consumption across the board is simply to stop subsidizing wheat flour, and instead improve storage and distribution facilities for Fish flour. The trade-off is such that any anticipated costs for increasing production capacities -for domestic resources- would still be outweighed by the compensation fund allocation to wheat flour -an international commodity with volatile prices.
The rest is history: improving nutrition improves workforce, productivity, growth and leads to an increase in standards of living.
Small Business vs Big Business: I tried in a post earlier this year to explain that smaller businesses tend to do better in valuation and results. We need to do away with the myth of “National Champions” because they only contribute to accumulate wealth with little or no real investment in the economy. Smaller businesses on the other hand, take risks and try to make something real with positive impact on communities and individuals.
The admission that capitalism is good does not preclude the reservation on the current economic structure of Moroccan business, which is neither capitalism nor beneficial to the many – only to the very few. MASI index -dominated by juggernauts- systematically did worse when compared to smaller cap-based indexes this year.
Still and all, access to liquidity is heavily skewed towards large businesses; credit rationing, with its adverse effects, turns out to harm smaller and riskier businesses, not because of their inherent risk, but because all liquidity has been captured by failing, larger companies. Regulations as well as dangerous acquaintances between businesses and banks makes access to liquidity discriminatory.
Parallel to an overhaul in credit allocation, there is a need to take on private monopolies and oligopolies: these harm collective welfare and destroy utility in the process: in Telecommunications, Edible food and other sectors, consumers pay more than they should in a more competitive market. Taking on business special interests means breaking up monopolies and concentrated holdings: SNI (formerly ONA-SNI), for instance goes too far in extending its hold on various business, ranging from Air Travel, Milk and Derivatives, Edible Oils, to the Banking industry. It is only populist in naming and shaming particular businesses, but the positive effects of a less concentrated and more competitive market setting will undoubtedly benefit everyone, from unions to end-users.
Agriculture, Taxation with Representation: tax exemption on agricultural products denotes of an obsolete, neoclassical mind-setting, if not outright narrow political calculations to keep off some lucrative rents going on. Taxation, contrary to a belief only too often held by many Moroccans, is not the modern equivalent of a punitive Harka expedition, a fiscal exaction of sorts; it is a policy instrument, that intervenes either to redistribute social surplus or to provide resources to public authorities so as to help what it perceives to be a potential new frontier. Both elements are designed within a political agenda, whose chief executive implements because they have a popular mandate for it.
Agricultural taxation will help overcome its biggest problem: estate domains; because Agrarian Reform still has not gone out of style, the progressive policy seeks to clarify, to introduce transparency on who owns what, on how collective ownership is defined. Because as long as no proper and serious tax proposal is introduced, as long as the tax moratorium is decreed -until 2013, that is- only big, urban-dwellers, export-oriented wealthy farmers will benefit from the opaque estate regulations. The point made earlier on breaking up monopolies fully applies to Agriculture as well.
Breaking the ceiling of Potential Growth: this topic is less obvious to policy-makers because it outlives their short political lifespan; it is about the general trend of education, research, finding ways to improve production and productivity, in short, the institutional elements fit to guarantee a solid base for growth and wealth creation. These are the issues where politics, the rule of law and economic, practical policies meet: the challenge to lay ahead is to produce adequate legislative framework to guarantee the rule of law and minimize administrative discretion over private ventures, to provide efficient and talented skilled workforce with good education and stable prospects, for both labour and business, and finally to find by ourselves, the perpetual ways to improve output and ensure growth does not do away.