They say coincidence is when God chooses to remain anonymous. Kiambu is county number 22. The Titanic, a British luxury liner ship, was considered to be unsinkable due to its safety features. Onboard were 2,200 people and at 2:20am, while travelling at a speed of 22 knots, it crashed into an iceberg and sank. Some1, 500 people drowned.
Kiambu Governor Ferdinand Waititu is in a catch 22 situation in his efforts to combat the chronic drinking problem by the youth in his county. He is damned if he does and damned if he doesn’t. Truth be told, he ought to be applauded for taking this bull by its horns. And for this, he has received applause and condemnation in equal measure. He has told off his critics, perhaps because some are his political competitors. And conceivably, he could be analysing their resistance to his programme through the political lens.
I am not a politician, so I pose no existential threat to inheriting his throne. Now that we have established that, I invite his government for a candid economic conversation. And should they be impatient to listen to the end, the short answer to the question of whether their approach is effective, is that it is not.
Here is the simple reason. The Bible teaches us in Proverbs 30:16 there are four things that are never satisfied — the grave, the barren womb, the thirsty desert and the blazing fire. Modern professional experts have inadvertently added a fifth — welfare. To put this into context, welfare programmes on poverty in the US ballooned from $107 billion to $688 billion, by 2015. This was a 640 per cent growth. In total, $19 trillion has been spent on these welfare programmes but the problem still persists. The solution to the alcohol menace in Kiambu is being underwritten through welfare.
They have concluded the youth have become alcoholic because they are idle due to unemployment. And in a well-intended response, the government has rolled out a youth environmental cleanup work initiative. As compensation, the youth receive Sh400 per day – Sh300 as wages and Sh100 for breakfast. This amounts to Sh2 million daily or Sh520 million per year for the current 5,000 beneficiaries. An additional Sh70,000 is spent on fuel daily to monitor the programme.
This approach is economically unsound on so many levels. Allow me to explain the unseen icebergs likely to sink this ship.
One, as English economist Arthur Cecil Pigou said, a man is only unemployed when he is both not working and also desires to work. The debilitating condition alcohol leaves its victims in makes it impossible for them to hold down a job. Begs the question, how many of the beneficiaries were both out of work, AND desiring to work?
Two, creating jobs is easy. It’s creating value that is hard. And the purpose of all economic activity is to produce as much value at the lowest cost possible, and with the scarce resources available. And this is the difference between a job and work. Jobs such as cleaning the environment keep people busy. This is tantamount to baby-sitting indolent youth. Where is the value in that?
Three, according to the Pareto principle, half the work or value produced is done by the square root of the people involved. This means of the 5,000 beneficiaries, this programme will impact only 70 of them. So where is the value for money for spending Sh7.4 million per person per year?
Four, when the law prohibits production and sale of a good, the winners are the ‘illegal’ producers. With prohibition, less of the product is produced or distributed because of the high risks involved. This causes scarcity and when goods are scarce, their prices increase. And because the youth have become addicted, they cannot do without it. It forces them to engage in riskier means of acquiring the extra money to buy it. So who gains? It becomes more lucrative for the ‘illegal’ producer to operate under a prohibitionist law.
Five, welfare largely produces unintended rewards. When incentives of being on welfare rise, more people desire to be part of the programme. There is no doubt there are more unemployed youths in Kiambu. However, they do not earn the Sh400 per day simply because it is a conditional offer — being an alcoholic. With such an incentive, it is reasonable to expect that some not hitherto predisposed to drinking, will advertently become alcoholics to benefit from this initiative. Hence, it no longer becomes the pursuit of a positive, but the avoidance of a negative. Resultantly, the number of youth alcoholics rises rather than decreases.
Six, there are people whose livelihoods depend on the youth remaining alcoholic. These are the vendors and staff from whom services such as youth breakfast, fuel, and programmer monitoring have been procured. They have an incentive to perpetuate the alcohol problem. The question that then begs is, to what extent do the needs of all stakeholders altruistically converge?
There are more icebergs that could be highlighted but I rest my case here and submit that there could be another way.
Overtly partner with the ‘illegal’ investors in the priorities outlined in the County Investment Development Plan. Inject the Sh520 million directly into these priorities and mandate they employ the county youth. Formal employment will offer them on the job skills that will help them create value for others, thereby creating wealth for themselves. It will also discipline them on time keeping and obeying rules and regulations, and condition them to be responsible adults with a sense of pride as they positively contribute to the society. This is not only sustainable, but will also grow the economy of the county.
Finally, my unsolicited advice to Kiambu governor is, no matter how great and noble the effort, some things just take time. You cannot produce a baby in one month by impregnating nine women.
If things go wrong, don’t go with them – Roger Babson