ENUMERATION AND SNAKE OIL SALESMAN

Census can't help in planning for delivery of goods, services

Enumeration is devoid of economic calculation. And in the absence of a pricing system, central planners are incapable of efficiently allocating scarce resources among competing ends.

In Summary

• It cost Sh18.5 billion to generate information on how many and what type of housing units we need, how many hospital beds we require, or even how much the private sector needs to invest in the production and delivery of goods and services.

• I would ask you to raise your hand if your mama mboga has ever conducted a census in your hood to calculate how much food she needs to stock for her customers.

Kenya National Bureau Of Statistics Director General Zachary Mwangi with Planning PS Julius Muia during the launch of 2019 economic survey in Nairobi on Thursday, April 25
Kenya National Bureau Of Statistics Director General Zachary Mwangi with Planning PS Julius Muia during the launch of 2019 economic survey in Nairobi on Thursday, April 25
Image: Enos Teche

‘Have you been counted or enumerated?’ Depending on your degree of bourgeoisie or pedigree, this has become the trending greeting in the nation.

The State concluded its eighth national population and housing census since the first one in 1948. The Kenya National Bureau of Statistics, the institution responsible for this undertaking, has informed us that the census forms the basis for planning of allocation of resources, and the development of plans to grow the economy and improve living standards. They have underscored that evidence-based decision making, informs planners, provides guidance and justification of approaches to take in developing various sectors of development, for the efficient management of countries.

Being enumerated is a costly affair. It cost Sh18.5 billion to generate information on how many and what type of housing units we need, how many hospital beds we require, or even how much the private sector needs to invest in the production and delivery of goods and services, respectively. This cost is a conservative estimate, because the jury is still out on how much the economy suffered due to lost revenue, occasioned by the decree to close bars and entertainment places on the census reference night.

COSTLY

Being enumerated is a costly affair. It cost Sh18.5 billion to generate information on how many and what type of housing units we need, how many hospital beds we require, or even how much the private sector needs to invest in the production and delivery of goods and services, respectively.

If this was a banking hall dialogue, I would ask you to raise your hand if your mama mboga has ever conducted a census in your hood to calculate how much food she needs to stock for her customers. I would also have asked the landlords in the room for a show of hands if they first conducted a census to determine how many bedsitters they will construct. I doubt there would be any show of hands.

Yet, have you ever spent a sleepless night wondering if your mama mboga will miscalculate the quantity of tomatoes needed? Has your landlord ever put out an advertisement claiming that without knowing how many people are in need of houses, he or she would not know how many units to construct?

Begs the question, how does your mama mboga know how many bunches of Sukuma wiki to stock?

The notion that it is imperative to count heads of people to ensure production and delivery of the right quantity of goods and services is a falsifiable hypothesis. It is true the State cannot know how many houses or hospital beds they can provide without population data. But, it is equally true that the State cannot know how many housing units or hospital beds they can provide with population data either. And this is not because it is hiding a dirty little secret. It is simply because they can’t.

In economic-speak, we call this the impossibility of economic calculation. It is an impracticability that manifests itself through the State’s central planners who determine what goods and services should be produced, the quantities that should be produced, and the prices at which they will be sold. They make these decisions in the belief that the type of production, quantities and cost of goods and services, are set by producers and sellers based on the number of people in need.

If it was possible to determine what type and quantity of goods and services were in demand simply by counting the consumers, the State and businesses would never fail, going by the number of times the census exercise has been undertaken. All they would need to do is ask consumers what they wanted, then produce the exact amount. And we would all be living in utopia with our basic needs fully met.

But enumeration only gives you an absolute quantity, but not information on consumer demand. The latter is dictated by a variable called price. To produce goods and services, one must pay for the factors of production such as wages, rent to land and interests to capital. The pay is informed by prices of raw materials to produce capital and consumer goods. If there is scarcity of a raw material, consequently, the commodity price will increase and its demand will fall. Therefore, prices inform producers what raw materials to use for production, what quantities to produce based on demand, and what price to charge based on consumer adjusted behaviour.

 

The State does not pay for any factors of production. It operates in the absence of a price system. They don’t pay wages, rent or interests. We do, through our taxes.

The State wants to build us houses to ease scarcity. They have told us the census will help them know how many units they need to construct. So how will the central planners, by merely counting people, and in the absence of a price system, know which materials to use for construction, how much of each should be used, how many units should be constructed, and at what cost they should be sold to the taxpayer?

This is the same dilemma that befalls corrupt individuals who sanitise their corrupt proceeds through real estate. We do not have a shortage of unoccupied high-rise apartments, particularly in upmarket suburbia. This is because the supply is not informed by a price system; but rather by a need to decontaminate the ill-gotten cash.

My submission is, therefore, that census cannot help in planning for the delivery of goods and services of capital and consumer goods, because enumeration is devoid of economic calculation. And no matter how well-intentioned the central planners are, in the absence of a pricing system, they are incapable of efficiently allocating scarce resources among competing ends. Resultantly, malinvestment by the State soon follows.

The role of the State should therefore not be to plan and provide for capital and consumer goods. They should embrace and employ the principle of subsidiarity where a larger and greater body should not exercise the functions that can be carried out more effectively by a smaller and lesser institution in achieving the desired objective.

In this regard, the State should leave the production and delivery of capital and consumer goods to the private sector and individuals, by incentivising them through more friendly taxation, regulations, legislation and ease of doing business.

Finally, my unsolicited advice to Wanjiku is: Beware of your snake oil salesman-cum-politician, when he asks you to go back to your roots to be tallied, so that resources and development can follow you to your village.

In the latter half of the 19th Century, there was a gold rush in California, US. Chinese immigrants arrived to seek their fortune as indentured laborers for the Transcontinental Railroad. Among the medicinal traditions they brought was snake oil made from mildly venomous Chinese water snakes. The oil is rich in omega-3 acids and was known to reduce inflammation from arthritis, bursitis or sore muscles. Due to its effectiveness, it was in high demand.

Many Americans wanted to cash in on this venture; and because there were no water snakes in the American West, they used rattlesnakes and duped consumers that it was snake oil. Snake oil thus because a euphemism for promising what you cannot deliver.

Imperfect action beats perfect planning - Sharon Pearson