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The
press release at the end of the US Federal Reserve’s Open Market
Committee meeting last week did not surprise too much. The markets
underestimated the amount of freshly minted money that the Fed was
willing to throw at the sluggish US economy: US$500bn, instead of the
US$600bn announced. In the end, I think even this is an overkill.

As
far back as August this year, Ben Bernanke, the Federal Reserve
chairman, had presaged his organisation’s commitment to reinvest
principal payments from its securities holdings, while buying
longer-term treasury securities, as part of a process of fostering
“maximum employment and price stability” in the US.

Of
greater moment is the debate over how useful this policy will be. A lot
has changed since the Fed first massively eased monetary conditions in
the US in response to the Great Recession. US banks, for one, are back
to their profitable old ways. They may not be lending as much today as
they did pre-crisis, but that’s the consequence of a different order of
things, and not because their balance sheets are burdened. Having only
recently had their chestnuts so dramatically pulled out of the fire, it
would be foolhardy for any to return to the fireside as closely as they
got last time, just because the Fed’s say so.

The
problem, however, with much of the debate on the pros and cons of this
second round of quantitative easing, especially in the US, is how
arcane it has gotten.

On
the strength of this alone, I rue the day when authorities here would
cite the US’ example, as reason to do the same here. Not just is it
still not so clear amongst US policy wonks that this is the best way
out of the current difficulty, with employment creation in the United
States, you indeed get the sense that even with the Fed, the assurances
are not so strong on the correctness of this policy trajectory.

Rather,
having run out of ammunition, and confronting an intractable problem,
the monetary authorities in the US, unwilling to sit and twiddle their
thumbs while their corner of “Rome” burns, have decided to throw the
kitchen sink at the problem. It may yet work! In the United States of
America.

Not
here! Same symptoms, though: no jobs, no new investment in fixed
assets, inventory stock remains flat, and a restive citizenry. But with
this big difference: our economy is ticking at fairly decent pace –
7.4% this year, and another 8.6% in 2011 (if you believe government’s
number crunchers, that is). Again, all of the growth in our case is
from a pretty low base.

There
is an additional difficulty in all of this. Reference to practice in
places like the United States of America is regularly excused in terms
of the need to apply global best practices to domestic affairs. This
trend has strengthened of late, as sections of the diaspora, victims of
the global financial crisis, return home. It is difficult, as it were,
to live with the “from the pulpit” mindset of this class of Nigerians.
Harder still to persuade the “returnees” of the fact that the failure
of the Nigerian state is not the consequence of unfamiliarity with
“global best practices.”

Instead,
our leaders have made a conscious choice, and the terms of a social
compact implicitly accented to by all segments of the populace – an
agreement that spares the middle class and all other strata of society
above it the full burden of the consequences of our leaders choices –
makes it easy to live like this.

Moreover,
it is to the consequences of our preferred lifestyle that we must turn
in search of resolution, rather than to practice elsewhere. Urban
unemployment in Nigeria is put at 25%. It is somewhat higher
nationally. Amongst the most important (since it is the largest)
demographic group, the 15 – 25 years old, unemployment stands at 58%.

Underemployment
is not usually measured here, but anecdotal evidence would suggest that
it is a major worry. What passes for manufacturing is increasingly no
more sophisticated than the Asian sweatshops that were the butt of
western environmental and fair labour activists in the 70s and 80s.

In
other words, we have local constraints, whose effect on the economy is
more perverse, than the application of global practices to their
solution could be salutary.