nazret.com
 

« Ethiopia: Looking for Bob Marley and Fela KutiEthiopia: The Cable from Meles Zenawi to Laurent Koudou Gbagbo: A Satire »

Ethiopia: The Futility and Damaging Effects of Price Control

advertisement

01/09/11

  11:31:01 pm, by admin, 3191 words  
Categories: Ethiopia, Seid Hassan

Ethiopia: The Futility and Damaging Effects of Price Control

Ethiopia: The Futility and Damaging Effects of Price Control

By Seid Hassan*

I. INTRODUCTION

The government of Meles Zenawi announced that it was imposing price caps on select merchandize goods, the first round of the imposition affecting 18 food items as of January 6th, 2011. After gathering several hundred local merchants at the meeting hall of the PM Office, Messrs. Zenawi, Melaku Fanta who is the general director of Ethiopian Revenue and Customs Authority and State Minister of Trade, Ahmed Tusa, accused the businessmen and businesswomen of price gauging, hoarding and engaging in unhealthy competition. The three men said that the merchants were exploiting the existing weak government regulations while at the same time using world-wide price hikes and the recent devaluation of the birr as an excuse to jack up the prices of their goods. Concurrent with the imposition of caps on prices of certain commodities, Messrs. Zenawi, Fanta and Tusa also vowed to “abolish this market disorder” and enhance competition down the road. Until the newly installed proclamation is put to effect to abolish the market disorder, they told the merchants that the authorities would use price caps and “cutting the fingers” of merchants in the short-term. For anyone who watched the entire taunting process and Mr. Meles’ rants as well as the stunned faces and complete silence of the 584 businessmen and women, he/she would realize that the gathered attendee s were really frightened. They had to be reticent because they knew that Meles has made good on his “I will cut your fingers” threats in the past. They knew that he has sent quite a few of them (most of his victims being non-TPLF/EPRDF members, and those whom he “did not like the color of their eyes”) to prison and closed down their businesses. The reproach was also accompanied with incredible and empty threats, two of the empty threats being his intent to supply the goods using the state-owned businesses and foreign suppliers.

Economists are generally opposed to price controls except in special circumstances (during emergencies). It is not that erecting price caps under emergencies would be without negative effects. It is just that, in crises situations, the positive effects of price controls could outweigh their negative effects. For example, imposing price caps could be necessary and morally acceptable in unusual circumstances such as during wars, unexpected crop failures, and natural disasters. Such special measures may be necessary so that some unscrupulous individuals could not use the sudden and unexpected situations to create big windfall gains for them while hurting so many others. Temporary price controls could also be effective in managing the country’s reserves, such as to buy time until the reserves are put into the supply networks. Nonetheless, both economic theory and the experiences of many nations who used price controls strongly indicate that using price caps as a panacea for a rising inflation is counterproductive and in most cases, the “cure” is more damaging than the disease. In the Ethiopian case, using price controls in the face a recent massively devalued birr is certainly a fool’s errand on the part of the authorities.

The purpose of this short commentary is to explain to the general public that, even though imposing price caps on certain goods may seem to be attractive to consumers, such measures, in general, will end up harming the very people they were intended to help. I will briefly illustrate the unintended (deleterious) effects of price controls in part II below. At this point, I would like to draw the reader’s attention to this important point: That the main culprits (root causes) of price hikes are SHORTAGES already existing in the system! Price hikes, especially those which appear to occur all over a sudden, are known to delude authorities (and consumers) as if they were artificially created by merchants. Authorities introduce price controls to appease angry consumers while at the same time shifting the blame towards the business sector. Once anger and confusion are in play, it is not uncommon to observe authorities exploiting the public’s anger towards their favor, one of their common tools being the Scapegoating of merchants for the price hikes. Let’s turn the now to the secondary effects of price controls, but those readers who are less interested in knowing the unintended and deleterious effects of price caps, they can skip Part II below, without much loss, and read the last two sections.

II. DELETERIOUS EFFECTS OF PRICE CONTROLS (in brief)

Price caps force producers to sell the products under unacceptable and, in general, below equilibrium prices. The reader is reminded that acceptable prices include both real (differences between cost and revenue) and imagined ones, such as the price of uncertainty existing within the system. Thanks to the price caps, the underpriced goods will now be available to the buyer without reflecting the true cost of producing them. Any good that is being sold without reflecting the true costs of production would be produced inefficiently. Since some merchants will be reluctant to sell their goods below the true market price (in addition to the fears), less trade is created and this is one form of the inefficiencies that is created by the price control measures.

Price caps kill the incentives to produce the goods that are under the price caps. The price caps also motivate producers to produce other goods that they think are more profitable and that are not under the government’s radar for price controls. This will result in resource misallocation and inefficiencies. In the end, less and less of the highly valued goods will now be available to the consumers, which hurts consumer welfare.

Price controls force producers to supply mostly low quality products into the market, which may lead the economy to be filled with lower quality products than would be otherwise. The process would create dissatisfaction on the part of the consumers. Economic history has shown that such consumer dissatisfaction, in addition to being inefficient, would force consumers to shift their attention to foreign-made goods, which could only be obtained in the black market at times. In the Ethiopian case, the price caps may help the cheap and low quality Chinese products.

As was evident from the practices of former socialist regimes that included Ethiopia, price caps exacerbate the existing shortages. When this happens, as Ethiopians who lived during the Derg’s reign mournfully remember it well, products are distributed on the first-come, first-served basis, thereby increasing the number of hours for queuing. This wasted time spent queuing (opportunity cost) lowers consumer welfare.

If the price caps happen to be too low, the intervention could increase more demand for the underpriced products. In process, the low prices would allow and motivate more consumers, including poor fellows like myself, to desire more of them, but with so many people being anxious to buy the products at the controlled price, the process makes the already existing shortages to become even worse. Fearing the newly enacted laws and consumer backlash, merchants and suppliers may continue to sell their products at the regulated prices, but history has revealed that they sell them mostly to their favored customers. Such favored customers are usually “good neighbors”, relatives, friends, and the politically well-connected. In short, the price controls create nepotism. Since the government can only observe prices being sold at the regulated prices, it will have no basis to accuse the merchants for violating the law. In case you are tempted to tell me that the government will go after those who discriminate between consumers, you will be wrong because such a practice will be beyond and above the newly enacted law. Even if it does, prosecuting merchants for discrimination will be both difficult and arbitrary, and by trying to regulate the difficult human behavior, the regime will be introducing another element into the equation.

Price controls most certainly create black markets, thereby encouraging people to break the laws when they try to obtain the goods which have become increasingly scarce, thanks mainly to the price control measures. This in the long-run motivates people to disrespect other laws. Economic history has revealed that black market prices are much higher than those which would prevail without the price caps. The higher prices reflect the severe shortages as well as other premiums such as compensations for being caught by government authorities (to cover the fines, etc.) Shortages, higher prices and premiums hurt the poor and the less connected more.

Etc. Etc. Etc.

III. WHAT CAUSED THE PRICE HIKES IN ETHIOPIA

In a write –up titled as the “The Causes of the Ethiopian Rampant Inflation Rates” that was made public about three years ago, I argued that the main culprit behind the rising Ethiopian food prices were shortages existing in the system, and not caused by the high demand of Ethiopians who were becoming increasing wealthy, as Prime Minister Zenawi alleged. It is my contention that shortages are still the main culprit behind the current price hikes but we have now a new element into the picture - the massive devaluation of the birr that was implemented beginning September 1, 2010. In fact, what we are observing now was predicted ahead in my highly popular article titled as “The Devaluation of the Birr: A Layman’s Guide.”

As mentioned it in the first paragraph above, the authorities told us that merchants have used market concentration, the recent devaluation of the birr and world-wide price hikes to raise the prices of their goods. Let’s briefly show the absurdity and contradictory nature of their claims. Speaking about the devalued birr first, as I explained and predicted in detail elsewhere, the 20 percent devaluation which took effect beginning September 1st, 2010, in collaboration to uncertainty and anticipated further devaluation of the birr were expected to result in price hikes of 20% or more. In this light, accusing the merchants for the problem that the regime itself has created is not only contradictory, but it is also absurd. Second, while acknowledging the existence of world-wide price hikes, Messrs. Zenawi and Fanta tell us that business leaders could neither engage in speculation, nor are they allowed to using the world-wide price hikes as their signals. Hello! Isn’t using world-wide information signals part and parcel of an entrepreneurial activity? If Ethiopian Commodity Exchange (ECX) and the farmers could use the world-wide price signals, why would it be any different for the merchants? The writer of this commentary has bad news for the authorities: current available data indicate that there are sweeping world-wide price hikes that are already underway and these price hikes will continue as long as there are shortages. And given that the regime’s current policies that are strongly geared towards exports, Ethiopia will be affected by what is happening world-wide. The interconnectedness between world-wide prices and the commodities produced in Ethiopia will intensify as the regime’s policies become effective and these policies change the crop patterns produced in the country (the policies favoring exportable products.) My prediction is that the shift in crop patterns and the introduction and intensification of bio-fuel agricultural products will raise the prices of food items in the country. You get the picture when you add the rising costs of oil prices and bio-fuels, the unchecked growth rates of the Ethiopian population, etc.

Shifting gear towards the claim made about market concentration and the “unhealthy completion” in Ethiopia, one cannot avoid but speculate (hoping that Mr. Zenawi will not cut my fingers for using the word “speculate”), the regime’s already prepared to expropriating private business under the guise of reforming the concentrated market. We saw this taking place during the so-called “Anti-Corruption Campaign” of 2001 that was effectively used to force prominent private sector operators in the trucking industry, coffee export, domestic trade services and insurance close down their businesses and flee the country. As it became evident, that carefully planned and executed exercise allowed party affiliated “endowed” companies to expand their foothold in the Ethiopian economy. As you can remember, Mr. Zenawi in 2009 also accused private coffee traders for hoarding their coffee beans and used the same orchestration to expropriate their coffee beans and to take away their licenses. Some of us cried foul, informing the world that Mr. Zenawi was using his carefully crafted orchestration in order kick out private coffee traders and make room for his regionally owned companies. Unfortunately, our crying of foul received deaf ears, and now that Guna Trading PLC, one of the conglomerates owned by the TPLF, has become a major player in coffee trading since then, the intended transfer of the coffee trading business from private companies to a party-owned conglomerate is almost complete. On January 6, 2011, Messrs. Melaku Fanta and Zenawi told the gathered local business people that the price hikes were caused by a disorganized market system and the practice of illegal wealth accumulation exercise on the part of the traders. In order to give reason for market concentration, Mr. Fanta said that there are 147 flour factories in the country in which case only 50 of them controlled 65 percent of the flour market. “An average of 53 percent of the market in each of the commodity types is controlled by only 30 top businessmen,” Mr. Fanta declared. Frankly speaking, this does not seem to constitute a market concentration to me. Do you think so? The world economy that is filled with an oligopolistic market structure can attest to the fact that a country could enjoy cut throat competition and stellar market performance even in a market that is dominated by less than a handful companies. However, this can only take place in an economic system where the legal system prohibits collusion (tacit or otherwise), and in a system where government muddling is strictly prohibited and enforced, a situation which does not exist in Ethiopia. Now that Mr. Zenawi is telling us that he would abolish the disorganized market system, could this again end up being a tool to be used to annihilate the private flour producers and to make room for the party-owned parastatals? Only time will tell but one cannot rule this out, given the common practices in Ethiopia. For sure, both economic logic and past experience strongly indicate that, in this kind of circumstances, government interference will make things worse, not better. In addition to hindering the voluntary (impartial) exchange process, the endeavor will exacerbate the already existing partiality into the exchange of goods and services. Moreover, in addition of being used to deflect the public’s attention to the root causes of the problem, the exercise is designed to create a rift (conflict) between consumers and businesses.

To repeat, the public needs to understand that the price hikes reflect the existence of shortages and they are not artificially created by greedy merchants. The public should avoid jumping on the bandwagon of accusing merchants using wrong and flimsy excuses suggested by Messrs. Zenawi and Fana. I also urge the public to look into the market concentration that Messrs. Zenawi and Fanta are talking about. I submit to you that nearly all the wholesale trading and transportation are in the hands of a few conglomerates that are owned by ethnic-based parties. In fact, some of the goods that the new price cap is imposed upon, such as sugar, are produced by the state-owned enterprise. Instead pointing their fingers on the state parastatals that they serve as board members, they decided to point their fingers on the merchants. The public also needs to understand that authorizes do not possess magic wands that would give them more advantage in allocating resources, including price hikes, than the free market pricing system set up to serve the interests of the people. For Ethiopians and those of us of Ethiopian origin, we happen to know that Mr. Zenawi has used these kinds of crises to target and attack businesses owned by certain ethnic groups. Unfortunately, I have witnessed such targeted attacks being geared towards a very highly successful and entrepreneurial ethnic group and I am not talking about the ethnic group that I belong here.

IV. CONCLUSION

Right after devaluing the birr by 20 percent, Mr. Zenawi threatened the merchants, telling them that he would pinch them by cutting some of their fingers (effectively, this means sending them to prison and/or closing down their businesses). This is in line with other dictators, such as the Hugo Chavez of Venezuela, who, who in 2007 and many times over, threatened businessmen that he would confiscate their businesses and give them to workers. In mid 2010, that country’s inflation rate was about 30%, the highest in Latin America, and the only nation in the continent whose economy has contracted in consecutive years. Chavez’s policy has failed so miserably that the Venezuelan currency, the bolivar, is being devalued again. In Zimbabwe, the government of Robert Mugabe physically lowered prices and even sent the” police and a pro-government youth militia swept into shops and factories, threatening arrest and worse unless prices were rolled back…” The end result was sheer chaos as “staple foods vanished from store shelves and some merchants reported huge losses.” Sounds familiar? The same fate awaits Meles’ policies and the birr, unless the regime changes its policies and begins to attack the root causes of the price hikes. Price hikes and shortages never are observed in a country experiencing double-digit growth rates, as professed my Mr. Zenawi’s regime, unless of course the double-digit growth rates have been cooked up from their sources (as several anecdotal evidence indicate.). Could these price hikes serve as signals indicating to us that the made-up propaganda growth rates are about to backfire?

It is really pretty hard for one to run a business, particularly in a resource-poor, destitute, and poorly led country like Ethiopia. Even under normal circumstances, it is very difficult to run a private business, for such a venture may lead to disastrous failures resulting in the loss of one’s lifesaving. Knowing that their survivals depend on their loyal customers, businesses don’t like to disappoint their consumers at all. Given this cardinal fact, it is totally ridiculous on the part of the Ethiopian authorities to scapegoat merchants every time they face problems. Businessmen also worry about their successes as well as the risks that confront them, be they current or future, imagined or real. They think about their shareholders to whom that they are accountable for. They constantly think about their long term survivals. Unlike government bureaucrats who receive their regular paychecks, they have to depend on their own dollars. And the livelihoods many people, including their families and their workers can only be guaranteed if they succeed. They have to think about all of these. In addition to the aforementioned challenges they face, Ethiopian businessmen and businesswomen are challenged by the highly nepotistic system which favors regional party owned conglomerates. If this is not enough, imagine being repeatedly bullied by the leader of the country, threatening you to cut your fingers, scapegoating you for the problems the regime itself has created. This is hell, an absolute nightmare and I wonder for how long people can live under such a nightmarish situations.

*The writer is a professor of economics at Murray State University


Related Links


Ethiopia fixes commodity prices to control price hike

76 comments

Comment from: Dynamite [Visitor]
Dynamite

Great piece Dr. Seid! Dictators always look for scapegoat for their failed policies. And they never learn not only from their predecessor’s mistakes but even of their own.

01/10/11 @ 00:12
Comment from: mershiti [Visitor]
mershiti

Mr SEID,
U said ethiopian merchant values its customers greatly and he/she doesn’t wanna disappoint them as their survival solely depends on them…let me tell you something it is easier to talk u have been here for most of your life u know nothing about what is happening in addis…i used to work for ELPA 3 years ago around piasa me and ma freinds who were bankers at local bank around piasa used to eat at MAME restaurant by the arada gieorgis church lunch costed us an average of 10/12 birr before gena tsom,then the guy added 2 birr after the gena tsom was ended we were ok with that 12/14 birr lunch right before fasika tsom started the average lunch went up to 15/16 birr on average we then opposed him he was like our freind and we were shocked to see that change within 2 monthes..but HE DIDN’T CARE..when fasika happened every food(keywet.gomenbesiga,kikil,tibis)were 20 birr and above WE ALL ABANDONED THAT HOUSE…When i was about to move to the states i just wanted to see if their customers were as full as before they were still enjoying lots of customers….so MR. SEID the reason the ethiopian merchants don’t care about their customers is if they lose one they know they will get another but the poor and the civil servant will always pay the price CAN YOU BELIEVE A LUNCH PRICE DOUBLED WITHIN 4 MONTHES(from 10-20 birr)?….i am anti weyane BUT I FULLY SUPPORT THIS MEASURE….yalteneka giligil yawikal yasmesilibhal wud professerachin!!!

01/10/11 @ 00:12
Comment from: justin [Visitor]
justin

Seid Hassan also told us ECX will never work. It should be recalled he said ECX is just a “HYPE". Mr. Seid’s track record on prognosis is quite poor, to put it kindly.

01/10/11 @ 00:14
Comment from: cofused and dazed [Visitor]
cofused and dazed

All those involved in business are not in the business of giving away money.some how they have to make profit.we must know the woyane business empire which controls 70% of the economy is squarely responsible for price hikes.
the woyane thieves(business men..ILMO) are systematically driving
their rivals (honest business men) by
all means bankrupt.the suppliers are controlled and ordered by woyanes and the traders have no other way than reflecting that by increasing prices.

Meles must dismantle all businesses under EPDRF’s control first before pointing his dirty fingers at the merchants.

01/10/11 @ 00:56
Comment from: zazu [Visitor]
zazu

Mr. Seid,

What school did you go to ? even the free market system gets US govt. intervantion once in a while and as needed…you’re trying to intelletuallize this issue way too much..
where was America two years ago ? And look at the market now and the excitement in Wall Street now, you think they’re unhappy ??

No wonder you don’t teach at U of Chicago …

01/10/11 @ 01:15
Comment from: halafi agdami [Visitor]
halafi agdami

Price controls have the adverse effect on supply.demand increases when prices are controlled artificially ,but it is foolish to assume supply will follow likewise.
in short,price control is not a remedy.
the Ethiopian economy is at the mercy of mafia like organization headed by
Meles Zenawi and family.

01/10/11 @ 01:19
Comment from: bereket [Visitor]
bereket

What ever the problem is we were suffering a lot .thanks to the measure taken by EPDRF we can atleast eat 2 times a day.
I dont think you guys have ever been to Ethiopia or have poor relative in here.its really easy to say sth you never experienced.
Mr seid is i think buisness consultant to one of those buisness people who has been sucking the blood of innocent people.

01/10/11 @ 01:21
Comment from: justin [Visitor]
justin

Seid Hassan also told us ECX will never work. It should be recalled Seid said ECX is just a “HYPE". Mr. Seid’s track record on prognosis is quite poor, to put it kindly.

Here is his way off the mark prognasis on ECX:

01/10/11 @ 01:32
Comment from: flulu [Visitor]
flulu

Dr seid mentioned that there is a not inflation and price hike in a country with double digit growth.dear professor how then do you explain the inflation that you see in china a country where there a double digit growth in the last 30 years or more.
I would expect at least balanced article .You never blamed the business community even a single time.From my own experience I know that the ethiopian business community increased prices at every possible incident.
even meles admitted there should be price increase b/c of the devaluation .he said that the price increase is more that what can be accounted by the the devaluation alone.
You mentioned about the sugar companies .we know that the price of sugar when it is out the factories is 80 to 90% lower than its market price.
It is customary in the ethiopian business community to increase their prices whenever they know that salaries are going to be increased by the gov’t to the civil servants.
it is this kind of business community that you are trying to defend.if they can the ethiopain merchants will eat the flesh and bone of ethiopian people alive.
most businessmen in ethiopia have their begnings during the derg era where the practice of short cut ,corruption were so rampant.I will never expect anything good coming out of this people.they always exploit the merit of free market ideal to their advantage.
You are totally biased and one sided.

01/10/11 @ 01:40
Comment from: iwitness [Visitor]
iwitness

you better go and finish your elementary school.you are one of greedy merkato’s guragae.

01/10/11 @ 01:42
Comment from: tew belew! [Visitor]
tew belew!

i’m kind of lost with what woyane is doing now days. as far as i know most of the business in ethio is controlled by woyane & their kadires specially leba azeb.so they should be the one to be blaimed. who els anyway! the devaluation of money can cause the price hike, but woyne never cared for the country except sucking the peoples blood. some day u will spile what ever u sucked. wait for the time to come. when the time comes woyanen ayadirgeng! u guys will pay big price. there is no government existed for ever except God’s kingdome. this is one of the sign for falier. u better start changing things before it gets worest.

01/10/11 @ 02:05
Comment from: bymeno [Visitor]
bymeno

This guy was wrong with so many of his hate filled analysis. Please, don’t waste your time trying understand him.

The last time this crook was in Ethiopia, our population was 25 million. That was how long he was away from Ethiopia.

God Bless Ethiopia!!

01/10/11 @ 02:29
Comment from: Abebe [Visitor]
Abebe

The Good prefacers you are out of you mind we are talking about Ethiopian economy not American or Europeans what kind of quality are you talking? Most of the price cup done was agro products event if I don’t like the economic police of this government this has to be done our merchants lost their chance, you can’t be riche in one day.

01/10/11 @ 03:16
Comment from: Alemayehu [Visitor]
Alemayehu

I think the so called professor is thinking only interms of Theory. Bro ur theory doesn’t work in Ethiopia. We know what price hike means we experienced it you don’t know what you are saying. First u have to understand the real context of Ethiopia before to write something waste like what you did. Eat ur theory.

01/10/11 @ 03:26
Comment from: Alemayehu [Visitor]
Alemayehu

First of all if you know Ethiopia well the price hike is not the result of real shortage. It is the ‘leba’ nature of merchantys in Ethiopia who wants to get reach at the expense of the poor. You said that “Knowing that their survivals depend on their loyal customers, businesses don’t like to disappoint their consumers at all” how do you know. That is what we witnessed. the merchants don’t care about their customer. Because they know that the people don’t have any option rather than paying for the price they are asking. So do you REALLY know what the situation is in Ethiopia. Do you know how many people, let alone who are job less and pensioners, civil servants eat three times a day and have decent cloth? Please I request you to come to ETHIOPIA and see for ur self first before writing such a theory which doesn’t reflect the Ethiopian suituation. I think you or ur relative have a business in Ethiopia who depend on exploiting the poor that might be ur reason to write such an article which is nothing but shows ur poor intelectual understanding of the Ethiopian context.

01/10/11 @ 03:55
Comment from: Imperial Body Guard [Visitor]
Imperial Body Guard

Thankyou Seid,
“To live a full-life and to be thankful for the blessings of God nothing is more rewarding than after having learned to teach your fellow-man, using your talent to teach others. May God guide you in the accomplishment of this task.” Selected Speeches of HIM Negus Haile Selassie I, page 519
“The aim of those leaders that is based on ambition for power and personal gain is one with no firm foundation and will, consequently, crumble easily.” Selected Speeches of his Imperial Majesty Haile Selassie I, page 471
“Every structure must be built on a solid foundation for those constructed otherwise would soon collapse. The proclamation by which We made land grants to the entire Ethiopian people is the foundation of this scheme.” Selected Speeches of his Imperial Majesty Haile Selassie I, page 487
Long Live the Constitutional Monarchy!
Fire burn down the alien imposed federation of secession
Rise with the Lion of Judah!
Gasha for Ethiopians!
Long Live Independent Ethiopia!

01/10/11 @ 04:04
Comment from: Kena Keb [Visitor]
Kena Keb

To most of us who are familiar with the series of previous articles by Seid Hassan,none of us will be surprised to read his reaction in this article as well. Seid Hassan who mockingly called the ECX a “HYPE” raised many eyebrows at the time but as the situation is now, the ECX through the genius of Dr Eleni G/Medhin has proved him disastrously wrong. Not having learnt from his hasted predictions then, he has, in this article, once again furiously attacked the actions taken by the Ethiopian government to control prices on consumer goods and forecasted obvious failure.
By refering to himself as a “poor fellow like myself", he attempts futilely to classify himself with the ordinary low income consumers in Ethiopia who are hurt so much by the price hikes(an attempt to gain sympathy from the readers here obviously!). Using his academic background, he creates a scenario of typical textbook cases but argues far from what the ordinary people in Ethiopia who struggle to make ends meet think and rationalize. By highlighting his concern on “consumer welfare", he tactfully politicizes the whole issue by opting to the trendy hype of fears that China would take over the world market when he expalains it as follows, “In the Ethiopian case, the price caps may help the cheap and low quality Chineese products..).To make this fear more Ethiopian he continues, “targeted attacks being geared towards a very highly successful and entrepreneurial ETHNIC(my emphasis) group…".
Algeria and Tunisia are in the midst of demonstrations and civil unrests on their streets because of high food and other commodity prices which has sadly resulted in the death of some protesters. Is Seid Hassan telling the Ethiopian government to wait until the people,like in Tunisia and Algeria, take to the streets, and disrupt the political stability and economic growth the country has enjoyed since the Derg was ousted?. The anti-Ethiopia diaspora elites will not leave any stone unturned and see this government fail but they forget to understand that the days of the Derg, the EPRP, MEISON and others with whom they are nostalgically attached to will not be reinstated by spreading malicious and unfounded accusations.

Ethiopia shall prosper!!

01/10/11 @ 04:06
Comment from: bombolino [Member]  
bombolino

I donot support woyane but in this case they did something what any responsible government would do. They stepped up big time!!

For this dude to think that the business comunity cares about their customers, he must be joking. ye Ethiopia negade, would kill a customer litrally to make money.

01/10/11 @ 04:49
Comment from: accept-truth although bitter [Visitor]
accept-truth although bitter

I hope the analysis will help to revise and add something to the planned action of the gov’t. I feel controlling price at the same time tackling the root causes of price hike will benefit both the pooor! consumers and merchants.

all the best for ethiopia

01/10/11 @ 05:40
Comment from: sassefa [Member]  
sassefa

Most of the analysis posted by Dr.Seid is of classic economics text book quality. I am sure any one with even a basic college level economics class would agree to the fact that price controls never solve problems of rampant inflation. However, it can also be hard to defend the ethiopian business men grossly. Let’s not forget Meles also has an economics degree and understands the consequences of his actions. However, with a MAJOR portion of the business community lacking the basic educational background, one can only resort to government regulation until a better informed generation takes over and lets the “invisible hand” do what it does best, allocate resources based on supply and demand.

01/10/11 @ 06:11
Comment from: haimanot [Visitor]
haimanot

I really do not know what to say to this crap, psuedo professor. I am so sorry for the students you supposedly teach, if at all you indeed teach at a standard big university.
Your write up is always charged with hatred and politics.
The time I saw you reading the cocluding reports of the so called East Africa and Ethiopia peace forum etc etc..I was so ashamed to see and hear the way you read. You were even drentched in sweat down your spine and fear on the podium.
You are simply useless, rag tag professor.
You should have decried at least the selfishness of the merchants in Addis, and elsewhere.

01/10/11 @ 06:31
Comment from: marctola [Visitor]
marctola

Both Melese and Seid Comments on the current situation of Price hike in Ethiopia have some piecies of facts but I dont think the issue is not well understood by all. there is clearl problems with the merchants and the government as well. any how the ultimate vitim is the poor consumers.

01/10/11 @ 06:37
Comment from: obsa [Visitor]
obsa

LET’S PRAY FOR EAST AFRICAN COUNTRIES!
ALL ARE SURROUNDED BY PROBLEMS ALL THE TIME!

01/10/11 @ 08:11
Comment from: Chala [Visitor]
Chala

It’s ok for an “economist” to be political but when he twists the facts to line em with his narrow agenda, it’s truly sad. Dr. Seid, we know that price control is not desirable and i give you credit for the theoretical insights on the same. And when you argue for the primacy of market forces, i applaud you. But you seem to suggest that the current prices levels in Ethiopia are not only reflecting economic fundamentals on the ground but are also reasonable (due to supply rigidities, as you call it shortage). I will also add expansionary monetary policy and lax fiscal discipline have contributed to the inflation. You can rightly blame the government. However, you have to also concede that hoarding, price collision and gouging are pretty common, particularly on commodities which have low demand elasticities. Whatever the price are asked for these types of goods, people would not cut back on consumption. And there are plenty of evidences for that. And in this instances any government be it a purely capitalist or semi-socialists is sanctioned to intervene because prices are no longer reflecting the reality on the ground. That is, prices are set higher than the equilibrium rate. And what the government is trying to do is bring it back down. Whether they succeed or not is not as easy as black and white, you seem to suggest (even under the most restrictive assumptions). But given the options the government has, it is not a bad idea to try legislating price controls on necessities (remember prof, these are price inelastic in demand not supply). By the way, i have no idea why you described the other two options tables by the government as empty threats. But from you subsequent writings, i understood that you are not even interested to give them the benefit of the doubt…Hope you divorce your political hatred from your economics knowledge in your next article (if there is any to come) so that we can take you more seriously.

01/10/11 @ 08:51
Comment from: Bekele [Visitor]
Bekele

Dear Prof. I have just view some of your articles but Icould not find any substential logic that matters the poor. I hope, the very cause for the lack of substential logic in your articles is your one sided view-the extrem hatrage to woyane (Tigray).

Dear prof. did you telling us that evry thing in ethiopia at this time is evile did of the government in power? If yes, you are marching in a wrong track so you need to think again. If no write some times the posetive works. You know during the military junta there were many things that are posetive for the country though much was bad.
I hope you are not reading the comments given by your readers. Had you been reading them you would have been corrected. you are simply writting what you want to write, period. You write articles against the existing government without any fundamental data source. Come to ethiopia and gather second hand information which are basically groundless and politicized.

Dear prof. You have to think about the coming generation while you are writting an article. LET THE GENERATION LEARN MORE ABOUT PEACEFUL CONFLICT RESOLUTION instead of hostility.

Dear prof. I think you are in USA. How could you see negatively the government intervention when there is unhealthy marketing in a country to save the poor?or markets should be controlled by the gready merchants? OR “ENE KELELOH SERDO AYIBKEL…”
you are in USA, probably with USA citizenship, so you donot care about the suffer of the poor. It seems.

01/10/11 @ 09:04
Comment from: LeColonel [Visitor]
LeColonel

Said, al-Said, it would useful if you tell us a bit about what your Umma-Saudi has for our country Ethiopia.

By the way, here an intersting thing from the confused Saudis:

A vulture tagged by scientists at Tel Aviv University has strayed into Saudi Arabian territory, where it was promptly arrested on suspicion of being a Mossad spy, Israeli and Saudi media reported Tuesday.

The bird was found in a rural area of the country wearing a transmitter and a leg bracelet bearing the words ‘Tel Aviv University’… Although these tags indicate that the bird was part of a long-term research project into migration patterns, residents and local reporters told Saudi Arabia’s Al-Weeam newspaper that the matter seemed to be a ‘Zionist plot.’

01/10/11 @ 09:14
Comment from: termoose [Visitor]
termoose

I didn’t go to school of economy but I am confident in common sense i am way better that that mr Said. I am in western world for more than 20 years there is a time price needed to be controlled. just don’t write becuase you don’t like the rulling governemt. the people of ethiopa are the one suffering not you let it be as is Meles is th ebest of bests

01/10/11 @ 10:51
Comment from: Tefera [Visitor]
Tefera

what a waste. this is the same guy who was ranting 24/7 against gibe power project and ECX.

01/10/11 @ 11:08
Comment from: Not Economist [Visitor]
Not Economist

I ask Dr Seid to answer. In US there is
a minimum wage cap. The government controls the livable wage. Rather than putting price cap on every day commondities, is it better to increase the minimum wage?
It seems to me both achive the same
goal.
Also how do you protect the public from
shortage created from inefficient
market (price set by few major distributors without competition)?
Take banana which cost 1.50 birr in south and costs 8 birr in Addis. I feel like
economic theory in books are good guides for ideal market but may not be realistic and practical in unorganized growing economy like ours. Government need to intervine when market is not functioning and get out when the market normalizes…

01/10/11 @ 11:34
Comment from: Arbegha [Visitor]
Arbegha

We just need this Klasincoff waginig TPLF out of Ethiopia what is he to cut real Ethiopian hand first Tgreas pay overdue tax for Ethiopia your betrayal of Ethiopia does not reward you native American status TAX EXemt traitors ask ISSAYAS{ EPLF} the man you fought for tax Exemt not real Ethiopians in ADIS Ababa or Harrar or Gonder please miget s out of our coutryto{ SAHEL DESERT} with your cadres leave us alone your days are numberd death to WEYANA{TPLF} LONG LIVE TRUE ETHIOPIANS

01/10/11 @ 11:39
Comment from: HC [Visitor]
HC

Seid Hassan, Thank you for your scientific assessment of price control. I am a registered nurse but no an economist. But Economics is all about forecasting without an clear cut mathematical formula. Ethiopia is a poor country with a very high unemployment, which means the buying power is also very weak. The government is absolutely right to intervene and control un-reasonable price hike on the working class. Don’t you remember American gov’t pumping billions and giving out cash to see auto companies and homes. One more advice to your sir, please stop posting your picture with the article. We are tired of Al Mariam doing the same thing for attention.

01/10/11 @ 12:16
Comment from: RAMATOHARA [Visitor]
RAMATOHARA

Normally I don’t support EPRDF. But on this they did a good thing. The merchants have no shame. It is good it happened before salary rise. Now the civil servants who were the least previlaged in the economy will have some time to enjoy relatively relaxed time. Ethiopian negadewoch jeboch nachew.They care not the least for their countrymen.

01/10/11 @ 12:45
Comment from: ledeta [Visitor]
ledeta

please the so called “DR” PROF” have you everlived in ethiopia or may be one of youfamily own those “merkato “shops where greedy bssiness men/women hording smugling even mixing dust and sand in food staff indangering the health and economy of the poor pepopel.Hatred one thing and doing somethin good for the country is anotherthing.the only thing you are educated with is oppening your filthy mouth and insult good citizens who change the country once for all.LET ME HERE IF YOUR CONTRIBUTION OTHERTHAN MAKING USELESS NOISE.

01/10/11 @ 13:31
Comment from: best [Visitor]
best

most of you gays have no idea about the bussiness. one gay mention the suger price the merchant get 80%. do you know the last oction held by the factory is 13.75birr/killo now the goverment force the merchant to sell 14birr/killo add the transportation cost and so on do the math. gays you need a littel serch befor you post samething. use commen sence.

01/10/11 @ 13:41
Comment from: Reality [Visitor]
Reality

Dear Dr Seid,

I know how much Ethiopia missed educated people like you. That is an economic fact.
I want to thank you for mentioning Zenawi’s economic genocide on the targeted ethnic group.
You are one of our great minds!
Keep up the good work.
Thank You so much!! What a piece!

For those who wish your retarded mind is right
The law of economics is not something a person can negate with a retarded mind. You have to read basic economic rules before writing your trash here. Whether you support or don’t support scarcity is everywhere. First please learn government cannot make you get everything for one birr.
Trust me your god Zenawi is going to read and learn from it for his next speech. Zenawi is a politician. He is repeating whatever the stupid adviser is telling him. I wish he reads some text books to make himself understand at least supply and demand.

01/10/11 @ 13:43
Comment from: Almaz [Visitor]
Almaz

Hassan is a well known OLF activist who once in a while feasts on perceived weaknesses of Ethiopian govt’s policies to spew his economics mantra on some Ethiopian websites. I don’t expect a well balanced critique of the EPRDF’s policies from a guy like this.

01/10/11 @ 13:49
Comment from: Ersasu [Visitor]
Ersasu

These idiot Weyane cadres all over this posting.The last comments said the Professor is an OLF , previously one said he is Guraghe. God save them. What kind of living is this kind of job. Propagandist for a dictator-egh

01/10/11 @ 14:30
Comment from: makelawi [Visitor]
makelawi

Dr or pro sedi , your are 100 per right. Very good analaysis and wish all ethiopia to read your report. In the future lot of shortage will happen unless goverment start rationoning to each family which never happen as we don’t have enough resoures. Secondly if ethiopia growing with second digit as meles bragged when ever he appears on tv why we do we need price impose ..very funny and ridiculous. Why do they blame business ppl. I suggest govement lower taxes,creat incetives,t end private business creat employment which are back of bone for growth of the country.

01/10/11 @ 15:10
Comment from: yoni [Visitor]
yoni

One sided article

Mr. Hassan washed us with his one sided view of the issue.
How could a person your acadamic level fail to analyze the isssue from the POOR’s point of view?

It sounds like Mr. Hassan himself has something to loose in this decision…Maybe he or his families are involved in the hoarding trade itself.

I have always said that Ethiopians who spend decades abraod as a PROFESSIONAL STUDENT or as FULL TIME FACT TWISTER/critiques :), get carried away barffing whatever they read.

WHY dont mr. Hassan make an attempt to go back home and withness the situation for himself instead of alligning himself against the poor people of Ethiopia who are tired of this hoarding.

01/10/11 @ 15:15
Comment from: one [Visitor]
one

Solomon, we have educated people of ethiopian origin who wright things based on their education, but they are biased and have a political twist to what they write. they don’t write because they care about ethiopian people the poor they wright stuff to further their political goals to be in power. the merchants will do everything to send mimi to private school and the wife to shop in europe. if i was a merchant i will do the same thing, do you think i care hell no. i won’t money at any cost. this guy’s analysis is based on hate of the current government, telling me the government does not interfere in American economy, hay professor don’t forget i live in America buddy and dont lie to people saying the government does not get involved. should i throw some names better business b. why do every old ethiopians want to be Politicians? something fish about that unless you are Corrupt and greedy. that is why i don’t trust EPRDF, kinijit, AUEP, medric….etc. we ethiopians should not support any party.

01/10/11 @ 15:22
Comment from: Efrem [Visitor]
Efrem

I am going to challenge neither your qualification nor your exprience. I respect you. However, you have just inflated your article by 200%. That is, “too many words chasing too few facts” in a similar fashion with “too much money chasing too few goods".

Don’t bias economics with a biased analysis.

01/10/11 @ 17:11
Comment from: yimer [Visitor]
yimer

thanks, MR Said.

01/10/11 @ 17:53
Comment from: guest [Visitor]
guest

the so called OLF intellectual Hassen, leave us alone and enjoy your comfortable america life.

01/10/11 @ 18:03
Comment from: ene [Visitor]
ene

Whether we like it or not, the inflation in Ethiopia is caused by fundamental issues within the economy.
Sure, merchants also might have taken advantage of loop holes within the regulatory framework but they are not the major part of the problem. As the writer said, price-caps rarely work. Time will provide the evidence. Dr. Berhanu was talking about the government expenditure and how that is affecting the supply of money within the economy a couple of years ago. The same sentiment was echoed by international financial institutions. The government is just looking for scapegoats.

What is going to happen is further shortage of goods and the current importers will be replaced by government’s own cronies but consumers will not benefit.

01/10/11 @ 18:12
Comment from: ADH [Visitor]
ADH

Dr. Seid,
I did not read the full text, however I am certain i will read the entire text and will be back to say something for or against. I tell you, I did not like your analogy of Chavez or for that matter any other dictator. You better find another way of sharing your academic knowldege rather than building negative sentiment which forces some of your readers to turn away from you. Thank you!

01/10/11 @ 18:23
Comment from: Shewarega [Visitor]
Shewarega

Thank you professor. I know you stand firm on your feet, that non of these attacks and insults from Woyanae cyber cadres will affect you one bit. For them, if you are Oromo you are OLF. For them, if you are Muslim, you are some extraterresterial from Saudi Arabia. But I know two things as a simple fact. The overwhelming majority of Ethiopians admire you, because you try your best to explain to them things they can’t or do not understand. Second, you are simply a true Ethiopian, who cares about his country and his people. For that, I will always respect you. I also want to apologize for all the negative thrown at you in here.

01/10/11 @ 18:24
Comment from: Mentor [Visitor]
Mentor

Dear “Professor”

Some COMMENTS

1. “Messrs."Check when to use it.
2. Improve your introduction. I hope you advised a thesis of some students.
3. Be trustful to yourself.
4. Good theory. (Application: it is not applicable neither to Ethiopia nor to any country as it is.)

01/10/11 @ 20:50
Comment from: Ethiopiawinet [Visitor]
Ethiopiawinet

Dr Seid have you read Le Colonel’s (Pseudo name of Assta B. Gettu) comment. If so why don’t reply to his comment. I don’t know if you got the point. Le Colonel (Assta) tells you it’s not your business to write about Ethiopia because you don’t believe in what he believes. So your country is Arab country. On the other side you see him crying for Arabs who are suffering by their few extremist Arabs. Believe me those minority Arabs choose their brand gene. He doesn’t know how they name him. I can say most Arabs(christians/moslems alike) call Africans name whether you follow their religion or not. So LeColonel would it not be better for you and your like fanatic Ethiopians to change their radars and look inward for love/peace toward those who do not believe in your gods.
Dr Seid writes about economy when the country’s big problem is those fanatics with tumor which is extremism.

01/10/11 @ 21:36
Comment from: YNEG [Visitor]
YNEG

JUSTIN THE MORON, can you tell us how Prof Seid was wrong in his prognosis of ecx? You must be too stupid to see that ecx hasn’t yet become effective in doing what it was meant to do. Yea, it was one big hype!
HAIMANOT AND THE REST OF YOU HODAM WOYANES, the Prof is only trying to teach you idiots the basics of economics. You don’t have to defend whatever your boss does just because you belong to the same clan.
AGASES, BELTO QIZEN HULU!

01/10/11 @ 23:11
Comment from: Bergude [Visitor]
Bergude

The statement from Mr. Seid regarding price control is confusing and unfair to Ethiopian consumers.
Never been heard in history of Economics price control is damaging? Interesting, you mean the merchants have to abuse the people for ever? Well, your opinion is not clear; though one can immediately understand you are defending the manipulating merchants.

The poor people of Ethiopia are not even entitled to purchase a bread at reasonable price. Leaving aside such as: meat, butter and teff is only for privileged people. It is really sad to hear such comment will make many sick and disappointing.

Let the prices be under control and
what ever damage should happen; it will not be worse than purchasing one egg for Birr 1.30 . Yes, everything is luxury for poor Ethiopian people! No more words, you so called educated Ethiopian only surfacing yourself on the air.

01/10/11 @ 23:28
Comment from: john john [Visitor]
john john

This funny man train and educated in Cairo (Egypt) don’t expect anything posetive about Ethiopia. Belive he is true Arab loyal servant who want send hi poor message.

01/10/11 @ 23:52
Comment from: flulu [Visitor]
flulu

Is it not the ABC of economics that overheating of the economy will mostly if not always produce inflation?
Inflation is rampant this day from china to india to north african countries.Even here in the USA we can see how much gas prices are costing?
I don’t see why the dear professor is blowing this out of proportion as if the gov’t has got the economy running bad.
Economic growth fuels high demands and in countires like ethiopia where there are business people who see no stone unturned to make profit will increase prices.
They would have gotten the same or more profit if they sell their goods for a lesser price because at the end of the day they will have more customers and they profit by selling to the masses.
Let God bless ethiopia.

01/11/11 @ 00:12
Comment from: Ali roble [Visitor]
Ali roble

Thanks Doctor but I thought Economics is anything but hard science or scientific facts. It is just based on multi-variate behavorial and social issues that can be manipulated and concocted at will.

01/11/11 @ 00:28
Comment from: Ali roble [Visitor]
Ali roble

Thanks Doctor but I thought Economics is anything but hard science or scientific facts. It is just based on multi-variate behavorial and social issues that can be manipulated and concocted at will.

And one more things,I will not be surprised if what is happening in Ethiopia could based on Melezconomics rather real economics principles just like his predecessor Mengeconomics has been.

01/11/11 @ 00:40
Comment from: flulu [Visitor]
flulu

Economics is a science that tells u the things u already know in a difficult and complicated manner.
i agree with robele.

01/11/11 @ 01:54
Comment from: Mentor [Visitor]
Mentor

What a professor is this???

HE DON’T DIFFERENTIATE SUGESTION AND CONCLUSION!!!!

01/11/11 @ 02:45
Comment from: Hacknyman [Visitor]
Hacknyman

If 70% of Ethiopian economy controlled by TPLF, think what would happen when Tigrai separate from Ethiopia. Economically we could be in big trouble. I am just wondering what those none Tigraian economist like Dr.Eleni Gabre-Madhin and others understand about TPLF party owned conglomerates. I read most economist addressing there concern regarding the illegal activities of EFFORT & GUNA Plc. Why don’t we hear some thing from Dr Eleni of ECX? You should come out and reassure the Ethiopian people that every thing you are doing is for the good of Ethiopia only but not the party owned company.

01/11/11 @ 06:56
Comment from: Seleme [Visitor]
Seleme

yoni,

. . .how possible people will believe the credibilty of your accountable stupid government that even you, you cant give a constructive opinion for a solution of this problem. instead, you spitted your poisonous venum here. . .SHAME ON YOU!

Boost Farm Production!
Increase Supply!
Improve access to rural areas!
Eradicate business monopoly of your CRONIES!
Proper monitoring of price cap and impose strict implementation, not only for lower businessmen but also your regime cronies businesses!

SHAME ON YOU P%G!


01/11/11 @ 08:09
Comment from: Seleme [Visitor]
Seleme

justin,

. . .go back to your school to enlighten your stupidity. . .


01/11/11 @ 08:11
Comment from: Seleme [Visitor]
Seleme

bymeno,

so, what is your solution? come on puppet! grow up!


01/11/11 @ 08:15
Comment from: abel [Member]  
abel

Doctor? Economics I hope not.
You may give your advise to Algeria, Bolivia and Eygpt to name a few.

01/11/11 @ 09:53
Comment from: Abuye Atir [Visitor]
Abuye Atir

Dummy Woyanes,Previously a merchant needed $14.00 Ethiopian Birr To Buy
$1.00 US dollar.Now he has to pay $6.00 or more to buy that same dollar
for his imports.So Dummy KIMAL, that is the reason the merchant has to increase it’s price.Mr.Tuhan is telling them to trade at loose.There is no business like that evenif Kimal,Kunich etc are clapping for him.
It is ABCD of the notion of business.
The merchant is not there to a community service they are there to make Dinero.By the way make your day by watching “Melez senawi stealing coffe” on you tube.It was the funniest stand up commedy I have ever
ever seen for free.
Cheers

01/11/11 @ 11:10
Comment from: Mario [Visitor]
Mario

When woyane is in deep shit (should I say, deep trouble) all it does is dump and lump its abysmal failure on a desired and fitting scapegoat. This time the scapegoats are the “hoarders", traders, merchants and business men and women. “Yabyen wede emeye …", as the saying goes.

This is a consistent pattern we observed all along. In the recent past, Meles did it with coffee “hoarders", traders and business men and women. Is there anyone out there surprised this time?

To seek a genuine remedy for the price hiking, capping prices could sound a solution, but it is not a lasting answer. To bring a meaningful solution to the problem, all the authorities should do is increase the supply of food items and other commodities on market. Not cutting fingers and arms of “hoarders", traders, business men/women as ranted by our democratic leader, Meles Zenawi. If he can increase the supply, the market itself will stabilize or control the price.

I can site a good example in this regard. We all know cooking oil is produced in Ethiopia on small-scale level. Unfortunately, price per one liter oil was unaffordable by the ordinary people (because of low supply). Few years ago, when woyane flooded the market with donated oil (but sold to consumers), locally produced oil price hit rock bottom. As a consequence, local producers became incompetent and went bankrupt and many oil producing factories closed. Too bad many lost their businesses and jobs, but in the process the market took care of the price. No “hoarders", merchants, or business men/women to blame or amputate. No wasting time looking for a perfectly fitting scapegoats.

Woyane should not beat about the bush this time or any time for that matter. It should tell the truth, do the right thing and public trust and confidence will be restored automatically. And then, everything will be alright.

A quick fix of this kind (current price capping) does take us no where, unless it is meant for something that is more sinister. People expect a political will that gives a tangible solution/result for their problems and not a quick fix for self skin-saving purpose.

Meles can dictate “hoarders", traders, merchants, business men/women by telling arms and fingers amputation over and over again. If this works for market stabilization, it means anything is possible in Ethiopia. Economists world wide should learn a lesson from him.


01/11/11 @ 13:41
Comment from: yonas asfaw [Visitor]
yonas asfaw

Mr. Sayed…Have you heard of price fixing?? Have your read anything on Monopoly?? Read up and you will find your answers there before you ramble with your mumbo jumbo!!

01/11/11 @ 14:42
Comment from: Nev [Visitor]
Nev

Mr Seid Hassan

Your article is interesting and you are right in some respects regarding price controls, only being used during emergencies.

Price controls were imposed in England during WW2 1939-1945 by Winston Churchill I also agree with the points you made about bio fuels and issues with them.

However, using Venezuela under Hugo Chavez, and Robert Mugabe who incidentally Ethiopia quietly helped the latter to fight that racist Ian Smith. As examples of badly run economies isn’t fair for a start both nations are under serious economic sanctions so they will not be hop skipping to the garden of prosperity. However, the way Latin America is organising there is a chance they will. Also Venezuela isn’t that badly off if this country can give $10 billion to Argentina after the Wall Street smash and grab raid on their economy during the 1980’s and 90s..

I am very disappointed reading your article that you think there is such a thing as a free market? If you check history Britain intervened to destroy infant manufacturing in Egypt and India. During the 19th century in order to protect Britain’s manufacturing I must also mention that you appear to have missed the biggest transfer of wealth from the poorest to the richest in a generation. America heavily subsidises and bails out in some cases its military manufacturing industrial base.

Ethiopian educated like you who seem to support this weakening dollar based system worry me I think Ethiopia will be in trouble, if you think this system is the answer for Ethiopian poverty again I really think Ethiopia needs a large tax paying population.

(lots and lots of jobs) maybe building infrastructure like this touted railway link across the country, modernisation of farming techniques, easier access to the technology for creating health enhancing essentials like clean drinking water.

My small opinion…

01/11/11 @ 16:14
Comment from: Derese [Visitor]
Derese

A retarded moron Meles Zenawi and his “kimalam” people have no idea about leading a nation.Great analysis prof.Seid,thank you.

01/11/11 @ 19:37
Comment from: haimanot [Visitor]
haimanot

Derese,
You look consumed by frustartion and envy. Hold your breath my friend. There is no people created kimalam. You can see kimal on anyone who lives in poverty. But there is kimalam chinklat like yours. am sure if your skull is opened, it is infested with millions of kimals (lice). That is what what drive you crazy. please visit your nearby hospital, if you of course have save some money from your housecleaning job.

01/12/11 @ 08:33
Comment from: Binor [Visitor]
Binor

I am not on any side of the isle. Just reading the comments above is mind boggling. How animal we Ethiopian are. A lot of trash, personal attacks, rubbish words instead of counter attacking the writer’s view when we don’t agree. I wonder why we never bring any tangible change. Why attacking the personalty while his/her idea is out there for discussion. What kind of growth will bring us deminishing him as individual? After all who are we as individual to judge people on their merit based on what they say? Can we grow up and be ready for matured discussion from which ever side we are.When will this be on my side or your are nothing attitude stops? It ruined a number of generations and still it is. I herad this say from some where; “we know how to eat together but not even close how to work together". It is true, we don’t even know how to talk to each other. We need to stop this vitriolic, personal attack and start on discusing the issue.

01/12/11 @ 10:19
Comment from: aksum [Member]  
aksum

Price control is regulated n all capitalist countries. Merchants should not be allowed to sell any product very expensively. |There is always a demand for consumer products in poor countries like Ethiopia. The writer is entirely wrong. Prices should be regulated by the intervention of government agencies. The government should also fight corruption. Some merchants are paying too much tax. The local agencies should not be allopwed to tac from merchants. Only the central authority has the power to tax merchants and all other companies.

01/12/11 @ 12:56
Comment from: TE [Visitor]
TE

Reading this article written by a professor in Economics prompted me to write the following points that don’t make sense to layman person in Economics like me:
The professor mentioned that price caps were just for emergency situations like war, unexpected crop failures and natural disasters. The recent price cap in our country is an emergency situation (though it might not be mentioned in Economics textbooks). I don’t think it is wise to just go only by the book while the reality in the ground and the studies conducted by the government prompted in favor of the price cap. And, I also believe that it is not a permanent fix but helps the crisis until they come up with a solution in time where the economy is going to be driven by free market and competition. And that requires more rigorous studies. We should not forget that the United States Economy has not recovered from recession yet while this country has the best Economists in the world. They are still trying to hit the recession on target. The government has taken them more than 2 years and they are still working on it and who knows how long.
The professor also has described the effects of price cap such as commodities will be produced inefficiently and with low quality. But, the situation in our country is different… let the consumers at least see the items they want to purchase before your speculation that they would have rejected them for their low quality.
Professor, I don’t see any solution that was suggested in your writing for such emergency situations our country is facing except criticizing the government that they should have not devalued the birr value.. Please don’t lecture us on what the Economics books says about “Price Caps” but provide us a list of detailed solutions in reference to the reality in our country that really makes a difference for the well-being of our country despite your political stand.
Also, I will like to suggest that you verify the accurate names of people mentioned in your article, for example, the general director of Ethiopian Revenue and Customs Authority is “Melaku Fenta” not “ Melaku Fanta” or “ Fana. It really says something about your article. Writing an informative and teaching article examines the real situation of our country in detail including….you know what I mean.

01/12/11 @ 17:33
Comment from: Habtmes21 [Visitor]
Habtmes21

It is a great article though Melles and his surrogates would not listen such kind of pragmatic and educational analysis. They prefer to listen Abadula’s or Sofian’s “tinkola".

01/13/11 @ 11:35
Comment from: yonas asfaw [Visitor]
yonas asfaw

when “negadewoch” agree on a increased price of commodity “fixed” is illegal. Mr sayed..did you know that???? Negadewoch are involved in illegal price fixing to amass huge profits by raping the poor people of ethiopia. This is not only an emergency but a complete break down of a society. The consequences are far reaching even to the point of clashes between poor and rich and with the goverment. There is no serious crime nor EMERGENCY than this one. Its called highway ROBBERY! Therefore you suggest the goverment to sit back and watch. Write little and use your brain for once please. thank you!

01/13/11 @ 21:12
Comment from: Awey balinjera [Visitor]
Awey balinjera

Thanks Haimanot for your input and teaching people like Derese a lesson….

I don’t know why I was compelled to write my opinion here but anyway I just wanted to comment how dismaying and disillusioning it is to observe that personal attacks are becoming ingrained in our culture these days. Will we ever refrain from and challenge the opinion.
To be honest,I do not agree with the economist Seid Hassan’s perspective regarding the major issues, however I respect his opinion and him self more importantly for putting all the effort to post his piece for the general public. It is only appropriate that he should be appreciated for his contribution and supported or challenged in a civilized (which was an inherent characterstic trait of our Ethiopian forefather/mothers) manner.
If we don’t have the civility and genuine nature to conduct ourselves in this manner then we should abstain from making remarks that will only reflect on what we are carrying in our brain.

01/14/11 @ 13:01
Comment from: mase [Visitor]  
mase

we know who creat this problem.it was started by woyane and those hodam merchants,woyane after 2005 election what they plan to get more spporter from country side and also to revenge the addis resedent ,they were offer excessive money to the poor farmer ,like loan ,illegal price fixing and advice them keep for long time in the store .and sale them by high price .they think that will be affect only the city ,but not, what they under know they start to stop this problem.the one thing IS what ethiopian know who ever creat AIDS DISEASE HE KNOWS HOW HE TO PROTECT OR STOP THIS DISEASE..more less that will be little bit good for poor ethiopian family
LET BE UNITE AND ASK GOD NOT woyane or united nation WE WILL GET PERMANET ANSWER
GOD BLESS ETHIOPIA

01/14/11 @ 14:03
Comment from: Lobby [Visitor]  
Lobby

Well, the inflation was said to have been caused (by Ato Meles) due to several reasons, which cannot stand by their own:

1- In 2007, he said the inflation was caused due to the high economic growth, and the only solution was increasing the growth even faster.
2-Same year, he said the the inflation (especially food of items) was caused since farmers were resilient to sell their products out, because they had enough yield from previous years.
3-Again, same year he told us that it was the international market crises and inflation.. were the driving factors.
4-Still he went on saying that it is “some” business people are behind this.

Well, whatsoever said the problem is still there. I believe the inflation has been due to these basic factors:

1) Shortage of product, especially food commodities, confirming that the “double digit” economic growth is mainly an artifact, though there is “growth".
2)The population has been shooting high pressing hard on relatively decreasing agricultural productivity.
3) Corruption, don’t ever think that the “retiring” fat EPRDF cats ‘leave’ the coutry empty handed, they indeed take billions of dollars out of that country!
4)Huge investments, paradoxically, the govt has been engagged in several huge investments, which are rather good by themselves, but their cost has been re-directed to ordinary Ethiopians, esp those who live on fixed income have been forced to bear

Solution: Complex! Seems evolutinary holocaust of the weak, since the problem stems out from our ignorance, greed and self destructive culture(religion)! We need to deal with these first, then come to a “commonsense approach” for the good of the country: ourselves!

01/14/11 @ 16:46
Comment from: selam [Visitor]
selam

Woyane is so shameful. The Ethiopian people enemy is not Ethiopian merchants but the rotten woyane economic policy is destroying the nation. Woyane’s paid cyber worriors should learn from Tunisia. Nothing last forever HODAMS. you go and tell Azeb mesfin and her partners to stop selling our land to the lowest bidder. Woyane stoop so low even the first lady for life is selling every strip of land to Indians and Saudi thieves.

01/15/11 @ 08:19

rebtel

advertisements

The views expressed in this article do not necessarily represent the views of nazret.com. The views are solely that of the author. Become a blogger of nazret.com, the #1 Rated Ethiopian Website according to Alexa. Contact us for details

Search

  XML Feeds

blog software
© nazret.com The Most Popular Ethiopian Website. nazret is Ranked #1 by Alexa and Qantcast.
All Rights Reserved 1994-2014
About Us | Contact | Feedback | Help | Privacy | Terms and Conditions