Category: Future

According to Nobel Prize-winning economist Joseph Stiglitz, America is no longer the land of opportunity. There is less equality of opportunity in the United States today than there is in any advanced country for which there is data. The US had an increase in GDP in 2009-2010, but 93% of the income growth went to the top 1% of income earners. Income and wealth is being concentrated at the top, and poverty is getting worse at the bottom.

Stiglitz goes on to argue that those who are earning the high incomes are disproportionately doing so through rent-seeking such as by abuse of monopoly power, failings of corporate governance, and failings of government fiscal control. The poor have been exploited through predatory lending and credit card practices. Most Americans now have a lower income, after adjustment for inflation, than they had 15 years ago.

Inequality of opportunity results in decreased efficiency. The barriers which protect the privilege of the rich and prevent the poor from bettering themselves mean that people’s abilities are not fully utilised, and the whole country’s economy suffers as a result. The wealthy use political influence to get lower taxes and reduced government spending, so that essential services and infrastructure are not provided and the country stagnates.

Some observers look at the growing church in China and Africa, and see a bright future for the church. Others look at the shrinking church in the West and see a gloomy future. Who can really tell what the future holds? Bobby Gruenewald of LifeChurch.tv expressed his confidence in the following dimensions of the future of the church in a recent Outreach Magazine article:

• The church of the future will prevail
• The church of the future will have an increasingly global perspective
• The church of the future will be more united
• The church of tomorrow starts today

The Bible says that not even the gates of Hell will prevail against the church, so those who believe the Bible will be confident that tomorrow’s church will prevail. It is easy to see only the small picture when you are struggling, but for 2000 years the church has survived though even the darkest of times. Information and knowledge can now be shared more quickly and effectively than at any time in the past, so the international church has become much more of a reality. Greater opposition in coming years will mean that those who belong to the church will become more united. We get to decide how we will contribute to the church of the future.

It was always expected that South Sudan would have problems starting on the long road to economic development. The country is starting from a very low infrastructure base, its people are very poor and have had very limited education, the country is landlocked, meaning that any international trade is going to have high transport costs attached, and the country’s ongoing conflict with Sudan drains it of resources and effectively cuts off oil revenues which constitute almost all of its income.

So when the looting of the country’s finances by government officials is added into the mix, the country’s prospects for survival look very poor indeed. The country’s current plan is to build an oil pipeline through Kenya to the coast, and in the meantime stretch out the country’s cash reserves as far as they will go using austerity budgeting. However that plan will not work if venal officials help themselves to the country’s money.

According to president Salva Kiir, officials have stolen some $4 billion from state resources. Most of the money has been taken out of the country and deposited in foreign accounts, with some being used to purchase properties. While grand corruption by high-ranking officials has been an established practice for many years in other East African countries, the possible consequences for South Sudan at this delicate juncture in its history are severe.

When South Sudan became independent from Sudan in the middle of last year, relations between the two countries were strained. The major export earner for Sudan had been oil from South Sudan, and oil from the south was still being shipped through Sudan, so Sudan decided to make a grab for the lion’s share of the oil royalties as “transit fees”. South Sudan responded by cutting off production, so neither country has been benefitting from oil revenue for the past 6 months.

As oil accounts for 98% of the income of the South Sudan government, the country has been living off reserves since December. The government has adopted an austerity budget, and expects that its reserves will last for up to another year. Those reserves have been accumulating since 2005, with earnings exceeding $50 per barrel being placed into an oil stabilisation account, a future generation fund and an emergency contingency fund. South Sudan hopes to complete a pipeline through Kenya within the next year, but will face difficulties if the construction takes longer.

Meanwhile, Sudan is attempting to restructure its economy to cope with the loss of oil revenue. The country currently produces 115,000 barrels per day (about one third of the production capacity of South Sudan), and is seeking to increase production as quickly as possible. Sudan is also trying to diversify its exports, including cement, gold and sugar, which is used for the production of ethanol.

Many commentators are not expecting India to follow China into rapid economic growth, and they are blaming it on democracy. Europe and the US followed a path of industrialisation and urbanisation over the course of the 19th century, and Japan, Taiwan and Korea followed the same path last century, with China experiencing the same extensive restructuring, productivity growth and wealth creation in the early part of the current century.

However, the big difference for India is that it is a democracy. Arguably, none of the countries which have successfully transitioned to “developed” status was at the time a genuine democracy. China is not a democracy, and the Asian countries which achieved high economic growth last century were not democracies either. When the US made the transition, a majority of Americans (blacks and women) were not entitled to vote.

India, so the argument goes, is too democratic to force through the unpopular changes which are necessary to maximise productivity. There are too many checks and balances in the Indian political system; what they really need is a good dose of benevolent authoritarianism. It is an interesting argument, but not one that I subscribe to. India has already made a substantial start down the prosperity path, and not even democracy will be able to stop it.

Celebrations accompanying the recent discoveries of oil in Kenya may have been somewhat premature, according to Bill Page of Deloitte Consulting, writing in the East African. Gas was discovered in Tanzania at the Songo Songo field in 1974, but commercial production did not begin until some thirty years later. The delay was largely caused because there was insufficient local demand to justify exploitation, and the costs of transport to other markets was too high.

East African oil suffers from similar potential problems. East African infrastructure is underdeveloped, and East Africa is a long way from the main energy consumers in Europe, North America and Asia, so that transport costs are very high. While demand for oil in East Africa has been increasing rapidly, the total quantity required by that market is very small by global standards and perhaps not sufficient to justify substantial development and infrastructure costs.

In the case of Uganda, the cost of development is estimated at $10 billion. To make a reasonable return on this sized investment, production would need to be around 200,000 barrels per day. Ugandan demand is currently around 15,000 barrels per day, so almost all of the oil produced would have to be exported via a pipeline through another country, thereby subjecting the success of the development to the whims of the government of another country.

Some weeks ago Kenya’s president Kibaki excitedly announced the discovery of oil in the Turkana region of Kenya. Kenya has in recent years been labouring under the heavy cost of importing sufficient oil to meet growing consumer demand. Oil is the country’s most expensive import, and the cost of oil imports exceeds the combined total of the country’s major exports. Neighbouring country Uganda discovered oil several years ago, and now Kenya has followed suit.

Other African countries such as Nigeria and Equatorial Guinea have enjoyed substantial oil revenues for many years; however, rather than fuelling general prosperity, oil in those countries appears to have fuelled corruption and mismanagement, with a few people growing very rich while the poor experience no benefit, perhaps even suffering additional deprivations because of environmental degradation and the draining effects of mineral resources on the rest of a country’s economy.

On the other hand, countries such as Botswana, Norway and Chile seem to have managed their resources booms well, using an appropriate mix of industrial, labour market, trade and exchange rate policies which boost economic activity in areas of the economy not exposed to the mineral wealth. Australia is currently attempting to do this to a limited extent with its mineral resources rent tax.

China’s influence in Africa has been growing, and for a number of reasons this is causing concern to the US, according to comments made to a congressional committee recently. America’s concerns are partly selfish and partly altruistic, and as is usually the case with US foreign policy, it is difficult to separate the two. China is gaining access to resources and commercial opportunities, potentially at the expense of US interests, and at the same time China is providing weapons and propping up human rights abusers.

China typically gives little weight to human rights and good governance issues in its dealings with African governments, undermining international efforts to promote transparency and responsible resource management. In a recent infrastructure project  involving construction of a terminal at an airport in Tanzania, 1,300 families were evicted from their homes and compensated only for 50% of the value. To make matters worse, the project was subsequently abandoned.

On the other hand, China’s role in promoting African corruption and mismanagement is often exaggerated by US commercial interests. China is often accused of land grabbing in Africa, but in seven countries studies as part of an investigation of land grabbing, there were more land lease projects proposed by American investors than by China.

The National Church Life Survey results from 2011 are due to become available shortly, but the trends shown in previous years are expected to continue. In particular, it is expected that the number of people attending churches each week will have continued to decline, with bigger falls in the Anglican and Uniting churches than in the Catholic church (which benefits from migrants) and more fundamentalist and pentecostal churches.

In the 2006 survey, attenders of pentecostal churches consistently showed stronger responses than attenders of other types of churches across a range of indicators including “alive and growing faith”, “strong and growing belonging”, “clear and owned vision”, “practical and diverse service”, and “willing and effective faith sharing”. Given the higher level of attender engagement that this demonstrates, it is no surprise that pentecostal churches have been growing while many others have been shrinking.

Older people are over-represented in the 2006 church demographics, and churches were failing to attract people under the age of 40. That trend has probably continued as churches have struggled to explain the gospel in a manner that is heard and understood by younger people. While individual churches can certainly make improvements, a reversal of the decline really requires a new church planting movement.

East Africa’s latest hope for economic salvation is oil. South Sudan’s economy is entirely dependent upon oil exports. Oil was discovered in Uganda several years ago, although the country is yet to establish the infrastructure necessary for production. Now oil has been discovered in Kenya, and the level of excitement is so high that the discovery was announced on Monday by President Kibaki himself, notwithstanding the fact that the size or commerciality of the oil deposit have not been ascertained.

What are the implications if the latest oil discovery does turn out to be significant? It could be problematic for Uganda and South Sudan. Uganda will need to build a long oil pipeline to a sea port, through another country, if it is to export its oil. Investors are likely to view oil from Kenya as a more attractive proposition, because the pipeline will be shorter and negotiations with other countries are not required. South Sudan is currently at conflict with Sudan, so has entered an agreement with Kenya to build a pipeline through Kenya, but now that Kenya appears to have its own oil there is already talk of renegotiating the agreement.

Even if the Kenyan oil discovery does not turn out to be bad news for Kenya’s neighbours, it may still be bad news for most Kenyans. Most citizens of oil-rich African countries have suffered rather than benefitted from oil exports. Oil in Nigeria and Equatorial Guinea has fuelled corruption and poor governance, making the elite wealthy while doing nothing to improve the lot of the poor. Oil wealth drives up the value of a country’s currency, making non-oil industries within the country uncompetitive.