In the roughly 250 years since the Industrial Revolution the world’s population, like its wealth, has exploded. Before the end of this century, however, the number of people on the planet could shrink for the first time since the Black Death. The root cause is not a surge in deaths, but a slump in births. Across much of the world the fertility rate, the average number of births per woman, is collapsing. Although the trend may be familiar, its extent and its consequences are not. Even as artificial intelligence (ai) leads to surging optimism in some quarters, the baby bust hangs over the future of the world economy.

In 2000 the world’s fertility rate was 2.7 births per woman, comfortably above the “replacement rate” of 2.1, at which a population is stable. Today it is 2.3 and falling. The largest 15 countries by GDP all have a fertility rate below the replacement rate. That includes America and much of the rich world, but also China and India, neither of which is rich but which together account for more than a third of the global population.

The result is that in much of the world the patter of tiny feet is being drowned out by the clatter of walking sticks. The prime examples of ageing countries are no longer just Japan and Italy but also include Brazil, Mexico and Thailand. By 2030 more than half the inhabitants of East and South-East Asia will be over 40. As the old die and are not fully replaced, populations are likely to shrink. Outside Africa, the world’s population is forecast to peak in the 2050s and end the century smaller than it is today. Even in Africa, the fertility rate is falling fast.

Whatever some environmentalists say, a shrinking population creates problems. The world is not close to full and the economic difficulties resulting from fewer young people are many. The obvious one is that it is getting harder to support the world’s pensioners. Retired folk draw on the output of the working-aged, either through the state, which levies taxes on workers to pay public pensions, or by cashing in savings to buy goods and services or because relatives provide care unpaid. But whereas the rich world currently has around three people between 20 and 64 years old for everyone over 65, by 2050 it will have less than two. The implications are higher taxes, later retirements, lower real returns for savers and, possibly, government budget crises.

Low ratios of workers to pensioners are only one problem stemming from collapsing fertility. As we explain this week, younger people have more of what psychologists call “fluid intelligence”, the ability to think creatively so as to solve problems in entirely new ways.

This youthful dynamism complements the accumulated knowledge of older workers. It also brings change. Patents filed by the youngest inventors are much more likely to cover breakthrough innovations. Older countries—and, it turns out, their young people—are less enterprising and less comfortable taking risks. Elderly electorates ossify politics, too. Because the old benefit less than the young when economies grow, they have proved less keen on pro-growth policies, especially housebuilding. Creative destruction is likely to be rarer in ageing societies, suppressing productivity growth in ways that compound into an enormous missed opportunity.

All things considered, it is tempting to cast low fertility rates as a crisis to be solved. Many of its underlying causes, though, are in themselves welcome. As people have become richer they have tended to have fewer children. Today they face different trade-offs between work and family, and these are mostly better ones. The populist conservatives who claim low fertility is a sign of society’s failure and call for a return to traditional family values are wrong. More choice is a good thing, and no one owes it to others to bring up children.

Liberals’ impulse to encourage more immigration is more noble. But it, too, is a misdiagnosis. Immigration in the rich world today is at a record high, helping individual countries tackle worker shortages. But the global nature of the fertility slump means that, by the middle of the century, the world is likely to face a dearth of young educated workers unless something changes.

What might that be? People often tell pollsters they want more children than they have. This gap between aspiration and reality could be in part because would-be parents—who, in effect, subsidise future childless pensioners—cannot afford to have more children, or because of other policy failures, such as housing shortages or inadequate fertility treatment. Yet even if these are fixed, economic development is still likely to lead to a fall in fertility below the replacement rate. Pro-family policies have a disappointing record. Singapore offers lavish grants, tax rebates and child-care subsidies—but has a fertility rate of 1.0.

Unleashing the potential of the world’s poor would ease the shortage of educated young workers without more births. Two-thirds of Chinese children live in the countryside and attend mostly dreadful schools; the same fraction of 25- to 34-year-olds in India have not completed upper secondary education. Africa’s pool of young people will continue to grow for decades. Boosting their skills is desirable in itself, and might also cast more young migrants as innovators in otherwise-stagnant economies. Yet encouraging development is hard—and the sooner places get rich, the sooner they get old.

Eventually, therefore, the world will have to make do with fewer youngsters—and perhaps with a shrinking population. With that in mind, recent advances in ai could not have come at a better time. An über-productive AI-infused economy might find it easy to support a greater number of retired people. Eventually ai may be able to generate ideas by itself, reducing the need for human intelligence. Combined with robotics, ai may also make caring for the elderly less labour-intensive. Such innovations will certainly be in high demand.

If technology does allow humanity to overcome the baby bust, it will fit the historical pattern. Unexpected productivity advances meant that demographic time-bombs, such as the mass starvation predicted by Thomas Malthus in the 18th century, failed to detonate. Fewer babies means less human genius. But that might be a problem human genius can fix.

Leading a team can be a lot of work, and for many business owners and leaders their first real experience leading a team is when they start their own businesses. This is why it's imperative that you take the time and energy to hone your management skills along the way to help your business grow and thrive. 

Today I want to share with you the theory of the elephant and the rider and discuss how you can use this idea to become a more in-tune manager with your team. 

The Happiness Hypothesis

Psychologist Jonathan Haidt has authored several books over the years, but one of my favorites is The Happiness Hypothesis. And in that book the author came up with a theory called "the elephant and the rider" which can be applied to modern management strategies. 

He said that all of us have multiple parts of our brain, the first of which is the "rider", which is what you would consider your higher brain. This is the hyperrational part of our brain where most of our cognition is observed, and where we develop awareness or self-awareness. 

When we talk about your brain in day-to-day conversation, this is the part of the brain that we are referring to. On the other end of the spectrum we have the part of our brain that is the "elephant." Now the elephant stands for our limbic system or mammalian brain.  

This is the part of us that is emotional and oftentimes irrational.  

It's a part of us that deals with certain primal drives like sex, food and power. And evolutionary-wise, this is the first part of humans that develops - and one that ultimately has a huge impact on our day-to-day lives, whether we want to admit it or not. 

Managing the Elephant and the Rider

How does this relate to management, you ask? When in a rhythm, the elephant and the rider can go long distances and get a lot accomplished. But if they aren't on the same page, little, if anything, will get accomplished. 

The rider can influence, cajole, bribe, threaten, and even train the elephant but ultimately, if our limbic system decides that it has other more important things to attend to, the driver is out of luck. We're not going to have a 200-pound person directing a 4-ton elephant to go somewhere the elephant doesn't really want to go.  

And so when we think about it this way, the key to managing the elephant is to harness our limbic system every single day. 

If you manage with emotion, using storytelling, metaphors and community, the elephant will be more willing to go with the driver to their end goal. And they need ongoing action with regular, reliable, and consistent feedback. 

Putting It Together

In summary, just telling your team to do a certain task won't be nearly as effective as getting them emotionally engaged and invested in the end goal for that project or task. So, try to incorporate both for optimal effect. Good luck! 

 

Inc

Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) have suspended the planned strike to commence on Wednesday over the removal of the petrol subsidy. 

The organised labour announced the suspension of the proposed nationwide strike and mass protest after a meeting of its leaders and representatives of the federal government.

The labour centres and the federal government are to reconvene on June 19 to further the negotiation.

Joe Ajaero, president of the NLC, and his team arrived at the presidential villa at about 5:45 pm on Monday.

The NLC was absent at the meeting between the government representatives and organised labour on Sunday.

Representatives of the Trade Union Congress (TUC) were however in attendance.

Shortly after the commencement of Monday’s sit-down, the national industrial court restrained TUC and NLC from embarking on the industrial action.

Delivering the ruling on Monday, Olufunke Anuwe, the presiding judge, said the unions should halt the planned strike pending the hearing and determination of the ex parte motion filed by the federal government.

During his inauguration speech on May 29, President Bola Tinubu declared that “petrol subsidy is gone”.

The president’s pronouncement immediately led to a resurfacing of queues at petrol stations and a hike in the pump price of the product across the country.

Organised labour had subsequently met with the government team but the sit-down ended in deadlock and was rescheduled for Sunday.

The labour unions are insisting that the new price template from the Nigeria National Petroleum Company Limited (NNPCL) should be reverted to the old pump price before there would be any meaningful negotiation.

Federal government representatives at the last meeting included Dele Alake, spokesperson for the government’s delegation; group CEO of NNPCL Mele Kyari; governor of the Central Bank of Nigeria (CBN) Godwin Emefiele; and Adams Oshiomhole, former governor of Edo state.

George Akume, secretary to the government of the federation (SGF); Zacch Adedeji, executive secretary of the National Sugar Development Council (NSDC); and Yemi Adetunji, executive vice president, downstream, of the NNPCL, were also in attendance.

RESOLUTIONS REACHED AT THE MEETING

At the end of the meeting, organised labour and the government team agreed to establish a joint committee to review the proposal for any wage increase or award and establish a framework and timeline for implementation.

Part of the resolution also was for the federal government, the TUC and the NLC to review the World Bank-financed cash transfer scheme and propose the inclusion of low-income earners in the programme.

Others are that the federal government and organised labour would revive the CNG conversion programme earlier agreed with Labor centres in 2021 and work out detailed implementation and timing.

They are to review issues hindering effective delivery in the education sector and propose solutions for implementation as well as look into and establish the framework for completion of the rehabilitation of the nation’s refineries.

The federal government is to provide a framework for the maintenance of roads and the expansion of rail networks across the country.

 

The Cable

Kwara State Government on Monday directed that work days be reduced from five days to three per week for every worker in the state.

This according to the government is following the astronomical hike in transport fares.

This is contained in a statement in Ilorin, by Murtala Atoyebi, Chief Press Secretary to Governor Abdulrahman Abdulrazak.

The State Head of Service, Susan Oluwole, therefore directed all Heads of Ministries, Departments and Agencies to immediately work out a format indicating the alternating work days for each worker under them.

Oluwole said that the government took the temporary measure to ease the burden on public workers in the state.

She also said that it was part of measures to relieve the state workers of the hardship being experienced as a result of the fuel subsidy removal announced by the Federal Government.

She, however, warned the workers not to abuse the magnanimity of the governor, stressing that the regular monitoring of MDAs by her office would be intensified to ensure strict compliance.

 

Punch

Rivers State presidential election coordinator for the Peoples Democratic Party, Abiye Sekibo, on Monday alleged infringement on the provisions of the Electoral Act 2022 on the use of electronic transmission of results.

Sekibo appeared at the Presidential Election Petition Court in Abuja as a witness in aid of the PDP’s petition challenging the victory of Bola Tinubu of the All Progressives Congress as the winner of the February 25 presidential election.

The witness told the court during cross-examination by counsel for Tinubu, Akin Olujimi, that results from polling units across Rivers State were not captured on the Bimodal Voters Accreditation System.

He said, “All the polling units I went to, they could not upload the results.”

He however admitted that the PDP presidential candidate, Atiku Abubakar, did not poll up to 25 per cent of votes in the Federal Capital Territory.

Also, the Nassarawa State collation officer for the PDP, Ibrahim Hamza, alleged electoral malpractices in the state.

Hamza told the court that he signed the presidential poll results under duress.

He said, “Due process was not followed…I had to sign to obtain a copy of the results because there was this intimidation that if I did not sign, I would not be given the result. I signed it under duress.”

 

Punch

Presidential candidate of the Labour Party, Peter Obi, on Monday tendered election results from six states at the Presidential Election Petition Court.

Obi, who came third in the February presidential election, is claiming Nigeria’s presidency as the winner of the 25 February election.

Atiku Abubakar of the Peoples Democratic Party (PDP) is similarly challenging the victory of President Bola Tinubu of the APC  in the election.

Tinubu was sworn in on 29 May as Nigeria’s 16th Nigerian leader, although the suits filed by Obi and Atiku to challenge his victory continue in court.

Obi and Atiku predicated their petitions on the premise that the election was marred by widespread irregularities ranging from non-compliance with the electoral laws to alleged manipulation of results favouring Tinubu.

At the resumption of proceedings on Monday, Obi’s lawyers – Ben Anichebe and Valerie Azinge – tendered result sheets from seven states of Nigeria.

The states are Ebonyi, Nasarawa, Kaduna, Imo, Ondo, Sokoto and Kogi.

The court admitted the results as exhibits.

But Tinubu’s lawyer, Wole Olanipekun and APC’s lawyer, Lateef Fagbemi, objected to the admissibility of the results.

The legal team of the electoral umpire, the Independent National Electoral Commission (INEC), also opposed the admissibility of the electoral documents.

The lawyers reserved their objections to Obi’s tendering of the documents until the close of arguments in the case.

After admitting the documents as exhibits, the panel headed by Haruna Tsammani adjourned the suit until 6 June to continue the hearing.

Last week, Obi tendered electoral documents comprising result sheets from 12 states of the federation.

Despite winning the presidential election in Lagos, Nasarawa, Delta, Ebonyi, Imo and other states, Obi argued that votes accruing to him were significantly suppressed in favour of Tinubu.

Also, in aid of his case, the Labour Party candidate has called one witness.

He had indicated his intention to call 50 witnesses and tender tons of electoral documents to substantiate his claims of rampant fraud during the presidential election on 25 February.

Obi has three weeks to prove his case against INEC, Tinubu and the APC respondents in the suit.

 

PT

RUSSIAN PERSPECTIVE

NATO-supplied tanks destroyed in failed Ukrainian offensive – Russian MOD

Russian forces have repelled a renewed large-scale attack by Ukrainian troops in several parts of Donetsk and Zaporozhye regions, the Russian Defense Ministry said in the early hours of Tuesday, claiming that Kiev’s armed formations and military units suffered “significant losses.”

“Having suffered heavy losses the day before, the Kiev regime reorganized the remnants of the 23rd and 31st mechanized brigades into separate combined units, which continued the offensive operations close to Novodarovka and Levadnoye,” said the ministry’s spokesman, Lieutenant General Igor Konashenkov. 

The renewed offensive mainly focused on the village of Vremevka in Donetsk Region, but was stopped by missile, artillery and heavy rocket- propelled flamethrower strikes, according to Konashenkov.

“The Ukrainian Armed Forces’ total losses in south Donetsk direction were over 1,500 servicemen, 28 tanks, including eight German-made Leopard tanks and three French-manufactured AMX-10 wheeled tanks, as well as 109 other armored fighting vehicles,” the Russian military spokesman said.

It was unclear if the tally included the losses from Sunday's botched attack, which was described as “large-scale” yet “unsuccessful” by the Russian military. In that attempt alone, Kiev lost more than 250 service members, 16 tanks, three infantry vehicles, and 21 armored vehicles, according to the ministry.

Some videos circulated by military bloggers on Telegram did show what appears to be several abandoned French AMX-10 light tanks, but did not include visual confirmation of the German-made Leopards lost in battle.

The Russian Defense Ministry has yet to release footage of the latest strikes on Ukrainian military vehicles. On Monday, it published a video of Ukrainian heavy equipment, supplied by the Western nations, being destroyed by Russian strikes the day before.

Ukraine's Deputy Defense Minister Anna Maliar confirmed that Kiev’s forces were moving to “offensive actions” in some areas, but provided no comment on the failed attacks and claimed that Moscow’s talk about the Kiev’s “counteroffensive”blunders was an attempt to to “divert attention” from its own alleged failures.

 

WESTERN PERSPECTIVE

Russia says it thwarts another major attack in Ukraine, inflicting heavy losses

Russia said on Tuesday it had thwarted another major Ukrainian offensive in Donetsk, inflicting heavy losses, while Ukraine hailed progress in fighting in the east, although it was unclear if it marked the start of a long-anticipated Ukrainian counteroffensive.

On Monday, Russia said Ukrainian forces over the weekend had begun a major offensive in the southern part of the Donetsk region, which it had also thwarted.

Ukrainian officials have made no mention of any broad, significant new campaign, although in his nightly address on Monday, Ukrainian President Volodymyr Zelenskiy was enigmatic, hailing "the news we have been waiting for" and forward moves in Bakhmut in Donetsk.

Russian President Vladimir Putin sent troops into Ukraine on Feb. 24 last year in what the Kremlin expected to be a swift operation, but its forces suffered a series of defeats and regrouped in the country's east.

Tens of thousands of Russian troops dug in over the winter, besieging Bakhmut for months and bracing for an expected Ukrainian counter-attack to try to cut Russia's so-called land bridge to the Crimean Peninsula.

The latest Russian defence ministry statement said Russian forces had inflicted huge personnel losses on attacking Ukrainian forces and destroyed 28 tanks, including eight Leopard main battle tanks and 109 armoured vehicles. It said total Ukrainian losses amounted to 1,500 troops.

"Having suffered heavy losses the day before, the Kiev regime reorganized the remnants of the 23rd and 31st mechanized brigades into separate consolidated units, which continued offensive operations," the ministry said on Telegram.

"A complex fire defeat was inflicted by army forces, assault and operational-tactical aviation, missile forces and artillery, as well as heavy flamethrower systems."

Reuters could not independently verify the reports. There was no immediate comment from Kyiv about Russia's assertions.

Russia and Ukraine have often made claims of inflicting heavy human losses on each other which could not be independently verified.

The Washington Post reported that some U.S. officials thought the counteroffensive was underway, but White House national security spokesperson John Kirby declined to say whether he thought this was the case.

"I'm not going to be talking for the Ukrainian military," he told a regular briefing.

"(But) whenever they decide to step up and whatever they decide to do, the president is confident that we did everything we could over the last six, eight months or more to make sure that they had all the equipment, the training, the capabilities to be successful."

In a promotional video released on Sunday and urging silence in regards to any military actions, Ukraine's defence ministry said: "Plans like silence - the beginning will not be announced."

HIGH STAKES

The success or failure of a counteroffensive, expected to be waged with billions of dollars worth of advanced Western weaponry, is likely to influence the shape of future Western diplomatic and military support for Ukraine.

Ukrainian Foreign Minister Dmytro Kuleba told Reuters on Monday Ukraine now had enough weapons for a counteroffensive but declined to comment when asked whether it had begun.

Russia's defence ministry said previously Ukraine had launched a large-scale offensive on Sunday in five sectors of the front in southern Donetsk, an area where Moscow has long suspected Ukraine would seek to drive a wedge through Russian-controlled territory.

"The enemy's goal was to break through our defences in the most vulnerable, in its opinion, sector of the front," it said. "It had no success."

In its evening report on Monday, Ukraine's General Staff made no mention of any large-scale offensive, nor did it suggest any deviation from the usual tempo or scope of fighting along front lines that have not changed significantly for months.

Deputy Defence Minister Hanna Maliar said on Telegram Ukraine was "shifting to offensive actions" along parts of the front but dismissed suggestions of a major operation.

"The main focus now is on the Bakhmut sector," said Maliar. "This has resulted in certain successes, including advances. We have taken control of certain heights."

Russian Wagner group mercenaries captured Bakhmut last month and handed their positions there to regular Russian troops.

Writing on Telegram, Wagner militia leader Yevgeny Prigozhin, who has often clashed with the Russian defence ministry, said its latest statement and the huge Ukrainian losses it described was "simply wild and absurd science fiction."

Russia now controls at least 18% of internationally recognised Ukrainian territory and has claimed four more regions of Ukraine as Russian territory after annexing Crimea in 2014.

** Russian attempts to waste Ukraine's advanced air-defense missiles with cheap drones are failing, UK intel says

Russia launched more than 300 Iranian-made drones at Ukraine throughout May, in an attempt to get the country to use up its stockpile of advanced air defense missiles, but the efforts didn't work, according to UK intelligence.

In an intelligence update on Monday, the UK Ministry of Defence labeled the campaign Russia's "most intense use" of Iranian Shahed uncrewed aerial vehicles to date, and said Russia was likely firing the drones in "an attempt to force Ukraine to fire stocks of valuable, advanced air defence missiles."

But it said that Russia was "unlikely to have been notably successful: Ukraine has neutralized at least 90% of the incoming OWA-UAVs mostly using its older and cheaper air defence weapons and with electronic jamming."

Shahed drones are estimated to cost upwards of $21,000 — relatively cheap compared to the cost of missiles, which Russia has also been firing at Ukraine, and more advanced unmanned aircraft.

Russia's failure to get Ukraine to waste its advanced air defense missiles comes alongside Russia's inability to destroy Ukrainian air defence systems, the UK MOD added.

The MOD said last month that Russia was prioritizing trying to knock out Ukraine's advanced air defense systems after Ukraine shot down Kinzhal missiles that Russia had previously bragged were unstoppable.

Ukraine has a variety of air defense systems, including the advanced Patriot missile systems it received from the US and European allies.

Last month, Russia claimed to have destroyed one Patriot missile system, but the US said it was still functional and had been quickly repaired.

The UK MOD also said that Russia was likely trying to "locate and strike Ukrainian forces well behind the front line," but without much success.

"Russia remains very ineffective at hitting such dynamic targets at range because of its poor targeting processes," it said.

 

RT/Reuters/Business Insider

Shelling, looting in Sudan's capital as military factions battle for eighth week

Shelling and heavy clashes hit areas of Sudan's capital on Monday, residents said, with reports of spreading lawlessness in Khartoum and in the western region of Darfur after more than seven weeks of conflict between rival military factions.

Fighting between the army and the paramilitary Rapid Support Forces (RSF) intensified after the expiry late on Saturday of a ceasefire deal brokered by Saudi Arabia and the U.S.

The war has uprooted more than 1.2 million people within Sudan and sent about 400,000 fleeing into neighbouring countries, inflicting heavy damage on the capital where the remaining residents are at the mercy of battles, air strikes and looting.

On Monday, residents reported a second consecutive day of fighting across the three cities that make up the nation's wider capital - Khartoum, Omdurman and Bahri. They said there had been rare ground clashes in Omdurman as well as shelling, and fighting in East Khartoum district and on the southern rim of the capital.

"The neighbourhood where we live in the centre of Omdurman is looted publicly on a daily basis without anyone intervening to prevent it, with clashes and shelling continuing around us," said 37-year-old resident Mohamed Saleh.

In Khartoum East, RSF troops who have spread out in neighbourhoods across the capital were in full control and were looting extensively, said Waleed Adam, a resident of the area.

"You see them right in front of you, taking cars, money, gold - whatever they can get their hands on," he told Reuters by phone. "I guess it's just a matter of time until they come to my street."

The RSF says it has been working to protect civilians by arresting looters.

DARFUR VIOLENCE

Some of those who fled the war have headed to neighbouring countries including Chad, South Sudan, and Central African Republic (CAR) which are already struggling with poverty, conflict and a dip in humanitarian aid.

The arrival of nearly 14,000 people in northeastern CAR and a halt to cross-border trade "puts additional pressure on the limited resources available to the 130,000 extremely vulnerable people in the region," Mohamed Ag Ayoya, the U.N. humanitarian coordinator for CAR, told a press briefing in Geneva.

The war has also triggered unrest in Darfur in Sudan's far west, a region that was already suffering from mass displacement due to earlier conflict and where residents in several cities and towns have reported attacks by militias linked to Arab nomadic tribes.

In recent days at least 40 people were killed and dozens more were wounded in Kutum in North Darfur State, according to activists who monitor the region. Residents have also reported widespread looting and insecurity in the area.

On Monday, the RSF, which has its power base in Darfur and its origins in the Arab-dominated militias, released a video purporting to show they had taken over the army headquarters in Kutum, a commercial hub and one of the larger towns in the state.

There was no immediate comment from the army, which had denied on Sunday that the RSF had taken the town.

There have been long communication blackouts in parts of Darfur, where aid groups have found it especially complicated to bring in humanitarian supplies.

In El Obeid, a city 360 km (220 miles) southwest of Khartoum and on a key route from the capital to Darfur, residents reported large deployments of RSF forces and the closure of some roads.

Recent days have brought the first showers of the year in Khartoum, marking the start of a rainy season that is likely to complicate a relief effort already hamperedby bureaucratic delays and logistical challenges.

 

Reuters

It’s disheartening to see a dubiously contrived consensus emerging among unsuspecting and otherwise critically-minded Nigerians on fuel subsidy.

The rhetorical offensive of successive governments on the issue is sadly proving successful. The debate has now shifted from whether petrol, the single most consequential product in our economy that directly or indirectly drives all economic activities, should be subsidised, to when and how subsidy should be removed, and how the government should invest the resulting revenue boost.

That’s exactly how the political elites want it. These are their preferred terms for discussing subsidy. This framing exculpates them, blames the nebulous and externalised concept of “subsidy corruption,” and demands nothing from them to help fix the fiscal mess we re in.

But the main issue is not about the corruption in the subsidy regime. They are trying to shape and shift the terms of the discussion to only focus on inflated subsidy invoices, which they had been paying to their favoured subsidy claimants.

Nigerians should stop falling into the political elites’ well-laid rhetorical trap for justifying the effort to transfer the cost of their greed, incompetence, and corruption to the masses.

A serious government that’s not implicated in the subsidy corruption and that truly wants to audit its subsidy waste will take measures to clean it up so that only legitimate subsidy claims are paid. This is the only sensible short-term fix that does not punish regular citizens for the financial sins of their political elite.

It is not about whether the proceeds of the so-called subsidy removal will be invested wisely. That is part of their rhetorical deception, their effort to distort the discussion to focus on wrong questions and wrong premises. We have seen how the savings of previous “subsidy removals” were frittered away or mismanaged, but that is the wrong conversation to be having.

There are real questions that need to be posed and which they are trying to keep Nigerians from asking by getting us to accept a flawed premise. They are trying to convince us that subsidising fuel by whatever means, which is popular in many countries, including the US, because of the positive ripple effects of affordable petrol on the real economy, is bad. They are doing so by steering you rhetorically to focus on the wrong issues. Here are the real questions and issues: 

1. If subsidy has been removed or partially removed multiple times in the past, why does the need to heavily subsidise fuel persist? Could it be that the idea of subsidy removal is a fraudulent distraction from the real issue of our loss of domestic refining capacity, despite spending millions of dollars on failed turnaround maintenance (TAM) contracts and our dependence, for the last two-and-a-half decades, on imported petrol?
2. Related to the above, why have successive governments not tackled the root cause of the problem by restoring domestic refining to meet our petrol consumption needs?
3. With the Federal Government being an investor, we are told, in Dangote Refinery, with the revelation by the CBN that it lent tens of billions of naira to the refinery project, and with the previous announcement by NNPC that it will supply about 400,000 barrels of our daily crude production to Dangote Refinery, which should eliminate the costs associated with purchasing and importing overseas petrol, why should fuel not be affordable in Nigeria, even if Mr Dangote adds something on top of his refining cost to make a deserved profit for his trouble? It is a mystery to us laypeople.
4. Given the reality that, for good or ill, in Nigeria, everything in the real economy (public transportation, home and small business power generation, the service industry, the movement of goods and labour, etc.) depends on petrol being affordable, is the subsidy not worth sanitising and preserving, whatever it takes, in the short-term, in order not to destroy what’s left of the battered economy and inflicting more suffering on our beleaguered masses?
5. Related to the above, why is it that every time the ruling political elites spend, borrow, and steal their ways into fiscal trouble, they try to raise revenue through “subsidy removal”, rather than cutting the perks of public officials and tackling the scandalous waste in the budgeting system of the ministries, departments and agencies (MDAs) of government? Is it because stopping subsidy is the path of least political resistance and leaves intact the equally costly but disguised subsidies extended to the political elites in the executive, legislative, and bureaucratic realms of government?
6. Is the rhetoric of “subsidy removal” not a policy discourse or consensus informed by the out-of-touch narcissistic consumption habits of political and business elites who can afford expensive petrol and are thus unable to relate to how regular Nigerians will find their daily routines truncated and their survival hustles drastically curtailed?
7. Is it not the case that if Nigeria continues to import refined fuel and cannot refine its own, the discrepancy between the landing cost of imported fuel and the pump price will resurface intermittently, no matter how many times subsidy is “removed,” as crude prices, shipping costs, and other fluctuating variables in the international economy push the landing cost up or down? Does that not mean that no subsidy “removal” is final, as our history has shown, since unpredictable developments in the global petroleum demand and supply equation and supply chain will likely, even if temporarily, produce a new discrepancy and necessitate subsidy in the future? By the way, why do we pay subsidy even in times when global oil demand is down and there’s a slow down in global economic activity? Is that not fraudulent subsidy? Is that corruption, along with the graft of over-invoicing, not the real problem that needs to be tackled if government is not lazy or complicit? Again, why skirt the real problems to implement a measure that’s not a permanent fix and will inflict long-lasting, perhaps fatal, damage on the economy and citizens’ livelihoods? Why cut off your hand because you have a stubborn, painful, but treatable pimple on it?

In a nutshell, the political elites want to get us from “paying bogus subsidy claims is bad” to “subsidising petrol is bad.”

Once we naively make that rhetorical shift, we’ve given them undeserved rhetorical victory and they’ve coyly won us over to their side.

Once that happens, we’ll be stuck discussing tangential, atmospheric issues, questions, and scenarios, leaving aside the main issues of their unwillingness to tackle corruption in subsidy payments and their failure to restore domestic refining — the short- and long-term solutions to the problem.

In 2008, University of Chicago economist (and future Nobel laureate) Richard Thaler and Harvard law professor Cass Sunstein published their book Nudge, which popularized the idea that subtle design changes in the architecture of choice (“nudges”) can influence our behavior. The book became a global phenomenon and marked an intellectual watershed. But 15 years after its publication, the question remains: Has behavioral economics lived up to the hype?

Thaler and Sunstein based their thesis on the research and insights of psychologists Daniel Kahneman and Amos Tversky, which they had previously applied to the field of law and economics in a Stanford Law Review article (co-authored with Christine Jolls). While the paper was one of the most cited law-review articles ever, it remained virtually unknown outside the discipline.

But following the publication of Nudge, and against the backdrop of the global financial crisis, behavioral economics burst into the mainstream, turning Thaler and Sunstein into superstars. Thaler received the Nobel Prize in economics in 2017. Sunstein was recruited by the Obama administration to head the White House Office of Information and Regulatory Affairs and translate the book’s findings into policy, spawning more than 200 “nudge units” around the world.

Acclaimed author Michael Lewis fueled further interest in behavioral science with his books Moneyball and The Big Short (the latter’s screen adaptation featured a cameo by Thaler). In just a few short years, behavioral economics went from niche specialization to cultural phenomenon.

Beyond the buzz, the behavioral breakthrough also promised to usher in a full-fledged epistemic revolution, fundamentally altering the sources of knowledge deemed valuable. In particular, behavioral economists underscored the importance of psychological factors, in addition to econometric analysis, in understanding how economic institutions work.

The integration of behavioral sciences into microeconomics, which focuses on the decisions and actions of individual actors, has led to a growing recognition that consumers’ and firms’ own heuristics and biases may cause their behavior to deviate from the economic model of rationality. Nowadays, most major universities incorporate behavioral economics into their curricula, and the majority of mainstream textbooks cite behavioral approaches (even if cursorily). Moreover, by exposing the flaws in the prevailing rational-actor approach, behavioral economics has amplified other perspectives, such as Ernst Fehr’s work on “strong reciprocity,” Robert Shiller’s Narrative Economics, and Nathan Nunn’s scholarshipon cultural economics.

But the impact of the behavioral revolution outside of microeconomics remains modest. Many scholars are still skeptical about incorporating psychological insights into economics, a field that often models itself after the natural sciences, particularly physics. This skepticism has been further compounded by the widely publicized crisis of replication in psychology.

Macroeconomists, who study the aggregate functioning of economies and explore the impact of factors such as output, inflation, exchange rates, and monetary and fiscal policy, have, in particular, largely ignored the behavioral trend. Their indifference seems to reflect the belief that individual idiosyncrasies balance out, and that the quirky departures from rationality identified by behavioral economists must offset each other. A direct implication of this approach is that quantitative analyses predicated on value-maximizing behavior, such as the dynamic stochastic general equilibrium models that dominate policymaking, need not be improved.

The validity of these assumptions, however, remains uncertain. During banking crises such as the Great Recession of 2008 or the ongoing crisis triggered by the recent collapse of Silicon Valley Bank, the reactions of economic actors – particularly financial institutions and investors – appear to be driven by herd mentality and what John Maynard Keynes referred to as “animal spirits.”

Even without a financial panic, as Keynes notes in The General Theory of Employment, Interest, and Money, “anticipating what average opinion expects the average opinion to be” is fraught with error and uncertainty. But, despite George Akerlof’s persistent advocacy for a behavioral macroeconomics that considers “cognitive bias, reciprocity, fairness, herding, and social status,” the real-world foundations of macroeconomic theory remain shaky, and the scope of efforts to systemize our understanding of contagion-type phenomena through tools like network analysis remains limited.

The roots of economics’ resistance to the behavioral sciences run deep. Over the past few decades, the field has acknowledged exceptions to the prevailing neoclassical paradigm, such as Elinor Ostrom’s solutions to the tragedy of the commons and Akerlof, Michael Spence, and Joseph E. Stiglitz’s work on asymmetric information (all four won the Nobel Prize). At the same time, economists have refused to update the discipline’s core assumptions.

This state of affairs can be likened to an imperial government that claims to uphold the rule of law in its colonies. By allowing for a limited release of pressure at the periphery of the paradigm, economists have managed to prevent significant changes that might undermine the entire system. Meanwhile, the core principles of the prevailing economic model remain largely unchanged.

For economics to reflect human behavior, much less influence it, the discipline must actively engage with human psychology. But as the list of acknowledged exceptions to the neoclassical framework grows, each subsequent breakthrough becomes a potentially existential challenge to the field’s established paradigm, undermining the seductive parsimony that has been the source of its power.

By limiting their interventions to nudges, behavioral economists hoped to align themselves with the discipline. But in doing so, they delivered a ratings-conscious “made for TV” version of a revolution. As Gil Scott-Heron famously reminded us, the real thing will not be televised.

 

Project Syndicate