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Fencing the Weak “Preys” from their “Predators” 

 Adal Isaw

  March 6, 2011

For a while; let’s set aside the political and economic achievements that Ethiopia has registered for several years.  Never mind that Ethiopia has grown by double-digit figure and the evidence for it is found at ease.  Never mind that Ethiopia has fought so hard to be safe and stable from the spoils of extreme elements of state and non-state actors, in a region where stability is a hard earned currency of survival, attained via a convoluted project for peace.  Instead, let’s mind for a while on the merit of the recent price ceiling agreement between business and the Ethiopian government, since some among many are contending that it is a measure taken for lack of economic knowledge.     

It’s given that, a great deal of work has to be done to utilize the knowhow of citizens in economic and other activities, in a way that maximizes the critical and positive role of individuals and groups of individuals.  This doesn’t make the government an actor whose role in economic activities of Ethiopia is secondary.  The government shall at all times regulate the “free market” and make agreements with business on behalf of the Ethiopian people if it finds it necessary.  The pivotal question is not whether the Ethiopian government should regulate areas of life-sustaining economic activities with or without the consent of business. But it is a question of to what degree and in what direction. 

In Ethiopia, it’s not as if laissez faire has brought itself rules and regulations that stifle growth.  Quite to the contrary; a laissez faire economic activity that the government tolerated for a reason not to stifle growth, has now triggered an agreed on action by business and the government to impede predatory pricing that may stifle economic growth.  The Ethiopian government had to do the recent agreement—for to stand idle while millions of citizens are faced with predatory pricing of life-sustaining commodities is an unthinkable dereliction of duty by a government.

            The recent agreement between business and the Ethiopian government is therefore a duty well thought and a measure of a middle-ground strain.  This agreement on one hand shows the impractical and undesirable nature of the doctrine of laissez faire.  And on another, it shows that the government cannot sit idle, especially, when the Ethiopian society becomes more complex and economic activity becomes significant in nature, affecting those with limited income adversely.

            Abuses in economic activities that especially target life-sustaining commodities should be always corrected by regulations, and if possible, by some kind of accord between business and the government.  The measure of correction by the government may target to eliminate sore spots, for example, an overnight 900% price hike by business on meat and grain for no other reason than greed.  It should be noted with emphasis that a measure taken to eliminate sore spots is not tantamount to a measure taken to control an entire economic activity.  Furthermore, a measure of correction is neither peculiar nor an unimaginable insertion of the power of government, but it is a long-lived familiar economic activity that even the US has been using for the past one hundred years.

            In America, it took the Anti-Trust Law to “cut short the hands” of predatory pricing.  Even after the Anti-Trust law was in full swing, predatory pricing in America did not cease.  Consider this:  “While Reagan extolled the virtues of free enterprise in front of the logo, G.E., along with Westinghouse, Allis-Chalmers and other giant corporations, was habitually controlling the market by clandestine price fixing and bid rigging agreements, all of which led, in 1960, to grand jury indictments, in what was characterized by the Justice Department as the largest criminal case ever brought under the Sherman Anti-Trust Act. Three G.E. executives pleaded guilty and went to jail.”,2

            The objective of the Ethiopian agreement, much like the Anti-Trust Law of America, is to stifle economic activities that habitually control the “free market” by covert price fixing based on greed.  The Ethiopian agreement is not intended to stifle competitive pricing but to curtail predatory pricing—the greed based inflation of prices on commodities vital to life.  The so called “free market” is not something mythical devoid of “preys” and “predators.”  Instead, it is a meadow where “preys” and “predators” intermingle with bird’s-eye regulation of the government. 

Needless to say, the government should at all times fend the weak “preys” from greedy “predators.”  While fending, the government should carefully walk the fine lines among the fences as to not impede the positive activities of the benign “predator”.  Seen from this angle, therefore, the recent agreement between business and the Ethiopian government to cap prices of essential commodities is nothing more than an act of fencing the weak “preys” from their “predators.”