LSE vs Oxford University, understanding their dominant economic models and their impact on Kenya

Majuu choosing a university especially for postgrad studies must be informed by one’s theoretical leanings. That is why they insist on interviewing an applicant, and the importance of the motivation letters that accompany one’s application. The admission dept asks whether you are a match, if not they recommend a school that would fit you.

Where am I going with this? The school one attenda determines how they will work. Now these two schools trained Mwai Kibaki (LSE) and David Ndii (Oxford). David Ndii has gone for Kibaki’s throat criticizing, nay dismissing him and the achievements that he says are minimal if not non-existent. To appreciate these two gentlemen, let us scan through the dominant economic models of the two schools.
When Kibaki studied Economics at LSE the dominant theory was the Keynesian [keinsian] was the official creed. Focussing on macroeconomics, John Maynard Keynes developed a model to aid US and the post war Europe to revamp their economies. He theorized that govt has a major role to play in the economy. And to spur economic growth, govt must invest in the market through infrastructure etc. When the economy is doing badly the govt should hire people to dig a big hole and bury money then pay people to dig out the money. By focussing on the macroeconomics the microeconomics will take care of themselves (the boats will rise with the water). I am not an economist so I won’t delve deeper. Now let’s look at David Ndii.

By late seventies, Keynesian model was losing steam as there wasn’t much progress globally to report, but still there wasn’t a strong theory to offset it. Oxford on the other hand focusses on microeconomics when modelling macroeconomics. Oxford has led in modifying Keynesian theory to focus on microeconomics. The New Keynsian theorists use
New Keynesian Dynamic Stochastic General Equilibrium model (DSGE, as part of RBC theory) that came up in the seventies and became popular in the 80’s (Ndii graduated in the 90’s). The RBC theory factors in households , firms and govt as key players in the economy. The DSGE model calls for distortotive and lumpsum taxation and the government investing in public goods and consumption. I will stop here.

You now can clearly understand Kibaki and his focus on money and infrastructure; and Ndii’s love for data (DSGE model is also based on historical data), taxation and prices of consumer goods. Just as Ndii is lambasting Kibaki and his theoretical leanings, he must remember that no theory no model is perfect and in policy implementation, the imperfections are reflected in the lives of citizens. Robert Lucas the proponent of DSGE criticized the reliance on historical data to formulate policy.

Ni hayo tu. Again I am not an economist so if I am not coherent or I have not done justice to the two models, I appreciate the economists who will make this better.

signed,
[SIZE=5][COLOR=rgb(97, 189, 109)]Koolibah[/SIZE]

The two theories can be seen at work in China and India…

Take your pick which one is successful and the other a basket case…

Wale majamaa wa bei ni 150 na ninatomba mamako hawawezi onekana hii thread. Anyway interesting read.

Keynesian model is straight forward and practical, it provides avenues for PPP. It only needs to be fortified with social programs (which in themselves are investments, something Kibaki didn’t seem to understand though Kazi Kwa Vijana vindicates him kiasi). DSGE is too academic, what with reliance on historical data and a complicated (in my view) role for govt. You realize nobody in the govt is talking economics, even on tweeter Ndii appears to be talking to himself. Euro can’t dare say anything beyond the talking points supplies by Ndii, kila siku its about subsidizing production not consumption. The govt is even coming up with taxes that blow up in their face (distortionary taxes) and they have to retreat, meaning there was no discussion, just doing what Ndii said. But marrying the two would be better. I think DSGE’ focus on households is great. It’s reliance on data makes it a great tool for policymakers to forecast. It is the current in-thing around the world with major Central Banks using it however banks like NY Federal Reserve Bank, Australia’s and Germany’s are modifying it; in Kenya I fear we are going for the textbook version. They are not mutually exclusive.

Ata wa kudunga na kunusa.
Thanks

Nice try even they are more of philosophies than “models”. Models we talk of “deterministic”, “probabilistic”, “Micro”, “Macro” etc. Keynesian, just like Neoliberalism, is the larger school of thought.

Kibaki understood that capitalism has to be “checked” by some level of social welfare spending, else massive inequality and poverty will emerge. Free primary education, some free medical services, subsidised electricity bills, pesa kwa wazee, stima mashinani etc are all social welfare spending to “distribute” income. Again, you can’t organise an economy over a “model”. Impracticable.

I don’t think David Ndii is worth much a discussion. Other day I started typing a thread about the council of Economic advisors which is a failure. I got tired and slept. Ndii chairs that body. What idea has that body floated to stir the country out the current economic mess. The only thing they are talking about is subsidies and controlling the dollar, maybe food production.

In your home, if you found yourself in financial hardship, you would consider two things. One is cut your costs, but also ways to generate extra income. In fact the latter is more important. Towards that, what have they targeted? KRA? What about the countries economic production goals?

Ndii is an economic theorist, on paper. A paper tiger.

Agreed.

Regurgitation of what your poorly schooled and paid lecturers taught you while trying so much to awe your lady colleagues in campus…

Nothing much to discuss on the guy, but since he is the puppeteer in matters economics here and his tirade against Kibaki I felt we should understand him in order to understand JSKS. Ndii is an armchair economist spewing textbook knowledge. He is not even modifying it and that’s why it is not making sense in it’s application. These models are designed on the basis of western economies that have comprehensive data and are stable and predictable. In Africa, with limited data and high unpredictability one has to modify the model

I am not an economist. I did econ in high school and I impressed girls with the law of diminishing returns

Ndii is a huge proponent of neoliberalism. You won’t know what will hit you. Soon you will say Ndii has misadvised the President.

Nashangaa sijaona @Wanaruona hapa. Angetuambia vile gold inafit in kwa hii stori

Neoliberalism is on its death bed. What we will witness is rise of nationalism. Neoliberalism gave rise to the globalisation. Which caused increased in the wealth gap between the rich and the poor. The working middle class are struggling because job were exported.
The rich elite buys the politicians they don’t pay tax because of favourable policy from the politicians. The masses are taxed more to fund the government.

Kijana capitalism is on its death bed. American have been preaching against socialism and communism. But the results are not positive. It lead to the masses being poorer. The Chinese model and the Indian economic model has worked for them.

Sisi kama leftists tunakuwanga anti-capitalists pia kama hujawai jua

Neoliberalism isn’t going away anytime soon. Neoliberalism is a philosophy to organise the market. Nationalism is not since it is more of a political ideology. Well, I agree that Neoliberalism should be placed by a better philosophy but none has been proposed sor far.

China customised capitalism and created “communism with Chinese characteristics”, AKA :socialism with Chinese characteristics". In actual sense, China has a capitalist system known as “developmental state” (economy is centrally planned). It will soon run it course…

Pre-colonial Africa was capitalist. Why do you want to forsake our forefathers :smiley: