ISSUE 02
MARCH 2023
ECONSCHOLAR
MAGAZINE
Your Economics Guide for the month
HTTPS://WORDPRESS.COM/POST/ECONSCHOLARUON.WORDPRESS.COM/1565
By the Economics Scholar Panel - UoN
1
Note from our Editor
Welcome to the second issue of the Econ scholar magazine. It features articles
handling matters to do with economic inequality, culture as a factor for sustainable
development, “Nairobbery” among other stories. Our feature story focuses on
economic inequalities in Kenya. The author notably argues that wage is the main factor
affecting economic inequality and is greatly influenced by forces of demand and
supply. He observes further that excessive taxation and lack of education increase
levels of inequality and concludes by offering solutions to combat excessive wealth
inequalities amongst netizens of any given country.
Whereas wage inequality seems to affect a majority of people in an economy, the
author of “market for lemons” observes that the market is in constant need of
individuals who have honed their skills. He emphasizes the need for skill, passion and
continuous re-invention of the labor market.
Sustainable growth for any economy is greatly
influenced by a people's culture. Every culture has a
dominant age group, gender and economic activity.
Therefore in order to thrive in a particular region as
an industry, you must greatly consider a people's
culture else you are set up for a downhill trend
should you invest in a culture that does not
appreciate your business model. A closer look at
the piece about culture as a factor for sustainable
growth expounds on this issue.
Our last article takes us back to the genesis of the
modern period and notes some of the effects this
has brought in the capital city such as the famous
“Nairobbery”.He makes note of the different
initiatives put forth by the government and
regrettably records that not much progress has
been made. He however recommends that the
theft experienced in the Central Business District
can be cubbed by a closer look into how the city is
governed.
As I pen off, I invite you to spare a few minutes and
dig into this rich source of literature.
- Faith Kasila (Editor-in-chief)
2
Table of
Contents
Highlight!!!
Effect of Economic
Inequalities on Societies
Anarcho Policing
Cultural Diversity and
Economic Development
The Market for Lemons
Events by the Economics
Scholar Panel
03
07
10
13
15
Effect of
economic
inequalities on
societies
Economic inequality means unequal access
to wealth and income. This brief mostly deals
with income. In most developed countries,
market income is mainly from wages and
salaries, but also from returns on capital such
as shares and rents. People's market income
is then reduced by taxation and/or increased
by government transfers such as pensions
and child payments. Often characterized by
the aphorism “the rich get richer while the
poor get poorer,” the phrase often refers
more specifically to the gap in income or
assets between the poorest and richest
segments of an individual nation. There are
many reasons for economic inequality within
societies. These causes are often interrelated, non-linear, and complex. Among the
acknowledged factors that impact economic
inequality in some part are the labor market,
innate ability, education, race, gender,
culture,
wealth
condensation,
and
development patterns.
One of the major reasons there is economic
inequality within modern market economies
is because wages are determined by a
market, and are hence influenced by supply
and demand In this view, inequality is caused
by the differences in the supply and demand
for different types of work.
3
A job where there are many willing workers
(high supply) but only a small number of
positions (low demand) will result in a low
wage for that job. This is because competition
between workers drives down the wage. An
example of this would be low-skill jobs such
as dish-washing or customer service.
Because of the persistence of unemployment
in market economies and the fact that these
jobs require very little skill results in a very
high supply of willing workers. Contrary wise,
there is a limited number of jobs available.
Competition amongst workers tend to drive
down the wage since if any one worker
demands a higher wage the employer can
simply hire another employee at an equally
low wage.
One important factor in the creation of
inequality is the variable ability of individuals
to get an education. Education, especially
education in an area where there
Among the acknowledged
factors that impact economic
inequality in some part are the
labor market, innate ability,
education, race, gender, culture,
wealth condensation, and
development patterns.
4
eroding social capital… The timing of the two
trends is striking: somewhere around 196570 America reversed course and started
becoming both less just economically and
less well connected socially and politically
Wealth concentration arguably makes
economic inequality a vicious cycle. The
effects of wealth concentration may extend
to future generations. Round of the vicious
cycle Children born in a rich family have an
economic advantage, because of wealth
inherited and possibly education, which may
increase their chances of earning a higher
is a high demand for workers, creates high
wages for those with this education.
Contrariwise, those who are unable to afford
an education generally receive much lower
wages. Many economists believe that a major
reason the world has experienced increasing
levels of inequality since the 1980s is because
of an increase in the demand for highly
skilled workers in high-tech industries. They
believe that this has resulted in an increase in
wages for those with an education, but has
not increased the wages of those without an
education, leading to greater inequality.
Prof Robert Putnam links social capital and
equality “Community and equality are
mutually reinforcing… Social capital and
economic inequality moved in tandem
through most of the twentieth century. In
terms of the distribution of wealth and
income, America in the 1950s and
1960s was more egalitarian than it had been
in more than a century… those same decades
were also the high point of social
connectedness and civic engagement. Record
highs in equality and social capital coincided.
Conversely, the last third of the twentieth
century was a time of growing inequality and .
income than their peers. These advantages
create another. It has been noted that the
rich tend to provide their offspring with a
better education, increasing their chances of
achieving a high amount of income.
Furthermore, the wealthy often leave their
offspring with a hefty inheritance, jump
starting the process of wealth condensation
for the next generation.
Progressive taxation, is another factor that
contributes to economic inequality where the
rich are taxed more than poor, is effective at
reducing the amount of income inequality in
society. The Nationalization or subsidization
of essential goods and services such as food,
healthcare, education, and housing is also
thought to reduce the amount of inequality in
society - by providing goods and services that
everyone needs for cheap or free,
governments can effectively increase the
disposable income of the poorer members of
society. Some have suggested that the rich
do not value a dollar as much as the poor
because of the decreasing marginal utility of
wealth. They argue that this causes a
redistribution of income towards the poor.
5
This is popularly known as the “trickle-down
effect", and its effects are thought to be
strongest in a booming "heated" economy.
Low levels of income often also lead to a lack
of health insurance for many people.
Especially in countries where health
insurance is not mandatory, poor people may
often refrain from getting health insurance
since they simply are not able to financially
afford It..However, this may lead to serious
health issues in the long run, since in case of
injury or diseases, those people will not have
access to proper medical treatment.
Economic inequalities can be eradicated if we
adopt the following strategies
By doing so, those poor countries may be
more likely to close the global income and
wealth gap to a certain extent and may be
able to transit from the state of a developing
country to the state of a developed country
faster.
Second trading with poor countries has to be
set up in a way that rich Western countries
do not exploit those countries, but rather
offer them fair trade conditions. Fair trade
conditions are crucial in order to strengthen
the local economy of developing countries
and to increase the overall wealth of local
companies and workers.
Third Better access to education Education is
key to overcome poverty and to accumulate
wealth. Therefore, it is crucial to improve
access to education. For instance, this could
mean that every child may be entitled to
attend school. It could also mean that poor
families get financial support in order to be
able to send their kids to school or to
university. By supporting poor families and by
strengthening the rights of children regarding
First Global Support In order to combat the
global inequality regarding the distribution of
wealth, governments from rich Western
countries have to support poor countries all
over the world with financial subsidies in
order
to
improve
their
education
infrastructure and to make them more
competitive.
access to education, poverty and
the
unequal distribution of income and wealth
could be reduced.
Fourth Create jobs It is also crucial to create
jobs, especially in regions with high levels of
unemployment so that people have more
working opportunities and can generate a
higher average income to accumulate wealth.
This could be achieved through tax
advantages for
companies that are willing to settle down in
those regions. By giving companies tax
advantages or other financial benefits,
companies may be more eager to open
branches in those regions and to create jobs.
6
Conclusion
I will give the government credit for the
Through awareness of intersectionality, we
initiatives it has taken to redistribute income.
Projects like CDF, Economic Stimulus Project,
can also understand our differences in
terms of inequality.
Women and
Slum Upgrading Program and free primary
and secondary education have enhanced the
welfare of people in low-income groups. It is
also working on Vision 2030, which is based
on three development pillars; economic,
marginalized communities are more
exposed to economic inequality. It is
important
to have these discussions as we forge to be
an economic powerhouse in Africa. We
social, and political, is supposed to transform
Kenya into a newly industrialized “middle-
need relevant policies that will ensure
equitable distribution of gains from the
income” country providing a high-quality life
to its citizens. It is important to note that the
economic revolution. We need to make the
country bearable for everyone, so that
implementation of these programs has been
stagnating, therefore, there is still more to
people like my mother don’t have to
struggle even after working 80+ hours a
do.Economic inequality is a complex
paradigm that has paralyzed people at the
week.
bottom of the income and wealth pyramid.
Abubakar Mohamed Farah
Economics student University of Nairobi
7
Anarcho Policing
Are men
inherently
rational? Can
we really selfregulate?
The genesis of the modern period was
defined by a number of events, one of
them being the transition to the modern
state, with its conception as found in the
ideas of the social contract as put forth by
the three philosophers, John Locke,
Thomas Hobbes and Jean Jack Rousseau.
These are also to be found in the works of
Nichollo Machiavelli and also in the
conception of the modern state as per the
1648 Westphalia Treaty as well as the
1933 Montevideo Treaty. One common
thing is the idea of a government, that is
simply the group of people that we give
consent to protect our natural rights
and liberties and also exercise sovereignty
on behalf of the people, the social contract
theorists will tell you that due to the state
of nature it is imperative then that we do
have a government to regulate the
animalistic behaviour of people.
But then you will also have another
political philosophy which has also his
brother, an economic philosophy. While
the former is anarchy, the latter is
anarcho-capitalism, both of which believe
that the state is inherently evil and
therefore an impediment to the human
liberties and progress and that since men
8
are rational, the society can then selfregulate, thus there should be no state,
meaning even the government should be
abolished.
Thomas
Hobbes,
who
advocates for absolutism will however tell
you that the government should be that
Leviathan in full control of man. Who do
we follow then? Are men inherently
rational? Can we really do good as the
anarchists put it? Do we need the
Leviathan in some cases? How far should
the Leviathan go? How rational is our
rationality either we the ruled or the
Leviathan? Can we really self-regulate?
If both conceptions are assumed to be
true what could be the social, economic
and political consequences? Do we
foresee a crisis?
This is the case with Kenya currently, and
especially in Nairobi where folks have
been complaining about the rise in the
gangs that are openly engaging in
muggings, stabbings and robbing the
residents with the police remaining silent
over the matter. Nairobi, or the way they
have baptized it Nairobbery is going to the
dogs, nobody is safe, with some areas now
considered as hotspots for such
unfortunate happenings. In a city that is
one of the busiest in Sub-Saharan Africa,
especially for commerce, then this
becomes really a big issue both for the
everyday mwananchi and the so-called
wenyenchi. But then what if the wenyenchi
do not seem to address the issue? On
whose mercy does the everyday
mwananchi remain?
The debate has been centered on the
police handling of suspected people or the
culprits with the bone of contention being
police brutality and the extrajudicial
killings in the country. With the new
government coming in, the police have
directly been pointed and given a strict
warning on how they have been handling
the culprits and the suspects, with the
previous cases of missing people later
being found dead, beatings and
unwarranted arrests. While in some cases
the police have been praised for such
atrocities, in some, they have been blamed
and their acts wished away. Can we really
be left to self-regulate as the anarchists
believe or are we just inherently evil as the
Hobbesian tells us and we need to be told
what to do? With the police not taking
action for the fear of being held
accountable should things not go as the
law says, then where is the mwananchi
left?
9
In any case, to the extent that we are
going to have the Leviathan or the
stateless state, then the weak one is the
one who is going to be on the receiving
end. The natural rights to life, property
and liberty would then be at the mercy of
either the uncaring Leviathan or the
gigantic and greedy strongman in the
stateless society or what can be the state
of nature. With such happenings in the
city, how then do we expect commerce,
especially in the hustler economy to
thrive? This for Jean-Jack Rousseau would
be the perfect state of nature that we
were forced to escape from but Nairobi
has found itself in. The fear is how the
police could react instead of responding
to this should the situation become more
acute. The usual suspects will face it rough
with even more extra judicial killings. The
bottom line here being that since men are
inherently egoistic and self-interested,
then we cannot assume rationality both
from the Leviathan or the people.
The solution would be then the change in
the training of the police, a dialogue
between the police and the community,
definition of ideals and norms- or what I
call the accepted minimums, the
synchronized approach to government
institutions and perhaps, but most
importantly, the creation of more jobs and
inclusion of moral lessons in our
education system from the early ages of
the youngstars. If we are not going to act
now, then expect more of Nairobbery than
Nairobi, more banditry attacks and an
unsafe environment for the everyday
normal commerce and movement due to
fear. In short, both the government and
the society should act.
Cosmas Okello
Political Science student, University of Nairobi
10
CULTURAL DIVERSITY AS
A FOUNDATION FOR
SUSTAINABLE
ECONOMIC
DEVELOPMENT
Cultural diversity has resulted into the
diverse preservation of good cultural
heritages within the country. This means
of cultural heritage has also resulted to
the preservation of early cultural items
which has greatly improved and made
the tourism sector more productive.
This is as a result of the foreign revenue
which has been a boost for the
economy of the country which is used in
boosting various sectors of the
economy. This has greatly resulted into
boosting of this sector of the economy
and a more economic development.
Cultural diversity is one of the key
principles for a better, sustainable
growth for the economy. In this essence,
this generally refers to that system
which generally recognizes and respects
the various diverse groups within the
organization and to a greater extent,
values their differences socio-culturally
and thus in a bid that will be able to
empower the growth of the economy at
large.
Cultural diversity, more importantly has
resulted into the emergence of more
firms within the country which has made
the economy more industrialized. This
existence of various diverse groups has
therefore helped reduce the rural-urban
migrations as there has been fostering
of more job opportunities within the
communities. This has been very
essential
in
the
sustainable
development of the economy to a
greater extent.
11
Cultural diversity is one of the key
principles for a better, sustainable
growth for the economy. In this essence,
this generally refers to that system
which generally recognizes and respects
the various diverse groups within the
organization and to a greater extent,
values their differences socio-culturally
and thus in a bid that will be able to
empower the growth of the economy at
large.
Age also is one of the key-factors here
on cultural diversity and thus would be a
basis for sustainable development
especially in consideration of the youth
within the country. This cultural diversity
would be realistic in a situation whereby
the youths would take part in the
creativity and innovation of new
ideas as well as modern technologies for
sustainable management. To a larger
extent, would be the adoption of new
methods that would help speed up the
aspect of food security as this would
lead to improvements within the
agricultural sector. Agricultural sector is
one of the forefront factors towards the
economic development of the country
as it would pose more profits that would
be able to boost the economic levels.
With regards to this, the adult age
people should also work hand in hand
with the youth for more realization of
this sustainable economic development
due to having a diverse range of ages
having the spirit of working together.
Socio-economic differences are also a
major cultural diverse point within the
communities and this should not bring
differences but rather bring a closer
economic relationship for basis of
growth.
This can be done through; the rich
supporting various economic plans
within the community such as funding
these sectors through the provision of
finances as well as incentives to those
who need such provisions. On the other
hand, they could also enhance building
of infrastructures that would create a
good
environment
for
various
businesses
to
flourish.
Good
infrastructural
development
thus
creates a pathway for more businesses
that would lead to better economic
productivity within the country. The
advantage here is also that a positive
interaction with those at lower levels
would result into the provision of job
opportunities. More job opportunities
would thus also help solve the problem
of unemployment within the country
and hence, to a greater extent,
realization of economic growth.
12
Gender is also a major significant point
in this context and should be taken as
basis
point
for
equality
and
development. There should be equal
provision of equal opportunities, without
being gender bias in order to ensure
equal participation of both genders
within the economy. In a nutshell, both
genders should be consulted on this
basis as there would be various ideas
that would be needed for more
productivity. If this is done, and no
gender neglected, there would be
compiling of different better ideas that
would be more important in the
financial sector. This would therefore
spearhead
various
industrialization
programmes within the country and
hence
a
sustainable
economic
development.
Cultural diversity in terms of different
ethnic groups/ethnicity is also
another driving factor for sustainable
development within the country. This is
because there would be understanding
of the key values that would be
presented in the various cultures. This
good understanding would therefore act
as a driving force for economic
development due to the fact that there
would be peaceful co-existence for this
to take place.Nevertheless,there would
be sharing of various productiveeconomic ideas that would help
spearhead the economy at large.
Cultural diversity has also led to better
education prowess and peaceful school
setting that is very essential for the
provision of skilled manpower for the
future jobs within the economy.
Peaceful learning without consideration
of different cultural differences has
enhanced good confidence in learning
and hence the provision of qualified
skilled personells that have been
working within the country’s economy.
This has been very essential for the
development of the economy. It is
therefore a major strong foundation for
sustainable economic development.
Cultural diversity has also, more
importantly enhanced more productivity
and better perfomance.This is because,
coming together of people without the
consideration of cultural backgrounds
has led to more sufficient and greater
opportunities for good professional
growth needed to sustain the economy.
A firm would therefore be in
consideration of retaining good skills
that would enhance good labor
provision which would enhance better,
sustainable development within the
country.
In conclusion, it is therefore important
to consider cultural diversity as a key
factor that would be able to enhance
good
economic
productivity
and
sustainability since it is advantageous in
this essence.
Naphkate Austin Juma
Economics student University of Nairobi
13
A look into Economic Theory
The Market for
“Lemons”
George A. Akerlof, in his paper “The
Market for “Lemons”, highlighted the
interaction that results from uncertainty
and quality differences in the market. He
points out that the use of certain metrics
by buyers to determine the quality of a
product incentivizes sellers to promote
low quality merchandise. Since the
benefits of good quality accrue to the
whole group of sellers, the impact is felt by
the group rather than the individual seller.
This leads to a decrease in the quality of
goods and market size.
Today’s labour market mirrors that of
lemons. Employers are in constant pursuit
of high-value employees. Economics
proposes that signaling is one of the
solutions to the uncertainties observed in
the labour market. Signaling has proven to
be insufficient on its own. Certification of
skills and abilities is no longer proof of
quality output. The metric is rigged. How
can one stand out and be part of the value
so highly sought after?
Let us start with the basics. It is no longer
14
about getting the work done. The crux of it
is how it gets done. That repertoire of
certificates no longer counts. Are you able
to continuously reinvent yourself to meet
the needs of the workplace? Are you
innovative to come up with new and more
efficient ways to accomplish tasks? What is
your attitude as you discharge your
duties?
ILemons will always be present in the
market but game recognizes game. The
aforementioned skills will set you apart
and you will not need to worry whether
opportunity knocks at your door. Going by
Solomonic wisdom, time and chance
happen to all, and in other all too familiar
words, luck is when opportunity meets
preparation.
One of the self-depreciating issues is the To sign it off, “The conventional mind is
what’s in it for me attitude. The attitude passive - it consumes information and
perpetuates a culture of doing the bare regurgitates it in familiar forms. The
minimum with an expectation of dimensional mind is active, transforming
maximum returns. This can only take one everything it digests into something new
so far. Cultivating a culture of excellence and
original,
creating
instead
of
not only sets you up for personal growth consuming.”
butA also
equips
with long-lifeTheory
skills:
look
intoyou
Economic
Robert Greene
grit, antifragility (as defined by Nassim
Masters of Economics student,
Nicholas Taleb in his book, Antifragile) and
the ability to maintain your composure in
University of Nairobi
spite of your environment.
n familiar words, we are a product of our
choices. Nothing should stand in the way
of honing our soft skills and mastering our
fields. I cannot overemphasize the role of
passion in everything we do. Skill and
ability will enable you to perform the task,
but passion will make you deliver the best
of it there can be.
15
An Insight into the activities of the
The Economics Scholar Panel,
University of Nairobi
1
2
16
3
1. Twitter Session with Prof. Bitange Ndemo
2. Public Lecture by Prof. Iraki on the sustainability of
Kenyan Debt
3. Public Lecture by Kwame Owino on Cash transfers on
Food Subsidies in Kenya
Members and
leadership of the
Economics Scholar
Panel at the IEA
Book Launch in
Serena Hotel
17
Students and members of the Economics Scolar Panel at a field trip to
Institute of Economic Affairs (IEA)
PUBLISHED BY THE ECONOMICS SCHOLAR PANEL OF UNIVERSITY OF
NAIROBI
All content published has been written by independent authors and do
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