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Economics People and Wealth in Sudan
The Grind

Economics People and Wealth in Sudan 

It is easy to state that Sudan’s economy needs to be fixed. What is difficult, is to provide the prescription for this fix. One of the main reasons problems are not solved is the lack of identification of the problem. So we need to look at the problem from its elements. Let’s start with the basic question, what is economics?

After looking at the many definitions of economics, it is clear that economics deals with people and how they deal with their possessions. But there is another aspect of economics that isn’t always factored into the definition, i.e. money. Most people don’t realize that there is economics without money, and that money has its own special effect on economics. Without considering this critical fact, there is no hope in solving economic problems.

Since economics deals with people and how they deal with their wealth, we often mistake monetary wealth with real wealth, and by doing so fail to take into account the existence or lack of existence of real wealth in determining why prices are what they are. This is best illustrated by looking at a universal price equation:

Price level = (Money quantity)  x (Money Velocity)
(Supply of all real values)

This complex looking equation is actually very easy to understand. This simply means that the more money the government prints and the faster that money is spent, then the higher prices will be. The less money there is available to be spent and the less people are willing to spend it, then the lower prices will be.

As we can see there are at least two characteristics of an economy that directly affect the level of prices; the amount of money (currency) printed by the government and the speed at which holders of money spend it. As for the first one, I must admit that this definition is a rather simple one, ignoring the more complex principles of money supply. The point we wish to make is that as a general rule, the supply of money is fundamentally controlled by the government. It can print as much money as it likes, or it can withhold money from circulation as much as it likes. As for the second one, all people who have money spend it. So we all have a role to play in money velocity. In truth, people will always spend money if they have it. And since Sudan is not a heavy credit laden economy at the consumer level, we are not as prone to increases in money velocity as are other economies where people spend money they don’t have.

That being said, it is time to look at that part of the problem that few economists are talking about. That would be the denominator of the price equation, which is the amount of value upon which the economy is running. There is a good reason why economists ignore this element of the equation; it is just too hard to agree upon the true value of anything. But in Sudan, at least in our discussion of the economy, what’s wrong with it and how to fix it, I think we have the luxury of not only allowing value to be considered, but to actually focus on it. Since the level of productivity is so low here, we can easily accept that increasing local production will increase the values upon which our economy runs. This will automatically lower prices according to the equation, given that money volume and velocity are stable. Maybe after ten or twenty years of proper productivity, if our economy is still sputtering on as it is now, we can stop looking at values and concentrate on monetary principles.

Now when we look at the equation we can state the obvious: prices rise as the quantity of money rises, and they rise again if the velocity of money speeds up. Prices drop as the amount of real values increases.

Looked at from a negative perspective, prices drop as the money supply drops, and will drop again if people hoard their cash. Prices rise as the amount of real values decreases.

When the equation remains balanced, price stability is the result. Some people argue that there must be some inflation, or at least that inflation can sometimes be good. Others argue that prices are too high and there must be some deflation, or at least that deflation isn’t always bad. But no one argues against the benefits, or even the preference of stability. We can say with assurance that if prices are stable, and low enough for all to buy what they need, then the nominal level of prosperity has at least been achieved.

Therefore, the reason prices are rising, uncontrollably in Sudan stem from three things:
  1. The government printing more and more Sudanese pounds (in addition to the banks creating even more, something not discussed here).
  2. The citizens as well as the government spending money as fast as they get hold of it; and
  3. A lack of productivity among Sudanese individuals.

So everyone has a role to play. It must start somewhere, so every reader should take on his or her role to solve the economic problems of Sudan. Individuals must become more productive, at any level and to any degree. Everyone must spend money wisely, purchasing what is needed and promoting national productivity in the process, as opposed to buying unnecessary items, especially those imported. Finally the government must take steps to enhance and defend the nation’s currency. This job can only be done by the government itself.

In formulating practical actions for solving this problem, there are three things to consider. First of all, Sudan is a Muslim country, so we should look into Qur’an and Sunnah as well as the Seerah of Prophet Mohammed (pbuh) and the lives of the Sahabah. And this is not to belittle the experiences of the earlier inhabitants of this land. How they managed to succeed economically may be vital to finding our solutions. Secondly, whatever we do should be enshrined in the constitution so that it continues. We don’t want to fall back on this problem again. Lastly, the military is part of the government. The national economy must be defended just as much as the national lands. In peace time we should employ this massive manpower in the effective defense of whatever strategies we employ. A simple example is how the U.S. Army Corps of Engineers has played a vital role in infrastructure development in the country.

No one is immune from Sudan’s economic malaise. And no one should be considered as not having a key role in the solution. The government, the millionaires, the middle class and the poor can each play their equal and vital role. The end result will be the elusive prosperity that comes from a strong, stable and productive economy. If we attain prosperity without a rise in productivity, people will have no incentive to be more productive. If we have productivity with prosperity, people will tend to continue their productive efforts because they can relate their prosperity to their productive efforts. The only problem comes when higher productivity fails to achieve prosperity (over time). This could happen if the monetary policies don’t work to keep prices down.

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