New information technology has radically shifted the balance of power between governments and their citizens. This empowerment has worked through two distinct routes. One –exemplified by Wikileaks – is that citizens now have more direct access to information, so that news filtered through elite interpretation is becoming less influential. The other – exemplified by Tunisia – is that citizens can now communicate more easily with each other, so that the cost of coordinating mass protest has fallen. Both will have profound consequences.
The diminished influence of elite interpretation of news has obvious benefits. While the effect is probably too new to be studied, it is somewhat analogous to freeing the press: there is both micro and macro evidence that press freedom has value beyond the intrinsic. However, the decline of elite interpretation of news also increases the risk of populism: the triumph of emotional over technical arguments. In both Europe and America there are signs of such populism: tougher policies on immigration; the rapid retreat from nuclear power in response to the Japanese earthquake; and the rise of the Tea Party. Technology may be transforming democracy from representative to direct; yet the original rationale for representative democracy was not merely that the alternative was at that time technically too demanding.
Potentially, the benign effects of direct information are likely to be at their most potent in Africa. African elites have been distinctively self-serving, while until recently most Africans have had few non-elite sources of information. The improvement in the conduct of the Nigerian election between 2007 and 2011 helped by IT is an important example. But offsetting this scope for gain, Africans are less educated than Europeans and Americans and so more exposed to populism. To date, however, there have been few signs of populism.
The new ability of citizens to communicate with each other has suddenly made autocracies vulnerable. An unanticipated by-product of the mobile phone is that only extreme brutality can now keep an unpopular autocrat in power. Indeed, even that may not be enough. Although some leaders are evidently willing to massacre their citizens, they may not be able to rely upon their forces. Cote d’Ivoire provides a salutary lesson for those who would cling to power by force. Ex-President Laurent Gbagbo spent years building a large and expensive army, but most of it dissolved without fighting as soon as the incentives changed. Even the entrenched North African autocracies have proved to be vulnerable, so none of the sub-Saharan African autocrats is now safe from the power of mass protest.
But autocracies are not the only governments that are now fearful of the street. In Africa, economic policy priorities used to be set to satisfy IMF Programs. Now they will need to satisfy the masses of young men who are rightly dissatisfied with what economic policies have delivered. The street is the new IMF, and its economic priority is starkly clear: jobs. While governments have succeeded in delivering the core IMF priority of low inflationary growth, they have not delivered jobs: indeed, they have not even built the data system to monitor employment.
The transmission from growth to jobs is not automatic. In Africa growth has been driven predominantly by the price boom in natural resources. This does not directly generate much employment: revenue growth has been mainly due to higher prices rather than increased quantities, and in any case the sector is not labour-intensive. Indirectly, it can even reduce formal wage employment through the standard Dutch disease squeeze on domestically produced manufactures as a result of real exchange rate appreciation. So how, during a commodity boom, is employment best generated?
Jobs will come from that part of the economy which is internationally non-tradable. Further, since the revenues from resource extraction are unsustainable, much of them should be devoted to assets rather than consumption. The sector which satisfies both these conditions is construction: it is non-tradable, and its outputs, structures, are capital goods. But what structures should be produced? The conventional answer is infrastructure, but its construction is often not employment-intensive. An alternative is housing: were Africa’s slums replaced by decent, low-cost homes it would create mass employment for young men. Housing is an asset that is relatively easy to collateralize: the homes for Britain’s nineteenth century cities were financed by building societies.
Channelling the revenue from commodity booms into urban housing is a long way from conventional growth-focused economic thinking, but it is the sort of idea that will be needed if the new power of the street is not to turn dangerous.