Trust the Nigerian People Like We Trust Alaskans!

Earlier in the year, while preparing a literature review for a paper on natural resources and economic development, I was lucky enough to read an article by the famed economist Xavier Sala-i-Martin.  I've enjoyed his papers in the past, as he's brilliant and quite a character.  Here is his website, if you want proof.

 Who said economists lead boring lives?

Anyway, the paper in question, linked here, co-authored by Arvind Subramanian (awesome name), is quite unique, as it offers not just rigorous econometric analysis but also some clear, novel, and ambitious policy suggestions. 

The suggestion that hit me is that to avoid corruption, underperformance, and all of the social ills that come along with both, the government of Nigeria should simply distribute all of the oil revenue to its people.  Directly.  Tax them if necessary, but don't keep it.  This is similar to the policy they have in Alaska, where they pay people to live there.  When I was in French camp, the amount was $1000 per person per year.  Apparently, this amount has varied over the years.

The reasons that this is a good idea are many.  The most important one involves keeping a democracy healthy.  If a government is the recipient of massive oil wealth, that means that a large portion of their budget does not come from taxes.  If this country has a very poor population, and an even poorer system of tax collection, the proportion of government budget that comes from taxes turns miniscule.  This means that the government is not dependent on its people in the same way as non-oil rich countries, often resulting in oil-rich countries turning a blind eye to their peoples needs and requests.

Another reason why this is important is it requires the government to collect taxes from people using a known tax rate.  This leaves less room for corruption, as the government's budget should be much easier to calculate.  Additionally, people will receive money (happy!) and then be taxed (sad...).  When government takes money away from its people through taxes, people want to make sure that it was for a good reason.  In this way, there will be much more public pressure for government to spend the oil wealth (first distributed to the public and then taxed) properly than if they bypassed the people altogether.

While there are more reasons why this would be an awesome idea, I'll just end with this simple one.  If you're a Nigerian, and you realize that not only could you get some of this oil money in which your government is bathing but it's also economically and politically the right thing to do, wouldn't you push for this?  I'm not a Nigerian, but if I were, I would.  And therefore it's the job of the Nigerian media to push for this kind of political-economic reform.  Push!!!