The government is not a deity
Sunday, 9 August 2009
Nizam Ahmad
MOST businesses in Bangladesh depend on government favours as cheaper loans, stimulus packages or protected markets. In contrast, true entrepreneurs anywhere in the world demand only few things from a government. They only want law and order, well-functioning courts, property rights, low taxes, monetary and market freedom.
A government can no longer be relied upon to provide sound money. If deficit financing, as Lord Keynes suggested, were so good, no country would have been in today's economic mess. Emphasising the policy of deficit financing, mainstream economists have destroyed the meaning of money. To them, it is not a medium of exchange or a store of value but something that a government manufactures and provides to people. In every country, money issued by its government is the 'legal tender' and the government forces it upon the people. Informal money market should better be self-regulated than wrong interferences by a government. Boosting trade should be one of the major goals of the businesses and here overegulation by the government can seriously distort the economy.
Government money flows to sectors that bureaucrats, politicians, and economists identify and choose. The economy with large government interference in countries like Bangladesh is viciously politicised. A government is almost a deity to many. People plead with the government, place their demands, and sometimes get what they want. In Bangladesh, the media and public events are filled with high government presence. There is constant clamour, demanding that the government must do this or must do that.
Our bureaucrats, the central bank, and our politicians have seized the economic autonomy of us, the individual. For every small or big economic matter we must ask them and they will decide if it is right or wrong, or whether we can do it or cannot do it. The ruling politicians or the top bureaucrats are our virtual masters. Our body language is one of subservience to them. We must please them to get what we want, whether it is a transfer of job or a permission to set up an industry. Our politicians and the bureaucrats have awesome power not only to hurt us but also to make us incredibly wealthy. The 'unlimited role' of the government is the main cause of our underdevelopment and lopsided development -- a few rich at the top and the majority of the people condemned to live a life of everyday hell.
Generally, the mainstream economists are in league with governments. They applaud big budgets, higher Annual Development Programme (ADP) allocations, and want more people in the tax net as they want more government spending in their pursuit of distributive growth, however illusive.
But, what is the condition of our agriculture or our infrastructure that the government manages, funds, and plans? The farmers still live in thatched houses as they have done in the past thousand years. They have no electricity or clean drinking water. No farmer dares enter the district administrator's office and inquire about his fertiliser quota or visit the bank manager to collect his cheap agricultural loan. Look at our infrastructure. Bridges are rickety and motorways are daily death traps.
There are neither emergency services or routine police patrol, nor are there resting facilities on the highways. Ports have meagre capacity to handle export-import traffic. Dredging of rivers are neglected and villages after villages are inundated in the absence of embankments. Electricity generation remains inadequate and the Power Development Board (PDB), the government's electricity authority, is a den of corruption. Skilled workers earn poverty-level wages but leading businesses take this as a positive factor, saying foreign investors find this attractive.
Government educational institutions and hospitals are in short supply and whatever they have are in a shambles despite the fact that vast sums of money are spent in these sectors. Can our academics explain why the government should bar the foreign doctors flying into the country to care for the vast majority of the people when our VIPs and the rich are allowed to fly to foreign hospitals? What kind of economics is this? Healthcare entrepreneurs can easily organise this task but the government consistently stalls such liberalisation to satisfy their politicised associations of doctors and domestic pharmaceutical companies. The government may reason that the use of precious foreign currency inside the country as payment to visiting doctors, would seriously harm the national economy. Does it make sense if such payments are made outside the country? This is an example of illogical foreign currency laws that are practised in our country.
Yet, our economists and politicians keep on supporting more government regulations and more government spending -- in newer forms like PPP (private-public partnership) or a bigger ADP. No ethical and prudent private investor would opt for a partnership with an institution as our government that has a dismal history of failures and corruption. Why we cannot ask for PPC -- 'private-public competition' -- instead of PPP? It is only through competition that a SOE can improve its efficiency as the Telephone and Telegraph (T&T) did when competition blew on its face. We need competition as a rule in all sectors, instead of government-floated partnerships to boost our economy. But the government's entrenched interest makes it hard to change. The same entrenched interest revived Trading Corporation of Bangladesh (TCB) that has the unique record of being one of the most corrupt government organisations in the country.
The bureaucrats and academics, unlike an entrepreneur or investor, decide, from their armchairs, our economic fate with zero experience in market operations. All individuals are different and no economist from any Ivy League university can know how individuals would react to prices or how they would satisfy their wants. Computer-generated economic models cannot be accurate just as computer-generated Climate Change representation remains disputed. Climate is another new sector on which the government will spend big money and create numerous 'green collar' jobs for their favourites.
Economists recommend that Bangladesh statistically compete with allocations of other governments in infrastructure, in spending and in higher deficit percentages of gross domestic product (GDP) instead of choosing an independent development policy. It is evident that corruption, black market and other market anomalies are the result of irrational government regulations and interference. People do not choose to be unethical but are compelled to become so. Before we as a nation become permanently amoral, the government, the economists and the politicians should cease organising our economic lives. Trying laissez-faire, along with genuine rule of law, could dramatically improve Bangladesh's economy.
Ideally, our government should focus on issues as transit and the Asian Highway or on the question of whether or not to permit India to use our seaports. The government should bring such issues to the people because there is apparently strong opposition to these. The government should try to convince the people why transit will not harm us and boldly seek a referendum on all such matters.
The government should not impose these by its sheer strength in the parliament as was done in 1975 while introducing the one-party rule. The government and the politicians should also work hard to settle water issues with India, including the construction of the dams that may damage our environment. The entrepreneurs are unable to do much here and the country needs political skill and mediation.
Trade deficit or surpluses with countries are self-regulative and do not need bureaucrats or structured regional bodies to decide trade items or tariffs. Markets are spontaneous with inherent forces, interpreted and acted upon best by people in the market and not by economists and governments. If experts in the US government, at FED or IMF knew so much about money and the economy, today's global recession would not have occurred. Our experts and the government can be no better; the more they will interfere, the more we will suffer.
The writer is the Director, Liberal Bangla UK
MOST businesses in Bangladesh depend on government favours as cheaper loans, stimulus packages or protected markets. In contrast, true entrepreneurs anywhere in the world demand only few things from a government. They only want law and order, well-functioning courts, property rights, low taxes, monetary and market freedom.
A government can no longer be relied upon to provide sound money. If deficit financing, as Lord Keynes suggested, were so good, no country would have been in today's economic mess. Emphasising the policy of deficit financing, mainstream economists have destroyed the meaning of money. To them, it is not a medium of exchange or a store of value but something that a government manufactures and provides to people. In every country, money issued by its government is the 'legal tender' and the government forces it upon the people. Informal money market should better be self-regulated than wrong interferences by a government. Boosting trade should be one of the major goals of the businesses and here overegulation by the government can seriously distort the economy.
Government money flows to sectors that bureaucrats, politicians, and economists identify and choose. The economy with large government interference in countries like Bangladesh is viciously politicised. A government is almost a deity to many. People plead with the government, place their demands, and sometimes get what they want. In Bangladesh, the media and public events are filled with high government presence. There is constant clamour, demanding that the government must do this or must do that.
Our bureaucrats, the central bank, and our politicians have seized the economic autonomy of us, the individual. For every small or big economic matter we must ask them and they will decide if it is right or wrong, or whether we can do it or cannot do it. The ruling politicians or the top bureaucrats are our virtual masters. Our body language is one of subservience to them. We must please them to get what we want, whether it is a transfer of job or a permission to set up an industry. Our politicians and the bureaucrats have awesome power not only to hurt us but also to make us incredibly wealthy. The 'unlimited role' of the government is the main cause of our underdevelopment and lopsided development -- a few rich at the top and the majority of the people condemned to live a life of everyday hell.
Generally, the mainstream economists are in league with governments. They applaud big budgets, higher Annual Development Programme (ADP) allocations, and want more people in the tax net as they want more government spending in their pursuit of distributive growth, however illusive.
But, what is the condition of our agriculture or our infrastructure that the government manages, funds, and plans? The farmers still live in thatched houses as they have done in the past thousand years. They have no electricity or clean drinking water. No farmer dares enter the district administrator's office and inquire about his fertiliser quota or visit the bank manager to collect his cheap agricultural loan. Look at our infrastructure. Bridges are rickety and motorways are daily death traps.
There are neither emergency services or routine police patrol, nor are there resting facilities on the highways. Ports have meagre capacity to handle export-import traffic. Dredging of rivers are neglected and villages after villages are inundated in the absence of embankments. Electricity generation remains inadequate and the Power Development Board (PDB), the government's electricity authority, is a den of corruption. Skilled workers earn poverty-level wages but leading businesses take this as a positive factor, saying foreign investors find this attractive.
Government educational institutions and hospitals are in short supply and whatever they have are in a shambles despite the fact that vast sums of money are spent in these sectors. Can our academics explain why the government should bar the foreign doctors flying into the country to care for the vast majority of the people when our VIPs and the rich are allowed to fly to foreign hospitals? What kind of economics is this? Healthcare entrepreneurs can easily organise this task but the government consistently stalls such liberalisation to satisfy their politicised associations of doctors and domestic pharmaceutical companies. The government may reason that the use of precious foreign currency inside the country as payment to visiting doctors, would seriously harm the national economy. Does it make sense if such payments are made outside the country? This is an example of illogical foreign currency laws that are practised in our country.
Yet, our economists and politicians keep on supporting more government regulations and more government spending -- in newer forms like PPP (private-public partnership) or a bigger ADP. No ethical and prudent private investor would opt for a partnership with an institution as our government that has a dismal history of failures and corruption. Why we cannot ask for PPC -- 'private-public competition' -- instead of PPP? It is only through competition that a SOE can improve its efficiency as the Telephone and Telegraph (T&T) did when competition blew on its face. We need competition as a rule in all sectors, instead of government-floated partnerships to boost our economy. But the government's entrenched interest makes it hard to change. The same entrenched interest revived Trading Corporation of Bangladesh (TCB) that has the unique record of being one of the most corrupt government organisations in the country.
The bureaucrats and academics, unlike an entrepreneur or investor, decide, from their armchairs, our economic fate with zero experience in market operations. All individuals are different and no economist from any Ivy League university can know how individuals would react to prices or how they would satisfy their wants. Computer-generated economic models cannot be accurate just as computer-generated Climate Change representation remains disputed. Climate is another new sector on which the government will spend big money and create numerous 'green collar' jobs for their favourites.
Economists recommend that Bangladesh statistically compete with allocations of other governments in infrastructure, in spending and in higher deficit percentages of gross domestic product (GDP) instead of choosing an independent development policy. It is evident that corruption, black market and other market anomalies are the result of irrational government regulations and interference. People do not choose to be unethical but are compelled to become so. Before we as a nation become permanently amoral, the government, the economists and the politicians should cease organising our economic lives. Trying laissez-faire, along with genuine rule of law, could dramatically improve Bangladesh's economy.
Ideally, our government should focus on issues as transit and the Asian Highway or on the question of whether or not to permit India to use our seaports. The government should bring such issues to the people because there is apparently strong opposition to these. The government should try to convince the people why transit will not harm us and boldly seek a referendum on all such matters.
The government should not impose these by its sheer strength in the parliament as was done in 1975 while introducing the one-party rule. The government and the politicians should also work hard to settle water issues with India, including the construction of the dams that may damage our environment. The entrepreneurs are unable to do much here and the country needs political skill and mediation.
Trade deficit or surpluses with countries are self-regulative and do not need bureaucrats or structured regional bodies to decide trade items or tariffs. Markets are spontaneous with inherent forces, interpreted and acted upon best by people in the market and not by economists and governments. If experts in the US government, at FED or IMF knew so much about money and the economy, today's global recession would not have occurred. Our experts and the government can be no better; the more they will interfere, the more we will suffer.
The writer is the Director, Liberal Bangla UK