Stop for a moment and ponder this question: What is the role of government? As simple as the question is, the answers will be extremely complex. The role of government is a hotly debated topic. At one end, people believe that government should be as small as possible and guide the citizenry only when needed. At the other end, is the argument for big government which takes an active role in every aspect of people’s lives.
We have our views on what government should be and it definitely is not on the side of big, overbearing administrations. Like most people, it is somewhere between the extreme ends. We believe that there are areas where the government must take the lead and provide solutions on behalf of the people because as a community, we have communal responsibilities. To begin, we believe that a government needs to be transparent and accountable to the people. Secondly, we firmly believe that the government and the politicians are there to serve and support the people; and not the other way around.
There is a lot of talk about becoming an economic powerhouse but our route thus far seems to be more towards the creation of a government powerhouse. We make this assessment because the foundation of any economic powerhouse is the people. To be a powerhouse, the people must hold and control the wealth. Sure, they can be an argument that what is the government’s is the people’s but that does not materialise in real world economics.
As we have said many times before, the government’s role in any society is to establish and execute social policy. Except in cases where there are no private entities eager to provide goods or services, the government should stay out of business; especially where there are multiple, willing and capable private entities ready to compete. Areas which will typically call for and support a monopoly are usually where governments may need to enter. Two areas that come to mind are water and electricity distribution. That said, with today’s technology, there are very likely sound business cases to place those entities in the hands of the private sector.
Right now, we are sure that there are many that have reached for their flag and wrapped themselves in the cloak of patriotism while ranting at the paper (or screen) that we want to ‘sell the family’s silverware for a few dollars’. Nothing is further from the truth.
What we want is for people to shed their political and other biases and really have a look at the role of government and how it can be structured to better serve the people. We have heard a lot from the current administration about “entrepreneurial socialism” as a justification for the government becoming actively involved in businesses and we can appreciate some of the decisions made under this umbrella but it is a slippery slope.
The West Indies Oil Company is a good example of the good, the bad and the ugly of government becoming involved in private business.
The “good” is the fact that the government was able to wrestle the business from the prior owner at a reasonable price, without incurring debt. The “bad” is that the business remains in the hands of the government and the shares have not been made available to the public for purchase. Even in this area, we can appreciate that there may not be enough investors to buy the shares, based on the value of the business, and we could very well end up with ownership being concentrated in the hands of a few, if the government were too quick to divest. So, technically it is “bad” because you would want a wide-cross section of the population involved in ownership but the reality makes it less so.
The “ugly” pertains to the government now being in a position of owner, regulator and operator in the competitive part of the business. Recently we saw the government involved in a spat with Rubis over their decisions relating to station leases. Many regarded that as a conflict of interest and the threats of action as an over-reach of the authority of the government (in the way it was telling a private entity how to do business).
At this point, it should be obvious that the areas of greatest concern surround competition. This gets back to our previous point where the concept is passable when there is need for a monopoly but on the competitive side, it is extremely questionable.
Let’s look at another example … the Ministry of Public Works. Who can forget the defiant words of Works Minister Eustace “Teco” Lake, who in late 2015 rankled more than a few persons when he sternly indicated that his ministry will continue pursuing private contracts; despite the perception that it is competing with private firms. He said, back then, “We’re not gonna stop doing it. I understand that individuals think we’re competing with the private sector, but there’s no competition – everything has to go to the Tenders Board.” Clear evidence that the good minister has a different opinion as to the role of government to ours.
It would be near impossible for any contractor to compete with a government entity on price because government entities have an unfair advantage, just by being a government entity: duty free and other concessions, more affordable labour, the backing of government, and the list goes on. These stack the deck against the small contractor and bolster the government. Does the economy benefit in the same way as if the money flowed to the contractors? No, it does not!
In the same way if the government decided that it wanted to cut out the middle man in the purchase of vehicles and became the agent for their own brand. What would happen to the existing car dealers and all of
their employees if the government dealership was the only place you could buy a duty free car? We don’t
need to answer that question, do we?
The long and short of it is, the government should support businesses by generating policy that creates a fair and level playing field for private individuals and business to compete and thrive. From that environment, the government can derive its revenue from taxation to support the social and other policies of the day. That is the only route to an economic powerhouse.