Thus government doing business and expecting to attract investment in the economy can be likened to a camel going through the eye of a needle or water flowing upwards. Confidence in a country’ rule of law can be likened to the multiplier effect Keynes referred to. It either makes the economic saboteurs flee or continue to operate with impunity or business as usual. The steps of four lepers sounded like an army in the ears of the enemy or saboteurs of the nation’s economy. The story had it that they abandoned all and fled. Cases of government officials fleeing abroad to escape the law is rife in the dailies.
Unfortunately what is prevalent in our clime as evidenced by the various corruption cases is a confidence game. A confidence game is a scam, a swindle. An unscrupulous individual obtains the confidence and trust of the electorate for the purpose of having funds or property entrusted to them which, after obtaining possession, the swindler departs with the property.
3. The power to collect taxes resides solely in the government. Tax is a cheap source of funds since it pays no interest or dividends unlike businesses that are accountable to providers of finance through interest and dividends payments. Therefore government venturing into economic activities encourages wastes since there is no accountability hence no incentive to be efficient, economical and effective in its management of resources.
Curbing wastages is the core rationale behind government privatization programs. More importantly government in business emasculates the competition and distorts the market economy. The market economy relies chiefly on market forces to allocate goods and resources and to determine prices. This way, economic resources are deployed to areas that guarantee the most return on investment.
A priori, it’s crucial that privatization programs are not only transparent but seen to be transparent by all and emancipated of all appearance of government nepotism to be able to engender confidence in the competitive environment. A competitive environment constantly evolves better products and services unlike monopolies which are epicentres of complacency.
So how do we avoid dis economic abyss? Dis means underworld. It also means scorn. So a dis economy means an underworld economy, an economy that escapes the tax system of a country; or a system of scorn for economic principles and rule of law. Therefore if any government be interested in avoiding a dis, it should only invest tax revenue in sectors as a rule where.
Curbing wastages is the core rationale behind government privatization programs. More importantly government in business emasculates the competition and distorts the market economy. The market economy relies chiefly on market forces to allocate goods and resources and to determine prices. This way, economic resources are deployed to areas that guarantee the most return on investment.
1. The market economy is unwilling to invest in, because of competing returns.
2. Sectors that are termed basic and essential like social welfare, environment, security, universal healthcare and unemployment insurance.
That way government provides a minimal level of well-being and social support for all citizens, sometimes referred to as public aid. The universal child allowance in Argentina will suffice here, where every poor child is given $53 a month in return for going to school and regular medical check up.
This I will refer to as the’ visible hand’ theory, an antonym for the invisible hand theory of Adam Smith wealth of nation’s 1776 publication. The notion that government should get involved in the economy is not sacrosanct. It’s a mantra peddled by politicians to corner common patrimony, which is why there is a prefix ‘juicy’ to certain ministries and national assembly committees.
Any other service or good like road construction, railways, airports, housing, refineries, and power should be thrown open to the private entrepreneurs to provide at no cost to the government. This way, the practice of inflating government contracts and awarding same to cronies and stooges by government officials is eradicated. In the short run this is about the most feasible way to eradicate corruption in government and the public service.
Let the cost of railway be funded by ticket sales, roads by tolls, airport by taxes and levies, refineries by sale of petroleum products, power by tariff and housing by rents, mortgage or outright sales.
Therefore we should encourage a system where end users for a product should pay for them. That way the consumer is king and market economy is allowed to evolve.
These way businesses are able to take advantage of rising demand to increase output by investing into the production process thereby creating jobs. Government also benefit through tax revenue, various levies and penalties for misdemeanor. The N5.2 trillion fine meted out to MTN would suffice here.
The above narrative would seem to suggest that government would be free from slothful shenanigans that breed unnecessary budget deficits whilst still retaining its ability to perform its primary objective of securing lives and property, a fast disappearing commodity considering the cries of wars and rumors of war espoused by terrorism.
Government therefore is left with carrying out purely interventionist and regulatory programs targeted at achieving policy objectives and amongst other things create, in economic parlance, a perfectly competitive environment for entrepreneurs to thrive.
The proverbial tail wags the dog anytime bureaucrats overstep their statutory functions of policy implementation to formulation. Monetary policies count for nothing in the face of fiscal recklessness. This is a fact well attested to by Mr. Lamido Sanusi, Nigeria Former Central Bank Governor and current Emir of Kano. In the story above it was stated that such policy brigandage led to ruin.
In conclusion economic activities are rife with risks. A fortiori, it follows that only people endowed with the ability to manage risks should venture into the economic system of production, distribution and consumption. Government has no business being in business.
-Oluwole Olatubi, a graduate of Economics from the university of Ibadan, is an administrator and public commentator. E-mail: [email protected], [email protected]. Phone: 07056527341
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