govt serves business best by staying out of it
An annual report on the government's performance is theoretically a useful document. But the report will remain practically useless if its findings do not spur timely action to improve the delivery of goods and services.
Last month, the Ministry of Planning released the first of what are planned to be a series of annual reports, detailing the performance of various State sectors. The initial report covers the period between October 2011 and September 2012. But, as Planning Minister Dr Bhoe Tewarie admitted, the report falls short because of a lack of timely data in certain key areas. In the health sector, for example, most of the information was four years old.
That deficiency alone demonstrates why the private sector, as the engine of the economy, will remain hamstrung in its operations. In a small country like Trinidad and Tobago, government efficiency is particularly necessary for economic stability and growth. This is not because the State must involve itself in business – despite the romantic attachment many people here have for socialism, as demonstrated by the hyperbolic praises heaped on the late Venezuelan president Hugo Chavez, economics history has demonstrated beyond reasonable doubt that government serves business best by staying out of it.
When it comes to economic activities, a government has just three main functions. First, a government should ensure that businesses and the financial sector are properly regulated. That the Trinidad and Tobago government has historically failed to do so has been demonstrated by the collapse of insurance companies back in the 1980s and the more recent CL Financial and HCU scandals. Proper regulation requires, first and foremost, no favouritism toward the rich and powerful, which is the group that generally stands to benefit from a lack of proper oversight. Yet Section 34 was an instrument precisely designed to safeguard this very group, and the economic fallout from that, though not yet obvious, could be quite sharp.
Second, a government should create and sustain an efficient bureaucracy. When Singapore back in the 1960s began transforming itself from a lazy backwater port to an economic powerhouse, a key policy measure was creating a State bureaucracy whose main purpose was to facilitate business persons, local and foreign. In T&T in the 21st century, by contrast, public servants are still too apt to treat business people like criminals – a perception not helped when Government officials step in to facilitate certain transactions.
And, third, a government must provide public sector goods which benefit the population and thus the labour force — ie health, education, and security. But the performance report showed that the State is falling short in these key areas. The murder rate remains high, although Government claims other serious crimes are down. The tertiary graduation rate is a dismal 38 per cent. And the under-five mortality rate is 27 per 1,000, as compared to five and below in developed nations.
These are the measures of a Third World country. And these are the basics the government must fix before we can even start to talk about becoming economically competitive.