Governments and Contradictory Objectives

Posted by: on Dec 24, 2012 | No Comments

My previous blog – Why Governments Fail – addressed some questions. Governments do not fail because of inept politicians or a dearth of the number of laws being passed.

There is talk of improving the public sector by removing political interference and granting autonomy i.e. run government companies as private companies. This is a contradiction. If the public sector is to function as the private sector and provide a return on investment, then why have it at all?

The money which goes to fund a government company is ours. Should we then not make the managers accountable to us? The only way to do this – other than making them accountable to 900 million of us, clearly an impossible task – is through our elected representatives that turns it into political interference.

Contradictory Objectives

The government has a plethora of often contradictory objectives

  • Public enterprises be efficient and provide a return. Select half the people by caste, race or other meaningless criteria – anything but ability to manage efficiently.
  • Keep inflation down. Print more notes.
  • Increase employment. Enforce Minimum Wage Laws causing unemployment.
  • Speed up development. Keep foreign investment in check by strict controls.
  • Raise industrial growth. Keep control over power, telecommunications, railways, ports and the rest of the infrastructure which then is unable to meet even a fraction of our industrialization needs.
  • Obtain high technology. Limit payment of royalty to a foreign company for transfer of technology.
  • Promote exports. Make an exporter negotiate through 200 pieces of paper for every consignment.
  • Reserve items for small scale industry. See that it deals with 42 corrupt inspectors.

Should the government not be restricted to the role of governance? Should the government really assume an entrepreneurial role? I would love to hear your opinion on these issues.

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