On Government, Policies and Free Men

I wanted to write something on policies to clear the Labour market. I am afraid, that will have to wait. One of the demands by the picketing unemployed was for jobs to be created. My question is who create jobs? Not the government. Government jobs are few and far in between.

Private sector creates jobs. How many they do, depends on the economy. The economy and the desired responses of the private sector depend on government policies- affecting the two. If the government blunders, then the signals to businessmen aren't that promising, they don't invest and they don't create jobs. Let us term the set of signals sent- policies.

So, what I wanted to do initially slowly evolve into an inquiry into the efficacy of government policies, in general. We are familiar with the observation- garbage in, garbage out. It is plausible, that what we are experiencing now is the result of flawed government policies.

We have problems in the labour market now. There are not enough jobs and that is closely linked to the state of the economy as a whole. We have people being retrenched and cannot find jobs because of mismatch between skills and wage- paying jobs. And I am not even sure, whether our policy makers take note of the trade-off between unemployment and income disparities? Lower unemployment actually results in widening income disparities? All these may be traced to flawed government policies ranging from misplaced educational policies and so forth.

As a further example, consider the NEP- a specific set of policies aimed at correcting economic injustices. It managed to achieve limited success. For some that is sufficient to crow about and offered as reason, we need more.

I hear the claim that is repeated often- see?, even with the limited success, look at how it has improved the lot of the Malays? That would be a proof, that we need that kind of policy to ensure continued success. And the even more open challenge retort- if we don't have kind-of NEP policy, with what shall we replace it? God knows we need one. We always need protection. That has been in our blood. For generations.

Except that when we measure that 'limited success' against the better successes of the social group by which we measured ours in the first place, then, the inevitable question emerges. How is it possible for one group with limited or no protection been able to pull ahead while the group agitating for correction with unlimited assistance can only managed limited success but still far from target?

Is it the government who is at fault or is there something wrong within us?

Let's get back to the issue of policies and its desired effects. The idea looks simple. There is a symbiotic relation between the government and private sector. Let us construct a model of an economy. Assume there are two parties- the government and non government.

Government and Non Government are united by a common purpose- that of creating the greatest good for society. Government makes policies, create the prospering and enabling environment, upholds the law, protects it citizens. Non government in response produce goods and services, consume them, pay taxes, and obey laws.

By now, it's already accepted, it makes sense for both parties to work together for the common good. The common good is the overriding principle. This point needs to be driven home, because in the course of achieving the common good, there may be disagreements which in the end must be subservient to the overriding principle.

Now, if both are desirous in achieving the best common good, it would be in the best interests of both parties to work on the correct set of inducements. The government because it has a monopoly over coercive instruments of power and monopoly over laws that ensure correct social behaviour are anxious to send the correct signals to elicit desired responses from non government. The non government sector has a monopoly over non-compliance; i.e. it can refuse outright to accept the signals and therefore with it, to withhold the desired response.

To make things simpler we assume the following. The government has an absolute monopoly over policies (an embodiment of all type of powers) while Non-Government has absolute monopoly over appropriate behaviour. Non government wants right policies while Government wants right behaviour.

Hence, it boils down to the issue of the right way to send signals of inducement to get as reward, the right social behaviour.

 

From generalisations, we move on to specifics.

Since 1970, we have implemented the NEP to restructure the economy. We desire to give Malays a greater share in the economy- owning at least 30% of the wealth in this country. We take equity in companies as signifying the extent of wealth holding. It's not entirely satisfactory, but it is close enough.

What have been the results so far? The Malay equity in this country's wealth is probably only near the 20% mark- short of the 30% target set out by the NEP. Failure to achieve this puts down the government. Some attributed the failure to faulty implementation. That attribution is not wrong but not entirely correct either.

It would be wrong however, if one reads from the blame assigned to the government, a suggestion that the entire responsibility lies with the government. Bur surely, the government MUST be wrong, you protest.

We don't like big intrusive government yet we are too quick to assign absolute blame onto them, if something goes wrong. It would then make for a stronger case to install a benevolent despot of a government. The government can say, give us absolute power. Trust in us and we will carry out the objectives.

That proposal is problematical. It would then run counter to the ideals of free men and ideas about democracy. When things do not materialise as we wish them to be, it is easy to place fault on the government. Doing that means you are acknowledging the omniscience of the government. That would further imply that government is the patron, the citizen its charges. That would be a very monumental underestimation of the people's resolve and intelligence to shape their own destiny.

It is we who compose this country; we create a government that facilitates our numerous social transactions. We have not created something that is over us. That being the case, my argument is: faulting the government entirely is not entirely right not because they do not deserve our censure and anger, but because to do so, would underestimate our own free will.

It follows then; the failure of the objectives of the NEP may also be attributed to the failure by the Malays to reciprocate with the right responses. Perhaps we too should be sharing the blame for the failure, by looking at our cultural practices and so forth.

Since the government, the implementers and the intended recipients are Malays, there are probably more reasons in their cultural make up, that can better explain the limited success of the NEP.