Sealing the cookie jar for collective interest

27 Jun, 2016 - 00:06 0 Views
Sealing the cookie jar for collective interest

The Herald

Stanely Mushava Literature Today

Public ownership can achieve socially beneficial outcomes, develop poorer regions normally shunned by profit-oriented players, serve a redistributive function, advance environmental ideals and protect national heritage.

Zimbabwe’s state enterprises, widely entangled in abuse, opacity and under performance, come across as a millstone.

Ministers, permanent secretaries and executives have been occasionally caught with their hands in the cookie jar, reaping for themselves where the taxpayers sowed.

Recently implicated sectors, including health, energy and information and communication technology (ICT), have been bled by embezzlement and crony capitalism.

The burden of dishonest stewards is not exclusively Zimbabwean.

Most countries, saddling the same vice list, do not report socially optimal returns from their public entities.

The tragedy rings clear when one considers that public wealth is not only bigger than public debt in most countries but promises sustained avenues for growth and social transformation.

Dormant and diverted public wealth, which includes state-owned firms, commercial real estate, forests, bank holdings, pension funds and toll-based transport infrastructure, has polarised economic thought.

How to maximise return on public assets is the enduring site of contest.

The market-oriented camp prescribes privatisation as the remedy whereas the state-oriented camp maintain that Government is a more reliable steward of public wealth.

And now, two leading economists are proposing to put paid to the debate.

In their 2015 book, “The Public Wealth of Nations,” Dag Detter and Stefan Folster argue that both neo-liberals and statists have it all wrong.

For them, to privatise or to nationalise is not quite the question since avenues for abuse equally obtain in both structures, with privatisation prone to crony capitalism where state ownership is entangled in inefficiency.

“It is time to focus on all the profit that is being left on the table to be captured by vested interests, after all the arguments over who owns the table,” demands the duo.

Detter and Folster estimate that better management and monetisation of state assets worldwide could increase annual return by $2,7 trillion, a figure surpassing global spending on infrastructure, and reduce austerity.

They advocate, for either setting, infrastructure for quality asset management to spearhead overall economic growth.

“The single largest owner of wealth in nearly every country is not a private company or an individual like Bill Gates, Carlos Slim, or Warren Buffet.

The largest owner of wealth is all of us collectively — you and your fellow taxpayers. And we all have our own personal wealth manager, who we usually call “the government’”, observe Detter and Folster.

“As far as we can calculate, governments own a larger stock of assets than all very wealthy individuals put together, and even more than all pension funds, or all private equity funds.

What is more, most governments have more wealth than they are aware of, including the many nations caught in the grip of debt crises,” writes the duo.

Greece, currently in the grip of a debilitating debt crisis, has not been able to come up with a well-functioning land registry.

The authors argue that vested interests which keep public wealth opaque in countries such as Greece can facilitate failure.

They argue that quality asset management requires protecting public wealth from the direct access of politicians and installing the infrastructure for democratic scrutiny.

Public ownership can achieve socially beneficial outcomes, develop poorer regions normally shunned by profit-oriented players, serve a redistributive function, advance environmental ideals and protect national heritage.

However, unfettered political meddling results in elitist tentacles overthrowing the public interest.

“Ministers should only be able to influence a sector and its participants through transparent and fair regulation,” they say.

The authors are sceptical about the dual role of politicians as players and referees, rather advocating the clear separation of ownership and governance.

Politicians are the custodian of public interest, a role which involves consumer advocacy in the economic scheme of things.

Ministers and secretaries normatively speak with the voice of the consumer to keep public entities on their feet for optimal social return.

However, this ceases to be the case when they are the faces of state-owned firms which they must hold to account, or have vested interests in the same.

Inconsistencies often emerge when politicians with boards in their direct ambit are tempted to direct state-owned companies according to self-interest.

The recent implication of Mines and Mining Development Permanent secretary Prof Francis Gudyanga, who sits on three boards of parastatal companies under his ministry, in a $1 million corruption scandal suggests the pitfalls of power and uninhibited access.

The same goes for Information and Communication Technology and Courier Services Minister Supa Mandiwanzira and Energy and Power Development Minister Dr Samuel Undenge’s allegedly self-directed meddling in entities under their ministries.

Stuck between the pursuit of self-interest and stewardship of public interest, politicians cannot be expected to maximise return on public assets.

In becoming complicit in abuse, they cede high ground and cease to be the consumer voice.

“Freeing politicians from administering public wealth allows them to squarely align themselves with the citizens, formulating expectations, goals, demands and, where needed, also regulations that attenuate market failures.

This goes to the heart of a well-functioning democracy — accountability, transparency, and disclosure,” contends the duo.

This should not imply detachment of public officials from state-owned enterprises; rather a shift of roles from participant to adjudicator.

The authors argue that politicians will be more successful if they focus exclusively on issues concerning citizens and the economy collectively.

They argue that for a state-owned firm to be more competitive and immune to abuse, government must outsource responsibility to independently managed but state-regulated national wealth funds. The case studies are not entirely salutary to the alternative and emerging economies such as China and Russia have propagated public wealth in state ambit.

However, it is expedient for nations to consider, against their unique experiences, “time-proven tools and frameworks of the private sector” which can enhance public wealth.

Transparency and democratic scrutiny of public assets is indispensable for socially optimal return to be realised.

Complementary arms of government and key sectors such as the media and the academia must step up to the assignment.

The writer can be contacted at [email protected] and blog

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