Overregulating our existence
Education in Fiji — Part 6
Last week, we discussed the rationale for public sector reforms that include the education sector. We highlighted that there were two points of focus: one, to reduce the size and consequently scope of the Government. And two, to open up space for the private sector to expand through investment. This is meant to allow private capital to fill the void left by the Government in the overall financing of the economy. Readers who are gifted with business-think would be speculating about incentives to invest right now. Those concerns were very much a part of the overall framework within which these reforms were being packaged. It was felt that the biggest obstacle in the path of business was the predominance of myriad government regulations that instead of encouraging investment were actually hobbling the private sector and rendering it impotent in playing its full role in the economy. Some of you have mentioned that we seem to have moved away from the central focus of this series – education. That is not really the case because education is included in the general wave of public sector reforms that swept the globe in the 1980s and ‘90s. What we are trying to do is set the stage for education reforms by looking at the pressures for reforms, the rationale for it, and the theoretical shift that continues to inform the whole reform process. We will get to actual reforms in the education sector a little later in this series. Here let us focus on the link between deregulation and small government.
Deregulation and small government
HISTORICALLY there have been heated, loaded, passionate, and ideological debates about the role of government in civilian life. The libertarian movement is grounded in a political philosophy that upholds liberty as a core value. Libertarians generally advocate a society with little or no government power. This, of course, is a utopian dream because society needs order to ensure predictability in its conduct. Just like a classroom full of toddlers becomes a warzone without rules and a firm teacher, society needs laws and government power to ensure that it conducts its business in an orderly manner. History shows us, however, that in our quest for predictability, fairness, recourse to justice and general orderliness, we have “over-regulated” our very existence.
In the process, many of our freedoms have become curtailed. Take for instance the fact that we can no longer have a picnic as soon as we see the sparkling sea and a likely spot. This was not the case in the 1970s, but now many areas have become restricted by law. One could smoke freely and float around at their leisure at one time; now they are told to leave or are smacked with a spot fine. Worse still, they can be floated straight into a police cell. It is these experiences with excessive regulation that have continued to fuel public demands for more freedom and choice. This freedom v order debate extends into philosophical discussions about the merits and demerits between left-wing and right-wing thinking that we as voters look for in government pronouncements and policies.
Within the framework of management/administration in the public sector, the focus inevitably moved to regulations once it was accepted that the public bureaucracy was too large and inward-looking. It was mired in a labyrinth of rules that gagged it from fulfilling its role as the main provider of services to the public. Pro-business thinkers like Milton Friedman had long been agitating about this. It was thus time to reduce the sphere of influence of government and open up space for the private sector to flourish and fulfil its true potential as the “real” engine room of economic growth. This would help reduce the public budget (cut costs) and improve service delivery. The expectation was that as the private sector moved into the space vacated by the government bureaucracy, it would fill this with its better skills, technology, etc.
The big question was: how do we create space for the private sector while reducing the size of government? And as mentioned earlier the first step was to either reduce or remove regulations to attract private investment. Ironically, the concerns of libertarians were now being used by pro-business scholars pushing for fewer rules so that businesses could realise its full potential. This is what is referred to as deregulation. The rationale was that once business thrived, society would benefit in a number of ways. One, opportunities would arise for the unemployed to find employment. Two, existing workers would get pay rises and better working conditions. Three, the Government would collect more taxes from these businesses as well as the now better-paid workers. Fourth, consumers would gain from better quality products, a wider range of choices in products, and cheaper prices because of more efficient processing using new technology by competitive businesses. Five, society would benefit through increased philanthropic activity by thriving businesses.
It was clear from this argument that profits would incentivise further business expansion and this would lead to previously unrealised benefits to society. Unfortunately, the conduct of business is not as predictable as outlined within this framework. This is because increased profits do not seamlessly lead to rises in pay and improvements in working conditions. There is a whole range of other considerations that come into play. The continuing struggle of unions to get better working conditions for their members provides some highly interesting insights into this highly hopeful expectation.
Likewise, customer welfare through better quality products, a wider range to choose from, and better prices has also remained very much an unfulfilled expectation. Leaving alone the product, customer service remains a serious concern. Supermarkets continue to force customers to queue while activating only one or two cashier machines even during rush hours. Restaurants run on skeletal staff and make diners wait interminably for service. In one instance, I was told that this was normal. Well, that wasn’t the case not too long ago. Many of our businesses have foreign accountants and financial controllers. Do we not have locals who could fill these positions or are there some special skills required to manage the increased flow of profits? Does the Government really end up collecting more taxes from thriving businesses? These are some of the findings and concerns raised in research focusing on deregulation.
The other half of the reform equation focused on actively reducing the size of the Government. This was done through outsourcing/subcontracting or contracting out services previously processed in-house or provided directly to the public by the Government. With both options, the Government moved into playing a secondary role while a private contractor took up the business opportunity on offer. This meant that parts of government like vehicle maintenance, for instance, were restructured and discontinued while some private contractors moved into that space. Garbage collection moved into private hands with the individual citizen having very little say in the quality of work being carried out. Previously, government workers could be asked or harassed depending on the situation. Now they don’t even look at you. The list goes on, but the point is that deregulation and contracting out have led to hybrid outcomes that fell well below expectations.
I will expand on this in the next article. Until then, sa moce toka mada va’lekaleka.
■ DR SUBHASH APPANNA is a senior USP academic who has been writing regularly on issues of historical and national significance. The views expressed here are his alone and not necessarily shared by this newspaper or his employers subhash.appana@ usp.ac.fj