Follow Up To Dr Nduom Please Let’s Play The Game More Adeptly

Sun, 20 Dec 2009 Source: Baidoo, Philip Kobina

One of the foundations of a vibrant democracy is the ability of its citizens to express their views freely, especially opinions that are not conventional or palatable to others. The active engagement of the citizens in this endeavour filters out the ideological dregs and promotes the noble ones. So when I write articles and it generate a lot of diverse opinion that enriches the national consciousness I feel a sense of accomplishment. In a recent article I posted at this website entitled ‘Dr. Paa Kwesi Nduom, please lets play the game more adeptly’ it engendered a few responds ranging from favourable to absolute insults, which I cannot repeat in a respectable company.

However, there is a classy one among the lot, which was diametrically opposed to my position, yet was very responsible enough to refrain from foul language but rather catalogued wonderful examples to rebuttal what I stood for. After reading it I felt that I would be doing those who shared my views a disservice, and even the respondent, if I don’t reply to it. To appreciate this piece very well I would advice that you read the above mentioned article posted on 12/12/09.

From the outset I will like Mr Kwame to know that there is no true perfection of anything in this world. Communism in its heydays was not practiced to the fullest neither can capitalism claim other wise. There are always certain human institutions that are no go area for private enterprise like defence. Even that, in the past, and still happen every now then, monarchs and dictators have used mercenaries for their own selfish goals. The British did that during the American war of independence. Communism is about common ownership of national resources, i.e. the factors of production, which most of the time they try to exclude the human component. If we have to include that in the true sense of the concept then individuals can neither own a wife nor a husband. But we know that this is something that cannot happen in real life and that goes the limitations of communism.

Before I will put my case across to defend what I wrote in that piece, I would like to refresh our memory on the basic definition of economic, which many intellectuals have wrestled without much success. However, one of the most widely accepted, is the one given by Lionel Robbins. It states that economics is study of the use of scarce resources, which have alternative uses. So economics is all about choice and it does not always have to involve money in order to make economic decision. For example, a medical team on a battlefield confronted by a lot of wounded soldiers will have to make swift decision based on their limited time and resources, which have alternative uses. The fact is there will not be enough doctors, nurses and supplies to go around. But in the mean time there will be some soldiers who will be near death with small chance of survival whereas others have a fighting chance if attended to promptly. On the other hand some of them will have minor injuries and would possibly recover whether they receive medical attention or not. So this is the catch, if the doctors do not allocate their time efficiently some of the soldiers will perish unnecessarily while time is spent on soldiers who perhaps not in urgent need of attention or on others whose wounds are so overwhelming and would die regardless of what the doctors do for them. I used this shocking example for people to think and perceive all our resources in the perspective of what a medical team faces on a battlefield. The choices we make and the efficient use of the scarce resources at our disposal is what determines the distance between poverty and prosperity.

Now this is the time to pull apart what Mr Kwame wrote in his comments. He suggested that the European Union, including Britain, subsidise all aspects of their economy so why can’t it be replicated in Ghana. To explain that I will have to write a whole book so I will relate it to the common agriculture policy of the EU in brief. It is insane for EU farmers to pour milk down the drain. The authorities know that it is bad but they have boxed themselves into a tight corner, literally positioning themselves between the devil and the deep blue sea and they cannot free themselves from that policy, which makes their preaching of globalisation a sham. All those policies are the vestiges of the glory days of European socialism. Though they want to scale it down yet they can’t. How many times haven’t we seen French farmers blockading roads when their government attempts to remove or reduce farm subsidies? It also happens in Canada and other industrial countries. The EU spend to the tune of $43 billion annually protecting 200,000 jobs which even if they have to redraw the subsidies and pay those that will be affected $100,000 to do nothing they will still be better off. Yet they have gotten themselves into a pickle and they cannot get out wasting billions year in and year out which could have been used in research to increase knowledge and the life of the majority instead of few farmers. And this is what I don’t want our country to get into because the benefit to the nation is zilch.

He suggested that it is nationalism that prompts the Indian government to buy food at a higher price and sell it at a lower cost to the Indian consumer and China setting up state farms to provide her people with jobs and food security. That is wonderful but he should go back and find out what happens on the ground, the sort of incredible devilish wastage that takes place on those farms. Let me furnish him with one example that used to happen on Russian state farms. The tractor drivers who plough the land knew that their superiors mostly inspect the furrows at the edges of the huge farms so they plough the standard depth at the edges and as they move towards the centre they lift the blades and race the tractor so that they can cover more area, which will increase their remuneration. Obviously, this resulted in the stunted growth of the crops towards the centre. And they found out after years of wasted resources. Mind you this will not happen on a private farm and if it does the cost will be borne by the farmer alone for his irresponsibility and not the whole society through the payment of their taxes

China has realised this and its edging towards capitalism at full thrust. They know that the transition could be chaotic if not properly controlled. That is the more reason why one of their leaders, Deng Xiaoping, said lets some people get rich first. Because they have come to the realisation that scientific socialism, which they claim to practice, could not deliver the sort of prosperity that their talent and the human resources at their disposal can achieve. China is no longer a socialist country; it’s a hybrid bidding its time to go full blast.

Also he talked about the fact that bankruptcy is part and parcel of capitalist economy and went on to name a lot of private companies that folded up in Ghana like United Trading Company, Learnards, Kingsway, R.T. Briscoe, and Glamour. Bankruptcy is the beauty of capitalism. It is what brings the best out of the system and I think it will take Mr Kwame a very deep soul searching and a lot of study to come to terms with this. When private enterprise becomes bankrupt it is only the private capital that is lost. But in state own enterprise every member of the society pays his or her hard earned taxes to finance the inefficiency of the enterprise and sometimes even the shear arrogance and the ostentation of the management. The question is why do I have to finance somebody’s inefficiencies. Before any investor puts their money into a company, they request for a financial statement to see whether the business is profitable or not. In a SOE the public permission is not sought and they pump the nations tax money and squander it on those insatiable SOEs.

The other basic ethos of economics is the constant search for ways to do things differently, which in the process weed out inefficiencies for the benefit of the consumer. All this companies that Mr Kwame mentioned were supplanted by companies who could do the same thing they were doing in a much lower cost to the consumer using scarce resources in a better way than they could. I bet he appreciates when he pays less than £500 for a basic computer, which used cost on the average about a £1000 twelve years ago. All the companies who couldn’t bring such lower cost to the consumer got weeded out and that is the splendour of the system. It was the Austrian economist, Joseph Schumpeter, who coined the word creative destruction to describe the spirit of capitalism. That is, the old system gets destroyed to create a new and better way of doing things for the benefit of the society. And I honestly find it very hard to believe why people see it as a negative. I bet no one complained when cassette tape replaced the bulky 8-track. Now the cassette itself has been replaced by the compact disc, which is also under threat by MP3 players. The MP3 enable people to carry all the music tracks they have in a portable electronic gadget, which would have been near impossibility to achieve with the 8-track. Life has become more comfortable as the old system get destroyed.

For the other international political territory he chartered I am not going to take the bait. Some of the answers go beyond practical economics so I will let him wrestle with his own conscience. However this is what I will let him know finally, the evil days of capitalism is gone. The days when workers used to work 12 hours a day seven days a week is history. Now it has got a human face. Labour union, competition both internal and external keeps the system on its toes. And I also think will do with some food for thought. He is the kind of person who will say that spending a million dollars to save one human life is worth it. On the other hand, that one million has alternative uses that can save multiple life elsewhere.

Philip Kobina Baidoo Jnr



Columnist: Baidoo, Philip Kobina