Sunday, March 23, 2008

Politics, Business And Development

One of the most important lessons that I have learned in my life is that all systems are only as good as the people who run them. The fault with all systems is the fallibility of human nature. Corruption, mismanagement, incompetence, patronage, nepotism and self interest are the weak link in all systems. It is therefore not a question of systems but who is implementing them and how.

Socialism, capitalism, communism, dictatorships, royalty are all meritorious ideas in their own way, and each if implemented with the common interest at heart, rather than self interest, can enrich nations and peoples. However the opposite is also true. Each can have disastrous consequences when integrity is overtaken by greed, corruption, self ambition and so on.

For any system to succeed, the people who manage it must be honest, qualified, responsible, motivated, and above all accountable for their actions and decisions at all times. This can only be done by putting in place transparent monitoring tools and mechanisms. This is the key to success for any system.

Another thing I have learned is that competition is essential to progress. Without competition there is less incentive to keep improving and less need to be creative. Lack of competition encourages other human weakness such as self satisfaction and laziness and leads to stagnation. I have seen this so often in monopolies but seldom in private companies.

However, what I have seen in private companies is far too much profit being skimmed off the balance sheets to pay unjustified bonus’ and/or dividends to partners and shareholders. Without the workforce both would be paupers. So, I’m definitely in favour of the workforce having a stake in profits. I know of no better way to boost morale, productivity, competitiveness and innovation.

Likewise, whilst I do not believe in monopolies, I do believe the state is foolish to give up control of strategic service industries such as electricity, water and gas supplies, as has Great Britain for example. Like much of Europe we are more and more dependant on Russian supplies and this means we are vulnerable and no longer in control of our own destiny. However, it is extremely important to ensure that these industries are managed with the same professionalism and efficiency as private industries and although this is no easy task, I am sure it is achievable.

State monopolies often depend on political patronage and are extremely vulnerable to changes of government. They therefore tend to be unstable. They are subject to sudden policy and leadership changes depending on the government of the day and are therefore lacking in continuity resulting in inefficiency. They are also in my experience much more bureaucratic by nature than private industries and therefore lack dynamism. The same is true of all state monopolies anywhere in the world.

Lastly, I would like to suggest that developing countries with natural resources maximise their earnings potential by building partnerships with manufactures from the developed world to add value to their produce at origin in order to export them as finished goods. They must fight restrictive trade practises and value added tariffs of trading blocks like the EU by fighting fire with fire. Insist importing countries remove the tariffs on value added goods or lose the raw materials. Sell the raw materials instead to those countries who are prepared to enter into genuine free trade agreements. This is the only way to ensure sustainable and meaningful development.

Why should producer countries have to export commodities in bulk because the EU and other trading blocks impose tariffs on value added imports . It’s their produce. They invested in it, set land aside for it, grew it and nurtured it with their labour. Why therefore should a company in Belgium, Britain, Holland, Germany, France, etc., make all the profit from adding value to their produce while they make none? This is a blatant imbalance and contrary to fair trade practise.

In order to change this it will be necessary to create a new kind of partnership with the importing nations, one in which one encourages them to invest as manufacturing partners to add value at origin. This is necessary because the importing nations have the established markets. Developing countries need their markets but the developed nations need the produce. This should be the basis for a new kind of partnership in which everyone benefits equitably in a manner that reflects the reality on the ground.

Fair trade can only come about when trade is fair and everyone is a winner. Fair trade is about mutually beneficial partnerships not unequal partnerships and this is I believe the way forward for everyone, but it will take great leadership in developing countries to force the hand of the more advanced economies.
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Anonymous said...

I’ve just returned from the Russian province with the refreshed impressions of what is going on in our poor state, where the sober forces may be accumulated. In our very particular Russian situation, giving full tribute to religious-nonreligious political correctness, I can affirm that Catholic Church may play such a role at us, with her universal servants – Africans, Polish, Italians, even Byelorussians who appear to be a creative mind tackling the Russian realities.

Today is the big Catholic feast – the Annunciation. So all other festivities, including the secular dates, events, anniversaries, personal jubilees – are under Our Lady’s grace and blessings for the future. I sincerely share the big joy of those who is involved by that mystery.

speakeezie said...

Thanks for your comment. I wish I could see for myself what is happening in Russia. Alas that is not possible.