You are here: HomeNews0000 00 00Article 19666

Opinions of Tuesday, 30 November 1999

Columnist: Maxwell Oteng


The consolidation of democracy in Ghana has a great deal of geopolitical significance. In a sub-region more notorious for its coup d'etats and political upheavals than anything else, the transfer of political power from one democratic regime to another marks a positively significant achievement of monumental proportions, expected to act as a beacon of hope for other countries and their citizens mired in regimes of conflict, rebellion and tyranny in the sub-region. Therefore the praises and camaraderie Ghana has received lately from the international community have come as no surprise. After all much of the rest of the world has low expectations of Africa.

However, the advent of a new popularly elected administration has brought in its trail new and renewed expectations of the Ghanaian citizenry never witnessed in the history of the country save perhaps the immediate period following Independence from the British. Never in the history of the Ghana do the citizens have high hopes of the government and expect it to do more for them. It is really a positive sign that the citizens have high expectations of the new government because a good and responsible government can play a very important and useful role in the advancement of a civil society within the confines of its limitations. Having acknowledged that fact, however, the question we all should ask ourselves, and deliberate upon in our individual quietude and as a part of the national political discourse is NOT what should the government do but rather what CAN the government do.

In a truly democratic dispensation, the realities that confront the political leadership are complex and fluid because the competing constituencies are diverse with narrowly focused causes and single-interest agenda. For example, the Trade Union Congress (TUC), on behalf of workers, has already reportedly asked for a 100% increase in the minimum wage rate WITHOUT probably giving a thought to how they would reciprocate that demand with increased worker productivity. The National Union of Ghanaian Students (NUGS), on behalf of Ghanaian students, will soon be on the negotiation table and maybe, when push comes to shove, resort to street protests with their placards to ask for financial relief in their academic pursuits, WITHOUT maybe considering how this can be achieved within the country's budgetary constraints. Then there will be the Ghana Union of Traders Associations pestering the new government for a reduction in taxes on imported goods, WITHOUT maybe taking into consideration the impact of their demand on economic growth. Sooner or later the Ghana Manufactures Association and other related associations will rear their heads asking the government to place tariffs on competing imported goods to enable them survive the competition. Ghana National Association of Teachers will come with a "calabashful" of demands and so will the University Teachers Association and so forth.

Yet, as all schools of political thoughts (conservatives, liberals, social democrats, progressives) acknowledge, there are limits to what a government can do. The limits to government activism are rooted in bureaucratic overdrive, short time horizons and also in the so-called "Tragedy of the Commons" or "Free Rider" problem because most government activities are in the realm of what is called public goods. For those not familiar with concept of the "Tragedy of the Commons" or "Free Rider" as used in Law and Economics, it intimates that in the absence of appropriate and enforceable private property rights, individuals have the tendency to freeload - that is, there is no incentive for a person to pay for a good if the payment makes no difference to the quantity of the good that the person is able to consume. This concept undoubtedly helps to explain the failures of most government activities and operations since Independence because people's attitude towards them is one of "it is not mine, and if I do not take care of it another person will".

In addition, there is the problem of bureaucratic overdrive. Because politicians derive their power from the size of the government, and only few people can resist the temptation to increase their own influence or power, there is a tendency for government bureaucracy to over-expand. That is, the objective of government is to maximize the size of bureaucracy contrary to the profit-maximizing or "bottom line" behavior of business people. The consequence of a ballooning bureaucracy is the creation of too many sinecure jobs, the presence of waste in government budgetary dispensation, and inefficiency and inertia in the discharge of administrative services.

What's more, in a democratic setting with four-year electoral cycle like ours, governments and politicians face short time horizons, which can lead to myopia or political decisions that may yield short-term payoffs at the expense of the long-term welfare of the country. Thus politicians are more likely to be gravitationally attracted to short-term decisions that would increase their chances of re-election than deal with the hard and unpopular decisions that may have positive long-term implications for the country.

It is imperative for all of us to understand that even for things that government can do, conditions must be right. First and foremost, the government must have the wherewithal to do it wants to do or we want it to do. Besides, government activity can work only if it is a monopoly, especially in cases where the market is likely to fail. If there are other ways of doing the job more efficiently, the government must leave the activity to the competition. It is also important that an activity be abandoned once it outlives its usefulness. Unfortunately, however, government hardly does that, making it tied to yesterday and outlandish activities that are no longer productive. In addition, because resources are scarce, we must discourage government activities from becoming "moral" rather than "economic". The government must be discouraged from spending too much for too long. Government activities should not be made to serve political ends, however laudable, but should remain narrowly focused on specific performance for the benefit of the public.


In order for us to know the constraints our of self-interested economic demands, and for the government to understand how it can respond effectively to them, it is imperative that both the governing and the governed understand the impact of international economic dynamics on domestic economic policies.

Since the1970s, the world economies have become increasingly integrated and transnational. The interdependence of national economies implies that what happens in other countries can positively or negatively have ripple effect on other countries.

In this transnational world economy, economic activity is being shaped by international trade and finance - the movement of goods services and factors of production across national boundaries. In this connection, domestic economic policies - both fiscal and monetary - are reactions to events in the international economic regime.

In this international economic regime, the role of such traditional factors of production as land (to a large extent) and labor (particularly unskilled labor) has paled in significance. The old paradigms of comparative advantages through cheap labor and abundant raw materials are untenable in the new global economy. Thus with the global economy moving away from resource-based to knowledge-based, raw material is being thrown out of the equation. This is not to say that natural resources are unimportant. But they are only important if they can be used in an innovative way. The only advantage countries have is through innovation and strategic vision. The government has to understand this - that is, everything is being re-calibrated around the paradigm of innovation. This new development makes the role of human capital, especially entrepreneurial and managerial skills, prominently important. Interestingly, in this "new world", the objective of production agents has expended beyond the traditional notion of "profit maximization" to include "market maximization" through the advantages of economies of scale. In addition, the survival strategy of production agents is to produce something different than your competitors. The winners are those who stay ahead of the change curve, constantly redefining their industries, creating new markets, blazing new trails, reinventing the competitive rules, and challenging the status quo and orthodoxy. In order not to be eaten up by the intensity of global competition, we have to a clear vision about what and how we can offer something different than other countries to some different group of global customers. It is no longer a matter of being better at what you do but rather being different at what you do. In addition, the government must know that the only way the economy can be innovative is by having a lot of local competition. The integration and interdependence of national economies also implies that countries have to work a fine line between "free trade" and "protectionism". This has brought about "reciprocity" among countries in their political and economic dealings with one another.

The strength and effectiveness of this "reciprocity" or "reciprocal relation" lie in regionalism or regional political and economic integrating blocs and unions such as the North American Free Trade Agreement (NAFTA), the European Union (EU), the Asian-Pacific Economic Cooperation (APEC), the Association of South East Asian Nations (ASEAN), the South African Development Community, and our own sub-regional talk-shop, the Economic Community of West African States (ECOWAS).

It must also be noted that in the integration of world economies has placed less restriction on the movement of some factors of production. This development has meant that factors of production, except land, can and do move to places where their earnings would be highest. On of the consequence of this free movement of factors of production is the loosening up of the fabric of PATRIOTISM.

In the light of this, for a country to attract the best of the most productive of the factors of production, including its own skilled citizens, and in order to attract the desired foreign investment to supplement its own resources, that country would have to put in place very attractive enabling environment as well as mouth-watering incentive schemes.

These domestic and international realities do not lend themselves to easy management at all. Obviously, these realities cannot be satisfied through charisma alone as we were all witnesses to in the last two decades - charisma alone without a sense of purpose and visionary ideas can only lead to misdirection and non-performance. Rather, these realities call for a delicate balancing act of principles, leadership, level-headedness and managerial skills.

They call for a new kind of leaders or what is called "leaders of leaders". Our political leaders must realize that in order to be successful they must build a decision architecture that practices a mixture of people-centered, top-down and bottom-up management strategy. They must decentralize power and democratize strategy by involving a rich mixture of different and imaginative people from inside and outside the walls of their constituencies or party hierarchies. In order for us to escape the gravitational pull of the past and move towards what works, our leaders should embrace change and encourage a pro-change culture in their working environments. It is crucially important that our leaders surround themselves with forward-thinking people with success and imagination in their bones, as well as be adept at fostering creative collaboration among these people to achieve what Gary Hamel calls a "hierarchy of imagination".

Above all else, our leaders must have a vision, a passion and aspiration. Importantly, the people (or at least the majority of them) should be able to share in this aspiration. This aspiration once shared by majority of the citizen can create a positive synergy of tremendous human energy.