Possessing the requisite wisdom

May 22, 2015 Editorial

With the dawn of every new administration, the primary concern of the populace is that we experience greater development than ever before.
It should not be difficult for the David Granger-led government to recognise that for Guyana to develop, and has now become necessary, catch up with our more progressive Caricom neighbours in the next decade, we will one way or another have to accelerate the pace of growth. It is imperative that bickering politicians will have to take some time out to agree on the major fetters to our efforts.
The factors for development are multiple and diverse. We all know, from our personal experiences, that there isn’t one simple answer to the question why each of us becomes richer or poorer. Hence, we shouldn’t be surprised that the question of why whole societies become richer or poorer also cannot be given one simple answer.
Different experts have different views about the relative importance of the conditions and factors that make countries richer or poorer. The factors they most discuss are so-called “good institutions,” which may be defined as laws and practices that motivate people to work hard, become economically productive, and thereby enrich both themselves and their countries.
Among the good economic institutions that motivate people to become productive are the protection of their private property rights, predictable enforcement of their contracts, opportunities to invest and retain control of their money, control of inflation, and open exchange of currency. For instance, people are motivated to work hard if they have opportunities to invest their earnings profitably, but not if they have few such opportunities or if their earnings or profits are likely to be confiscated.
There is no doubt that good institutions are important in determining a country’s wealth. To our credit, we have introduced most of the above institutions in the last twenty-five years. So why haven’t we progressed farther? There is the question of time.
A long history of government doesn’t guarantee good institutions but at least permits them; a short history makes them very unlikely. One cannot just suddenly introduce government institutions and expect people to adopt them and to unlearn their long history of backward organization. Our politicians must appreciate we are a very young work in progress.
An additional factor behind the origin of the good institutions is that in our country, Europeans introduced corrupt “extractive” economic institutions, such as slave and indentured labour and confiscation of produce, to drain wealth from our country. There were also authoritarian political institutions.
In our case “extractive economic institutions” meant practices and policies designed to extract incomes and wealth from our entire society to benefit the foreign imperial power. For instance, even though we produce sugar, not a single refinery was established here to give a higher value added product.
This was unlike countries such as Canada and Australia where European settlers had to work themselves and they developed institutional incentives rewarding work. When the former colonies like ours achieved independence we inherited the extractive and authoritarian institutions that coerced the masses to produce wealth for dictators and the elite.
In the ‘settler’ colonies of Australian etc., they were left with institutions by which the government shared power and gave people incentives to pursue. The extractive institutions retarded economic development, but incentivizing institutions promoted it.
But while we acknowledge the comparative youthfulness of our nation, this does not give our political elite an exemption. It is an indictment of their maturity that while the questions above were confronted by the founders of our independent nation, some seem to revel in finger-pointing.
Unless the institutions undergirding our flawed systems are modified to match our circumstances and patience is exercised to ensure their rules are inculcated in our people (including mainly themselves), we could be arguing about our ‘underdevelopment’ for decades to come. It is hoped that our leaders, today and beyond, possess the requisite wisdom to avoid us having to squabble.

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Possessing the requisite wisdom

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