When diversification becomes socialism

Aug 12, 2026 Features / Columnists, Peeping Tom

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(Kaieteur News) – There is an economic philosophy that has long gained traction in Guyana and which appears to have solved the eternal problem of capitalism. That philosophy argues that the private sector should have opportunities for making profits and the government should be saddled with the problems.

When a business is profitable, it is said to belong naturally in the hands of private enterprise. When a business is difficult, expensive, socially necessary and incapable of generating a handsome return, government is expected to take it over. Then, having taken over the unprofitable business because nobody else wants it, government is criticised for losing money on the venture.

The market whispers, “We don’t want it,” and then somebody blames government for saying, “All right, we’ll do it.”

Consider water. Guyana Water Inc. exists because somebody has to provide potable water to the population. The private sector has never demonstrated the enthusiasm for building and maintaining a national water distribution system, particularly in communities where the cost of extending pipelines bears little relationship to the revenue that can be generated from customers. GWI therefore has a monopoly in the provision of piped potable water—but it is hardly a monopoly that the private sector has been fighting to acquire.

The irony becomes almost comic when GWI proposes entering the bottled-water market. Suddenly, government is accused of competing with private enterprise and attempting to establish a monopoly over water. But GWI already has a monopoly over water coming through the nation’s taps.

Where was the private sector when that monopoly was being created? Where were the entrepreneurs when pipelines had to be laid, pumping stations constructed and water delivered to households in communities where the economics were unattractive? Apparently, bottled water is where capitalism draws the line.

The same contradiction appears in sugar. The private sector has shown little appetite for taking over Guyana’s sugar industry. Yet sugar remains important not simply as an agricultural commodity but as an economic lifeline for rural communities. That is why the government continues to support Guyana Sugar Corporation (GuySuCo)

The interesting question, therefore, is what government is supposed to do when sugar production loses money. If it closes the estates, it will be accused of abandoning sugar workers and destroying rural communities. If it subsidises the industry, it is accused of wasting taxpayers’ money. If it diversifies GuySuCo into other crops, agro-processing, livestock or related agricultural enterprises so that profitable activities can cross-subsidise sugar, it will presumably be accused of “crowding out” the private sector. In other words, government must rescue the industry, but it must not actually do anything that might may make the rescue economically sustainable.

That is a remarkable doctrine. Imagine telling a private company: “You are losing money in one division, so you are forbidden from establishing another profitable division because it might compete with somebody else.”

The private sector would call that diversification. When government does it, apparently it becomes socialism.

The same intellectual gymnastics are applied to electricity. The private sector is perfectly happy to sell electricity-generating equipment, provide services and participate in profitable segments of the energy industry. But when it comes to assuming the enormous responsibility of maintaining a national electricity distribution system and ensuring that power reaches consumers throughout the country, enthusiasm suddenly becomes considerably more modest.

Guyana Power and Light remains government’s problem. And so does the public hospital. And so does water. And so does infrastructure.

The State is expected to provide these services because they are essential to national life, not because they promise a spectacular dividend to shareholders.

This is the fundamental distinction that gets lost when every government enterprise is judged as though it were a private supermarket. A supermarket can close an unprofitable branch. A government cannot simply tell an entire village: “Sorry, the customer density is insufficient to justify your water supply.”

A private bus company can abandon a route because there are too few passengers. Government cannot necessarily tell citizens in  Region 1, that it is closing the ferry service because the rate of return on investment is too low.

A private hospital can decline to provide a service because it is commercially unattractive. A public hospital does not have that luxury. In fact, the government is now financing tests for citizens at private hospitals. Government therefore carries a burden that the market quite rationally avoids.

That does not mean government enterprises should be inefficient. It certainly does not mean they should be permitted to squander public money. Government corporations must be properly managed, audited, held accountable and constantly challenged to improve their performance.

Instead, we sometimes seem trapped in a strange economic circle in which government is condemned for entering industries the private sector does not want; then, when government tries to make those industries more commercially sustainable, it is condemned for competing with the private sector.

Perhaps the private sector should be invited to solve the problem. Take over the sugar estates. Take over the water systems. Take over electricity distribution. Run the public hospitals. And, most importantly, assume the losses.

Until then, perhaps we should recognise that government does not always enter a business because it wants a monopoly. Sometimes it enters because nobody else wants the responsibility.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper)

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• diversification, Guyana Water Inc., Peeping Tom, socialism

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