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Monday 17 December 2018
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Commentary

An unenterprising state

REGINALD DUMAS

Pt I

AT A PNM special convention in late November 1970, Dr Eric Williams presented what he called the “Chaguaramas Declaration,” which set out his “perspectives for the new society.” New, because the Black Power upheaval and the army mutiny earlier that year had brought fundamental changes to TT.

Williams said: “(A) country can be truly interdependent with the rest of the world in economic matters only when it has achieved a certain amount of economic independence… (W)e have to strengthen popular participation in the economic life of the country (and) to localise decision-making over the key sectors of our economy.

“This can be done… in a number of ways: (t)he assumption by the State of outright ownership (with compensation) of certain foreign-controlled enterprises…; 51 per cent participation by the State in foreign firms; joint ventures on a 50-50 basis with foreign firms; government regulation over particular enterprises…” It was the true beginning of our state enterprise system.

But Williams added words of caution: “(T)his does not mean that we should reject foreign private capital and foreign aid. What it implies is that we must ensure that such aid and capital must become adjuncts to our internal effort, not the centrepiece of our development strategy. Development is something which in the long run can be achieved only by the people of this country themselves. Foreign aid and foreign private capital are necessary to help us achieve this goal. We need and want foreign aid and foreign private capital, not foreign economic domination.”

Also, we had “definitely (to) avoid the mistake made by so many so-called “socialist” Third World countries in seeking state domination of the entire economy. There should in fact be every opportunity provided for a nationally controlled private sector, broadly owned, to expand.”

Ten years later, shortly before he died, Williams reviewed his party’s stewardship from 1956. He pointed out that the PNM had “rejected both capitalism and socialism, opting for state-owned enterprises in which the shares are to be divested to the public, ensuring equal opportunity for the small man.” But things had not worked out as expected; he was clearly disillusioned.

He said: “With the state enterprises, the situation becomes impossible – workers demanding higher wages, boards of directors voting bonuses indiscriminately and calling on the Treasury for funds for development before approval by the Cabinet, frequently on the basis of contracts entered into with consultants, designers, builders without approval. It is as if a state enterprise purchased by the taxpayers is to be operated solely for the benefit of that section of the community working in it whether as workers, professionals, management or directors.

“No state enterprise in any country can be allowed to operate as if it is a law unto itself, committing the country to unauthorised expenditures, dipping hands into the public purse at will and without ministerial approval and parliamentary sanction. The economic and financial liabilities are only compounded should there be any conflict of interests among directors between their duty to the public and their private interests as agents or as consultants either to a foreign enterprise involved or to foreign capital and technology in general.”

In June 1992 I addressed the first annual conference of the Public Enterprise Managers’ Association. (Does the association still exist, I wonder?) I examined several issues affecting (and afflicting) state enterprises but will confine myself now to only one quotation I gave. It came from Yair Aharoni’s 1986 book, The evolution and management of state-owned enterprises.

“The multiple goals by which an SOE is judged,” wrote Aharoni, “means that accountability is lost. Since objectives are unclear and ever-changing, management can always blame losses on the various other (social) policies it was asked to pursue… Quite often, SOEs are to pursue objectives helpful to a government minister…” Sound familiar?

Then, as if he had never heard of Williams’ disenchantment with the operation (though not the principle) of state enterprises and didn’t know that the shortfalls identified by Aharoni hadn’t been resolved, Patrick Manning, in his 2006 budget speech, introduced the special purpose state enterprise.

Fifteen of these were to be set up “to deliver an accelerated implementation of certain approved government projects… Strict procedures” on funding, management remuneration packages, procurement, accounting and reporting had been “established.” Have you noticed all that? Or, rather, an increase in the number of badly-run state enterprises and a more massive cost to the taxpayer?

In his November 8 Guardian column, Mariano Browne was his usual direct self: what we were doing now with state enterprises wasn’t working. State assets had to be managed more efficiently, and leadership, accountability, management, and productivity improvements were central to this effort. But none were in evidence.

Agreed; just remember Aharoni and Williams. But do we need all these enterprises in the first place?

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