It's easy -- it's also joyous -- to complain when those who govern us get things wrong. For a commentator like me concentrating upon bad government decisions means that I'll never run out of things to write about.
On the other hand perhaps we, or I, should try to be fair. As the saying goes even the blind squirrel sometimes finds a nut so possibly we should offer praise when the government gets something right? True, this won't offer quite such a cornucopia of things to talk about but still.
So, this announcement by the Finance Advisor, Dr Ahmed. When some part of the state, the government, wants land then it can simply pay the same price as anyone, and everyone else for that land. Wholly correct.
What's even better is that this is not that blind search for something good. This is driven by entirely -- and wholly -- correct analysis. This is, in short, a damn good idea. So, praise is due and here is that praise. Well done.
To take a step back. Two even. Sometimes it is true that what the government does adds value to our lives. I'm one of those who think that's rare but that's an opinion of mine, a prejudice even. But those rare occasions do exist. Which is great, we're therefore going to have some government. But how do we work out whether this action of the government is, in fact, adding value to our lives?
So, move from that second step back to that first step back. Prices are important things. We have scarcity -- we do not have enough of everything for what everyone wants. We want those resources to be used for the most valuable things. Prices tell us what everyone values those resources at for what they might currently do with them.
Take, for example, barley. This can be used to make haleem. It can be used to make beer. Now, as a journalist of course I desire all of it to be made into beer so that my breakfast is nice and cheap. But other people also have desires and some would prefer that scarce resource to be made into haleem. The market price of barley is the balance of those different desires of what barley will, could or should be used for.
Prices are important, that is. They reflect the desire of everyone else to use this whatever it is in the other, alternative, uses for it.
Which is the great insight that Dr Ahmed has deployed. Of course, if prices are different then demand will be different. That is not a complex observation. We all will desire to have more of something that is cheaper -- why do you think that I want barley to be made into beer not stew?
Just because it is the government that thinks it wants the land -- or the barley -- this does not change. If there's a special, low, price then people will use more of it. Further, we can only know that the government is adding value by using this resource -- land or barley -- if they have to pay the same price as everyone else. As Dr Ahmed says,“In many cases, agencies claim they need 100 acres when they actually only require 10, simply because the price is token.” Exactly so.
One of the things my colleagues were responsible for in Britain was an application of this principle. Spectrum -- electromagnetic spectrum, the airwaves -- is valuable. We can have radio, TV, mobile phones, military communications, mobile internet, and so on. But each waveband can really only be used for the one use. So, those colleagues of mine insisted that the Department of Defence had to pay the same amount as the mobile phone companies to use it.
Yes, wholly true, we had to increase the budget for the armed forces by exactly the amount they then paid back to the Treasury for their use of that scarce resource.
Simply watching those numbers dance across their budgets made the soldiers, sailors, and so on much more careful about how much of this scarce and valuable resource they were demanding to use. Of course, of course, defending the country is the prime duty of the government, they can have as much as they need for their radios. But how much they “need” changes when they see the price.
The Bangladeshi government -- and all its agencies and offshoots -- should pay the full market price for land in Bangladesh. Let us all praise Dr Ahmed.
Tim Worstall is a senior fellow at the Adam Smith Institute in London.
