Humanity being as humanity is, we often see the same problems in different places, over different countries. The advantage of this is that if one place has solved that particular problem then, well, there we have it, a solution. This can then be applied in other places as well.
This is generally true -- here is how to build a bridge that doesn't fall down, here's a good recipe for eggplant, this is a vaccine for polio. This is also more specifically true for what we're interested in here, solutions to economic problems. Do not try to create economic growth by shooting all the clever people -- Stalin tried that, it doesn't work. Do try to have some amount of capitalism and free markets -- all the rich countries did do that.
But we can be very specific as well. For example: “Recent news that the Bahaddarhat Baroipara canal project in Chittagong has been revised for the third time, a full decade after its initial approval.” Ah, yes, we recognize that one. For all the fact that governments have all the power they are not, in fact, very good at doing things. So, perhaps we should not use the government to do things? Which is, for me at least, one of those arguments in favour of markets and liberty and so on -- the other method, that of politicians telling us what to do, doesn't work well.
This does run into another problem. Which is that there are still things that we need to use the government to do. There are fancy names for different types of things here, public goods, common goods, but the basic idea is true -- there are things we need to get done that simple free markets won't do. So, we have to use the government even though the government isn't good at doing these things. For it is true that for some things it is better that it be done badly than not done at all.
Which leaves us with that problem of the thing we need doing -- here the drainage of Chittagong -- done but we'd really rather prefer it was done well, not badly. So, what do we do?
Colleagues of mine in London worked out a solution to this 40 years ago (yes, I am old but not old enough to have been involved in this). Which is to use the power of government to get the thing done but not to use government to do the thing. Use that political process -- and, yes, tax money -- to decide to build, but do not allow the government and its bureaucracy anywhere near the actual building of it. Instead, hire someone to do the project.
Furthermore, get that project manager to build it and then maintain it for, say, 30 years. They gain an annual fee for having done so and at the end of the three decades only then does the government own it. Finally, the fee for doing this is a fixed annual payment only. Everything -- most especially the price -- gets agreed right at the beginning.
In this manner we get that government part -- these public or common goods the market will not provide -- built but we miss out on the government inefficiency of ever actually doing anything.
It's not a perfect solution because nothing ever is in this vale of tears that is our imperfect world. But it is better. And given that better is all we're able to do -- perfection not being possible -- then that is what we should probably be doing. Don't allow the government to build things but do allow the government to pay for things to be built.
Tim Worstall is a senior fellow at the Adam Smith Institute in London.
