The Chinese Economic Zones story shows us exactly, precisely, what is wrong with the economic government of Bangladesh. We need to do better if we are even to maintain, let alone increase, the speed of economic growth.
There's an old idea in the business world, that any decision is better than a delayed decision. Yes, even a bad decision, a wrong one, is still better than endlessly considering before doing anything.
Part of this is that greater consideration may or may not lead to a greater chance of making the correct decision. But more than that, while a decision is being considered nothing else happens. Better to get it out of the way.
Yes, it is true that people do indeed make the wrong decision using this idea. But even so, evened out across all decisions made, making one now is better than taking years to do so.
This is even more so in an economy. Which is why this is such a good illustration:“Following a decade of administrative friction and structural delays, Bangladesh’s plans for dedicated Chinese Economic Zones are finally moving forward.” A decade? 10 years?
Yes, OK, we know that the economic decision-making under the last government was, shall we say, flawed. And yet this is still a good illustration of the point.
Consider what economic growth is, in and of itself. It's people doing new things. Or, perhaps also, people doing old things in new ways. This increases productivity, increases GDP, makes us all richer.
So now we add in a bureaucracy. We can call this government planning if we wish. So anything new has to go through that government process before it can be done. Permission is required that the committee has to allow.
So, what happens then? The speed at which the new thing is done, the new method adopted, is the speed at which the committee calls for evidence, considers, meets and discusses, allows.
This is rather slower than people just doing it and seeing if it works. Because this is slower, it reduces the speed of economic growth.
Now, we can argue that the government considering things and the bureaucracy applying its expertise leads to better decisions. Not that there's a great deal of real world evidence to support that idea but it's an argument that can be made.
Now return to that business idea at the top. A decision now is better than one delayed. Because taking the decision means everyone can get on with everything else, either in the presence or even the absence of the new which is allowed or not.
Now, myself, I think that special economic zones are a bad idea. In order to work effectively, it's necessary to have some areas of the country not ruled by current laws about tax, planning, and so on.
This is also the same as the statement that current rules about taxes, planning, and so on stop business from happening. This must be so -- the only reason to have areas free from such laws is an admission that the laws prevent business from happening.
So, and therefore, my insistence is that instead of SEZs we should just kill those bad laws that prevent business from happening. For the whole country, obviously, not just for special zones.
Bureaucracy has delayed these SEZs by a decade. That's a loss of economic growth. The benefits from them are now going to turn up 10 years later than they could have done. Everyone is now poorer by the effect of that delay.
So, don’t have the government and bureaucracy decide who may do what. Because that system simply will slow down economic growth. We will be poorer for allowing it.
This is also what the “free” in the free market means. It doesn't mean the industry is free of all regulation. Rather, it means that anyone's free to try out something new. It means “free entry” into the market. No permission is required, no beseeching of a bureaucrat, no campaign contribution to a politician. Just do it and see whether it works.
This is why free market economies grow faster. Simply because there isn't that extra layer preventing them from doing so. And, well, we'd all like our children to be richer than we are, yes?
So let's have faster economic growth by having that free market without the bureaucratic delays on people being able to do new things.
Tim Worstall is senior fellow at Adam Smith Institute in London.
