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Election Manifestos and the Level - 4 Spender | Nat. Dwamena

Voter’s interest in every election is to see that things get better. This interest has caused many to think that whenever we are unsatisfied with what the free market produces, the government must be employed to save the situation. Even though many think the market fails occasionally to provide certain needs such as defense, we seem to worry little about government failure. Therefore, we constantly call on government actions to improve things.

In reality, the contrary happens since self-interest runs through the state. 

As people, we get alarmed by government debt stock but we do not cease inviting government in every aspect of our lives. Ghana’s debt stock hits Gh¢236.1 billion in the first quarter of 2020 and the manifestos of the major political parties - thus New Patriotic Party& National Democratic Congress - is not going to reduce the debt stock.

To say, ‘every government borrows’ is agreed by all across the political divide. Adam smith opined that 'there is no art which one government sooner learns of another than that of draining money from the pockets of people’.

If you want the government to do, then do not complain if they borrow on your behalf to do it. The government does things that will keep them in power, win elections, and enrich their supporters at everyone's expense. The cost of every government project is passed down on us, yet we do not realize the cost to the next generation. When the debt becomes burdensome, the government can print money to repay its debt with devalued currency.

This legal plundering makes it difficult for individuals to build wealth or engage in productive ventures hence distorting the free market. Therefore, individuals become susceptible and call on the government to improve every aspect of their lives.

We keep surrounding our livelihood for the hope of a better future. Yet, reality portrays a different story. We have been set up in a situation to be in dying need of the government. This creates an incentive for the government to look like they are helping.

Ghana is becoming a welfare state with this syndrome. Every voter is expecting some freebies and has fueled various political manifestoes to include freebies. The focus however is to win an election, therefore politicians are prepared to give freebies and tell voters everything they want to hear.

If you want someone to spend to improve your livelihood, then be mindful of the spender. This leads to the four levels of spenders;

  1. You spend your own money on yourself: At this level, you are efficient in both knowledge and budget. You know what you need and have the incentive to spend efficiently.
  2. You spend other people's money on yourself: Level 2 kind of spender is efficient in knowledge but not budget. You have no incentive to minimize spending.
  3. You spend your money on other people: Here you are inefficient in knowledge but efficient with the budget because you are spending your own money on other people.
  4. You spend other people's money on someone else: This level of spender is inefficient in neither knowledge nor budget. You buy things with little idea of whether it will benefit those you spend on. You waste money and have no incentive to stop spending. The best fit at this level is the government and all government welfare programs.

It is proper to help the poor morally. In any case, private charity and church are much better at helping the poor in our society than the government. They have local knowledge and can determine who is lazy and who genuinely needs help. They have little incentive to show off and every incentive to get individuals off their relief and work as fast as possible.

On the other hand, if we want the government to improve our livelihood, then be ready for worse spending. This is because the government is a level-4 spender.

The biggest problem when politicians, bureaucrats, and state administrators are invited to improve our livelihood or perhaps give us welfare programs is how they measure success. Thus they measure success by the number of people they served ignoring that true success is when no one needs the welfare for their survival.

We have blacklisted individual entrepreneurial might and view businessmen as individuals who are exploiting us in the society. If we still think that the government is a saint, at least we cannot disagree with Ayn Rand as she states that, ‘a businessman cannot force you to buy his product; if he makes a mistake, he suffers the consequences; if he fails, and he takes the loss. A bureaucrat forces you to obey his decisions, whether you agree with him or not… if he makes a mistakes, you suffer the consequences; if he fails, he passes the loss on to you, in the form of heavier taxes’.

Government can borrow or tax to undertake projects and programs but as we expect more free stuff from the government know that all the spending done on our behalf as citizens of Ghana is done as a level-4 spender. As Frederic Bastiat would put it, ‘the state is the great fictitious entity by which everyone seeks to live at the expense of everyone else’. Interesting, isn’t it?

This does not mean we don't need our government, we all agree that the government can tax us or borrow to ensure good security in Ghana, protect property right and enforce law and order. However, such security must protect us against theft and fraud. Simply, the government must set the rules and leave us to function in an enabling environment.

As people, we must be wary of inviting the government in our livelihood. If you want the government to do, then do not turn and blame the government for excessive borrowing and higher taxes. As you know, there is no such thing as free stuff. We must aspire to build a civil society where cooperation, trust, and reliance enhance our livelihood.



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Article by

Nathaniel Dwamena

Research & Development Manager, Institute for Liberty & Policy Innovation

2020-10-01 18:40:08

Source: ILAPI