Elected oligarchy and economic underdevelopment – conclusion


This essay will conclude the series on the post-1992 elected oligarchy by proposing a set of policies that could circumvent the further entrenchment of the present oligarchy or the emergence of future elected ones. These proposals are by no means exhaustive and complete. However, I am of the view that these are the ones that should be given priority so as to ensure the economic transformation of the country.

Those who read the series of columns would remember that it was argued that the PPP’s oligarchy is rooted in the Democratic Centralism of the party which takes advantage of the powers embedded in the tinkered 1980 Burnham Constitution. The PPP – in particular the Jagdeo Administration – has utilized this power to the fullest to reward subservient political leaders and chosen business leaders; thus, the interaction of politics and economics – otherwise known as political economy.

The columns also noted three main channels through which the oligarchy retards economic development of the nation. Firstly, the oligarchy suppresses independent private business investors. Secondly, given the favours granted to family and friends of the leaders, those most equipped to do a job are not necessarily selected. Therefore, this “adverse selection” diminishes the productivity of the nation. Thirdly, the oligarchy chooses sub-optimal economic policies instead of practical and realistic alternatives, again diminishing the productivity of the nation. The financing aspect of the LCDS epitomizes this latter point. In the aggregate, therefore, the economic stagnation continues; therefore, the masses are dependent on an economy in which household consumption is propped up by remittances, a massive underground economy, and short-term grants and aid to maintain the government’s cash flow – especially for the purpose of handing out tokens for the up coming election.

Proper institutions
versus individuals

In my experience, I have seen Guyanese become overly sentimental and supportive of individual leaders at the expense of building timeless institutions. These very leaders since Independence in 1966 have used poorly specified rules to abuse the overly sentimental masses. The proposals I would offer, although not new, must be seen in the context of institution building. Institutions are not buildings. Instead, they refer to rules that govern the behaviour of leaders and people. Institutions set the rules and laws under which economic transactions can take place. Suitable institutions will be necessary for providing the foundation for the kind of structural production transformation this column has called for on several occasions.

Institutions are timeless; leaders come and go. Furthermore, institutions must be seen as larger than leaders. Therefore, common folks are actually shooting themselves in the feet should they agree to change the existing Burnham Constitution, in spite of its imperfections, to suit the wishes of  one or two leaders. The Constitution must never be changed to satisfy the fancy of a leader. The country still suffers from a debilitating Constitution that was changed to please the wishes of Forbes Burnham. Doing the same today to fulfil the wishes of President Jagdeo will further perpetuate underdevelopment and backwardness.

Policy proposals

The first reform to build lasting institutions must be the creation of a meritocratic, independent and professional public service. I have noted in the past that we cannot have a developmental state without such a service with efficient and professional bureaucrats. The elected government of the day is expected to conceptualize the vision of transformation, but the professional bureaucrats execute and implement that vision.  The bureaucrats will also be responsible for implementing industrial policy by first understanding what policy space is allowed by global multilateral rules. Had we gone down this road we would not have wasted time behind the financing aspect of the LCDS when the United States and China are not willing to accept such an environmental model in the first place.

Any public service reform must include a rigorous written examination to enter the service. There must not be any ethnic quotas. The only requirement must be a good education and a written examination. Once a bureaucrat or technocrat enters the service, he or she must have a chance for long-term tenure so as to allow for institutional memory and independence. In addition, the head of the public service must never be a seasoned politician as we currently have under the PPP.

This kind of institutional reform is never really encouraged by the multinational financial institutions. Instead, they promote laws and rules that are meant for the operation of free markets, especially financial markets. I believe this is a mistake because financial institutions rather than  financial markets will tend to predominate in most developing economies. In any case, also, the manufacturing and service sectors are not really markets but firms operating with the power to determine prices and outcomes (natural oligopolies). Therefore, public service reforms ought to be seen for the purpose of the promotion of private enterprise rather than free markets with rapid price adjustments from short-term speculation. Once we get this distinction right, I believe we can clear up much confusion, and the relevant laws to promote private enterprise can become more obvious. And in any case, to the extent liquid financial markets evolve they must be regulated as rapid changes in price and flow of capital can destabilize an entire economy. Bureaucrats are needed for the task of regulation and monitoring. The second reform must be Constitutional reform. There are experts who know a lot more about this matter than I. However, at minimum I would like to see laws put in place that will curtail elected oligarchies who game the system for their personal advantage. The guiding principle must be the supremacy of the national Constitution and not a political party’s constitution – for instance the PPP’s constitution that promotes Democratic Cen-tralism and Marxism/Leninism. The opportunistic and greedy contemporary oligarchs have ironically accumulated massive personal wealth while using a Marxist/Leninist party constitution to game the National Burnham Constitution.

Therefore, at minimum a political leader in an office at Robb Street must never have the power to select sycophants as Members of Parliament (MPs). Of course, these leaders surround themselves with sycophants because they never want to be subjected to internal scrutiny. MPs must be elected directly by a locality; thus they are answerable to the grass root folks and not a leader who uses lotto funds, a heavy VAT, and aid funds to buy out their loyalty. At least the geographic representative can be ditched by the local electorate should he/she fall for the largess of the leader. This ought to be the essence of grass root politics and not the nonsense that some talk about regarding grass root connection and mobilization. There can be no true grass root politics without grass root representation in Parliament.

We might not need to remove the Proportional Representation when electing the President and Prime Minister. However, I believe MPs must come from certain geographic locations. This also allows independent candidates to challenge the main political parties even though they are likely to win the presidency. Geographic representation could also facilitate ethnic representation – especially for Indigenous people who really should have the power to elect their own leaders rather than the ethnic Indigenous leaders Freedom House provide.  This would move beyond the tokenism enshrined in the outboard engines and all terrain vehicles handed out to Indigenous folks just before the election. It is time the Indigenous people mobilize to be represented as a group in Parliament.

The third reform must be a Freedom of Information Act (FOI). The FOI would make it easier to investigate state largess given out to the chosen friends of the oligarchy. It could help also to make the procurement process more transparent and therefore allow independent business investors to get a share of government contracts.
There would obviously need to be other reforms, but I believe these are three important ones that could go a long way towards improving governance and economic policy.  In the next column, I would explain why Guyana went largely unscathed during the recent global financial crisis.

Please send comments and criticisms to: tarronkhemraj@gmail.com


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