Monday, October 26, 2009

Lessons Forgotten

Talifaitasi W. Satele

Governor Togiola has said that the profit motive will not run the new ASG Cannery. So does he expect this company to operate at a loss or barely break even? If this new government entity does not generate revenues above expenses, then taxpayers will be throwing their money down a bottomless pit.

And I don’t believe anyone around here is so naïve as to believe that government officials or workers don’t have a profit motive of their own. If they didn’t, then we could rest assured that ASG employees all worked for free! That is simply not the case.

Nevertheless, the profit motive in government just doesn’t work like it does in the free market. For one, there isn’t the same level of responsibility in government as there is in the marketplace. That’s because the money the ASG will use is not Governor Togiola’s or Mr. Sanchez’s. Whether this venture succeeds or fails, no one here will be held financially liable, and that fact alone makes their decision making process a lot less reliable than someone who has a personal stake in a gamble of this nature and magnitude.

Second, the profit motive in a free market depends on having a very satisfied customer. That’s because the customer is your only source of revenue, and on top of that, he is free to go to your competitor. Government, on the other hand, can continue to tap taxpayers as a source of revenue whether the customer is satisfied or not. Or whether they do the job right or not, or the market is up or down, or they advertise sufficiently or not, and so on and so forth.

We can go all day making the case why ASG involvement in the cannery business is certainly doomed for failure. Is it not enough to take a overall look at the government as a whole and see where and how this thing is going to end up?

But how can anyone blame Governor Togiola for taking such drastic measures? After all, this is what the majority expects a governor to do, and that’s to do something, rather than nothing, especially at a time like this! Our expectations of his office empower him to take almost any measure necessary lest his constituents judge him for not having enough compassion for those who are about to lose their jobs.

However, a popular idiom reminds us that the road to hell is paved with good intentions. In actually using the government to do something to remedy the situation, we only make matters worse.

In times of extreme shakeup of an economy, conservatives-libertarians point to three ideas for policy guidance. They are benevolent ignorance, creative destruction, and believe it or not, having faith. Benevolent ignorance means government ignores a problem so that private actors can more appropriately and efficiently address the situation. Creative destruction refers to the fact that sometimes something has to be destroyed in order for something else to be created and take its place. And having faith means just that: having faith that it will all work out. These are lessons already learnt but easily forgotten; especially for those with little faith indeed.


Post a Comment

Subscribe to Post Comments [Atom]

Links to this post:

Create a Link

<< Home