Deregulation, Back To Fundamentals

Deregulation, Back To Fundamentals

Monday, June 10, 2019 3:29 am


Ifeanyi Uddin

Uddin Ifeanyi

Notwithstanding the passions elicited each time public discourse touches the subject, deregulation” is not always the invitation to anarchy that its opponents invariably make it out to be. Doubtless, advocates of both the concept and processes by which parts of the state’s play in an economy are dismantled almost always have a soft spot for the market. However, as anyone who is acquainted with much of the conversation that accompanied Margaret Thatcher’s deregulation of the British economy in the early 1980s will attest to(pace Stephen Littlechild), the setting up and strengthening of the state’s regulatory competence/role is a crucial component of the transfer of state resources via market mechanisms to the private sector. Thus, the “state” isn’t exactly eviscerated when it is deregulated. Its responsibilities simply change.

Even when the argument (specious at its most articulate points) is conceded that Nigeria is a unique economic proposition. Or, put differently, that efforts at implementing fancy examples from “civilised” places will be trumped by a plethora of local constraints. It is hard to fault the case that governments’ interactions with the economy run the gamut from autocracy to anarchy. That is, from government controlling every aspect of life in an economy (as the Communist Party of the Soviet Union tried and spectacularly failed to do over 70 years), to a condition where the very notion of the “community” is totally absent.

Even the latter thought construct is problematic. Not only do you have to go way down the animal and plant kingdoms to find examples (few and far between, pardon the cliché) of this anomie. In human societies, any such example of anomic “civilisations” left far fewer evidence than did the dinosaurs. Our societies, in other words have existed far more in the middle of the continuum expressed by the antipodes of autocracy and anarchy than they have at their bleeding edges.

As an aside, when parts of the domestic conversation around deregulation focus on local constraints as lets to global best practices, the logic invariably can’t proceed beyond the point where its invited to contemplate another local quirk. Because the transfers of state resources to the private sector, which have been the hallmarks of successive efforts at deregulating our space never pass through the market, they wear albatrosses from the start. Burdened by the partisan needs of nepotistic relationships, these “privatised” businesses can only be relieved by the imposition of additional taxes on the people. Thus, far from contributing to society’s net welfare gains, these newly “privatised” businesses continue to drag productivity down.

Still, the question posed by the demand to deregulate the state for each community is “What mix of the state and marketare you willing to tolerate?Better still, this question breaks down into a much simpler one: “What mix of the state and market is each community able to pay for?” For, in the end, and in the absence of an infinite resource pool, the modern state cannot afford to providegoods and services to its people, without the intervention of the market. As the Soviet Union learnt to its embarrassment, a state may easily undermine market economics by providing goods and services below the market clearing rate. But it just as easily destroys value in the process.

The market, especially when the barriers to exit and entry are that few provides the competition that forces businesses to innovate (new technologies, new business processes, new labour relations), strengthen new product pipelines, and keep prices down. This process, by driving profitable corporations, which employ well-paid staff, in turn provides the tax income (corporate and personal) with which exchequers are funded. The main arguments, here, of course, ignore the state’s ability to raise debts. We have clear evidence over the last four years in Nigeria that in the absence of market-based private sector responses, the state’s bulimia for debt is no less debilitating than its disregard for a vibrant private sector.

What do governments do with these tax receipts? Eggheads continue to argue over the meaning of David Easton’s description of “politics” as the “authoritative allocation of values for a society. Besides, the phrase itself may have become over-flogged. But there is no doubt that the processes included in Easton’s definition require an educated and healthy populace, able to conduct its business and enjoy its leisure within defined spatial and temporal boundaries, and within these boundaries, each individual must be free to express herself and realise her potential. Restraints will exist, and the state will police and punish, only to the extent that a citizen’s expression of self, and deployment of potential costs other individuals and the community far more than the benefits to any such citizen.

To tell the truth, all of this is fancy stuff. Can anyone genuinely argue against deregulation in the rail transport sector, for instance. Repealing the provision of the Railway Act that vests all rail-tracklaid on Nigeria’s soil in the Nigeria Railway Corporation rolls back the state in favour of more private investment in the sector. How can this be an undesirable outcome?


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