Governments donot grow economies
Since the recent ground-breaking ceremony for the Baha Mar project, some members of the Progressive Liberal Party(PLP)have argued that the governing party has not done enough to acknowledge the role played by the last PLP administration to make Baha Mar happen.
Some have argued that Baha Mar is a PLP project.
The governing Free National Movement(FNM)too engages in the discourse of ownership when it comes to economic success. It regularly reminds Bahamians that Atlantis the largest private sector employer in the country came to The Bahamas on its watch.
The not so subtle message behind this discourse is that politicians cause prosperity. This is untrue.
Governments do not grow economies. The combined actions of private individuals lead to growth.
Governments are parasites. They gain wealth by taxing the wealth of citizens. When they directly go into sectors of the economy, governments extract wealth usually by setting up legal monopolies or unfair arrangements where the state agency has an advantage over other private companies in the sector.
Sarkis Izmirlian, his family and the other investors involved have taken on the majority of the risk associated with developing Baha Mar. Sol Kerzner and his investors have taken on the risk associated with Atlantis. These people should be congratulated for their courage.
With both of these projects, the Government of The Bahamas had a role to play. That role was primarily as a regulator. It had to decide what would be allowed following the laws of the country. Once the investment was approved, the government also had to fund certain necessary public infrastructure enhancements to meet the increased economic activity associated with the project.
In the case of Baha Mar, arrangements also needed to be made about the transfer of vast amounts of public land to the developers.
Some politicians think, once in power, that this authority as regulator to allow or block investment empowers them to decide who prospers and who fails. This is a perverse misunderstanding of that authority.
Governments should exist as regulator to ensure that there is fair play in marketplaces and to ensure that individuals have the opportunity to invest and earn a living. If a private citizen wants to make a reasonable investment in line with the laws of the country, the government has no moral authority to block that investment.
The government should, in fact, do all it can to ensure that there are as few barriers as possible to investment and economic activity.
The government coming to an arrangement with Kerzner, Izmirlian or any other investor about the transfer of public land is an example of the government living up to its responsibility to facilitate investment and economic activity in a liberal democracy.
Simply put, taxes should be kept to a minimum; regulations should be reasonable and kept to a minimum; and the goal of the government should always be to help encourage and facilitate participation in the marketplace.
Governments should try to stay out of the way of creative and bold investors. They should also try not to take credit for what they did not do.