The recent passing of the Depositors Insurance Protection Act is a considerable step backwards for our country. I find it very interesting that this Bill was unanimously supported by the Parliamentarians present in the House of Assembly. This is politically motivated legislation designed to protect those intelligent depositors who knew the terms being offered by the Gulf Union Bank were well outside the practices of all other banks. This should have been evidence enough that there were problems brewing.
I did not read or hear the details of all the debate but I don-t think anyone made the point that in order for the losers in the Gulf Union Bank affair to be compensated, those of us who smelled the rat have to pay them back. This is protection for some but it certainly is not being "fair" to all.
The overriding question is: why should the other banks and the Bahamian taxpayer be responsible for reimbursing those individuals who chose to risk their money in a questionable enterprise for what they believed was an opportunity to obtain greater rewards?
Does Parliament have exclusive responsibility to ensuring fairness?
Dr. Bernard Nottage in his presentation even suggested that people should be reimbursed for investments in the stock of companies that might go bankrupt. I realise that this all sounds good. But I am beginning to understand the reason for a politicians existence… sound bites. Make your constituents believe that you are going to "help" them. Whether it is possible or not really doesn-t matter.
During his presentation, "B. J." as he is affectionately known, used the opportunity to bash the new car retailer when he suggested that they were attempting to prevent the used car lots making a living. Somehow he wants us to think that this relates with the so called protection of depositors.
What it does relate to however is the unintended consequences of governments policy known as Price Control. The rule designed, at least in the legislators mind, as one to help the small man by preventing "excessive" mark ups is now haunting the very people that designed it… the politicians. If the importers of used cars from Japan have found a good product at a reasonable price, that the consumer wants to buy, why can-t they make a "fair" profit. Hopefully you can see from this one example how convoluted this "fairness" thing becomes.
In discussing "fairness" Dr. Thomas Sowell recently noted in the Jewish World Review that "It makes sense to blame human beings for biased rules and standards. But who is to be blamed for circumstances that are the results of all sorts of conditions of the past and present, interacting in ways that are hard to specify and virtually impossible to disentangle? We need to stop the pretence that somebody is guilty whenever the world does not present a picture that suits our desires or fits our theories."
"…there is often a pretence of villainy enshrined in rhetoric about "predatory" pricing or "domination" or "control" of the market. And here again there are third parties who lose – the consumers.
Gouging and other rhetoric.
This debate was used as another opportunity to pit us against each other. Consider the following points:
- It was suggested that the small man needs protection. Unfortunately the policies being espoused do little to lift us up as a nation. It uses the Rev. Jesse Jackson approach of making us believe that we are not capable of using our own judgement to solve our problems… we need the government to do this for us.
- It was suggested that the Depositors Insurance Act was helping those people who were taken advantage of by Gulf Union Bank. Why should the individuals who freely chose to "invest" in this institution be compensated for their personal indiscretion?
- It was suggested that banks be restricted from "gouging" by adding the cost of this new legislation onto their service charges. Why is it that only business people gouge? Do professionals and politicians gouge or do they charge what the market will bear? Are lawyers and doctors the only people who are allowed to make a profit? No mention is made of the spiralling cost of our government forcing the need for more tax revenue. It should be the goal of government to ensure the necessary freedom exists so businesses can profit. Profit is not a dirty word and by ensuring an environment where business can flourish more opportunities will be created, thereby helping the very people they claim to want to help.
- It was suggested that we should protect people from potential losses if they purchase shares in a company that goes bankrupt, as if we are not capable of thinking for ourselves. How can we expect to "pay" people for loses when government helps make the climate that creates business losses with its often unwarranted policies?
This level of debate does not lead, it only serves to stir up resentment and confusion. It also leads to more legislation that restricts initiative and the entrepreneurial spirit. It seems far too easy to suggest that we all need being taken care of.
What should we do?
I think our political leaders, Dr. Nottage included, should be more concerned with the development of us as a people committed to education and the rule of law. Not a people of dependency and anarchism.
It-s a slow process but we have to break out of this modern form of bondage. This bondage is better known as socialism. It is fitting that when we are considering more protectionist legislation and the creeping power of the State the centenary of the birth of Friedrich Hayek, noted author and economist is being remembered. In his book The Road to Serfdom, Dr. Hayek discussed the dangers of socialism this way:
"Although we had been warned by some of the greatest political thinkers of the nineteenth century, by de Tocqueville and Lord Acton, that socialism means slavery, we have steadily moved in the direction of socialism. And now that we have seen a new form of slavery arise before our eyes, we have so completely forgotten the warning that it scarcely occurs to us that the two things may be connected…
"The Nazi leader who described the National Socialist revolution as a counter-Renaissance spoke more truly than he probably knew. It was the decisive step in the destruction of that civilisation which modern man had built up from the age of the Renaissance and which was, above all, an individualist civilisation. Individualism has a bad name today, and the term has come to be connected with egotism and selfishness. But the individualism of which we speak in contrast to socialism and all other forms of collectivism has no necessary connection with these…"
Human Capital and outdated policies.
It should be clear by now that we must place more emphasis in developing our human capital if we expect to lift our nation to greater heights. In an attempt to help our citizens we must move away from outdated policies of dependence and continue to open our market to more competitive forces.
We are more responsible and capable than Dr. Nottage would have us believe.