THE GRAVEST DANGER TO ECONOMIC LIBERALISM IN GUYANA

January 17, 2015 | By KNews | Filed Under Features / Columnists, Peeping Tom, Source - Kaieteur News

I have pointed out in a previous column to one of the problems that can be experienced in instituting a liberal economy in Guyana. That problem is the dearth of social capital which hinders trust and cooperation that is so essential for the success of capitalist enterprises.

Today, I want to comment on another problem, not unrelated to social capital. I will use an example to illustrate this problem.

Giftland Office Max is building a massive shopping mall on East Coast Demerara. In the same area is to be constructed a development that will house a massive Movie Town complex.

These are developments that have signaled the tremendous progress that has been made in this country and progress that has filtered down to the ordinary man. If the purchasing power and the demand for these services were not there, these investments would not have been committed. Guyana is therefore moving ahead and these projects will place up right there on the top with the rest of the Caribbean.

Or so it is hoped. I say this because no one has catered as yet for the invasion of vendors that will mushroom around these projects. I am saying that unless steps are taken to convert the access into and from this mall and proposed Movie Town complex into private roads, then vendors are going to swarm the place and create an eyesore for the country and problems for the developers.

It is no use carping on what has been expounded on before, but it is now public knowledge that vending has destroyed Georgetown and it is destroying other parts of the country where development is taking place.

It seems, now, that somehow vendors feel that they have a blanket right to go in front of your business and to squat and put up all manner of unsightly structures with little regard for the investment that you have put.

Vending itself does not represent a threat to a market economy. What it does, is the open policy of encouraging this practice because once this is done there is no turning back and lawlessness will prevail.

A market economy will contribute to imperfections. First, there is the imperfection of distorting economic incentives. Second, is the imperfection of increased informality. Third, there is the lawlessness that prevails which subtracts from an enabling environment. Fourthly, there is the imperfection of unfair competition.

I have seen many established businesses being forced to put their goods out on the pavements because if they do not, then vendors will come out and occupy in front of the business and this will shoo customers away from the business.

But it is not just the imperfections that are a problem. The encouragement of vending is an attempt to hijack legitimate economic space. This is the great malady because market economies demand respect for property rights and when real property rights are subject to economic trespassing, then this undermines the very foundations of a market economy.

But it is also a dangerous practice to encourage, especially when the basis of its encouragement, as has been openly admitted in some quarters, is competition for economic space.

Vending can assume a life of its own and become the pretext not for economic empowerment- it has never had that capacity- but rather an attempt at economic dispossession and the illicit transfer of wealth from legitimate to illegitimate sources. Those who do not recognize this danger may end up becoming its victims.