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Ethos Issue 4, Apr 2008
The Changing Face of Government
The ETHOS Roundtable
As governments become more lean and efficient, how can they continue to play a crucial role in economic and social development?
ASHRAF: The role of government has changed. At some point, the government owned everything: all the factories, companies, the economy, and it was responsible for education, health and so on, and everyone served the government, not the other way around. Centralised government promised people the following: "You just work, we will take care of you". Now we have moved to a different kind of economic structure where the government’s role in industry has to be reduced, because running a company requires more nimble management. Most of the time, governments do not know how to do what the private sector does easily. So you should try to find someone who is capable of running the company better than the government. But you shouldn’t just leave the private sector and citizens to face off without arbitration.
There is a stronger role than ever, in terms of regulation. You should be intervening at the right time and having some sort of leverage over the market. Governments have to monitor market sectors and provide the necessary frameworks and logistics to make sure that there is competitiveness, the market is open to different players and citizens’ rights are preserved.
Governments, apart from being regulators, also have to look ahead, see what is on the horizon, and plan for the future.
PALAI: The challenge for governments is to develop the necessary capacity to understand and leverage on globalisation for national benefit, without necessarily increasing the bureaucracy to do so.
I think it is key to stay only in the few areas where government is really needed, such as security, and roll back in other areas to create space for people. Why, for example, am I regulating so many businesses? What if I say: "Ok, all I do is check that you’re legitimate and not tied to a terrorist organisation, and then you carry on"? I think this has to be part of the rethinking of government.
Increasingly we are beginning to accept that wealth creation is better done by individuals and individual companies than by government. So the public sector has to develop a new service culture which says, I work for you. If you want a license to get on with business, I give it to you and you then go on to create the wealth.
Governments also get greater value out of taxes from private enterprise, rather than by trying to run businesses themselves.
FENG: I notice that the Singapore Government plays a very strong and positive role in the economy. It means that government still has a very important role to play in a market economy.
In China, one aspect of being a service-oriented government is to provide service quickly and effectively, for example in approving an application for starting up a company. Another service is in providing a good environment and infrastructure to attract investments and development. Governments will also be needed to make good regulations; tax policies, for example, have to be attractive to foreign investors.
But when government provides a service, it is not always passive. Sometimes you have to be very active, because globalisation can be resource intensive and involve a lot of risk. The government must have a vision. It plays an important role in pushing for economic transformation, particularly in developing countries.
As economies grow at a rapid place, the gap between haves and have-nots is also widening. How should governments address this challenge?
ASHRAF: I think it is the social responsibility of the government to make sure that society is moving together. Government has to provide the policies and regulations to make sure that everyone has a share, and that it’s not just wealth accumulated by one group of people, because of unequal education, skills or health or whatever reasons. Economic growth should benefit society overall.
But growth is a tool for solving other problems, such as the eradication of poverty for example, and social stability. You have to have growth and wealth to ensure social stability. Otherwise, it will fall apart because people will start to feel poor, and lost, and fight among themselves.
FENG: Inequality is a big problem facing China, due to unbalanced development between the different regions, and between urban citizens and rural farmers. We are in the process of reforming our distribution system. That is to say we will stick to and improve the system whereby distribution according to work remains the predominant mode and co-exists with various other systems. As a government, we should also allow the factors of production, such as labour, management expertise and technology to play a role in distribution. Nevertheless, I think it’s important to strike a balance between efficiency and equality. This is why the government will continue to have a very big role to play. In China, we try to subsidise low income families and so on, and there is much more we can do.
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