HomeBusiness DigestCandid Comment: Overregulation, policy see-saws hurt economy

Candid Comment: Overregulation, policy see-saws hurt economy

Itai Masuku

THIS week we woke up to a new list by Zimra of products that are now subject to 25% surtax. This replaces a previous one not so long ago which made the products subject to the same tax. The previous week we learnt of new licence fees governing the mining sector. This followed earlier announcement on fees relating to the same industry.

Thereafter we had the Reserve Bank making a raft of new measures, among which was telling us how much of our money we can withdraw or transfer. It’s our money, but they also want to determine how we use it.

Then last week, we had minister Kasuks announcing new regulations about shop trading licences. All in the space of less than a month! Anyone want to add to this list of rafts of new measures that are constantly being announced in case we lose track of them? Our authorities have a proclivity for over- regulating.

If we are not careful we risk sliding back into the old days of price and what-have-you controls and the damaging consequences on economic activities. For newspapers it’s good business because the public will constantly need to know what the latest is and therefore buy the paper every day. One doesn’t believe that government constantly needs to come up with new laws and regulations although these are necessary from time to time.

From the little one can remember from ‘O’ level Biology once upon a time, there is a phenomenon in the human body called homeostasis. The enlightened will excuse the shallowness of the narrow definition thereof but some have defined homeostasis as the property of a system that regulates its internal environment and tends to maintain a stable, constant condition of properties like temperature or pH. Some key words from this statement are ‘stable’ and ‘constant’.

To these two could also be added ‘environment’ and ‘temperature’. Drawing from this definition, we need an economic homeostasis. We need an economic environment that is stable and constant. We also need an investment climate (temperature) that is neither too cold nor too hot for business to handle.

Once there is an element of predictability, the investment — both domestic and local that we are constantly clamouring for will — be a matter of course. In fact in all living organisms homeostasis is a critical factor. Agreed, homeostasis is stability and in the natural world, according to the experts, multiple dynamic equilibrium adjustment and regulation mechanisms (whatever those are), make homeostasis possible.

In modern economies, governments play the role of the system that regulates the internal environment. Really, that’s the job of a government. But ours overdoes it and hence we’re at best an overregulated economy with see-saws in policy that go against stability. Why the three years of the GNU are celebrated is because there has generally been financial stability because of the US dollar.

Thank goodness it’s a multi-currency regime otherwise we would wake up to be told we are a US dollar economy today, South African rand tomorrow, British pound (mmmm) tomorrow, and Greek drachma (heaven forbid) next.

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