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I might have mentioned before that there are some things that simply must be done and also can only be done by the government. These are the things that should, therefore, be done by the government. For these are the things that only the government can do and they also need to be done, obviously enough.
I’ve also mentioned that there are many things that the government can do but which don’t need to be done. There’s also that special class of things which should not be done but which governments tend to try and do.
This week we have an example of each to inspect.
Among those things that must be done is to regulate the spectrum. This is the electromagnetic spectrum that allows radio, TV, mobile internet, satellite communications, even those systems that allow airplanes to land in the fog and rain. The requirement for regulation is that the use by one person for one task prevents another from using it. So, there needs to be someone carving it up for the varied possible uses so as to allow each to be performed effectively.
It is possible, of course it is, for the government to allocate those frequencies by use. But that runs into another problem, which is that spectrum is a scarce resource — there’s not enough of it. That makes it valuable. So, why should the users be made rich by some friendly government, or bureaucrat, giving it to them? It’s also true that those who don’t pay the price for something, whatever it is, tend not to be efficient users of it. So, we’d like to charge for access to the spectrum. Have auctions even, so that the person offering the highest price gains it.
The government can then collect that price and use it to pay for the government. Tax the rest of us less, that is, but provide that same level of things which need to be done.
The good news here is that the Bangladeshi government currently does exactly that. The 4G and 5G spectrums have been auctioned off and raised Tk10,643 crore. This makes no difference to us as telecoms consumers, because those buyers would charge us as much as they could for mobile internet anyway. The money moved to us as taxpayers comes from the profits those companies would have made. Money moving from shareholders to us, we like this.
Then we’ve more good news from the Bangladeshi government. Supporting old technologies, supporting them well past their redundancy date, is something governments are prone to. This is not something that should be done, this is something that should not be done. But there’s that political problem — all the people stuck in that old line of work have votes. Therefore the political imperative is to take tax money off of all of us and give it to people doing what shouldn’t be done at all.
At which point, the Bangladeshi government has been subsidizing the jute mills for many years now. There’s even long been a Minister of Jute (one of whom I’ve actually met), which shows the political constituency for continued “help” to the jute industry. The government in Bangladesh has now advanced. For that aid, help, subsidy, is diminishing.
Excellent news, in fact. The jute mills earned Tk484 crore in 2020-21, and spent Tk3,652 crore. This is a loss of Tk3,168 crore, money that has to be found out of the pockets of all Bangladeshi taxpayers.
The thing is, tasks that lose money should not be done. Simply because a loss is the destruction of value and the idea of having factories, companies, and mills is to add value, not subtract it. So, if those jute mills cannot make a profit, then there should be no jute mills.
Which is the conclusion that the government has reached. Of the 25 jute mills under the Bangladesh Textile Mills corporation, 24 have been closed down and one rented out. You and I are no longer being taxed to perpetuate something that shouldn’t be happening at all.
The lesson to be learned here is that it is possible to have a good government — charging for spectrum by auction — and it’s also possible to make the government better — stop subsidizing jute mills. The big difficulty, though, is that a good government is, by my definition at least, doing only those things which both must be done and which can only be done by the government. As the decades it has taken to lose the jute mills down shows, keeping government limited to that very small set of tasks is the difficult part of a good government.
(DT)
